Sustainable Boardrooms: Democratising Governance and Technology for Society and Economy [1 ed.] 9789819948369, 9789819948376, 9819948363

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Responsible Leadership and Sustainable Management Series Editors: Nayan Mitra · René Schmidpeter

Apoorvi Shrivastava Amlan Bhusan   Editors

Sustainable Boardrooms Democratising Governance and Technology for Society and Economy

Responsible Leadership and Sustainable Management Series Editors Nayan Mitra, Sustainable Advancements (OPC) Private Limited, Kolkata, West Bengal, India René Schmidpeter, Ingolstadt, Bayern, Germany Editorial Board Kanji Tanimoto, School of Commerce, Waseda University, Tokyo, Japan Samuel O. Idowu, Guildhall School of Business and Law, London Metropolitan University, London, UK Noha El-Bassiouny, Faculty of Management Technology, German University in Cairo, New Cairo City, Egypt Bhaskar Chatterjee, Former DG and CEO, Indian Institute of Corporate Affairs, Gurugram, India Gabriel Eweje , School of Management, Massey University, Auckland, Auckland, New Zealand Tanuja Sharma, MDI Gurgaon, Gurugram, India

The series aims to transform corporations into future-fit businesses by bringing forth latest perspectives from cross cultural and interdisciplinary learning, management and business administrative paradigm. It will not only showcase systemic outlooks on how new businesses look like, but also foray into specific key areas to comprehensively reveal their challenges and propose solutions. The series intends to make varying concepts, research and practices of responsible leadership and sustainable management accessible so as to promote their better understanding and implementation. The scope of this series will lie in collaborating with global researchers, practitioners, policy makers and other stakeholders, so that responsible leadership and sustainable management becomes mainstream in organisations and businesses. The objectives of this series are: a) to foster collaboration between Europe and Asia in content creation and knowledge transfer on the topic b) to publish research that focuses on building strong, resilient international value chain and common market c) to advance a new sustainable, responsible thinking The series publishes research monographs, both authored works and case studies, to highlight innovative and best practices on the topic, and edited volumes putting together varied perspectives. The content covered should be international with fresh perspectives on topics that have the potential to bring about transformational changes in corporations, for their seamless evolution into businesses of the future.

Apoorvi Shrivastava · Amlan Bhusan Editors

Sustainable Boardrooms Democratising Governance and Technology for Society and Economy

Editors Apoorvi Shrivastava Arbitrator and Associate Professor Manipal Law School, Manipal Academy of Higher Education Bengaluru, India

Amlan Bhusan Chairperson and Director MBI Global Oxford, UK

ISSN 2730-9533 ISSN 2730-9541 (electronic) Responsible Leadership and Sustainable Management ISBN 978-981-99-4836-9 ISBN 978-981-99-4837-6 (eBook) https://doi.org/10.1007/978-981-99-4837-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Foreword

I am extremely delighted to write the foreword for this book, an anthology of articles meticulously chosen and presented like a beautiful bouquet with lasting fragrance by the industrious compilers. A book is written, or an anthology of enriching articles are presented due to many a reason. It may be pleasure, commitment, sharing of experiences, preaching, or propagating an idea or ideas, of some other compelling reasons. The present book, ‘Sustainable Boardrooms’, as I perceive and understand, is founded, and inspired by the concept of ‘universal concern’ that lays emphasis on affirmative sustainability, environmental ethicality having due regard to the future generations, growth of business having respect for humanism and human fights, progress sans obsessive commercial vision, and development of contemplative and competitive approach to encompass realistic inclusiveness. The fundamental purpose behind the compilation is to selflessly, yet skilfully, make an endeavor to change the philosophy of the commercial concerns at the highest level and to make every individual aware of the new lexicon that the thinkers of the world are developing expecting every entity to remain ‘Argus-eyed’ to the statutory compliances, not to take shelter under any adroit excuse and the countries to act in accord with the prevalent conventions. It is essential to state here that the present book breathes with modern ideas. One is compelled to recall what Oliver Wendell Holmes had once said: “It is the modem books that give us the latest and the most profound conceptions.”

The articles have a common thread. They propose the idea that, in today’s world, profit-making is not the sole criterion for social recognition. It is no longer the singular measure. It has to rationally and voluntarily engulf the graph of ‘corporate sustainability’, for the said term has gained the respect of sensitivity. It is because the concept of globalization of human culture is dependent on corporate morality and individual obligations and responsibilities. The impact of development without social responsibility jeopardizes the nature of nature and, resultantly, surrounding circumstances. Neither a corporate entity nor

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an individual can afford to be cruel to nature. ‘Environment’ is not to be treated as dull matter as it has cells that speak. That is what the book conveys. The ‘value addition’ of any business entity of any status depends upon its ‘Green behavior’. The idea connects it with conduct and constructive psychology. The unequivocal stress is on ‘Green Economy’ to establish one’s reputation on the sands of time. Corporate Social Responsibility and its value is not to remain within the statutory command, but it has to be embraced as a philosophy of doing business having respect for transparency and accountability. The anthology, I am obligated to say, lays the spread of less known ideas or the ideas with new perspectives. But they have their nice nuances and sanguine significances. Historically, some feel, taxation is an impediment to the corporate growth. The article critically analyzes it and holistically states that taxation helps in growth and empowers the entity. It is to be read with apt attention to be appreciated. I have, in the beginning, stated that the present anthology is an expression of concern of universal nature. This anthology, I would like to say, is an excellent effort in organizing corporate intelligence, making an individual concerned about the ‘Green Culture’ and admonishing the collective to be aware of and to positively respond to the concerns that the future generations are likely to face. It is clearly told not to live with the borrowed time of your posterity. I am sure, the anthology of articles titled ‘Sustainable Boardrooms’ shall not only get appreciation from all quarters but will also become the laser beam for the economy wedded to ecology and environmental spirituality.

New Delhi, India October, 2023

Justice Dipak Misra Former Chief Justice of India

Preface

“We pay taxes, cess which can be used for the benefit of society at large. Why put a mandate of Corporate Social Responsibility or ESG or preach Sustainable Governance?” We always come across these questions during our umpteen professional conversations. They made us realise that the industry has a microscopic view of growth and numbers are the only parameters for success. This led to an afterthought that it is our cardinal responsibility to reflect and educate the business community that sustainable practices are not an obligation but an investment. Over the last few decades, the idea of inclusiveness or a whole of organisational attitude towards social giving has been an imminent part of corporate behavioural change. Movements sponsored by both civic societies and advocacy coalitions in developed economies, as well as governmental public policies in middle-income countries, have called for a tectonic shift in socially inclusive decision-making, both by private as well as public enterprises. It is been acclaimed by leading social voices and prominent commentators, that, in the realm of a shared world of limited resources, the idea of isolated acts of social giving, are made more universal and mere episodic tales of benediction, would not suffice the crude need for access and equity. Gold can’t be minted for eternity by destroying the earth. Organisations need to do the right things rather than claiming to do so. This is the contestable proposition that we were confronted with, as we set forth with this book. As academicians and consultants with an equal footing across the higher education sector as well as mainstream corporate world, as an editorial team, we have had interactions with students, researchers, policy analysts, and mainstream corporate leaders, all trying to make meaning, out of their experiments with social responsibility. Terms like welfare economics, green governance, and statutory constructs of inclusiveness in corporate decision-making are often taken for granted—we witnessed a lot of confusions, platitude, and expressions of self-triumphalism or of absolute helplessness and regret, expressed by various groups.

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Thus, we decided to search for dominant themes in these exchanges, to see if there was some form of homogeneity, in how companies, agencies, and academics, relate sustainable governance to decision-making and how all of it found a place, across Boardrooms. It is evident that, unless leaders and boards were resoundingly pro-sustainability, pro-social inclusion and pro-inclusive governance oriented, the much-needed changes on the ground, would be reduced to mere aphorism and wishful thinking, albeit with the largesse of popular press and the wanderlust on social media. As Immanuel Kant said, “Experience without theory is blind but theory without experience is mere intellectual play.” Therefore, we wanted this book to be an interpretive repertoire of experiential tales of senior decision makers, sharing their points of view on the topic, followed by mainstream discourses by academicians and researchers, to maintain a strong academic vein in the process. The book introduces itself through a trio of expert talks from industry stalwarts, who have shared their professional wisdom and experience on sustainable corporate governance in the light of boardroom behaviour. Each chapter after that is an analysis of different aspects of corporate governance and their interplay with social inclusion, sustainability, and the essential constructs of impact. There is sparing academic or industrial resource available that treads the fine line between academic investigation and managerial application. We believe this book with its varied perspectives and interpretations on sustainability as well as governance through sustainable practices will be of ready use for corporate decision makers, as a ready reference guide to interpreting sustainability in decision-making. The rich academic constructs that hold this book will also be of ready reference for academics and thinkers, who will use this book to help guide academic efforts to connect sustainability in boardrooms with the wider social outcomes of sustainable corporate governance. This will be a tremendous contribution to the field of leadership and innovations in corporate governance and organisational behaviour. It is always a surreal experience to bring together a piece which we hope changes the stride and benefits the society at large. We would like to take this opportunity to thank our editorial team members, and corporate leaders Mr. Richard Burge and his EA Abbie Rawlins for their contribution, Mr. Krishnamurthy managing one of the largest Public Sector organisations in India, and Dr. Mark Mann, with his decades of expertise, managing Impact and Sustainability at Oxford and all over the EU for sharing their real-life experiences. We would also thank Ms. Shinjinee Namhata for her valuable research contribution. We owe our gratitude to our family members and friends who encouraged us to take this journey and our wonderful Publishing Editor Ms. Nupoor Singh, for her unmatched professionalism and dedicated support. Bengaluru, India Oxford, UK

Apoorvi Shrivastava Amlan Bhusan

Introduction

Governance is often defined as steering rather than rowing the changing processes of policy decisions and actions across boundaries of private, public, and civic sectors. Sustainable governance is increasingly advocated to be embedded into business models and strategies. Sustainability is no longer an afterthought, but it is the white elephant standing in the middle of every boardroom, not waiting in for recognition, but barking out loud for consideration. Therefore, the notions of Sustainability, Corporate Social Responsibility, and Environmental Management have become very popular among academia, as corporations are moving beyond transparency, business ethics, and stakeholder engagement as the only dominant themes in contemporary management studies. This book attempts at bringing in a special research method into practice—Interpretive Repertoire. This involves collating and presenting a collection of interpretations from subject correspondents, responding to a set of incidental stimuli. In this light, the book clearly identifies how green governance and corporate decisionmaking with sustainability at the core form a fitting nexus. It aims to analyse the possible merits of ‘Sustainable’ governance and incorporates the reflections of decision makers from India, the EU, and other parts of the world to address how they have integrated sustainability into their organisational decision-making processes. Professional notes from notable industry leaders and professionals give a fitting introduction to the concept of sustainable corporate governance. This publication combines both a theoretical and a practical approach. It highlights the need to shift focus from governance to sustainable governance, through various chapters discussing issues around climate change, need for green economy, green human resource management and green jobs, sustainable technology, green tax governance, green dispute resolution, and ESG reporting. This book is a rarity, in the sense that it bridges multilateral industries, different geographical, socioeconomic settings, and diverse academic landscapes, to bring together a collection of interpretations from senior managers, practitioners, and academics alike, who see the subject from their different lenses. This book serves the purpose of showcasing experiences from research, field projects, and best practices to foster corporate responsibility and sustainability, which ix

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is a very emergent conception in itself. Discussions in the ensuing chapters are characterised by the presentation of theories that define the core concepts with a fine blend of applied expert opinions and case studies. This book, it is hoped, will help create a functional academic construct, which will assist managerial academics to teach ‘green’ competencies to learners. This book shall also act as a comprehensive guide for industry experts to understand and execute sustainable governance in a variety of scenarios. The chapters delve deeply into the complexities of sustainable governance and its various nuances, connecting them to the key themes as outlined in the previous paragraphs, exposing the guiding ideas, concepts, and tactics that ensure its successful execution. We seek to provide policymakers, practitioners, academics, and concerned citizens with the information and inspiration necessary to negotiate the challenging landscape of sustainability governance through a rich tapestry of insights, research, and real-world examples. The chapters slowly yet methodically unfold the notions of sustainable governance and culture and how they ace businesses at large. Corporate sustainability is understood as the ability of companies to positively influence environmental, social, and economic development through their governance practices and market presence. Good governance ultimately fosters sustainability, creates sustainable values, and helps companies achieve these values. The growing clarion calls concerned corporations to undertake more responsibility in terms of becoming more sustainable in their operations, and, hence, be held accountable for their actions which are not necessarily restricted to the confines of the Board or the Shareholder meetings any longer. Sustainable business practice is not only fruitful to the business entity but also proves to be beneficial for the society at large. The need for shifting focus on ESG norms has been emphasised in a very effective and efficient manner through the very Chap. 1 of the book. Companies may use frameworks like the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), or the Task Force on Climate-related Financial Disclosures (TCFD), among others, to evaluate and disclose their ESG performance. These frameworks establish rules and standards for quantifying and disclosing ESG-related data. ESG principles encourage businesses to think deeper about their societal and environmental implications than just their financial performance. Businesses thus can contribute to creating a future that is more sustainable, responsible, and inclusive by incorporating these norms into their plans and daily operations. For every other emerging concept, there is a dire need for effective regulations and tools for efficient management purposes. While ESG has been a topic at the forefront of responsible investments for more than a decade, the impact of COVID-19 has corroborated the need to further ESG-informed investing. Chapter 2 not only discusses the effectiveness of corporate sustainability but also analyses how ESG reporting may be enhanced to better serve the needs of the relevant stakeholders and the potential challenges in bringing regulatory reforms on this front. Moreover, Corporate Sustainability and Green Human Resource Management (GHRM) are closely intertwined concepts that emphasise the integration of environmental and social considerations into an organisation’s practices, policies, and strategies. They are related in terms of environmental stewardship, green talent acquisition and retention, and approaches that align environmental and social goals

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with HR practices. On that note, Chap. 3 focuses on the greening of employees with a view to achieve environmental goals of the organisation. It also proposes how organisations can advance sustainable development, with a special emphasis on their contribution to social equity by ensuring for women, an equitable access to employment. Upon development of the concepts of green governance and sustainable development, gradually emerged the concepts of ‘green economy’ and ‘green jobs.’ Green skills are the competencies and knowledge required for individuals to participate in and contribute to a green economy. The discourse on green jobs became a natural follow-up to the debate on green economy and green growth. The book in its Chap. 4 highlights various intergovernmental organisations’ approach towards green economy along with their policy initiatives in line with green jobs and green skills. The green economic agenda is visibly promoted and advanced globally in a significant way through Intergovernmental Organisations (IGOs). These groups offer platforms for cooperation, exchange of information, policy formulation, and execution of actions that promote ecologic development. Together, they help to achieve sustainable development objectives, protect natural resources, and lessen the effects of climate change. This chapter also aims to produce a comparative study of the green economy growth and the governmental policies and initiatives taken by Singapore and German governments towards building a sustainable future. Amidst the shoutout for sustainable governance and shift to green economy, global climate change still remains a major challenge worldwide. Decentralising climate action involves shifting the responsibility and decision-making power for addressing climate change from centralised authorities to local governments, communities, and stakeholders. By drawing lessons from global practices, the authors in Chap. 5 aim to explore possible methods of social engagement for developing the climate resilience that can be implemented globally with a specific reference to India, based on learnings from global practices. Artificial Intelligence (AI), however, can play a significant role in advancing green governance by leveraging its capabilities in data analysis, predictive modelling, automation, and decision-making. AI can be leveraged in green governance in manners like predictive modelling and risk assessment, sustainable resource management, smart infrastructure, urban planning, and so on. Chapter 6 aims to evaluate the current green governance practices and its impact on climate sustainability. It also in a way seeks to evaluate Artificial Intelligence (AI) as a potential tool for assessment of climate-conscious decisions along with Environmental, Social and Governance (ESG) investments and a way out to reverse climate change. Adapting Green governance has the potential to bring the world out of this ambiguous situation towards a clean economy and a win-win situation for democracies by slashing their dependence on autocracies. Innovation is a key driver in the growth of certain businesses. However, certain business practices aimed to create value through patents tend to appropriate Traditional Knowledge. The intersection of traditional knowledge, sustainability, and international intellectual property law raises several important considerations and challenges. Balancing the protection of traditional knowledge, promoting sustainability, and ensuring the equitable sharing of benefits require a combination of legal frameworks, policy measures, and inclusive approaches that respect the rights and

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knowledge of indigenous and local communities. The author puts forward in Chap. 7 that appropriating Traditional Knowledge is not a sustainable business practice. It then takes a Third World Approach to examine the draft articles prepared by the Intergovernmental Committee with regards to Traditional Knowledge, and Intellectual Property. One of the most important requisite for sustainable governance to foster is a healthy taxation regime and associated social credits and recognition. An effective and efficient taxation regime not only caters to the progress and economic growth of a company but also substantially contributes to the achievement of the Sustainable Development Goals. Social credits for green business growth however involve a system that recognises and rewards businesses for their positive social and environmental contributions. These credits can be earned based on various sustainability criteria and can provide benefits that support the growth and development of green businesses. Some of the key aspects of social credits for green business growth can be sustainability performance assessment, continuous improvement and innovation, government support and incentives, and so on. Additionally, Sustainable governance and an effective taxation regime are closely related and are mutually reinforcing in promoting sustainable development. Such a practice, in the long run, improves the financial performance of the company and brings it major market recognition. Chapter 8 focuses on the social credits and recognition, sustainability brought into corporate governance practices, and how companies through an efficient fiscal policy and taxation regime can contribute towards the Sustainable Development Goals (SDGs) having a special emphasis on Asia-Pacific business operations. Implementing a social credit system for green business growth requires clear criteria, transparency, and verification mechanisms to ensure credibility and integrity of the credits. Moreover, by incentivising and rewarding sustainable practices, social credits can encourage green businesses to thrive, contribute to the transition to a more sustainable economy, and address pressing environmental and social challenges. Such environmental and social challenges often lead to disputes and disputes are inevitable. There is a dire need for effective resolution mechanisms best suitable in the interest of a predominantly environment-friendly atmosphere. Effective dispute resolution for sustainable governance involves mechanisms and processes that address conflicts related to environmental, social, and economic sustainability in a fair, transparent, and inclusive manner, concisely, Green dispute Resolution mechanisms. Green dispute resolution refers to a process of resolving conflicts in a manner that is environmentally and socially responsible, as well as economically viable which helps to minimise the negative impact of conflict on the environment. The authors in the final chapter aim to explore the importance of sustainable dispute resolution in the corporate world and how this approach can contribute to the overall well-being of society. By integrating elements of sustainable dispute resolution mechanisms, sustainable governance can effectively address conflicts, promote sustainable development, and ensure fair and equitable resolution of disputes related to environmental, social, and economic sustainability. Such strategies aid in inclusive and participatory decisionmaking, generate sustainability outcomes over the long term, and advance societal well-being.

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The intent of this book is to inspire readers to embrace sustainable governance as an absolute necessity for the future we want to build. It challenges us to picture a society in which the long-term welfare of people and the environment is given top priority by political institutions. It inspires us to rethink what success looks like, recognising that it isn’t about unrestricted consumerism but rather about the peaceful coexistence of ecological integrity, social equality, and economic resilience. To promote a more inclusive and equitable future, sustainable boardrooms that seek to democratise governance and technology for society and the economy are indispensable. These boardrooms place a high priority on incorporating sustainability-oriented principles into decision-making procedures, fostering diversity and inclusion, and leveraging the potential of innovation for societal and economic advancement. We hope that this book will inspire researchers, practitioners, policy makers, and boardroom commentators, to find a connect between Governance and sustainability and thereby, create a collective effervescence in the mainstream managerial literature on this area.

Expert Talks-I: The Challenge of Sustainability to Business Leadership

Richard Burge, CEO of London Chamber of Commerce and Industry

My approach to business sustainability is conditioned by two factors: The first being I have been originally trained and have specific background as an academic ecologist, so a personal commitment and interest is the foremost aspect of sustainability that influences my perceptions of green business. The second is that I lead a business organisation; a chamber of commerce which represents London; one of the greatest world cities and which aims in making green finance a key element of its global offering. As such, not only do I need to run the chamber in a manner which makes the best possible decisions over sustainability, but which also acts as an exemplar model and source of advice to our member companies. Historically, “sustainability” had a very narrow yet predominant definition in business. A sustainable company was regarded as the one whose products and markets were predictable creating a sustained value for the company and a sustained return on the investment. The definition is very simple in approach. But this narrow definition has proven to be highly vulnerable in contemporary times. It became apparent xv

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that competitive advantage could be achieved by conveying the true costs of doing business. The most disreputable were products or services having huge immediate or subsequent economic cost but with sufficient debates about where such a burden was borne by unconnected agencies and generations. Tobacco companies did not factor in the health costs of their products, and the price of oil was not increased by having to compensate for the climate consequences of their activity. Financial sustainability became a countervailing force to create profit by exploiting weak measurement and supervision of the environmental and social impacts of corporate activity. The business entities I represent specifically face a three-fold challenge as follows: • that sustainability is a series of measures of a wider impact not simply the net outcome of financial performance; • that the components of sustainability are fearsomely intricate, and there appears to be precious few individuals in commerce whose knowledge and judgement can withstand the determined scrutiny of experts outside the world of business; • that the reputational damage from inadequate (or worse, false) sustainability measures is no longer limited to environmental or social interest groups, but is increasingly assessed by investors, owners, and regulators. It can be automatically assumed that the business owners look for ways of evading the scrutiny that sustainability imposes, and that is what annoys them often. They feel suspected of either bending the data and system, or of making extravagant claims without ensuring veracity. In short, they feel mistrusted, and that the sustainability community will not assume their positive intent. Many point that they are of a generation that has grown up with the ever clearer need to construct business sustainably, to leave no footprint, to be net zero in approach. And even if they are not from a generation where environmental sustainability and social justice were such a focus of global concern, they had been employing people and have children who are. This resentment is felt most acutely by the leaders of micro, small, and medium enterprises (MSMEs) who feel much closer to their communities and suffer direct impact (both positive and negative) of their businesses. Similarly, it is also felt by the more foresighted leaders of large enterprises, and they are often in a tough place of being confronted by investors and shareholders who simply are concerned with the return of their investment measured by the value of stock value and dividends. To them, Sustainability is simply regarded as an operational hurdle that is the job of their senior management to overcome. The world of purposeful business requires a meeting of minds between investor, senior management, staff, suppliers, and clients. That meeting of minds is almost difficult to achieve when some participants have an unfocused and imprecise understanding of the varied aspects of sustainability, or are suspicious and sceptical of it, or have a very “Milton Friedman” view of the business of business; that its purpose is simply to make profit for shareholders and owners, and everything else is a dereliction of fiscal duty by the management. This is thus a very confused and unbridled sea of conflicting perceptions, ambitions, and understanding of sustainability among the key stakeholders in a business. Business also

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operates increasingly in a very public realm, where reputation can impact investors and customers even if they originally professed little or no interest in sustainability. Supervisors use regulation as a tool for reducing the negative impacts of business activity and promote sustainable business behaviour, but their focus is simply on the aspect of sustainability with which they are charged. They are never penalised for a business failing because of their regulatory impact; they are not incentivised for making regulation work. They simply do not see the business from the vantage point of the manager or the actual owner. Too often, the reputation of a business in sustainability is determined in the public realm by academic experts who possess similar characteristics of a regulator/ supervisor. They have a narrow focus on the aspect of sustainability that concerns them, and in addition, they have no interest in the business circumstances. This criticism of the imposition of sustainability and the consequent resentment among business leaders may be genuinely held. Provided they are fairly and impartially applied, based on verifiable evidence, and validated independently, the barriers erected by sustainability are simply preventing a business from externalising the true cost of production. If that cost is monetizable, and that damage can be recovered through technical or policy intervention, then that cost should be factored into the price of goods and services. To do otherwise is simply a market distortion providing unfair competitive advantage to a business that “successfully” externalises such costs. Equally, there is little purpose in imposing the internalisation of costs caused by unsustainable behaviour if the funds are not used either by the company or the state to prevent or remediate the consequences of unsustainable behaviour. A contrary way is simply to apply a tax, which will add to resentment and not address the purpose of encouraging, enabling, or enforcing sustainable behaviour and practices. These aspects of sustainability, though a burden to businesses, are not their greatest vulnerability. That is coming increasingly from supply chains, both upstream and downstream. The advent of scrutiny on sustainability has come at the same time as the rise in digital e-commerce and almost the accidental opportunity of international trade for MSMEs. The trend of online ordering of goods and products shows that some companies find themselves in the middle of a complex international supply chain even before they realise. What used to take endless attendance at trade fairs, overseas marketing visits, and long telephone calls can now occur through a simple transaction on a B2B or B2C website. This generates two complex problems for a business. The patrons, whom I represent in London as a global city, report these frequently. • Firstly, manufacturing and processing businesses find themselves accountable not only for their own sustainable practices but that of their suppliers and often for the inappropriate use of their products downstream. At best, material substrates, component parts, and subcontractors can engage in practices which can make a product socially as well as environmentally unsustainable. These can be virtually invisible in the world of e-commerce and digital B2B transactions. When they are discovered, it gets too late. The reputational damage is done. This is particularly true when reduced costs are underpinned by modern slavery, poor

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working conditions, and child labour. Many companies who have worked at the extremely specialised aid of technology and precision engineering are aware of the perils of dual use of the output. But fresher, younger companies, especially those involved in the use of technology to develop disruptive business models, can often find reputational damage from working for clients whose sustainability values are not their own. Or who use their high and verifiable sustainability standards to counterbalance their own less rigorous approach. This is not simply in manufacturing but also services and finance. With whom an MSME banks can impact their reputation as much as from whom they purchase. • The second complex problem is measurement of sustainability. Environment, Social, Good Governance (ESG) often acts as a substitution for business sustainability. Initially, it had the potential of offering clear taxonomies and simple metrics for companies both to measure their performance and promote their goods and services. In the course of time this may well ensue, but currently it is a maelstrom of competing schemes offering differing definitions, measurements, and demands for validating and verifying claims. There are genuinely held differences in the taxonomy of sustainability, and in the accuracy and efficacy of measurement. But this has not been helped by competing commercial models. It has also been disrupted by many, seeking over simple solutions and check boxes. This desire is particularly strong in the financial services sector which still sees the traditional balance sheet as the only evidence that needs detailed expert understanding, and the ESG and sustainability reporting of a company deserving of only the most rudimentary of glances. Many of our Chamber companies are simply seeking the reduced risk by addressing the notion of sustainability, but to me, an increasingly large majority want to do it because they wish to do the right thing. They have created or run companies that believe to have a purpose which is not defined merely by financial performance. They have grasped that the root of their sustainability is that they cannot leave an environmental or societal consequence for someone else to resolve or pay to remediate. Things will apparently get easier in the long run. Standard definitions and taxonomies ought to emerge. The legal requirements will start to dominate the process of validation, and verification will become more transparent. However, companies irrespective of their size and scope of operation, need to adopt a resolute process of clarity and simplicity. The three keys for accomplishment of the same are as follows: • Identify the components of sustainability that are embedded in the company supplies, and specific activities (the process of manufacturing or service delivery) and in the delivery of products to clients and customers. • Decide on the verifications for sustainability required from suppliers, and the independent validation one provides of his own claims of sustainability. • Have clear sustainability performance standards that lie alongside financial performance and measure the externalised costs that the company is generating.

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To summarise and conclude, sustainability is all about reducing the externalised costs of the business as far as possible, measuring and reporting that performance in a manner that is easily validated by others, taking steps to mitigate or compensate for the reported externalities, and verify that the supply chains are not passing on un-reported externalised costs and consequences for the business.

Expert Talks-II: Sustainable Culture: The Edifice of Corporate Sustainability

Ravi Krishnamurthy, President of SBILIFE

While parking my car today at my designated place, I had to spend almost about ten minutes parking it with perfection as the space is too narrow. Between two pillars, I always face the struggle to do the same. I was just readily wondering why can’t we have the structures built without pillars? Are pillars necessary to define boundaries or have relevance way beyond this? Someone would say this is so immature to think of a building without pillars. Also, pillars cannot be just built anyhow and anywhere. To build the same, there is a detailed procedure like testing the samples of soil, water, and so on. But once it is done, the entire structure stands strong on it for decades and centuries. Similarly, to my belief, the very notion of organisation culture is this very pillar in any organisation.

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Each Organisation ought to dive further and essentially should delve into the elementary questions: • • • • • • • •

•

What civic role do we actually play? How can we deal with our effect on the environment? Are we attempting to make a safe and different labour force? Is it safe to say that we are adjusting to innovative change? Are we providing open doors so that our workers and business proactively answer to an inexorably robotised world? Are we preparing employees for job rotations, higher jobs, and superannuation with behavioural finance and other tools? Are our leaders able to understand the corporate responsibility to not only shareholders but also to various internal and external stake holders? Do Boardrooms oversee integrated culture of the organisations in building a workforce which not only challenges itself to reach shareholder goals but also ensures no compromise to the integrity, transparency, and responsibility to various other stake holders including the society, the weaker sections, the climate, and overall environments? How do employees across hierarchy and functions communicate and collaborate towards organisational goals?

It is important to notice how political and economic beliefs define the role of leaders and have an impact on HR management (HRM) practises in addition to the wellknown trends like technology, an ageing workforce, and rising education levels that have an impact on culture. It is obvious that significant relationships and power dynamics are at work. All such practices aim to result in creating a workplace that is joyful, encouraging, and where employees are motivated to do something extra on their own. An internal bonding is the glue to create a promoter-employee cadre where the employee owns the company, and she/he works for the company to build his/her company thinking it as his/her own company. This is what my understanding of sustainable culture of Corporate Sustainability/Governance is. Workplace culture is often ignored as the edifice or pillar even as we talk of Corporate Governance/ESG as the foundations of the future. It is the culture that can create sustainable road map strategies for Governance and ESG and other similar Boardroom practices. I therefore propose that the pillar called Workplace Culture be strengthened and fortified for the future. The ingredients of such foundation ought to include: 1. A workplace where employees and teamwork among them are appreciated. 2. Leadership involvement and support in the discussing and planning together of their future goals as a regular practice. a. An employee growth road map with opportunities for skill upgrades. b. Organise fun events that allow employees to interact and build mutual trust.

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3. Regular R&R for leaders who build cultures for encouraging employees like punctual employee of the week, not just for coming to office but also for leaving on time. 4. Encouraging and training leaders to bravely take regular feedbacks regarding their work, job profile, and a 360° feedback on culture and company goals. 5. Creating policies that are transparent and measurable.

How can HR help build a Sustainable Culture? A sustainable culture in the workplace is the key to success of any business. It determines how engaged your employees are and how likely you are to hold on to the talented ones and how we challenge the less talented in a positive way. It is an important goal of any Human Resources (HR) professional to create a sustainable culture that can align the company’s vision with that of the employees. If HR professionals understand their role in developing a sustainable culture in the organisation, they can facilitate an environment that employees find productive, trustworthy, and exciting. The HR team can help build a sustainable culture within any organisation if they pay attention to certain key aspects, including the following: a. Be proactive to support leaders functionally to create challenging yet joyful workplaces. b. Identify training needs on an ongoing basis. c. Align new entrants to the required culture while at the same time eagerly imbibing good practices from their past organisations. d. Constantly oversee sustainability of corporate goals in a manner benefitting the internal and external stakeholders including the communities. e. Focus on research into new areas to innovate for proactive response to the external and internal challenges. f. Use CSR and ESG investments as a tool to build employee care for society and assist the employees’ culture to imbibe integrity, and care for the society. g. “Employees as good citizens” is a brand well-built if the culture at workplace is able to foster mutual trust, care, and love for each other in the company and imbibe the duty to support the external communities, climate, etc. h. Fair competitive succession planning which offers new opportunities to employees and also helps build sustainability.

Impact of Sustainable HR Culture The sustainable development of the organisation and best governance practices require fundamentally the vision of the management to achieve long-term goals and objectives simultaneously by enhancing the brand and reputation of the corporate.

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This needs long-term-oriented conceptual approaches and activities aimed at building a leadership culture which constantly oversees the reputation of its brand. Brand repute means Culture. The recruitment, selection, development, deployment, and release of staff must be socially responsible and economically viable for corporate governance of sustainability. Employee satisfaction, employee motivation, retention, employee presence, social relations between employees and management, employee involvement and loyalty, leadership quality index (360-degree outcomes), and continuous succession opportunities both internally and occasionally externally inputs of outside talent and perspectives that come along with it are some of the metrics around sustainable HRM consequences. The aforementioned sustainable HRM outcomes will undoubtedly result in organisational performance by • • • • • •

Increased turnover Market price Market share Sales growth Productivity, superior products or services, and customer satisfaction Future investments and product/service development.

More importantly, it will produce predictable sustainable growth in these metrics. It thus becomes vital for developing a strong culture as it will enhance all input parameters which will provide fruitful outputs. To have a sustained organisation, other crucial aspects which needs to be focused on are: A. The Role of Learning and Development—Constant learning is like water: You need it despite having 70% of it in the body. It means that having knowledge is good but upgrading it with time is best. Trends today are changing at a lightning speed hence the need for learning and development. This portion if neglected can cause serious troubles within an organisation like lack of confidence within employees, resistance in learning and growing, etc. Things that make learning and development crucial are as follows: 1. Organizations need to demonstrate a commitment to an employee’s development if they want to compete for top talent. 2. Hiring is More Highly Priced than Employee Retention—It is hard to understand the actual expenses of employee turnover, but we inherently remember the fact that dropping productive employees isn’t always a great choice. Regardless of the precise rupee value, retaining personnel is more valueeffective than the charges associated with separation, recruitment, and the hit to productivity. I even have come across personnel who’re equipped to live longer at a business enterprise that invests in their improvement. This is also a way that businesses are helping to preserve their personnel by using investing learning and development (L&D). L&D is incredibly critical to boost employee confidence in themselves and believe in their business enterprise.

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3. Training an Employee Improves Your Bottom Line—Employees are a business enterprise’s greatest asset. With the right group in place, the sky’s the limit. With gaining knowledge and development specialising in filling in expertise gaps and upskilling personnel by means of focusing at the strengths of their personnel, companies are probably to boost their share of profit. 4. Untrained Employees May Put You at Risk—A company’s overall efficiency largely depends on the skillset and training of its employees. In some cases, inefficiency of the employees hampers the image of the overall company. Mitigation of perils is done by focusing on behavioural components in the purview of learning and development. Companies also have a duty to make sure their employees work in a safe and inviting environment. Implementing a powerful ethics training program can help employees minimise the danger of proceedings for failing to conform with industry requirements of workplace behaviour. B. De-risking Organisational Structures from People Dependency Risks— Competent and efficient employees that are uniquely esteemed to a company’s achievement are really worth their weight in gold, but what occurs when they go away, do they take that institutional expertise with them? Relying on key people incorporates dangers that, if not properly controlled and regulated, may additionally cripple the turnover, productiveness, and self-assurance among other personnels. Also, it is the company’s image which will be at stake. To maintain overall efficiency, a company must take into consideration the following essentials: 1. 2. 3. 4.

Take stock of Key Individuals. Have plans in place—Succession Planning. Spread knowledge through cross-training. An alternative model to diversify skillsets within the organisation and balance the risk of a set of key individuals leaving the organisation through opportunities of succession planning.

Companies that put a lot of accentuation on how not to lose a key individual might neglect to ponder how that ability can best be deployed there. There are three vital qualities of key positions: • They connect with organisation technique and facilely affect the viability of key execution. • They display high flexibility in the nature of the work completed by individuals who possess them. • They require one-of-a-kind organisation expertise, unsaid information, and industry experience that won’t be quickly found in the outside work market. Once recognised, it seems strategic to fabricate appropriate moderation measures to have progression planning for these jobs. This is a critical element to balanced cultures.

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Conclusion: Sustainable HRM—Is It the Magic Potential Solution to Building Sustainable Corporates? The need for organisations to orient themselves towards different stakeholders is not a new concept, but today’s context certainly is; it is more relevant as most policies for sustainability drawn up as a part of the Governance architecture presupposing an existing glue within the company which is called Culture. And no culture policy can be laid out easily as it is not easily definable. But people and interaction within people are the glue of a company and that is called culture. This is the element of HRM that is missed out during strategic thinking within the organisation but has high impacts on the quality of decisions. It is recommended that organisations do periodic dip-stick study on culture in organisations around how important decisions are taken towards the sustainable health of organisations as well as succession planning aspects. Sustainable or ‘green’ HRM vows to encourage more prominent affirmation and comprehension of long-haul issues connecting with esteem creation and worth catch. The sustainable HRM viewpoint hopes to challenge the strength of “augmenting investor esteem” techniques and plans of action and on second thought line up with meeting the interests of numerous partners over the long haul. It perceives execution results, which are more extensive than monetary results (for instance, by including ecological and social results, work environment bliss, representative variety, administration variety, and so on). In pursuing various objectives, there are probably going to be problematic results that should be settled. Moreover, Green, or sustainable, HRM catches value over the more drawn-out term. Since it perceives that to be really feasible, HRM should have the option to manage the internal and external environment and the changing scenario wherein the business is working (for instance, quickly changing financial and cultural climate). As the field develops, there is expanding arrangement among Corporate Administration specialists regarding the qualities of Sustainable HRM. These are illustrated underneath: • Long-term direction: Labour force organisation; surveying requirements of future workers. • Upkeep of representatives: Well-being, security, prosperity of the board; balance between fun and serious activities. • Conservation of environment: Cultivating ‘eco-vocation’. • Profitability projects. • Social exchange programs. • Outer association: Participation with key partners. • Adaptability: Adaptable working game plans; work turn. • Consistence past work guidelines: Include representative delegates in decisionproduction where cooperation is a legal necessity; monetary and non-monetary help.

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• Representative collaboration: Cooperation; great connections between directors and workers. • Decency and uniformity: Cultivating orientation variety; deferential connections; vocation. However, there are important questions in this emerging concept, including whether and how HR capabilities can change from a shareholder/proprietor orientation to serving multiple stakeholders, how HR capabilities handle workplace risks and opportunities related to creating shared value, and, ultimately, to what extent a sustainable HRM orientation enables the career to meet the strategic objectives of businesses. These are significant difficulties in the field and concepts that must be carefully and extensively considered if HRM is to become clearly viable. Risk management for shifting internal and external contexts is at the heart of sustainability. HR Culture is the rather missed-out yet key component of sustainability as it ensures quality of engagements, conversations, reskilling, hiring, and succession planning decisions which are at the optimum within the corporate. This is the very key to long-lasting successful organisations offering meaningful outcomes to stakeholders and society. Much needs to be invested in understanding and improving: Culture the glue of a Corporate within itself and with the external stakeholders.

Expert Talks-III: SMEs and the Future

Mark Mann

Christoph Köller

MD, Mark Mann OÜ

Managing Partner, Görgen & Köller GmbH

Having worked in research and innovation all my adult life, I’ve come to find the understanding of human behaviour to be the most fascinating and most important aspect of trying to get anything new done. Working for the last decade at the interface of those first steps on the journey of making an innovation a reality, one can readily feel the constant stress and strain growing, and how early-stage businesses are put under in an increasingly complex world. I also look at the general agreement globally that the world, particularly its changing climate, is in peril and that Something Ought to Be Done. I also look at the social and rights issues, all of which are set out in the United Nations’ Sustainable Development Goals (UNSDGs), and I set these goals against the priorities of an early-stage business, or indeed a Small to Medium Enterprise (hereinafter referred to as ‘SME’), and they will rightly ask the question: What can we meaningfully do? Why should we do it? xxix

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It is quite because SMEs do not know what their scope is. There are obviously a multitude of forward-thinking businesses: purposeful businesses, social enterprises, social ventures, not-for-profits, big corps, etc. across the world who do make it their priority to address an issue of a social, environmental, or cultural nature to effect a positive change, but they do not hold the majority. Any accountant will know that for early-stage businesses, the key aims are to balance the books, make sales, and comply with the regulations those businesses work within. There is so much work to do that the capture or measurement of impact, as noble a cause as they might consider it to be, is not enough to feed their families; they will turn to the measurement of impact when there is time, and there isn’t any. There never is. If you, as a business, do not know how to measure your impact, you are never going to measure your impact; there is always something much more pressing to do. This is a big problem, and bigger than is commonly understood. So, what of the forward-thinking businesses? What do they do? If you are a forward-thinking SME, where, as a business, you fundamentally believe that you should make a positive impact on the world, either because you see it as a necessary or at least desirable part of your brand, or because it is intertwined through your company constitution, you will necessarily look to see how you can provide evidence that positive impact has been made. You then try and find out how you are going to measure it; find that there is a congregation of impact measurement systems. The Global Intermediary Identification Number (GIIN) is the most widely adopted by impact investors, partly because they designed it. There are vast guides to look through. This is the case for most of the major impact measurement systems. They are large, complex, and impenetrable which initiates great opportunity for budding consultants. Impact measurement therefore costs money, either in time for the business measuring the impact, or by employing someone else to do it. It is then to decide as an SME that whether it is worth the toil, in order to deprioritise it and focus the activities elsewhere.

Objective of the Note Through my note, I’m not specifying any target audience. It may be SMEs which should think/do more with regard to impact, or those which are offering impact measurement solutions like SVE? The consultants also realise that they can’t sell their impact measurement services to SMEs either. They focus their activities on large corporates who have significant resource and can afford to pay the high rates the consultants need to charge to make themselves a sustainable going concern. A significant sum is invested in measuring the impact of the large corporate, but problems present themselves here as well. One of the major way SMEs become self-sustaining is to land a contract with a big client. If one can get a big contract with a big corporate, the income would be more secure and sustainable. He would be able to present himself to other potential

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big corporates as a company with a strong track record and as a business that they can trust. You can grow your pipeline, borrow money, and grow. The consultants of the big corporate organizations often realise that in order to measure the impact of the big corporate that they need to measure the impact of the companies in their supply chain as well. If 25% of your corporate’s costs comes from buying products from SMEs, what they do and how they behave affect the big corporate’s impact as well. If you look at the statistics in fact, 50% of the world’s population does not work for big businesses; they work for or in SME REF, so if a corporate is going to measure its impact, the SME needs to measure its impact as well. Now, taking you back to the beginning of this argument, fundamental to a successful understanding of impact, there is a big black hole for SMEs. They don’t measure themselves as they don’t have the resources and skills to do so, so any report a large corporate produces on their impact has a huge degree of uncertainty around it meaning its outcomes and conclusions can be disputed.

The Business of Impact The capture and measurement of impact is itself a market and we need to break it down in order to work out how to address it from the perspective of an SME. To understand a market, one should understand the human behaviours in it and what will cause people and organisations to adopt new innovations and ways of working. What does one to create impact in the market? They turn to the politicians. Is that where the market actually is? Well, the answer will be both ways. This note is written in a time of political flux across the world, particularly in the United Kingdom. The government, elected initially under Boris Johnson, pushed a “levelling up” agenda as part of its election campaign. Indeed, levelling-up ministers were appointed to address this agenda. Levelling up, like impact, is a word we can understand the concept of. Rather than evening up the outcomes for people by taking money and opportunity from the rich and giving it to the poor, the rich stay where they are and the poorest are given the resources they need to catch up. But it is the ambiguity of the phrase levelling up, or indeed the word impact, which causes people to think they agree with each other, when in fact they are not; as soon as you ask the question “levelling up of what and for whom,” agreement will certainly break down. The solution therefore is to work out what the priorities are. One can only do this through measurement, and by that, I mean measurement of everything; you need to know what you are dealing with before effecting the change. You then decide what your priorities are, put resources to solving the problem which hopefully causes a positive change, and you measure it again to see what the change is. A politician might mention the resources they invested in a certain issue, such as helping a poor person in a low-income area of the United Kingdom. If a measurement reveals a material improvement, the politician can use this as proof that they were responsible

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for the change and use it to support their bid for re-election. Anyone with a passing interest in politics can see that this is a dangerous road. In the United Kingdom, its Office for National Statistics (ONS), funded by the government but independent of it, already collects various measures which can integrate with some of the measures such as the United Nations Sustainable Development Goal (UNSDG) indicators at a very granular level—the UK is effectively broken up into groups of a few streets. Poorer countries do not have this level of measurement and in all countries, some measures are tracked better than others. It therefore requires investment in measurement which many countries, even the rich ones, do not have the resources to make. There are therefore two solutions, don’t measure everything (such as measuring every SDG indicator), or don’t do it to such a high level of detail. While the second option can be worked around through modelling, the former means that you are essentially pre-choosing priorities in a particular country without having had a political debate to determine priorities. Through modelling, you cannot necessarily trace the activity of a smaller entity such as an SME through the actions it takes. Then there are problems that measurement causes for the politicians themselves. Resources, even in the richest countries, are far less than is needed to solve the problems represented in SDG indicators. This means a politician will be seen to ignoring certain problems. Even riskier is pushing the resource to a problem and the indicators showing that the intervention hasn’t been successful. You are essentially selling a system to a politician which shows how bad they are at their job. This makes a clearly awkward set of data for a politician to defend, and they will probably conclude that they are better off without such. The politicians are not necessarily motivated to develop the tools needed to measure their effectiveness, but potentially the charities, unions, associations, and NGOs that are specifically mandated by their funders, members, or constitution to target a particular issues are driven to support communities. However, their focus is often very tight; they can effectively fight their corner, but their resources are usually thinly stretched and how their activities coordinate with other organisations varies. There is no single organisation or stakeholder that has the need to solve the problems for whom there needs to be most effect. There is no clear and direct business model for impact as the systems and actors are too complex in their needs, wants, and ‘nice-to-haves.’ For most SMEs, having a good impact on society is a ‘nice-tohave.’ There is, however, movement on how impact capture will become a want and eventually a need for SMEs.

Stimulating the Change Fundamentally, an understanding is that any social, environmental, or cultural issue cannot be solved by government alone. The whole of society across the world needs to be empowered to be able to solve its problems for itself. The wisdom of the

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organisations who focus on a particular social or environmental problem needs to be properly partnered with other actors who may have more resource to do something. SMEs account for 50% of the world’s population REF—they are an untapped resource and collectively and properly stimulated, and have the most to offer in solving the world’s problems. They can be nimble, and don’t require sign-off through extensive management structures; they have the ability to set to a problem and solve them quickly. In Germany, the federal government has legislation—the so-called Supply Chain Act—which, at the time of writing, was currently scheduled to come into force on 01/01/2023, which mandates companies with at least 3,000 employees to be able to account for sustainability and impact throughout their supply chain REF. By the way, from 01/01/2024 the law will include companies with more than 1,000 employees. SMEs will be affected indirectly in their role as suppliers of larger companies. It is to be expected that large corporates will urge their supplying SMEs to align with the legislation, too. This causes huge problems for large, multinational corporations. The large pharma companies, for instance, will have the order of 100,000 companies in their supply chains, the vast majority of which will be SMEs. With systems currently available, there is no feasible mechanism of being able to effectively demonstrate an acceptable quality of data on these companies. The German Federal Government’s intervention is the only effective way of stimulating the whole of society to be accountable for its activities: economic, environmental, social, and cultural. Ultimately, the successful implementation of the UNSDGs can only begin with leaps of faith such as this. It is well-understood the legislation can create as well as stimulate markets and in business, companies will ultimately only respond to market demands; legislation promotes the ‘nice-to-have’ of corporate sustainability to a ‘need’ in one swoop. With governments having signed up to making the UNSDG targets a reality, the German legislation is likely to be the first of many for developed economies around the world. This is the root of the business of impact—without a legislative stimulus, it will not happen. There are therefore two markets. The first is for those companies wishing to get ahead of the game to get “first mover” status for themselves which we are already in the second, which, for Germany will begin in 2023, others later, is for companies needing to catch up quickly for legislative compliance. However, legislation is only effective when it is realistic; bad laws are ignored or the implementation of them is relaxed—how many cars speeding on your country’s roads are actually stopped for breaking the speed limit? For new legislation adding burdens to business, the enforcement of it usually begins pragmatically and indeed, the authorities may not know right from the beginning how or what they are going to enforce to ensure compliance. Assuming a ‘light-touch’ implementation, large corporates probably already have the necessary resources in place to provide the information they need for their own activities. They will certainly have a sustainability department and it might need to add another member of staff to gather all the data and put it into the necessary form, but this is not where the market is heading, nor does it cover the bigger issue, which is how the SMEs in the corporate’s supply chain provide data when they are capturing little if anything themselves? Looking at

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the tracking of impact from another perspective, the bottom-up perspective, universities across the world are increasingly spinning out companies not only to make money from their intellectual property which they then plough back into funding their institutions but also to make an impact with the new knowledge that their research generates. Indeed, in the United Kingdom, since 2015, funding from the research from its government has been directly related to the impact the research makes through the Research Excellence Framework (REF). Impact is counted as 25% of the total funding a university receives; the higher the impact ranks, the more money it receives. The REF is a costly exercise—it is estimated to cost of the order of £200m REF—as it is a largely narrative-based impact measurement system covering all disciplines which is then blind-reviewed by peers. University spinouts, which themselves are SMEs (usually with emphasis on the S), often form part of this narrative. It would be, however, fair to see, that this additional burden places obligations on these nascent companies that they really don’t have the resources to meet. Indeed, some licence deals can be so complex that it can take them many weeks to gather the data necessary to fulfil their reporting obligations. From the university’s perspective, there would clearly be a strong desire to reduce the paperwork burden. Some of the larger universities can have as many as 100 active spinout companies at any one time—monitoring this portfolio for income and impact is a huge burden to place upon them.

A Pragmatic Approach to Impact Capture for SMEs The title of this note is to look for the answer to the question on what is in it for SMEs to capture their impact. I have successfully argued that widescale legislation is on its way and so SMEs will have to deal with it whether they like it or not—sooner or later. Various organisations in countries across the globe may lobby for delays in implementation, but with the overall direction which are far less relevant than others, particularly on the question of harm. How much harm can a company of a dozen employees actually do to the world? Unless it is a company that has been explicitly formed to make the best use of child slavery, or chops down Amazonian rainforest, a small company, as long as it is legally compliant, is unlikely to do significant harm. Therefore, to ask from a rather negative perspective, for a company to go through an extended list of things of the harm it is not doing, will engender animosity against the very system which is designed to help them to become more sustainable and reward them for it. Impact capture should be roughly proportionate to the size of the company and contain measures relevant to the sector it is in. While there will always be fringes in terms of company classification according to these metrics, the aim should be able to capture as much valuable information as possible, capture good positive impact and thereby encourage companies to carry out more positive action.

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Existing Data of the SMEs Fundamentally, social value measurement is contentious. Let’s take the example of wages. The United Kingdom has a Minimum Wage, a Real Living Wage (slightly higher) and locally focused measures such as the London Living Wage (higher still). What does an employer measure itself with respect to? What is fair? Who decides the criteria? Though the processing of the data is contentious, the data, nevertheless, exists and it should be used. With wage measures, regardless of what the appropriate measure should be, developed nations all have, to some degree, a national statistics service with local wage earnings and many other measures mapped. Most companies will also employ some form of software to manage their accounts and their staff data, which means a level of automation is possible in processing the data that an SME already has and converting it into social value information. For instance, you could use how much an SME is paying an employee, map that to the national statistical data, and calculate a measure of what the social value uplift (or otherwise) is. This can likewise be done with choice and location of suppliers, travel spend, etc. to build up a holistic collection of ‘entry-level’ data for impact measurement. • Automating the collection of data for SMEs means that some of the measures have the potential to come as a surprise to an SME. Many managers and staff will not have been trained on all aspects of social, environmental, and cultural impact, and they, at first, should not be penalised for any ignorance of issues they might have. This has several consequences. • Any impact tracking system must, at first, be private to an SME when they first start using it. If a company is doing something which does happen to be harmful, but they are ignorant to it, they should be given the time to put things right before going public with the data. If they do not, then they will resist using it in the first place for fear of the consequences. • Furthermore, an SME should only be mandated to report on the data it has to those who definitely require it, and those that receive that data should treat it with tact, and pragmatism as it will be more likely to have the spare cash to do so. With most SMEs living more hand-to-mouth with less spare cash; though it can probably change things quickly, it may lack the means to start immediately. • Any impact tracking system must be complemented with training with some straightforward solutions for how companies can make an improvement. You cannot have a system which is only a stick, there must be a carrot too. • Companies should all be put in the context of where they begin, so a ‘delta’— a positive change in any measure—should be rewarded as much as a company starting from a more progressive starting point. Therefore, changes and improvements need to be given prominent value in any impact tracking system.

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Involvement of Institutions To alleviate the debate on contentious issues (though never eliminating it), institutions are ultimately the only means by which a level of agreement, validation, and assurance can be found through the creation of an independent body made up of trustworthy institutions who are entrusted with the responsibility to independently research, create, maintain, and validate measures that capture social value fairly and are not encumbered with the pressures of the money that supports them. National Patent Offices are a good example of maintaining a level of independent oversight while being self-sustaining through the provision of the processing of the applications they receive and are paid for. This shows it is possible to have a system whereby the ‘woolly’ definitions of novelty and inventiveness are agreed and maintained through precedence with the full transparency that comes with the eventual publication of the process.

Praise for Sustainable Boardrooms

“Sustainable Boardrooms sheds much-needed light on the crucial confluence of sustainability and corporate governance. The authors have put together a thorough handbook that offers useful advice for professionals and organisations devoted to ensuring their business strategy meets society’s growing and shifting expectations. It is an essential and important resource for anyone seeking to understand the complex realm of sustainability in the boardroom at a time when such challenges are becoming increasingly impactful, to companies and their shareholders as well as to the planet and society. The book’s emphasis on keeping traditional knowledge alive and working with practitioners of Indigenous practices is particularly refreshing. In a world where sustainability is no longer an option but a necessity, Sustainable Boardrooms offers a roadmap for making ethical decisions and offers realistic solutions to the challenges companies face today. I wholeheartedly recommend it to anyone committed to aligning business success with a sustainable future for our society and economy.” —Mr. Joel Makower, Chairman and Co-founder, GreenBiz Group Oakland, California, USA “From corporate governance to democracy, to activism to corporate sustainability to excellence, this book offers a unique reading experience and prepares you towards a conscious decision as to how your boardroom should respond towards sustainable policy making. It is a must-read for those who wish to understand corporate decisionmaking to the next level by addressing human, economic, and technological aspects of corporate management.” —Dr. Shyamtanu Pal, Assistant Professor, School of Law Pondicherry University, Puducherry “I wholeheartedly recommend the book ‘Sustainable Boardrooms.’ This book serves as a source of knowledge and direction for people of all ages, corporations, and decision-makers in a time when the condition of our world is in jeopardy.

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A path for coordinating economic, environmental, and social goals has been laid out by the authors with an expert analysis of the complex web of sustainable governance. It not only clarifies the urgent need for sustainable governance but also offers organisations and companies a roadmap for completing this crucial journey. They provide light on the ability of sustainable governance to promote positive change through in-depth study and actual examples from the world around us. This book is a must-read for anyone committed to building a more equitable, resilient, and environmentally sustainable world.” —Mr. Arnab Mondal, Deputy Manager (Community Development), Southeastern Coalfields Limited, Coal India Limited “In order to preserve the environment for future generations, we propose integrating sustainability into all business decisions. Sustainability ensures our future, but greed frequently triumphs over environmental concerns. The book ‘Sustainable Boardrooms: Democratising Governance and Technology for Society and Economy’ by Dr. Apoorvi Shrivastava and Amlan Bhusan deserves high praise. By chronicling numerous techniques and viewpoints from company leaders, researchers, and consultants, it provides useful advice for environmentally responsible governance. The book is a perfect demonstration of how companies and business organisations can harmonise their decision-making frameworks. This book represents a significant step in the right direction, illustrating how the corporate world should align its economic, political, legal, and cultural frameworks to make holistic decisions aimed at preserving our natural partners, whether biotic or abiotic. This includes the diverse flora and fauna, mountains, and other physical elements. I have great hopes for this book and extend my best wishes for its success.” —Mr. M. G. Kodandaram, IRS. (Retd)

Contents

1 Environment, Social and Governance Norms: Assessing the Need for Shifting Focus from Corporate Governance to Sustainable Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sarthak Mishra and Kritika Singh

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2 An Overview of ESG Reporting in India: Practices and Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aparna Asokan

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3 Green Human Resource Management—A Gendered Approach to Sustainability Through Women Employment . . . . . . . . . . . . . . . . . . . Pritha Biswas and Subhoda Banerjee

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4 Reflections on a Green Economy with Reference to Green Skills for Green Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Easwaramoorthy Rangaswamy, Choong Kit Leon, and Gemini V. Joy

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5 Decentralizing Climate Action In India—Lessons From Global Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Naim Keruwala and Radha Karmarkar

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6 Leverage AI in Green Governance: Potential For A Climate Reversal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mihir Kumar Shome and Uday Sankar Das

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7 Traditional Knowledge, Sustainability, and International Intellectual Property Law: Biopiracy in Patent-Intensive Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Anmol Patel

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8 Social Credits, Recognition, and Tax Benefits for Green Business Growth: Companies Demonstrating Greater Green Governance and Their Social Stand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Apoorvi Shrivastava and Shinjinee Namhata 9 Green Dispute Resolution: A Sustainable Way of Resolving Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Akash Gupta and Arushi Bajpai

Editors and Contributors

About the Editors Apoorvi Shrivastava is an Associate Professor, Manipal Law School, Manipal Academy of Higher Education, Bengaluru, India, and an arbitration enthusiast. She is also an accredited associate arbitrator of Chartered Institute of Arbitration (CIArb), leading professional membership organization representing the interests of alternative dispute resolution practitioners worldwide. She also runs a Centre of Alternative Dispute Resolution and propagates narrow interpretation of public policy aspect in Indian Jurisdiction. Her research interest includes corporate law, international commercial arbitration, and role of public policy in the societal norms. She is an avid supporter of green arbitration and has written numerous papers on sustainable advancement of corporate sector by tackling human rights, environmental, and labor issues. Her public–private arbitration is applauded globally. She conducts various mediation and negotiation trainings for researchers, students, and corporates to equip them in technique to resolve disputes, crack deals in amicable manner along with considering green governance principles. Amlan Bhusan is a public policy specialist trained at the School of Government, Victoria University of Wellington, New Zealand, and has been a behavioral economist with Lund University, Sweden, with an independent consulting practice over two decades with many multilateral organizations across Australia, New Zealand, Switzerland, Sweden and the wider ASEAN region. He is currently a Policy Advisor to the Blavatnik school of Government, Oxford University, a visiting professor to the Indian Institute of Management, and an Adjunct professor to the National Institute of Technology in India. Amlan is also a director and Chairperson at the Research consultancy firm, MBI global Limited, based out of London, U.K. His research interests include social economic integration, contours of social Impact in both industrial organisations as well as academia, large-scale fund sourcing constructs and alternative finance methods, and regional economic integration on the sustainability charter. In addition, his consulting terrain further over the

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years has diversified into rehabilitative urbanization, labor mobility, skills development, sustainable livelihoods, and capability development for local and regional government agencies in several countries.

Contributors Aparna Asokan Bangalore, India Arushi Bajpai Jindal Global Law School, O.P. Jindal Global University, Sonipat, India Subhoda Banerjee Law, St. Xavier’s University, Kolkata, India Pritha Biswas Economics, St. Xavier’s University, Kolkata, India Uday Sankar Das Department of Management & Humanities, National Institute of Technology Arunachal Pradesh (Institute of National Importance under Ministry of Education, Govt. of India), Jote, India Akash Gupta Jindal Global Law School, O.P. Jindal Global University, Sonipat, India Gemini V. Joy VIT Business School, VIT University, Vellore, India Radha Karmarkar National Institute of Urban Affairs, New Delhi, India Naim Keruwala National Institute of Urban Affairs, New Delhi, India Choong Kit Leon Amity Global Institute, Singapore, Singapore Sarthak Mishra National Law University, Jodhpur, India Shinjinee Namhata IFIM Law School, Bengaluru, India Anmol Patel Open AIR and ABS-Canada, Centre for Law, Technology and Society, University of Ottawa, Ottawa, Canada Easwaramoorthy Rangaswamy Amity Global Institute, Singapore, Singapore Mihir Kumar Shome Department of Management & Humanities, National Institute of Technology Arunachal Pradesh (Institute of National Importance under Ministry of Education, Govt. of India), Jote, India Apoorvi Shrivastava Manipal Law School, Manipal Academy of Higher Education, Bengaluru, India Kritika Singh National Law University, Jodhpur, India

Chapter 1

Environment, Social and Governance Norms: Assessing the Need for Shifting Focus from Corporate Governance to Sustainable Corporate Governance Sarthak Mishra and Kritika Singh

Abstract As an entity working towards balancing out diametrically different economic goals, a strong governance mechanism is of utmost importance in a Company. Over the years, there have been some impressive pieces of legislations aimed towards creating an objective, impartial and transparent governance structure for the corporations across global jurisdictions. However, as the looming challenges of climate change grows more significant with the passing days, the role and position of a Company is also witnessing an apparent shift. The growing clarion calls concerning the Corporations to undertake more responsibility in terms of becoming more sustainable in their operations, and hence, accordingly be held accountable for their actions which are not necessarily restricted to the confines of the Board or the Shareholder meetings any longer. In such a scenario, the previously understood notions of governance have been laid bare for critical scrutiny, especially in terms of their loopholes and shortcomings against the new age challenges. The augmented focus on ‘Sustainability’ has forced the Companies and the policy makers to revisit their notions of governance, thus, contributing heavily towards advocating of ‘Environment, Social and Governance’ norms as the ‘new golden standard of governance’ norms for Corporations across jurisdictions. The theoretical assessment of the above proposition although has enough merit to warrant a closer scrutiny. However, the same is not without flaws. While the increased possibility tedious paperwork often linked to the filing requirements under the ESG norms does sufficiently enough to paint a rather unglamorous picture on one hand, the additional concerns relating lack of standardisation of norms, awareness, personal and moral bias in terms of interpreting ESG ratings on the other hand, pose a direct threat to the veracity of the whole concept. In light of the aforementioned context, the present piece is an attempt by the authors, to undertake a critical theoretical assessment of ESG as a concept S. Mishra (B) · K. Singh National Law University, Jodhpur, India e-mail: [email protected] K. Singh e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_1

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and in furtherance, attempt to understand its feasibility within the general framework of operations of the Indian companies. In doing so, the authors first attempt to construing a workable definition of the phrase ‘Sustainable Business’. Thereafter, they shall carry out a comparative assessment of ESG norms prevalent in EU and India, before, delving into primary practical roadblocks that could possibly hinder the implementation of the norms in a Company. Keywords Sustainability · ESG · Sustainable governance · Company · EU · India

1.1 Introduction Business entities since long have always been considered as economic entities, whose professional ethos have always hinged upon the sacred economic ideal of ‘wealth maximisation’ (Morse, 2021). However, the pervasive issues of information asymmetry and the control v/s ownership dichotomy (Jensen et al., 1983; Singh et al., 2016), necessitated the need for adequate governance norms in these corporations, to provide a semblance of parity during the decision-making processes in these entities (Bethel & Gillan, 2002). The corporate legal frameworks across various global jurisdictions, provides us with meticulously catalogued legislative and policy instruments, documenting the continuous efforts of the regulators in ensuring good governance in the Companies (Pistor, 2014). While the foundation of a responsible business remains steadfastly hinged upon the philosophy of “accountability of the Corporation towards its stakeholders” (Armour, 2009), the understanding of the term ‘accountability’ however has remained fluid over the course of the aforementioned legal evolution (Haft, 1981). Thus, with the danger of an irreversible climate change apocalypse looming over the horizon and the growing concerns within international community, forced the world leaders to revisit the concept of ‘accountability’ of the Corporations, especially the ones having a multi-national presence (Sipiczki, 2022). There was also an emergent need for identifying a more sustainable model of operation for the said Corporations (CFA Institute, 2021). The aforementioned concerns were well highlighted initially during the COP21 (hereinafter ‘Paris Accord, 2016’), which in our humble opinion can and rather should be regarded the single most influential international agreement in recent times, post the Climate Change Conferences of 1972 (hereinafter ‘the Stockholm Conference’ and 1992 (hereinafter ‘the Rio de Janeiro Conference’). However, the similar set of concerns have been reiterated with much greater urgency during the recently concluded COP-27 (hereinafter the ‘Egypt Conference’) (United Nations Framework Convention on Climate Change, 2022). The Paris Accord not only re-affirmed the previously agreed upon Sustainable Development Goals (hereinafter ‘SDGs’) during the Stockholm Conference and the Rio de Janeiro Conference, but, also shifted its focus towards the Multi-National

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Corporations (in terms of accountability concerning reduction of carbon footprints, which previously fell squarely on the sovereign States) (Gupta & Chanchal, 2022). A direct implication of the signing of the Paris Accord, was felt globally, as the jurisdictions across the world brainstormed the possible solutions to make the Corporations more sustainable in their operations, as well as accountable towards reducing their carbon footprints (OECD, 2021). Resultantly, the major loophole concerning the standards of governance of a Company become more apparent i.e., the functioning of a contemporary Corporation goes well beyond the established notions of an economic entity (Zeijl-Rozema, 2005). Hence, mere economic parameters or considerations to adjudge the specific regime concerning the governance standards and or the performance of a Corporation in general parlance has assumed a certain semblance of redundancy (United Nations Development Programme, 2015). There have been many attempts being made by various jurisdictions to resolve the aforementioned redundancy, with the European Union being at the foremost of the recent policy developments (Brown & Hamilton, 2022). The European Commission had initially framed an action plan in 2018 (hereinafter the ‘2018 Action Plan’), in an attempt to fulfil its obligation under the Paris Accord, which focused on an increased financing sustainable growth (European Security Market Authority, 2018). However, the same were updated and replaced by a new set of principles known as the ‘Strategy for Financing the Transition to a Sustainable Economy’ (hereinafter the ‘Strategy Report’, 2021) (European Security Markets Authority, 2021). The Strategy Report called for the adoption of the European Green Bond Standards (hereinafter ‘EUGBS’), a set of voluntary standards as recommended by the Technical Expert Group on the Sustainable Finance under the supervision of European Security Markets Authority (ESMA). The developmental course of ESG norms in India, also has had a long evolution process. The initial Guidelines were released by MCA in 2009 (Ministry of Corporate Affairs, 2009). The guidelines drew heavily upon the report of J.J. Irani Committee (Irani, 2005), and for the first time attempted to make the Corporations socially responsible and play a more proactive role in the development of the society (Dhiman, 2017). The 2009 guidelines were further revamped and included within the Companies Bill, 2011, and were enforced vide the enactment of Companies Act, 2013, which ushered in a new regime concerning the governance standard and thus for the first time provided the gold standard of reporting requirements in India (Varottil, 2012). However, one of the drawbacks of the said reporting requirements was its scope, which was of an extremely myopic nature and focused only upon the internal conduct of a Company. Hence, in the aftermath of the Paris Accord, the Government realising the need and the importance of the role of the private sector in the sustainable, has provided for Voluntary Guidelines on the Responsible Business Conduct (Ministry of Corporate Affairs, 2019), which has attempted to set guidelines for the Corporations, in an attempt to align the conduct of the businesses with that of sustainable development goals. The present piece, is an attempt to analyse the ever-increasing need for adopting ESG norms within the current governance framework of India. In doing so, the

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authors would rely upon the developments in the European Union as a comparative tool, to evaluate the present framework concerning ESG norms in India and its probable loopholes. Consequently, the authors would recommend possible actionable changes to the existing framework.

1.2 Defining Sustainable Business: Removing the Discrepancies The ESG norms are based upon principles intended to create a set of sustainable business practices, which are in alignment with the sustainable development goals enshrined under various Climate Change Conferences. Hence, an understanding concerning the significance and relevance of ESG norms cannot be formed without understanding the meaning of ‘Sustainable Business’. For the past thirty years, the word “sustainability” has become a catchphrase. However, surprisingly the terms “sustainability” and “sustainable development” remain without a clear, official definition (Czarnezki & Meyers, 2021). Resultantly, the concept has evolved into a “container phrase” that is open to greenwashing (Czarnezki & Fiedler, 2016). Furthermore, the terms “sustainability” and ESG, CSR and TBL (Triple Bottom Line- “people, planet and profit) (Elkington, 1997), where all of the above-mentioned acronyms include an element of economic viability (as opposed to economic well-being or equality), as well as environmental and social factors (Alva Group, 2021), are frequently used synonymously. The term sustainable development has been defined as ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’ (Brundtland Commission, 1987). The definition has been based on the principles of intergenerational equity, balancing resource consumption and supply (Kemp et al., 2005). It may also be described as a strategy of implementing processes which not only upholds but also furthers the fundamental principles of the sustainable developmental goals (Kocmanová et al., 2011). In generic terms, corporate sustainability may be understood as the ability of a Company to be able to influence its surrounding ecosystem and the society in general, while catering to the overall financial interests of its various stakeholders, by implementing adequate internal governance mechanisms and policies (Hˇrebíˇcek et al., 2011). While some have perceived sustainability as a process of value creation followed by a Company through mitigating the plausible negative implications arising environmental, social and economic factors and subsequently, benefiting from the resultant positive ecosystem (Gupta & Kumar, 2013). Although, this term serves as the foundation for business sustainability, however, the underlying emphasis on resources, has resulted in a mistaken belief, sustainable development is exclusively concerned with environmental concerns only (Kates et al., 2005). Nevertheless, this is a wrong notion, as sustainability predominantly concerns

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itself with balancing the ideals of development and increasing the longevity of usage of the said resources (Klarin, 2018). Hence, it is rather imperative for the Corporations to have a clear understanding concerning how corporate sustainability as a principle is to be construed. Furthermore, having a certain degree of clarity regarding the applicability of sustainable development to a certain business model and consequently compliance with its necessary pre-requisites, goes a long way in ensuring the right approach towards being a sustainable business (Hˇrebíˇcek et al., 2011).

1.2.1 Is Corporate Social Responsibility Same as Sustainable Development? On similar lines, another common faux pas that has become the norm is the synonymous use of the term Corporate Social Responsibility and business sustainability. A probable explanation for the confusion, could be attributed to the underlying intent behind carrying out CSR activities (Sánchez-Camacho et al., 2022). As a commonly accepted notion, the activities being carried out by a Company necessarily has an impact on the society in general (Das et al., 2021). Such impact may be of a direct nature such as generation of employment or may be of a more protracted nature such as loss of habitat, exhaustion of natural resources and so forth (Baumgartner, 2014). Thus, the global jurisdictions have attempted to promulgate laws and in order to create some accountable for the Companies to provide reparations (not necessarily amounting to compensation) in order to even out the possible adverse impact on the society (Camilleri, 2022). To clarify, CSR focuses on the procedure a firm utilises and the activities it takes to address the collective set of demands of its stakeholders. CSR is “[a] responsibility among firms to meet the needs of their stakeholders and a responsibility among stakeholders to bring enterprises to account for their actions” (Chandler, 2022). Importantly, CSR can possibly be understood from two different perspectives. Firstly, CSR as often is the case, is viewed as a voluntary effort above and beyond any regulatory constraints. The second perspective to explain CSR is through the lens of shareholder primacy (Berger-Walliser & Scott, 2018). Hence, CSR focuses on the decisions an organisation makes regarding its actions (or lack thereof) based on shareholder interests, as voluntary activities carried out by organisations in the environmental or social spheres, or as a clear moral, ethical, or social obligation (Berger-Walliser & Scott, 2018). It is at this juncture, that the proverbial paths of CSR and Sustainable Business depart from each other, in a rather significant fashion. While possibly an unpopular opinion, the contemporary position of the CSR mechanisms across jurisdictions, has been somewhat reduced to a level, where it could possibly be considered as a marketing gimmick or just a public relations tool, being used by the Companies to enhance their public outlook or increase the marketability of their brands. However,

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if the actual contribution of CSR practices is to be analysed vis-à-vis increasing the sustainability of the business practices being followed by a Company, unfortunately, the metrics stand at zero.

1.2.2 How to Construe a Sustainable Business? Contrary to the existing popular notions of sustainable business as evident from the foregoing discussions, the principle of business sustainability shifts the business’s focus to the future and can be described ‘as a business strategy that creates long-term stakeholder value by addressing social, economic, and environmental opportunities and risks material to a company’ (Cramer-Montes, 2017). The issue of how to perceive a sustainable business has been a long-standing issue. However, the questions concerning forming the correct perception of sustainability and its subsequent application within the business framework of a corporation have been thoroughly discussed by (Roy & Epstein, 2001) and (Silberhorn & Warren, 2007). According to them, forming the correct perception of Sustainability and its subsequent application to internal business frameworks requires the completion of the following steps. (a) Firstly, integration of Sustainability element within the decision-making framework of the business (it is essential to understand here that, in this context, sustainability should not be interpreted as mere CSR, rather it should be construed as a strategic element of business planning.) (b) Secondly, identification of apposite business performance metrics. The same should be chosen by adopting an inclusive approach and considering the social, economic as well environmental indices, which in the opinion of the Company affect its overall performance. (c) Finally, quantification of the effects of sustainable activities being carried out by the Company on its financial health and subsequent impact assessment of such activities on the prospects of value creation for the Shareholders and other Stakeholders. Needless to say, long-term value creation strategy for managing the company’s financial and non-financial capital is necessary for a sustainable business strategy. To do this, a business must first decide which metrics, such as key performance indicators (KPIs), to track. Then, armed with this information, the business can develop long-term growth strategy. However, quantification of non-monetary indices such environmental or social factors, have more often than not, proven to be a rather tough nut to be cracked. It is at this point, the ESG norms have proven to be particularly helpful. However, the exact implication of the same would be analysed in the forthcoming section.

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1.3 Environment, Social and Governance Norms—The New Frontier of Corporate Governance: Analysing the Regulatory Perspective It has never been more important to address issues connected to ESG than it is right now. The financial and economic effects of ESG concerns are becoming more widely acknowledged (CFA Institute, 2021). ESG is becoming more significant since investors are using it more and more as a criterion to help them make investment decisions (OECD, 2021). Regulators and enforcement organisations throughout the world are paying more attention to ESG-related concerns and taking a stricter stance against non-compliances or greenwashing by any company about their ESG credentials (Horn et al., 2022). ESG has become a metrics-based strategy aimed at raising corporate accountability (Gerber et al., 2022). Companies can use the information gathered through this method to enhance performance management and for external reporting (Delange, 2021). Investors and other stakeholders who want to hold the corporation accountable for its deeds might utilise the external reports to their advantage. For instance, a business may declare an environmental project to lessen its carbon footprint and increase its positive social impact in the name of CSR. In such instances, ESG proves to be a significant tool to track the development of such objectives (Kolk, 2016). In simpler terms, the goal of ESG guidelines is to make sure that company operations are carried out more responsibly. The businesses make up and are seen as essential elements of the social system, and they are responsible to the greater society, which is also a stakeholder, in addition to their shareholders in terms of income and profitability (Morgan Chase & Co., 2021). As a result, adopting ethical business practises by organisations to address ESG issues is just as important as their operational and financial performance (Department of Environment, Food & Rural Affairs, 2021). Every firm must be accountable for its obligations to the environment and the people that make up the ecosystem—whether they are employees, customers, or other stakeholders—in order to comply with ESG guidelines (Lagasio & Cucari, 2019).

1.4 ESG Regulation Norms: An European Perspective While the ESG norms gained a greater traction post the signing of the Paris Accord in 2015. However, they have been practiced in Europe for a better half of the last two decades, during which it has undergone a shift from being a niche understanding to being a mainstream obligation (Sipiczki, 2022). However, the Paris Accord proved pivotal for the European Union in terms of the regulatory regime (Alva Group, 2021).

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The European Union has witnessed an unprecedented growth of products and services focusing sustainable technologies over the last decade. The same in conjunction with the renewed obligations of the Union on account of its 2030 agenda, necessitated the need for a specific regulatory regime, tailor-made to the requirements of the ESG arena. The response to the above need, have been rather spectacular. At present, the European Union arguably has developed the most pronounced strategy regarding sustainable financing, apart from being the first global regulator in providing the standards for classification of ‘sustainable activities’ as well as for the ‘disclosure regulations’ for the Companies (Brown & Hamilton, 2022). 1. European Union’s Attempts Vis-À-Vis ESG Regulatory Regime Post the Paris Accord, the European Union has put in place foundations of significant importance in its attempts to enhance investments into sustainable activities as well as creating a sound and comprehensive disclosure regime (Alamillos & Mariz, 2022). The regulatory framework in European Union concerning the ESG norms have been broadly categorised into two: (i) Prudential Regulatory Measures; (ii) Conductbased Regulatory Measures. The former category of regulations necessarily covers financial credit institutions or investment firms, and focuses primarily upon the integration of risk arising out of ESG norms within the disclosure and reporting requirements. Whereas, the conduct-based measures cover the Companies, Asset Managers or Directors, while focusing upon the mitigation of sustainability risks (Giese et al., 2019). The various regulatory instruments may be compartmentalised into the following documents: (i) Non-Financial Reporting Directive (hereinafter ‘NDFR’); (ii) Sustainable Finance Disclosure Regulation (hereinafter ‘SFDR’) & (iii) The Framework Regulations, 2020 (also known as the ‘Taxonomy Regulations’). The NDFR, SRE II and SFDR, form a part of the 2018 Action Plan (European Security Market Authority, 2018) which was formulated by the European Union as a response to achieve its obligations under the Paris Accord and as well as to ensure funds mobilization for catering to the need for additional required for achieving its goals enshrined under Agenda 2030 (Alamillos & Mariz, 2022). The 2018 Action Plan, was further supplemented by the Framework Regulations, 2020 as well as by the Strategy Report, 2021 (European Security Markets Authority, 2021), which not only bought the ESG considerations of an Enterprise within the ambit of fiduciary responsibilities, but also, introduced newer concepts such as sustainably linked bonds and green mortgages. a. Non-Financial Reporting Directive The above directive was enforced in 2017, and provides the disclosure regime for on large corporations concerning the fulfilment of obligations of the Company in pursuance of the ESG norms, as well as the impact of ESG norms on their own performance. NFRD’s applicability scope is restricted to Corporations fulfilling the following requirements:

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i. No. of Employees—500 or more; or ii. Net Profit of EUR 20 million or more; or iii. Net Turnover of EUR 40 million or more Recently, the European Commission has proposed certain changes to the prevalent NFDR regime, vide its Corporate Sustainability Reporting Directive, with specific amendments being proposed concerning the reporting requirements of the nonfinancial elements. The said amendments, requires all the listed companies (irrespective of whether the above requirements are fulfilled; and specifically excluding micro-enterprises) and other large corporations to publish reports concerning their activities in pursuance with the ESG norms (European Commission, 2021). b. Sustainable Finance Disclosure Regulation This regulation came into force in 2019, was made applicable from 2021. The regulations provide for a set of disclosure requirements for the Companies to disclose information concerning the risk towards ESG, being posed by their portfolios. The SFDR predominantly concerns itself with asset managers, financial advisory firms and insurance firms operating out of European Union, in any instance, where the entity operating within the Union is a subsidiary company, then in such instances, the SFDR is also made applicable to holding enterprise irrespective of its place of operation (European Commission, 2019a). The fundamental premise behind the implementation of SFDR is to prevent ‘greenwashing’, which is a phenomenon arising due to discrepancies in the various voluntary measures which preceded the SFDR instrument (Alamillos & Mariz, 2022). The said discrepancy coupled with the high degree of subjectivity in the erstwhile measures allowed the Corporation to bypass the said measures, without necessarily complying with the same (Lagasio & Cucari, 2019). Thus, the enactment of SFDR has not only bought about a uniformity in terms of the ESG disclosure regime by introducing an element of objective standards, but also facilitates a deeper scrutiny by the investors concerning the conduct of the Company as well as regarding utilisation of the ESG funds by the Companies (Grantham Reseach Institute on Climate Change, LSE, 2021). c. The EU Framework Regulations, 2020 The Framework Regulations (otherwise known as the ‘Taxonomy Regulations’) work on the fundamental notion for creating a standardised and ESG standards. Article 3 of the Regulation, provides for a classification system, which lays down the criteria for defining as to what would constitute sustainable economic activities, whose risk assessment may be carried as per the standard set under the NFDR regime should the company decide to pursue the said activity (European Commission, 2022). Furthermore, Article 9 of the Regulation states six objectives in furtherance and in consonance with SDGs and Agenda 2030. This is accompanied with a legal mandate, whereunder, a Corporation is required to actively contribute (i.e., carrying out economic activities which help either to achieve the said objective or at least financially support the carrying out of sustainable economic activities) to at least

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one of the listed objectives (European Commission, 2020). The objectives are rather broad in their scope to allow a certain degree of flexibility and include the following: i. ii. iii. iv. v. vi.

Climate Change Mitigation; Climate Change Adaptation; Sustainable use of Aquatic and Marine Resources; Prevention and Control of Pollution; Protection and Restoration of Biodiversity and Ecosystems; and Facilitating transition to a Circular Economy

The aforementioned attempts of the European Commission, has been nothing short of ambitious, whose impact and role in creating a streamlined and stringent regime concerning facets of accountability, disclosure and transparency, of a Company’s conduct has been rather undeniable. While, still in a nascent phase, the European Union’s prevalent regime has played a significant role in providing the necessary layout for the other jurisdictions, especially the developing jurisdictions to follow the suit as we will be witnessing in case of India in the following segment.

1.5 Assessing the Indian Regulatory Regime Vis-À-Vis ESG Norms Unlike, the comprehensive regime of EU, the India evolutionary development in this regard is yet to mature sufficiently, to outrightly regarded as a regulatory regime in itself. However, having said that, there have been constant attempts by the Reserve Bank of India (hereinafter ‘RBI’) (also the regulator of the money markets in India) as well as by Security Exchange Board of India (hereinafter ‘SEBI’) (the capital markets regulator) to calibrate and revamp the existing regime in accordance with the developing ESG norms as well as to achieve the objectives agreed by India under the Paris Accord. The segment shall provide a brief discussion concerning the existing measures which have been adopted by the aforementioned regulators to ensure compliance of the Indian companies with the ESG norms. 1. SEBI’s Attempt at Regulating ESG Disclosure Regime While different laws have been introduced in India at various points for corporate governance, environmental protection, and the fair treatment and general well-being of employees, there isn’t a single piece of legislation that addresses all aspects of ESG or uniform standards for ESG-related criteria. Even though there have been a number of initiatives to focus on ESG related compliances implemented over the past ten to twelve years, these have often been fragmented and done on a voluntary basis (Das et al., 2021). SEBI has also noted that the listed entities access funds from the public, and as a result, have an element of public interest involved, and are required to make exhaustive continuous disclosures on a regular basis. This was in response to the

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introduction of voluntary guidelines by the Ministry of Corporate Affairs in 2011 (Ministry of Corporate Affairs, 2009). As a result, in order for the relevant listed entities to be able to describe the initiatives they took from an ESG perspective, SEBI introduced the requirement that the top 100 listed companies by market capitalisation include the Business Responsibility Report (hereinafter ‘BRR’) as part of their annual report in 2012 (SEBI, 2012). The top 500 listed businesses were added to the list of entities that must make such disclosures by SEBI in 2015. The top 500 firms that are required to file BRR may optionally adopt “integrated reporting” beginning with the financial year 2017–18, SEBI said in 2017. In 2019, the top 1000 corporations by market capitalisation were added to the list of entities that must provide BRR declarations. The Business Responsibility and Sustainability Report (BRSR), a more comprehensive reporting framework that focuses on measurable key performance indicators across all the principles of the NGRBCs (Ministry of Corporate Affairs, 2019), replaced the BRR in 2021. Starting with the financial year 2022–2023, the top 1000 listed companies by market capitalisation will be required to submit BRSRs. Additionally, the MCA has mandated voluntary ESG disclosures in the format offered for additional listed and unlisted firms through the Report of the Committee on Business Responsibility Reporting (BRSR Lite) (Ministry of Corporate Affairs, 2020). a. Companies Act, 2013 Vis-À-Vis Compliance with ESG Norms The duties of directors with regard to their responsibilities towards the society and environment have been codified in the Companies Act. A director of the company must ‘act in the best interest of the community as well as the environment’. According to the Hon’ble Supreme Court, a director’s obligation to act honestly under Sect. 166(2) of the Companies Act extends not just to the company and its shareholders but also to the environment (M.K Ranjitsinh vs Union of India, 2021). Furthermore, the Act also provides that the annual board report must also detail the board of directors’ efforts to conserve energy, use alternative energy sources, and make capital investments in energy-saving machinery. 2. RBI’s Tryst with ESG Norms The Reserve Bank of India (RBI) has also established a “Sustainable Finance Group” (SFG) in May, 2021, to suggest regulatory framework and strategies by coordinating with national and international agencies that could be prescribed by banks and other entities to promote sustainable business attitudes and mitigate climate degradation. The Indian Bank Association has also suggested National Voluntary Guidelines for Responsible Finance for businesses to be responsible in their lending and investment activities (Indian Banks Association, 2016). Thus, all of this portrays and signifies that regulatory framework for ESG in India has been gaining momentum in the last decade, and with more impetus being given to the regulatory authorities like SEBI and MCA to come forward with more guidelines regarding ESG disclosures on a uniform basis makes sure that the corporates are walking the talk.

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It is abundantly clear that the Indian regulatory authorities are now catching up with the ESG trends that have been ongoing on a global level as evidenced by the establishment of the SFG by the RBI, recognising the importance of green finance in India, and release of the SEBI consultation paper on “Environmental, Social and Governance Rating Providers for Securities Markets” that proposes a framework to regulate ESG rating providers in India (SEBI, 2022).

1.6 Challenges and Roadblocks Vis-À-Vis Implementation of ESG Norms The ever-increasing relevance of sustainable development and resultantly of ESG within the contemporary legal frameworks across globe, the demand for availability of ESG data has witnessed a tremendous growth (Sipiczki, 2022). The corporations have started to realise and thus appreciate the need for well-structured ESG policies which are in consonance with the markets standards and investors’ interests. The reliance being placed on compliance with ESG norms as a significant determinant for attracting investment is well justified. However, on the flip the value and quality of such data sets, as well as the veracity of the ratings and the research (essentially being produced by third party service providers) on the basis of which such decisions are being undertaken still remains questionable (Siri & Zhu, 2019). A growing number of studies have indicated that there is a general lack of coherence amongst the indicators being employed for the purposes of ESG disclosures. Furthermore, the said lack of coherence, seriously hinders the comparability of the rating methodologies being adopted across jurisdictions (DG FISMA, 2021). Additionally, the discrepancy within the various legislative instruments, brings up the issues of greenwashing, thereby resulting in weakening of the position of the investors and further jeopardising the fundamental goal of ensuring sustainable business practices (Lovisolo, 2021). The present segment would analyse two major possible roadblocks for the embedding of the ESG norms within the business model of a Company and its resultant implementation thereof.

1.6.1 Diversity in Rating Methodologies and Conflicting ESG Scores The past decade has witnessed a significant increase in the size and complexity of the ESG product and services industry. The growth is visible in terms of the multiplicity of ESG standards, metrics, increasing number of third-party service providers, rating agencies etc. The estimated number of ESG ratings indices stand in excess of 600 (Wong et al., 2019). While the underlying premise and goal of these ratings are the

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same, however, inconsistencies in the rating methodologies being adopted by various rating agencies and consultancy firms have more often than not resulted in such rating lacking veracity (Boffo & Patalano, 2020). The situation is further aggravated by the lack of a regulatory definition, defining the specific criteria for ESG norms thus, allowing the rating agencies the leniency and the flexibility to adopt the otherwise existing informal definitions of environmental, social and governance aspects, in their own tailor-made fashion (Dimson et al., 2020). For instance, MSCI (a ESG Rating agency) uses about 35 key ESG areas which are selected on an annual basis, spread over 10 different themes. Similarly, S&P, determines and ascribes ESG ratings based upon 30 different points of considerations. On the other hand, Sustain Analytics (another ESG rating agencies), provides ESG rating based on more than 250 different indices (Drempetic et al., 2020). One of the adverse implications of such diversity is that it renders any kind of comparison a redundant exercise, as the comparison would not provide any fruitful result (Prall, 2021). Furthermore, the methodologies adopted by these agencies are extremely opaque (although same could be considered as a trade secret in context of such agencies). The resultant lack of transparency creates further roadblocks pertaining to establishment of best practices (Berg et al., 2022; Dimson et al., 2020; Kotsantonis & Serafeim, 2019; Lopez et al., 2020; Pyles, 2020).

1.6.2 Moral Hazards of ESG Reporting The lion-share of the information that are relied upon in formulating the ESG ratings, are often based either upon the voluntary and most unaudited disclosures made by the Companies or on responses received on the questionnaires and surveys that are conducted by various rating agencies (Berg et al., 2022). In comparison to the audited documents such as financial reports or annual reports, the disclosures of ESG data are made largely unstandardised, unstructured and open to multiple interpretations. (Cichon, 2021) has argued that, “self-reporting of data is opaque, one-dimensional and discounts the possible ESG that may have compliance, financial and reputational implication for a Company”. In another empirical study conducted by Deloitte, where more than 4000 ESG reports were analysed over a period of four years, in case of unaudited reports, it was found that there were significant instances of data omissions, uncorroborated claims and erroneous figures (Hespenheide & Koehler, 2013). While on the contrary, sustainability reports which had been previously audited included much relevant information pertaining to environment and other social aspects of the ESG norms (Hespenheide & Koehler, 2013). Hence, the veracity and trustworthiness of the said data, has been primary ground for critiquing the quality and reliability of the prevalent ESG ratings. Furthermore, apart from the issues pertaining the veracity of the data being provided to the rating agencies, the practices being adopted by the investors for integrating the ESG ratings within the investment process, remains a grave concern (Bernow et al., 2017). The recent scandals surrounding corporate green washing

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stands testament to the lack of accountability regime for investors’ default or erroneous integration of ESG norms within their investment methodologies (Darwyne, 2021), and this creates an ideal situation of a moral hazard for investors willing to invest in sustainable project. In general parlance, the Company whose economic activities falls within the ambit of sustainable economic activities and are considered to be in compliance with the ESG norms, are considered as ‘Green Label Funds’ (Chandler, 2022). Thus, a moral hazard necessarily arises in any event where the asset managers or the directors of the Company are able to use the ‘green fund label’, without providing any opportunity for the investors to verify such claims (Drempetic et al., 2020). Thus, having some semblance of accountability becomes a matter of utmost importance to prevent fraudulent usage of ‘green labels’, which in our opinion has become a common prevalent practice.

1.7 Conclusion At the 75th Independence Day celebrations in 2021, Hon’ble Prime Minister Mr. Narendra Modi introduced a novel 25-year plan known as ‘Vision India@100’ for the nation that calls for Gati Shakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and Climate Action and Financing of Investments. The sentiments of the Hon’ble Prime Minister had been duly reflected in the Union budget 2021–22, which was intended towards transforming India into one of the fastest growing economies in the world by integrating a robust ESG framework across industries and coordinating with the 17 UN Sustainable Development Goals. In a speech at the Union Budget 2021–2022, the Finance Minister highlighted the budget’s six fundamental parameters of Central Government’s outlook concerning the regulatory framework, which included (i) Wellness & health; (ii) Infrastructure, financial, and physical resources; (iii) Development with Inclusion for an Aspiring India; (iv) Boosting Human Capital; (v) R&D and Innovation; and (vi) Maximum Governance with Minimum Government. The parameters projected a framework of international acceptance and portrayed India’s position as a liberal and conducive country for trade and the passage of global supply chains. The budget was deemed to have a futuristic scope with the Government being on a continuous path to support India’s journey towards becoming a more resilient economy. The Budget 2022–2023, furthers the vision contained within the previous year’s budget and has primarily attempted to formulate fiscal and regulatory policies that are in close consonance with the prevalent ESG norms. However, despite the discussion in the foregoing paragraphs, it remains an undeniable fact, while ESG may be regulated by public officials, they are implemented at ground zero by private individuals. Hence, in the opinion of the authors, the adequate implementation of ESG norms is much more reliant on the Companies, rather than on the governmental actions. Owing to the multifarious challenges posed by ESG

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norms, the role of the senior officials becomes critical and it could also be stated that the actual success rate of the implementation of these share a direct co-relation with the proactive participation of upper echelons of a Company’s management. To conclude, ESG has risen from the periphery to the forefront. Companies must show ethical leadership and a collective knowledge to meet expectations under the global ESG theme as ESG compliance becomes a policy obligation. Furthermore, while strategic policy measures have been undertaken by the government, the same still remains at a very embryotic stage. As the Indian jurisdiction grows more mature in terms of its experience in arena of the ESG norms, the legislations in questions would necessarily become more structured in their approach, clear in their essence and streamlined in terms of its applicability. Given the prevalent legal developments and eagerness of the present Government to learn, adapt and evolve with the changing times, the future does seem rather bright for the regulatory regime concerning ESG norms in India.

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Chapter 2

An Overview of ESG Reporting in India: Practices and Challenges Aparna Asokan

Abstract The chapter provides an overview of the growth of ESG as a corporate sustainability concept. It specifically focuses on the regulatory framework for ESG reporting in India and how it has developed into what it is today. ESG reporting is one of the most important tools used in communicating a corporation’s aspirations and performance on sustainability. There are many prominent standards and frameworks available for measuring the ESG performance of organisations. The latest development in India on this front is the introduction of the Business Responsibility and Sustainability Report (BRSR), which mandates ESG disclosures for the top 1000 listed companies in the upcoming financial year. Since BRSR is in the nascent stage of its working, it is too early to comment on its effectiveness or utility. In this chapter, an outline of the BRSR framework is provided. The chapter also discusses how ESG reporting may be enhanced to better serve the needs of the relevant stakeholders and the potential challenges in bringing regulatory reforms on this front. Keywords ESG · Sustainability · Business Responsibility and Sustainability Report (BRSR) · Corporate Social Responsibility (CSR)

2.1 Introduction Creating a strong business and building a better world are not conflicting goals—they are both essential ingredients for long-term success. —Bill Ford

It is a traditional view that businesses cannot be profitable and sustainable at the same time. But there has been a shift in this understanding of business in the last few decades. Sustainability and profitability are no longer viewed as mutually exclusive. In addition to the recognition that sustainability and profitability can co-exist, today, A. Asokan (B) Advocate & POSH Consultant, Sol Consulting Services, Bangalore, India e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_2

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integrating sustainability into business practices is considered as the smart thing to do. Environment, Social and Governance (hereinafter referred to as ‘ESG’) reporting, often referred to as sustainability reporting, is an activity undertaken by thousands of organisations on a global scale today. While ESG has been a topic at the forefront of responsible investments for more than a decade, the impact of COVID-19 has corroborated the need to further ESG-informed investing. ESG is not an investing style like social impact investments or ethical investments, but it is a set of criteria used to evaluate an entity’s sustainability practices. Conversations on ESG help businesses unleash their competitive potential. It also helps in attracting socially conscious investors. Organisational responsibility to make available ESG information through non-financial reporting is at the core of the discourse on ESG. It is one of the most important tools used to communicate the organisational aspirations and performance on sustainability and currently, there is also strong evidence indicating a business case for sustainability reporting (Du et al., 2017). A few empirical studies suggest that companies with strong ESG performance also score highly on traditional financial metrics (Hill, 2020). Over the years, reporting on ESG information was mostly carried out voluntarily by business entities. This has been through frameworks developed and standards set by various non-state organisations. Multiple standards and frameworks were available from which businesses were free to adopt whatever was convenient. The multiplicity of reporting frameworks and standards has posed challenges to financial professionals since the information available may not be always comparable. In recent years, various states have developed ESG frameworks and have incorporated the same into their regulatory regime. Through this, they have been demanding ESG disclosures from companies. ESG reporting, be it voluntary or mandatory, creates greater transparency and accountability for businesses. ESG reporting is crucial since investors, sustainabilityconscious clients, and other stakeholders that associate with businesses may use such metrics to make mindful business decisions. Currently, a business entity’s success is not measured exclusively by the profits they yield. Their impact on the environment and society at large has also become important success metrics. Businesses have grown to be positively mindful of the same, and they strive to maintain their sustainability goals keeping in mind the triple bottom line, i.e., profit, people, and the planet. By using the information obtained through these ESG frameworks, one can understand not only the impact of businesses on ESG factors but also how ESG issues may impact or influence business. Therefore, ESG reporting is a great tool for all relevant stakeholders of any business. This chapter seeks to understand how ESG reporting developed into this widely accepted practice it is today, with specific emphasis on the ESG framework in India. In this chapter, the phrases ‘‘non-financial reporting,’ ‘ESG reporting,’ and ‘sustainability reporting’ are used interchangeably. ESG initiatives became a common corporate practice only in recent years. It became relevant to the corporate world and investors once there was a general recognition of the idea that companies that invest in sustainability perform better in the

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market. Prior to that, the narrative on corporate sustainability focused on other ideas like corporate social responsibility. The first part of this chapter seeks to understand ESG as a corporate sustainability measure by comprehending the shift in the notion of corporate sustainability. It also elaborates on some of the major ESG frameworks and standards followed by corporates in the twenty-first century. From issuing voluntary guidelines on Corporate Social Responsibility in 2009 to developing a framework for Business Responsibility and Sustainability Report (hereinafter referred to as ‘BRSR’) in 2021, ESG reporting and compliance framework in India has undergone transformative changes in recent years. The second part of this chapter outlines, very briefly, the growth of ESG practices in India by specifically highlighting relevant laws and policies. The recently introduced BRSR framework is a significant milestone in India’s ESG-related governance. The BRSR framework draws inputs from major sustainability frameworks. BRSR is said to have addressed many shortcomings of the previously existing Business Responsibility Report (BRR) framework. The third part of this chapter explains the newly introduced BRSR framework and attempts to highlight the significant differences between the BRR and BRSR frameworks. As will be explained in this chapter, ESG-related initiatives and discussions developed exponentially only in the last two decades. Therefore, ESG-related rules and frameworks are undergoing periodical reconsiderations. In India, BRSR is at a nascent stage of its working, and it may still be too early to comment on its effectiveness or utility. However, a close reading of the newly proposed format casts light on future opportunities and challenges. The final part of this chapter will give an overview of the same. With an aim to explore the relation between corporate sustainability practices and the regulatory landscape in India, the chapter will attempt to answer questions relating to what comprehensive guidance is available to companies on accepting sustainability culture, particularly on the point of ESG reporting.

2.2 Changing Conceptions of Corporate Sustainability and ESG 1. Notion of corporate sustainability—then and today The idea that businesses may have a general responsibility to society at large is not a novel concept and has a long history (Agudelo et al., 2019). The idea of responsible investing was initially limited to avoiding investments in ‘sin stocks,’ i.e., stocks relating to companies associated with business activities that are considered unethical or immoral. This exclusion is based on moral values applied to businesses relating to alcohol, tobacco, weapon manufacturing, etc. Recent studies have shown how sin stocks are more exposed to ESG issues (Paradis & Schiehll, 2021). The concept of responsible investment is no longer limited to disinvesting in certain stocks based on moral or ethical values but is much more than that. However, it has not been

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very long since the modern concept of ESG reporting became a common corporate practice. For far too long, corporate practice was influenced by ideas like that of Milton Friedman, which stated the following: there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game… (Friedman, 1970).

Over the years, the corporate sustainability narrative has been influenced by various other notions and concepts. For example, in the 1980s, the emphasis has predominantly been on Environment, Health, and Safety. During this period, the regulatory responses focused on reducing overall environmental impact. Therefore, since the later part of the twentieth century, sustainability has been at the core of environmental advocacy and development dialogue. There has been pressure on corporations to adopt fair and responsible practices in their working. In addition to the conscious organised efforts made by different international organisations and regulators, there were also instances that ignited environmental activism spontaneously. The publication of ‘Silent spring’ by Rachel Carson, which raised questions about the detrimental effect of chemical pesticides on humans and nature, is one such instance that invited large-scale industry response (Griswold, 2012). The World Commission on Environment and Development (WCED), popularly known as the “Brundtland commission,” was instrumental in driving the conversation on sustainability. In 1987, the Brundtland Commission released a report titled ‘Our Common Future’ wherein they discussed critical environmentand development-related issues and framed practicable measures to deal with the same. The report also popularly defined sustainable development as development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.” (WCED, 1987). The report acknowledged that transnational corporations have a substantial impact on the environment and resources, global commons, and in overall development (particularly with respect to developing economies). It also recognised that international measures have been generally lacking in pinning responsibilities on such actors. The development and implementation of the Sullivan principles, during the apartheid era in South Africa, is a significant example of the social burden shouldered by corporations to “do the right thing.” Sullivan principles, developed in 1977, refers to a set of principles to be followed by corporations functioning in South Africa during the apartheid period. It was aimed at increasing corporate response to the specific human rights issue, and it also provided some guidance on the treatment of employees during the apartheid period. This was aimed at imposing economic pressure on the offending State to respond on the matter. The corporations not following these principles were targeted for disinvestment (Gray & Karp, 1994). The positive impact of the Sullivan principles also led to the introduction of the “Global Sullivan principles” (hereinafter referred to as ‘GSP’) in 1999, which is an aspirational framework that can be used by socially responsible companies to enhance their commitment to human rights and social justice. This is applicable with respect to a range of issues

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including exploitation of workers, human rights concerns, and climate crisis, among others, which may be directly or indirectly associated with their business functions. The objectives of GSP, as explicitly mentioned in its preamble, are as follows— “The objectives of the Global Sullivan Principles are to support economic, social, and political justice by companies where they do business; to support human rights and to encourage equal opportunities at all levels of employment, including racial and gender diversity on decision making committees and boards; to train and advance disadvantaged workers for technical, supervisory and management opportunities; and to assist with greater tolerance and understanding among peoples; thereby, helping to improve the quality of life for communities, workers and children with dignity and equality.” (IFESH, 1999). However, the transformative milestone for integrating sustainability as a more common corporate practice was the introduction of the “Triple Bottom Line” concept (Elkington, 2004). Triple bottom line is the foundational concept followed by all significant sustainability frameworks today. It refers to the idea that the success of businesses should be measured by keeping in mind their social and environmental impact as well and not just by the standard ‘bottom line,’ i.e., the profit (Miller, 2020). Accordingly, there are three dimensions based on which corporate performance can be evaluated; they are people, planet, and profits (3Ps) (Slaper & Hall, 2011). There are also various other sustainability concepts (for example, circles of sustainability) that gained traction over the years. As time progressed, there was also a paradigm shift in the corporate viewpoint of sustainability. While earlier, sustainability was all about doing less harm, today, it is about doing good. This became more prominent at the beginning of the twenty-first century when the regulatory focus further shifted to the idea of Corporate Social Responsibility (CSR). Very often CSR and ESG are used interchangeably. While both concepts are linked to a corporation’s social responsibility and demonstrate organisational commitment to sustainable business practices, they are vastly different ideas. In 1998, through the World Business Council for Sustainable Development (WBCSD) Stakeholder Dialogue on CSR, corporate social responsibility was defined as “Continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.” While philanthropy is a significant part of CSR, CSR is much more than ‘corporate giving.’ CSR involves greater involvement on the part of organisations and demands continued efforts. CSR acts as an internal framework for organisations and practically, it can be implemented in various ways. CSR activities are individualised, and reflective of the company culture. CSR activities are often limited to instances of corporate volunteering on specific themes. ESG is more comprehensive and covers aspects beyond CSR. ESG is based on materiality and is linked to an organisation’s operations. ESG measures an organisation’s level of success in implementing sustainability strategies throughout its operations. Both CSR and ESG are relevant to corporate entities as these measures have an impact on their reputation.

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Over the last two decades, many sustainability initiatives have been taken, especially under the aegis of the United Nations (hereinafter referred to as ‘UN’), in response to the climate crisis, calling for and demanding corporate responsibility in matters of sustainability. In the modern context, one of the earliest initiatives encouraging businesses to adopt sustainable policies was the U.N. Global Compact (UNGC), which was launched in the year 2000. UNGC is a strategic voluntary corporate citizenship initiative for encouraging responsible business practices. It follows a principle-based framework with ten principles in areas like human rights, labour, environment, and anti-corruption. These principles, in turn, are derived from the core UN conventions in these areas. For many years, UNGC has acted as a platform for various stakeholders to come together and develop corporate strategies on sustainability. One of the earliest documents recommending integration of ESG issues in mainstream business functions was the 2004 report titled ‘Who cares wins.’ The report was a product of a joint initiative of different financial institutions across nine countries and was overseen by the UNGC. The report provided recommendations to various stakeholders on integrating ESG issues in asset management, securities brokerage services, and associated research functions. It was introduced with the aim to increase awareness and improve clarity with respect to such issues among the different market actors (The Global Compact, 2004). It is a significant milestone in the development of the ESG framework since the acronym ESG was popularised after the same. Gradually, more conversations shifted focus to the more holistic idea of ESG. However, ESG is data-oriented and focuses on material risks and opportunities for firms. Materiality is the core concept that guides ESG reporting. Material information is one that is considered ‘relevant’ and is likely to influence the decisions of stakeholders with respect to the reporting entity. Earlier, corporate reporting was primarily based on financial materiality. Focus on financial materiality meant that companies reported on matters that could influence their enterprise value. Over the years, reporting pattern has grown from focusing on information based exclusively on ‘financial materiality’ to giving reverence to the concept of ‘double materiality.’ Double materiality consists of both financial materiality and impact materiality. Impact materiality implies an emphasis on information that shows, to all relevant stakeholders, the reporting entity’s impact on society and the environment (GRI, 2022). The UN Principles of Responsible Investment (hereinafter referred to as ‘PRI’) framed in the year 2006 is yet another significant milestone in the evolution of ESG. PRI is a set of six principles developed by a group of institutional investors to understand the investment implications of ESG issues. Through the implementation of these principles, the investors sought to align their interests with the broader objectives of society. The principles, which are voluntary and aspirational in nature, attempt to integrate ESG values and offer a menu of specific possible actions to incorporate such issues into investment practices (PRI, 2006). In 2009, Global Impact Investing Network (hereinafter referred to as ‘GIIN’) was launched with the objective to increase the effectiveness of impact investing. The establishment of GIIN was significant in changing investor mentality towards

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corporate sustainability drastically through the improved focus on impact investments. Impact investments refer to those investments aimed at bringing about measurable social and environmental impact while also focusing on investments that generate financial returns. GIIN published the core characteristics of impact investing describing in detail, for all stakeholders, as to what constitutes credible impact investing (GIIN, 2019). The improved emphasis on impact investment is a shift in the age-old idea that corporate response to social and environmental issues may not be financially viable. In 2012, the outcome document of the UN Conference on Sustainable Development called ‘The future we want’ explicitly recognised the significance of corporate sustainability reporting. It noted that corporations must consider integrating sustainability information in their reporting cycles and appealed to the relevant stakeholders on adopting the best practices to implement the same (UN, 2012). The development of the global goals in 2015, more popularly known as the United Nations Sustainable Development Goals (SDGs), was also a by-product of increased conversations on sustainability. The agenda consists of 17 SDGs and 169 targets in total. SDGs focus on five key areas referred to as 5 Ps. They are people, prosperity, peace, partnership, and, finally, planet. The private sector also plays a key role in implementing the SDGs through various means (Rashed & Shah, 2021). The SDG compass acts as a guide assisting companies in maximising their contribution to SDGs. The SDG compass provides five-step guidance to align business actions in such a manner that it ensures sustainability as an outcome. Accordingly, the five steps that help companies maximise their contribution to SDGs are understanding SDGs, defining priorities, setting goals, integrating sustainability into core business, and, finally, reporting and communicating with stakeholders (Global Compact, 2015). Today, there is a general recognition of the idea that sustainability is important for businesses themselves. Many measures are taken by corporations to demonstrate that they take their social and environmental responsibilities seriously and that it is a priority for them. Some entities may adopt a carrot-and-stick approach wherein they may link their ESG performance to executive remuneration. For example, in the UK, reports suggest that 45% of the FTSE 100 companies have linked ESG performance to executive incentive plans (Thomas, 2021). With the extensive recognition that corporations have responsibility with respect to sustainability, and that their performances need to be evaluated, the quest for measuring the same began. Accordingly, several ESG frameworks were introduced to measure corporate performance on ESG factors and the same are continuously evolving. Most of the ESG standards and frameworks adopted worldwide attempt to link their standards to SDGs. 2. Important ESG Standards and Frameworks An organisation’s decision pertaining to what standards or framework it must follow is largely dependent on factors like the industry or sector in which they function, intended audience, and strategies adopted, among other things. Where the law mandates ESG disclosures, the organisation may be required to follow certain reporting requirements laid down by the regulatory authority. Guidance available on

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corporate sustainability measures can be broadly categorised into two; there may be organisations focusing on ‘ESG standards’ and others issuing ‘frameworks’ or ‘guiding principles.’ According to Global Reporting Initiative (hereinafter referred to as ‘GRI’), standards refer to an agreed level of quality requirements for ESG reporting. It defines specific criteria or metrics on what should be reported under specific headings whereas frameworks are typically referred to as a set of principles providing guidance on the matter (GRI, 2022). Standards and frameworks may be laid down by the law or voluntarily followed by organisations based on stakeholder requirements. Frameworks are broader in scope whereas standards are more specific. Additionally, certain organisations evaluate and rank ESG performances of entities by assigning a score based on pre-defined criteria and data collected through ESG disclosures. Such rankings and ratings help stakeholders understand how organisations perform in comparison with their peers. Some organisations focus on ESG standards exclusively while other organisations primarily focus on providing a guidance or framework for ESG (GRI, 2022). ESG standards and frameworks have been continuously growing in the last two decades and are widely in practice. According to GRI, 93 of the world’s largest companies by revenue report information on their ESG performance. Evaluation of ESG performance is particularly relevant for investors since high ESG performance is positively related to valuation and profitability and negatively correlated with volatility (Spellman G. K. 2019). Across the globe, there are several ESG frameworks and standards for sustainability disclosure. Between them, very often, there is no uniformity or consistency with respect to definitions or the standards set. GRI, Sustainability Accounting Standards Board (SASB), and Climate Disclosure Standards Board (hereinafter referred to as ‘CDSB’) are some of the most relevant ones. GRI is an independent non-governmental organisation established in the year 1997. GRI is one of the most widely followed standards for sustainability reporting having been used in over 100 countries. 73% of the largest 250 companies across the globe follow GRI standards for sustainability reporting (GRI, 2022). GRI standards cover disclosures on a wide range of topics, and they have also devised sectorspecific standards. GRI’s renewed focus on ESG standards setting started in 2016. Accordingly, GRI has adopted a three-pronged approach to setting ESG standards. It focuses on universal standards, sector standards, and topic standards. Universal standards apply to all organisations. They lay out foundational concepts and clarify how to use the standards to ensure good-quality reporting. Additionally, they identify general disclosures for organisations and helps organisations in identifying topics that are material to them. GRI sector standards are developed for around 40 high-impact sectors. They are intended to increase the quality of the report as they identify topics material for organisations in a specific sector and clarify what to report. As the name suggests, topic standards focus on providing information on specific topics. Organisations may report on topics material to them based on the standards provided. For example, there may be disclosures specifically on topics like waste, energy, anticorruption, employment, child labour, etc., which may be reflective of economic,

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environmental, or social impacts of organisations. GRI standards are not designed to provide information for any specific group of audience. SASB is also a non-profit organisation working to develop sustainability accounting standards. It was established in 2011. While the standards under GRI were designed to be used by organisations across industries, SASB’s focus has been to lay down industry-specific disclosure standards. SASB provides standards for 77 industries across 11 sectors. SASB standards primarily focus on investors as their target audience. SASB’s approach to materiality is quite different from that of GRI as they focus on financial materiality as their guiding principle. Under SASB, sustainability refers to “corporate activities that maintain or enhance the ability of the company to create value over the long term” (SASB, 2017). SASB has identified five broad sustainability dimensions, which are environment, social capital, human capital, business model and innovation, and leadership and governance. SASB’s standards adopt a systemic approach to standard setting and they are evidenced-based, market-informed, and industry-specific (SASB, 2017). CDSB, formed in 2007 at the World Economic Forum, is an international association of both businesses and not-for-profit organisations. The primary goal of CDSB is to integrate environmental information into mainstream reports of organisations. Initially, it was set up to address the issue of lack of climate-related disclosure standards, and a framework to collect information pertaining to the same was launched. The framework focuses on providing information on the opportunities and risks related to climate and environment that may be useful for relevant stakeholders. Over the years, CDSB has significantly influenced disclosures on environmental and natural capital information. According to the CDSB framework for reporting environmental and social information, environmental information includes natural capital dependencies, environmental results, environmental risks and opportunities, information on environmental policies, and performance against environmental targets (CDSB, 2022). GRI, SASB, and CDSB are only some of the prominent actors setting ESG standards and frameworks. There are plenty of other ESG standards and frameworks like those by European Financial Reporting Advisory Group (EFRAG), International Financial Reporting Standards (IFRS), Integrated Reporting Framework by International Integrated Reporting Council (IIRC), Task Force on Climate Related Financial Disclosures (TCFC), and so on. Owing to the collection of standards and frameworks, it is almost regarded as impossible to discuss ESG without mentioning an ‘alphabet soup of acronyms’ (Ganesan A. 2022). These standards and frameworks are by and large voluntary in nature for companies. They are put in place with an intention to advance precision, validity, consistency, and inter-operability (Bose, 2020). However, the multiplicity of reporting frameworks and standards has posed a challenge to financial professionals for many years. This has recently led to deliberations on creating global baseline corporate sustainability disclosure standards. In 2021, at the UN Climate Change Conference (COP26) in Glasgow, International Sustainability Standards Board (ISSB) was formed as a response to the growing demand for creating global sustainability standards. ISSB was established by the IFRS foundation. The goal of ISSB is to develop comprehensive global sustainability

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and climate-related disclosure standards. The Constitution of the IFRS foundation lays down the powers and responsibilities of ISSB (IFRS, 2021). The standards require entities to provide disclosure on governance, strategy, risk management, and metrics and targets and have identified these four factors as its core content (IFRS, 2022). Across the world, many countries have been adopting regulatory measures to promote ESG perspectives in business. In recent years, many countries like China, Singapore, Malaysia, etc. have introduced guidelines for corporates to disclose their ESG information. Through these different sets of guidance, business houses are encouraged to follow ethical and sustainable business practices. While the scope of sustainability-related commitments differs under different frameworks, on principle, businesses’ responsibility on such matters extends to all stakeholders including value chain partners and employees indirectly engaged by these businesses. India recently revamped its ESG reporting framework by introducing a new format called Business Responsibility and Sustainability Report (BRSR). Significant developments have been taking place in India, particularly in the last decade, with respect to corporate responsibility for sustainability.

2.3 Evolution of ESG in India: The Road from Voluntary Disclosures to a Compliance Mandate While ESG-related developments progressed internationally, ESG discourse in India has advanced substantially in recent years. This has led to the creation of a robust ESG reporting framework within the sub-continent. Within India, corporate responsibility on matters like employee health and safety, environment, etc. was primarily recognised through legislative and policy measures. For example, in 2003, the Ministry of Environment and Forest (MoEF) introduced the Charter on Corporate Responsibility for Environmental Protection (CREP) wherein industry-specific action points were set out. Over the years, there have also been various laws on occupational safety and health like the Factories Act, 1948, Mines Act, 1952, etc., where responsibilities have been pinned on employers on matters relating to occupational safety and health. Currently, this is dealt with under the Occupational Safety, Health, and Working Conditions Code, 2020 (OSH Code). Conversations on corporate responsibility on environmental, social, and governance factors in India can be said to have evolved rapidly after the recognition of CSR as an important corporate value. Therefore, CSR can be regarded as a precursor to the ESG regime in India. The 2009 voluntary guidelines on CSR were introduced with the aim to encourage businesses to formulate CSR policies aligned with their business goals. The guidelines required CSR policy to cover six core elements, which are care for stakeholders, ethical functioning, respect for workers’ rights and welfare, respect for human rights, respect for environment, and, finally, activities for social and inclusive development.

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CSR started as a voluntary self-regulating measure that is focused on exceeding the conventional explicit and implicit obligations imposed on a company and emphasised on the idea of ‘doing well by doing good’ (Falck & Heblich, 2007). However, in India, CSR is no longer voluntary for all organisations. It is a compliance mandate for some larger organisations. Under the Indian law, CSR became mandatory only after the enactment of the Companies Act, 2013. This applies to both private and government-owned companies. According to s. 135 of the Companies Act, 2013, Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year” has a CSR obligation and such an organisation is bound to spend “at least two percent of the average net profits of the company made during the three immediately preceding financial years.

Further, s. 134 of the Act suggests that the board’s report must include details about policy developed and implemented by the company on CSR initiatives taken during the year. Many companies voluntarily take up projects aimed at public good and social welfare even when it is not a mandate for them. What activities can be incorporated under the CSR policy of a company is also prescribed under Schedule VII of the Act. Companies can choose from several activities mentioned therein. This includes activities relating to eradicating hunger, poverty, and malnutrition, promoting gender equality, and ensuring environmental sustainability among others. Even contributions made to the Prime Minister’s National Relief Fund or to different schemes or funds set up by the central government may be part of a company’s CSR activity. Apart from CSR, one of the earliest guidance received for businesses on regulating responsible business conduct in India was the 2011 National Voluntary Guidelines on the Social, Environmental and Economic Responsibilities of business (hereinafter referred to as ‘NVG’). NVG, which was designed to be used by all businesses, consisted of nine principles that were equally important and non-divisible. It also consisted of certain core elements that were aimed to help put principles into practice. The nine principles laid down under the NVG, 2011, are as follows: 1. Businesses should conduct themselves with ethics, transparency, and accountability. 2. Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle. 3. Businesses should promote the wellbeing of all employees. 4. Businesses should respect the interest of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable, and marginalised. 5. Businesses should respect and promote human rights. 6. Businesses should respect, protect, and make efforts to restore the environment. 7. Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner. 8. Businesses should support inclusive growth and equitable development.

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9. Businesses should engage with and provide value to their customers and consumers in a responsible manner. A reporting framework was also included in the NVG in an ‘apply or explain’ format, which provided a standard disclosure template for entities to report on their performances in different areas. The reporting framework was introduced not only to encourage meaningful engagement with relevant stakeholders but also for businesses to understand what makes their operations more ethical and responsible. Following this, in 2012, Securities and Exchange Board of India mandated BRR to be filed by the top 100 listed entities by market capitalisation. This was to follow the disclosure requirements laid out in NVGs, and it was the first mandate on sustainability reporting for companies in India. Up until that point, disclosures of non-financial information were only voluntary. Later, with international developments like the introduction of SDGs and the United Nations Guiding Principles on Business and Human Rights (UNGP), the domestic framework regulating responsible corporate conduct needed to be updated. Accordingly, in 2019, the National Guidelines on Responsible Business Conduct (hereinafter referred to as ‘NGRBC’) was introduced by the Ministry of Corporate Affairs. NGRBC is an improved version of NVG. This was introduced with an aim to align NVG with SDGs and the ‘Respect’ pillar of the UNGP. Like NVGs, NGRBC was also designed to assist business entities in adhering to business responsibility standards. The nine thematic pillars of NGRBC, called ‘principles,’ are similar to the principles identified under NVGs. The adoption of NGRBC refers to the integration of the principles and their core elements into the core business strategy and their operations including its value chain. Annexure 1 to NGRBC has provided extensive guidance on its adoption. Accordingly, there are four key steps to adopting NGRBC and integrating them with the core business. The four key steps are 1. 2. 3. 4.

Prioritising the core elements Reviewing and developing policies Determining ambition Setting targets.

Annexure 4 of NGRBC has mapped the relation between the 17 SDGs and the NGRBC principles relevant to each of them. Annexure A of NVG and Annexure 5 of NGRBC have also provided ‘Business Case Matrix.’ Business Case Matrix is a tool to map the benefits of integrating environmental, social, and other factors (through the guidelines) in business functions. Under Annexure 6, NGRBC further provides guidance for entities to self-assess how well aligned they are to the NGRBC. The alignment can be assessed in two ways, firstly, by evaluating ‘completeness’ and secondly, by focusing on ‘ambition.’ ‘Completeness’ measures the extent to which principles and their core elements are traced by the business, whereas ‘ambition’ focuses on the quality of the performance targets set by businesses and evaluates to what extent they are achieved. As noted earlier, in 2012, Securities and Exchange Board of India (SEBI) mandated the top

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100 listed entities to report on ESG factors through Business Responsibility Report (BRR). The requirement was extended to the top 500 listed companies in 2015 and further extended to the top 1000 listed companies in 2019. Under the NGRBC as well, a reporting framework was deliberated. Finally, in 2021, SEBI mandated a framework for sustainability reporting through Business Responsibility and Sustainability Report (BRSR), which is regarded as an enhancement of the previously existing BRR framework. The current BRSR framework standardises the ESG framework and is aimed at facilitating quality ESG disclosures for corporations in India.

2.4 BRSR Framework: Future of ESG Reporting in India As evident from the previous sections, the global reforms in ESG thinking have largely influenced India’s approach to ESG. Between 2000 and 2017, 29 countries mandated firms to disclose ESG information, and such disclosures improve the availability and quality of ESG reporting particularly among organisations with poor ESG performance (Krueger et al., 2021). The aim of creating a robust framework like BRSR is to establish it as a credible and widely accepted source of information on business responsibility and sustainability practices of organisations in the country. Corporate information relevant to investors and other stakeholders may be both financial and non-financial in nature. Financial reporting is a systematic process of recording and communicating an entity’s financial data. Through this, the financial information of businesses is communicated to all relevant stakeholders. The framework for obtaining financial information of organisations is well established and has been in place for some time. However, within India, the framework for obtaining non-financial information is relatively new and is still evolving. In August 2020, Ministry of Corporate Affairs, India (MCA), put forth a report by the Committee on Business Responsibility Reporting (the committee). In the report, the committee put forth recommendations based on information obtained from prior BRR filings by the top corporations functioning in India. One of the core recommendations given was to encourage ESG disclosures through sustainability reporting by organisations. Recommendations put forth by the committee on the new framework were after taking input from an IICA-led study titled ‘Baseline Assessment of Business and Human Rights Situation in India.’ As per the briefing provided in the report of the committee on Business Responsibility Reporting, the IICA-led study included an analysis of BRR disclosures in 490 listed companies (MCA, 2020). The study focused on understanding the BRR disclosures based on three criteria—completeness, accuracy, and the clarity of information provided in the disclosures. The three criteria identified in the study have been explained as follows: Completeness referred to whether information on all the nine NVG principles was provided; accuracy related to whether the information provided was of relevance to the principle; and clarity refers to comprehensibility of information provided. The IICA study showed that after the successful implementation of the BRR framework for over half a decade of its working, organisations have the capacity to provide the information sought in disclosures.

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Introduced very recently in 2021, BRSR is in a nascent stage of its working. Being a state-driven framework, BRSR would act as an accountability instrument. The new BRSR framework has been fashioned keeping the NGRBC-BRR framework as the base document and examining it against the BRR filings over the years, UNGPs, SDGs, and other relevant ESG-related information. It draws inputs from major sustainability frameworks. Being mindful of the compliance demand on businesses, the BRSR format was envisaged as a simple but comprehensive source of non-financial and sustainability-related information that is accessible to all stakeholders (MCA, 2020). The shift to BRSR was to convey an increased focus on sustainability in addition to business responsibility. The report by the committee suggests that with the growing importance of non-financial or sustainability-related disclosures, such information would be used by banks, credit rating agencies, and other financial institutions, along with financial information to assess the credibility of a company or a business (MCA, 2020). It is presumed that BRSR will bring in more transparency and accountability with respect to ESG issues of companies compared to the earlier framework. BRR can be considered as a precursor to BRSR. BRSR is said to be an evolved or improved version of BRR and is said to have been introduced with the aim to address the gaps in the BRR framework. There is a considerable difference between BRR and BRSR frameworks. The earlier BRR framework has been straightforward and easy on compliance. BRSR will provide consolidated data on more than a hundred parameters across nine themes, and the same can be utilised by the different stakeholders. The data sought under the new framework is more specific and detailed compared to the earlier existing framework and through that, it facilitates meaningful engagement with different stakeholders. Since the entities are expected to produce reports entailing such a large volume of information, a guidance note is also available under the BRSR framework. This is available in Annexure II. It aids companies in their reporting obligations. The guidance note provides more clarity on the meaning and scope of the questions incorporated in the new reporting framework. BRR and BRSR follow different formats for reporting. There is also a significant difference in the quality of data disclosed since BRSR provides both quantitative and qualitative information on matters including ESG. Under BRR, there were five reporting sections. They included general information about the company, financial details of the reporting company, business responsibility initiatives of the company, business responsibility information including governance and policies for business responsibility, and, finally, principle-wise performance. On the other hand, under BRSR, the format was redesigned as having only three comprehensive and valuable sections. The threefold format under BRSR includes general disclosures, management and process disclosure, and, finally, principle-wise performance disclosure (as provided under Annexure 1). Accordingly, ‘general disclosures’ are to include

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general information in relation to the company including details of the listed entity (CIN, address, etc.), products and services offered, employee information, operations, information on holding, subsidiary and associate companies, information on CSR and transparency, and disclosure compliances. ‘Management and process disclosures’ help stakeholders understand, and the businesses to communicate, the structures, policies, and processes that have been implemented towards adopting the NGRBC Principles and Core Elements. The third and final section consists of ‘principle-wise performance disclosure.’ Through this, organisations can demonstrate to relevant stakeholders how they have integrated various principles into their work. This is further grouped into ‘essential indicators’ and ‘leadership indicators.’ It is expected that entities that have adopted NGRBC disclose information related to essential indicators. While it is mandatory to report on essential indicators, the latter may only be voluntarily disclosed. However, it is desirable that businesses report on leadership indicators if they want to position themselves as entities taking their environmental, social, and ethical responsibilities seriously and aspire to progress in their sustainability practice. This is because there is a significant difference in the quality of information collected and reported under these headings. For example, Principle 4 indicates that businesses should respect the interests of and be responsive to all their stakeholders. The essential indicators corresponding to Principle 4 only include information on the stakeholder groups identified and the level and frequency of engagement with them, whereas leadership indicators seek to get data on details of stakeholder engagement, processing of feedback, how inputs are incorporated into policies, and so on. Further, under BRR, only a single template was provided for all reporting entities, whereas BRSR proposes two formats—a comprehensive version and a lite version. The more established entities shall follow the comprehensive version, whereas the smaller entities, that are just starting out on sustainability reporting, may follow the lite version. The BRSR lite version was suggested keeping in mind the familiarity issues that may possibly arise while expanding the BRSR to companies that had previously not participated in reporting under the earlier format. Thus, a lite version would enable companies to initiate reporting practices without complications and with ease. The lite version may be adopted on a voluntary basis by entities not bound by the SEBI mandate. Through this, the smaller organisations get introduced to sustainability reporting in a phased manner and receive enough time to understand their capacity, set targets, and realise their goals and not give up, especially owing to initial constraints. The committee had also recommended that BRSR be integrated with the MCA21 portal. Accordingly, in addition to the data provided in the annual report, disclosures may be made on the MCA portal as per the new format. Earlier, with BRR, this option was not available. Disclosures on the MCA portal help streamline the ESG reporting process and simplify the same since information already filed by companies will be automatically filled while filing BRSR. This helps to avoid duplicate reporting requirements, which may eventually lessen the burden on organisations. The BRSR reporting has been introduced to be implemented in phases. Accordingly, reporting under the new framework was made voluntary for the financial year

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2021–2022 and is made mandatory starting from the financial year 2022–2023 for the larger listed companies. As per SEBI, ESG disclosures are mandatory for the top 1000 listed companies in the upcoming financial year. This allows the smaller companies to develop the bandwidth to adapt and implement disclosure obligations eventually. The committee suggested a five-year period for the implementation of the framework so that it eventually covers all companies. While the BRSR framework is currently applicable to only a few companies, the hope is that the philosophy behind such regulation would inspire others to participate voluntarily.

2.5 ESG Reporting: Opportunities and Challenges Businesses have a transformative role in creating inclusive development. Considering the numerous global challenges like the COVID-19 pandemic, climate change, growing inequality, etc., it appears businesses have a vital role to play in society. The responsibility of businesses to people other than their shareholders is now widely acknowledged. One prominent example of the same is the “Statement on the purpose of a corporation,” which was issued by the Business Roundtable (BRT) in 2019. Through this statement, they acknowledged that all businesses have a fundamental commitment to all their stakeholders in addition to serving their own corporate purpose (BRT, 2019). ESG reporting makes information accessible to all relevant stakeholders, in an intelligible format, so that they can understand how business actions may impact them and make informed decisions accordingly. Likewise, such information also allows businesses in understanding potential ESG risks and helps in strategising accordingly. Good sustainability practices impact the performance of organisations, and studies have shown that operational performance improves by 88% as a result of solid ESG practice (Clark et al., 2015). ESG reporting provides a holistic review of an entity’s performance. Using the information obtained through such reporting, businesses may strategise taking evidence-based actions. According to the Sustainability Reporting Standards Board of ICAI (SRSB), customer satisfaction and retention, gaining of competitive advantage, accountability, employee satisfaction and retention, demonstration of progress, and providing specific information are some of the main objectives of sustainability reporting (SRSB, 2021). Sustainability reporting helps demonstrate an organisation’s commitment towards environmental, social, and governance issues and since more people care about such issues, such reporting helps improve the satisfaction of the customer or consumer base of any firm. With respect to gaining a competitive advantage, credible and transparent reporting on a firm’s sustainability would convince and attract investors and other providers of financial capital. Sustainability reporting entails the creation of goals and targets and reporting on the same with measurable indicators, which indicates the accountability of firms. It helps with employee satisfaction and retention since such reporting may help inspire trust and confidence in a firm’s management. Reports on sustainability issues and the responses of the firm make efforts taken by the firms more tangible and in that sense, they help demonstrate

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progress made by the firms in a concrete manner. Finally, since sustainability reports provide specific information with measurable indicators, they help set apart the efforts taken by the firms from those initiatives that are indicative of ‘greenwashing’ (SRSB, 2021). While ESG reporting is clearly of great significance to corporations as noted above, such reporting is complex and there are some major challenges in measuring and reporting on ESG-related elements. Even with the existing comprehensive BRSR framework, there is some room for improvement. In India, reporting under the BRSR framework appears to be data intensive. The larger the volume or demand of ESG information, the more likely it is to reduce into a box-ticking activity. Across nine principles and three sections, the reporting framework covers more than a hundred data points that are to be provided by organisations. Further, the collection and analysis of such a variety of data across different themes, and from different teams, make the filing process potentially demanding and exhausting for organisations. Therefore, the quality of reporting and engagement is a matter of concern. Auditors and external assurance providers play a significant role in the ESG reporting of a corporation to ensure ESG information provided is adequate, accurate, and reliable. External assurance is a method of reviewing an organisation’s ESG performance based on the sustainability report submitted. In addition to nurturing confidence and trust, especially among external stakeholders, external assurance helps improve reporting practices by developing accountability and by challenging organisations to step up their ESG performance (Hayat & Koldemir, 2021). Sustainability measures taken by companies often face criticisms along the lines of greenwashing or green tokenism. External assurance helps deal with issues like data manipulation and improves the reliability and credibility of ESG reports. They also provide recommendations on improvements for the future. External assurance may be performed by qualified personnel like auditors or certified public accountants. The level of assurance, whether it is limited or reasonable, must be predetermined by the parties depending on the requirements in each case. Assurance providers must ideally be independent and must aim to provide opinions tailored to each entity. Internal and external audits and assurances are significant in maintaining the integrity of sustainability reports and therefore, the same may be integrated into the ESG reporting framework. The BRSR framework, however, does not mandate organisations to obtain external assurance on their ESG performance. BRSR needs to be implemented in phases, and ESG reporting is currently focusing on larger organisations. For smaller entities, ESG reporting is voluntary to begin with. However, for many smaller businesses the costs of implementing business responsibility initiatives and ESG reporting are likely to outweigh the benefits. The Indian market for businesses is already compliance heavy. ESG reporting may therefore create an additional burden on such businesses. It may be harder for these firms to absorb such costs and therefore they may be less likely to report on ESG performance voluntarily. Such entities must be encouraged to report on at least the core material ESG issues relevant to them. One can further explore whether there is any scope for incentivising such actors, directly or indirectly, to share relevant data. Again,

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the size and format of the end report also warrant a discussion. The given BRSR format makes it easy to browse through relevant ESG topics. However, the sheer amount of content that needs to be processed makes ESG information analysis challenging. It would be desirable for companies to issue an additional separate report focusing on the highlights to ensure that relevant information reaches concerned stakeholders. Another prospect would be to focus on the overall layout of the end report. The 2020 report by the World Business Council for Sustainable Development (WBCSD) identifies certain trends in sustainability reporting since the year 2017. Based on data collected from 106 companies, the report has included information on three categories, one of which is ‘experience.’ Experience evaluated how the sustainability reports performed in terms of user experience and assessed the extent to which a sustainability report meets the needs of specialist and generalist audiences. For example, it examines aspects like accessibility, consistent messaging, navigation, flow, and, finally, design (WBCSD, 2020). It may be desirable to examine the format provided for ESG reporting against such factors so that ESG information reported is clear and comprehensible to the end user. Another limitation of the existing BRSR format is that it is generic in nature. While the format identifies issues relevant to most sectors, it would be more useful to introduce sector-specific formats. This has already been suggested by the committee in their report. Sector-specific BRSR formats may be developed at least for those sectors experiencing high ESG risks. This would allow for a more in-depth understanding of the environmental, social, and governance-related issues that may be unique to each sector. This would in turn allow entities to be more responsive by devising strategies and policies more likely to catalyse ESG responses. BRSR also does not provide any instruction on determining materiality in the context of ESG-related information. Materiality is the concept that guides ESG reporting. Material information is one that is considered ‘relevant’ and is likely to influence the decisions of stakeholders with respect to the reporting entity. Materiality is important since it affects the predictability of an entity’s financial performance. Earlier, corporate reporting was primarily based on financial materiality. Focus on financial materiality meant that companies reported on matters that could impact their enterprise value. Over the years, reporting pattern has grown from focusing on information based exclusively on ‘financial materiality’ to giving reverence to the concept of ‘double materiality’ (GRI, 2022). Materiality analysis helps organisations understand what issues are to be prioritised based on the positive and negative impact it has on various factors. Under the BRSR framework, it is desirable to have detailed guidance on determining materiality in the context of ESG reporting. It would have an impact on the quality of the final report. Developing a regulatory framework for ESG rating providers within the subcontinent is another aspect worth considering. ESG ratings typically are a measure of an entity’s ESG performance based on a set of identified metrics. It is indicative of an entity’s exposure to ESG risks, and such ratings are utilised by different stakeholders, particularly investors, to assess the performance of businesses. Within India, ESG ratings are still a relatively novel concept and are not yet under any regulatory

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supervision, and the ESG rating providers (ERPs) do not follow any uniform assessment criteria. In recent years, in order to increase market confidence and to protect investors, a need to regulate this space has been sensed. In 2021, the International Organization of Securities Commissions (IOSCO) published a report on ESG ratings and data product providers (IOSCO, 2021). Through this report, IOSCO proposes that regulators could consider focusing greater attention on the use of ESG ratings and data products and the activities of ESG rating and data product providers in their jurisdictions. Following this, SEBI released a consultation paper on the topic and identified specific points suggesting the need for regulations in ESG ratings in India (SEBI, 2022). In its consultation paper, SEBI identified the following issues with the current ESG ratings ecosystem: 1. Ambiguity about a wide range of products offered. 2. Inconsistency in disclosure and transparency of the methodology and rating process. 3. Unregulated nature of the market and potential conflict of interest. 4. Lack of India-specific ERPs. Subsequently, a framework to regulate ERPs is in the process of being developed. SEBI has also proposed to accredit ERPs for the purpose of assigning ESG ratings.

2.6 Conclusion With the advent of 2020, the COVID-19 pandemic, and the consequent dialogues on ‘building back better,’ issues surrounding sustainability have become more significant than ever before. The decade starting with 2020 is also viewed as the ‘decade of action’ since it is the final 10-year mark for achieving the SDGs. With a renewed focus on sustainability and the recognition of the role of corporations in achieving sustainability-related targets, ESG information has become crucial to businesses and related stakeholders across the globe. The main tool used to make ESG information available to all relevant stakeholders has been ESG reporting. The basic principle behind the enhanced emphasis on ESG reporting is the recognition that only “what gets measured gets managed.” ESG reporting leads to documentation and disclosure of various ESG metrics. While ESG reporting started off as a voluntary practice, in many jurisdictions such disclosures are being mandated. Mandatory ESG helps close the information gap on ESG-related factors. This typically arises when there is a high demand for information from different stakeholders, especially investors, on ESG performances and the firms fall short of supplying adequate information to them. It is imperative that the framework followed for reporting and disclosures must be trusted by the market actors to provide adequate, transparent, fair, and comparable information. For a long time, the multiplicity of reporting frameworks and standards has been a concern for reasons like limitations in comparability and interoperability. Therefore,

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there is a shift towards creating a global baseline corporate sustainability disclosure standard. Across the world, many countries have been adopting regulatory measures to promote ESG perspectives in business as well. In India, significant developments have been taking place on ensuring the same and one of the latest developments on this front is the introduction of BRSR. The aim of creating a robust framework like BRSR is to establish it as a credible source of information on business responsibility and sustainability practices of organisations in the country. While it is a significant improvement on the previous BRR framework, it is not without its limitations. However, with the rapidly changing sustainability landscape, BRSR brings transparency and accountability to ESG reporting—both of which are indispensable in making adequate progress in the sustainability journey of corporations. For the overall growth of the economy, focus on sustainability is the need of the hour, and ESG reporting is an important tool that helps measure to what extent organisations are successful in meeting their obligations.

References Agudelo, M. A. L., Jóhannsdóttir, L., & Davídsdóttir, B. (2019). A literature review of the history and evolution of corporate social responsibility. Int J Corporate Soc Responsibility., 4, 1. https:// doi.org/10.1186/s40991-018-0039-y. Bose, S. (2020). Evolution of ESG reporting frameworks. In: Esty D.C., Cort T. (ed) Values at Work: Sustainable investing and ESG reporting, p 13–34. Business Roundtable (BRT). (2019). Statement on the purpose of a corporation. CDSB. (2022). CDSB framework for reporting environmental and social information. Clark G.L., Feiner A., & Viehs M. (2015) From the Stockholder to the Stakeholder: How sustainability can drive financial outperformance. https://arabesque.com/research/From_the_stockh older_to_the_stakeholder_web.pdf. Accessed 20 Jan 2023. Du, S., Yu, K., Bhattacharya, C. B., et al. (2017). The business case for sustainability reporting: Evidence from stock market reactions. Journal of Public Policy & Marketing, 36(2), 313–330. Eliza Griswold. (2012). How ‘Silent Spring’ ignited the environmental movement. In: The New York Times Magazine. https://www.nytimes.com/2012/09/23/magazine/how-silent-spring-ign ited-the-environmental-movement.html. Accessed 20 Jan 2023. Elkington, J. (2004). Enter the Triple Bottom Line. In A. Henriques & J. Richardson (Eds.), The Triple Bottom Line (pp. 1–16). Taylor & Francis. Falck, O., & Heblich, S. (2007). Corporate social responsibility: Doing well by doing good. Business Horizons., 50(3), 247–254. Friedman, M. (1970). Friedman doctrine: The social responsibility of business is to increase its profits. In: The New York Times Magazine. Available via https://www.nytimes.com/1970/09/13/ archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html. Accessed 02 Jan 2023. Ganesan, A. (2022). ESG and its Alphabet soup of acronyms. https://esgfoundation.org/esg-andits-alphabet-soup-of-acronyms. Accessed 20 Jan 2023 GIIN. (2019). Core Characteristics of Impact Investing. https://thegiin.org/assets/Core%20Charact eristics_webfile.pdf. Accessed 02 Jan 2023 Global Compact. (2004). Who cares wins: Connecting Financial Markets to a changing world. Global Compact. (2015). SDG Compass: The Guide for Business Action on SDGs.

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Gray, K. R., & Karp, R. E. (1994). Corporate Social Responsibility: Sullivan Principles and South Africa. Visions in Leisure and Business., 12(4), 2. GRI. (2022a). ESG standards, frameworks, and everything in between. In: The GRI Perspective. https://www.globalreporting.org/media/jxkgrggd/gri-perspective-esg-standards-frameworks. pdf. Accessed 20 Jan 2023 GRI. (2022b). Materiality madness: Why definitions matter. In: The GRI Perspective. Available via https://www.globalreporting.org/media/r2oojx53/gri-perspective-the-materiality-mad ness.pdf. Accessed 20 Jan 2023 GRI. (2022c). The GRI Standards: Enabling transparency on organizational impacts. Hayat U., & Koldemir, K. (2021). ESG Disclosure: How can external assurance help build trust? https://blogs.cfainstitute.org/investor/2021/11/09/esg-disclosure-how-can-externalassurance-help-build-trust/ Accessed 20 Jan 2023 Hill, J. (2020). Environmental Social and Governance (ESG) Investing: A balanced Analysis of the theory and practice of a sustainable portfolio. Elsevier. IFRS. (2021). Constitution, para 58. IFRS. (2022). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. International Foundation for Education and Self Help (IFESH). (1999). Global Sullivan Principles. IOSCO. (2021). Environmental, Social and Governance (ESG) Ratings and Data Products Providers. Krueger, P., Sautner, Z., & Tang, D.Y. et al. (2021). The Effects of Mandatory ESG Disclosure Around the World. In: ECGI Working Paper Series in Finance. Miller, K. (2020). The Triple Bottom Line: What it is and Why it is important. https://online.hbs. edu/blog/post/what-is-the-triple-bottom-line Accessed 20 Jan 2023 Ministry of Corporate Affairs (MCA). (2020). Report of the committee on Business Responsibility Reporting. Paradis, G., & Schiehll, E. (2021). ESG Outcasts: Study of ESG performance of sin stocks. Sustainability., 13(17), 9556. https://doi.org/10.3390/su13179556 Principles for Responsible Investment (PRI). (2006). Principles for Responsible Investment. https:// www.unpri.org. Accessed 19 Jan 2023. Rashed, A. H., & Shah, A. (2021). The role of private sector in the implementation of sustainable development goals. Environment, Development and Sustainability., 23, 2931–2948. SASB. (2017). SASB Conceptual Framework. SEBI. (2022). Consultation paper on Environmental, Social and Governance (ESG) Rating Providers for Securities Market. Slaper, T. F., & Hall, T. J. (2011). The Triple Bottom Line: What it is and How does it work? Indiana Business Review., 86(1), 4–8. Spellman, G. K. (2019). ESG matters. ISS EVA. Available via https://www.issgovernance.com/file/ publications/ISS_EVA_ESG_Matters.pdf Accessed 19 Jan 2023 SRSB. (2021). Background material on Business Responsibility and Sustainability Reporting. The World Commission on Environment and Development (WCED). (1987). Our Common Future. Thomas, D. (2021). Half of FTSE 100 companies link executive pay to ESG targets. https://www. ft.com/content/609eae5e-1576-4081-9340-5d5001b5b02e. Accessed 20 Jan 2023. UN. (2012). The future we want. In: UN Conference on Sustainable Development Rio +20, Brazil, 20–22 June 2012. WBCSD. (2020). Reporting Matters: Maintaining ambition amidst disruption.

Chapter 3

Green Human Resource Management—A Gendered Approach to Sustainability Through Women Employment Pritha Biswas and Subhoda Banerjee

Abstract Green Human Resource Management (HRM) is one of the most significant elements of twenty-first century. The study aims to reflect on all the events pertaining to expansion, accomplishment, and continuing preservation of a system, which focuses on greening of employees with a view to achieve environmental goals of the organisation. It also proposes, how organisations can advance sustainable development, with a special emphasis on their contribution to social equity by ensuring women equitable access to employment. For women to be able to benefit from the green economy and to combat discriminatory attitudes, policy actions are required. The study also makes some recommendations for actions that businesses might do to promote gender equality at work. Further, the study points out the policies and practices that motivate employees to go green for the advantage of the people, business, community, and the natural surroundings. The review highlights an immediate need for formulating laws to protect the interest of green whistleblowers. Keywords Green · Human resource management · Environment · Sustainability · Business · Women · Gender equality · Female labour force participation

3.1 Introduction “Good stewardship of the environment is not just a personal responsibility; it is a public value... Our duty is to use the land well, and sometimes not to use it at all. This is our responsibility as citizens, but more than that, it is our calling as stewards of the earth”.

—President George W. Bush. P. Biswas Economics, St. Xavier’s University, Kolkata, India S. Banerjee (B) Law, St. Xavier’s University, Kolkata, India e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_3

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At the advent of this writeup, the above-quoted words by one of the greatest personalities of all times have been found to be very apt in context of our society. The quote clearly mentions about the importance of 3P’s: People, Planet and Profit. There is strong nexus among these three words since it talks about all the stakeholders’ involving people of today and our future generations; our mother earth; and business which are run in the society. The underlying fact that the ‘current consumption and production level is 25% higher than the earth’s sustainable carrying capacity’, as furnished by ‘The Brutland Report—20 Years On’, clearly outlines the pressing need of promoting sustainable development so as to avoid a dark future. The welfare of the society can be upheld only if the business contributes in a socially responsible manner and since businesses are run by human beings, they become the stewards to save the air that we breath, the water that we intake, soil in which we live and run our business. The enormous fruits of globalisation and privatisation have led to many desirable and undesirable consequences. It has opened doors for new markets, improved quality of products and services and has led to advancement in technological innovations. However, the urge to compete with one another in order to meet global demands has unfortunately amounted to over-exploitation of the ecological cycle. The preconceived belief that businesses are only meant to earn profit is changing by leaps and bounds. Today, businesses focus more on the approach of providing beneficial services to the society since this remains the key to achieve constant and sustainable profit. Business organisations form a critical player in addressing sustainability issues. While talking of the society, sustainability becomes the primary factor in shaping the global ecological challenges and this is exactly where human beings play the most significant role in implementing environmentally friendly policies in their respective surroundings and organisations. Thus, arises the need for amalgamation of the two distinct terminologies, i.e. ‘Green’ and ‘Human Resource Management’ which together gives birth to ‘Green Human Resource Management’. Since people are connected globally, various strategies need to be incorporated so that the word ‘Green’ in ‘Green Human Resource Management’ remains preserved. The word ‘Green’ has a very wide amplitude. It is more than a colour. It is about a movement for protecting the environment system. The present buzzword in the entire business world is about going green. Going green includes greening of the functions of HRM. While speaking of human resource, it is understood as the combination of people forming workforce of an organisation, industry or economy. It is one of the core units of any organisation responsible for matters related to employee’s recruitment, hiring, training, etc. Human Resource (HR) being a skilled workforce in an organisation is responsible for managing the lifecycle of an employee. The term ‘Resources’ denotes limited availability and ‘Management’ refers ways to optimise and make best use of such limited or scarce resources with a view to meet the organisation goals and objectives. The first step of HR planning is to identify the current human resources supply of the organisation. HR studies the strength of the organisation based on the number of employees, their skills, qualifications, positions, benefits and performance level. The term Green HRM has gained tremendous importance in the present world for

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its long-term existence and development. In this light, Green HRM becomes one of the core wings of HRM. Today, the organisations should emphasise not only on financial aspect but also on social and environmental aspect. Environment can affect a business positively and negatively. Along with creating opportunities’ it can lead to severe threats as well. In this regard, green management plays a vital role as it creates a balance between industrial growth for wealth creation and protects the natural environment for development of the future generation. A very high level of technical, managerial expertise is required to apply these green management initiatives. Such skillset aids in building a competitive advantage of the organisation thereby amounting to foster growth in innovation, focussed on environmental initiatives. The shift to lower carbon economies and increasing investments in environmental infrastructure through economic stimulus packages have received renewed importance as a result of the financial and economic crises. Green jobs are chances for employment that help economies use less energy, conserve, and repair ecosystems, and produce less waste and pollution. Green employment presents a chance for more justifiably distributed growth and a more equitable revenue allocation between capital and labour. The vast majority of staff exhibit strong devotion and job satisfaction towards an organisation that is constantly ready to go ‘Green’ and has strong environmental concerns. In addition to their positive impacts on the environment, green employment must also have a social dimension, especially if they contribute to advance social equity. To minimise climate change and put nations on the path to sustainable development, social issues need to be addressed. Environmental goals are being hampered by widening income disparity, increased unemployment, and the marginalisation of women workers (International Labour Foundation for Sustainable Development, 2009). Due to their better environmental knowledge, women should occupy their rightful place in the green economy. The world can move more quickly and confidently towards low-carbon growth if women held more productive and executive positions. According to surveys, women are more inclined than males to purchase recyclable, environmentally friendly and energy-saving products. More women than men support government intervention in the economy to advance environmental objectives, such as restrictions on non-sustainable items and price reductions for greener products.

3.2 Concept of Green HRM Green HRM is a new concept in the HRM literature. Green Human Resources Management (GHRM) can be defined as ‘a set of policies, practices, and systems that stimulate the green behaviour of a company’s employees in order to create an environmentally sensitive, resource-efficient, and socially responsible organization’. One of the key features of Green HRM is usage of less paperwork at every aspect of HR functions, viz. recruitment, selection, training, performance review, etc. in order to create a sustainable economic-friendly work environment and gain competitive

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advantage. Ren et al. (2018) explicitly provide a working definition of GHRM stating that it is ‘an organization’s aspiration to design and implement an HRM system that supports a proactive and positive approach to addressing environmental concerns by (1) formulating an overarching HRM philosophy that reflects green values; (2) promulgating formal HRM policies that state the organization’s intent and serve to direct and partially constrain the green behaviour of employees; (3) actively ensuring actual green HRM practice (by ensuring the daily enactment of green HRM philosophies and policies); and (4) using green technological processes for designing, implementing, evaluating, and modifying GHRM philosophies, policies, and practices as they evolve’. On similar lines, Green HRM is described as ‘sustainable HRM practices that have an ecological impact on the organisation. It is a fundamental component of corporate sustainable strategy, promoting across the board employee green behaviours and ecological and social performance’. Thus, the above-quoted definitions represent all activities aimed at helping an organisation to implement its agenda for environmental management by resorting to reduction in carbon emission, enhancing performance management of employees by imparting green training and development, adopting methods to promote green compensation and reward management. As such, the idea of sustainable development triggers the thought of setting up environmentally friendly workplace and in accelerating awareness building. 1. Review on Green HRM Green revolution is a step towards improvement in environmental and workers’ health and safety. Green HRM also formulates and implements policies and practices that encourage sustainable people management by developing more knowledgeable workforce and superiors. Human Resource is that part of the workforce which acts as the driver of the organisation’s green culture, by aligning its practices and policies with sustainable objectives of the organisation. Effective implementation of green management initiatives through the implementation of environment management system requires strategic implementation of human resource system that fits with organisation culture and long-term good. Human resource can help in cost control and talent acquisition by building environmental consciousness and preservation of ethical values. The pressing needs to adopt Green HRM are as follows: . . . . . . . . .

To conserve and preserve the natural environment. To safeguard the healthy and environment-friendly working environment. To gain competitive advantage over the rivals. To ensure corporate social responsibility is implemented. To become cost-effective. To raise the brand value of the company. To reduce and recycle waste and maximise utilisation of available resources. To stimulate innovation and encourage environment consciousness. To promote environment and value-based learning.

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Human Resource Management is the genus and people management practices in an organisation is the species. The canopy of people management practices deals with the various parameters like how people work, their conduct, strategy to grow, etc. It is not only about managing the people, but it also includes understanding and assessing the needs of every employee and accordingly, guiding and motivating them through proper trainings. Since the corporate landscape is changing consistently, the business world is experiencing a shift from the conventional manual system to an automation system. As such, ‘Human Resource Management System’ tools are devised which removes the exigencies faced by a paper-bound system. Therefore, effective people management practices are about responding to social and environmental factors as it caters the green culture and growth of the organisation. 2. Green Human Resource Management Practices in Organisation (a) Green Recruitment and Selection Strategies Green Recruitment and Selection strategies is a step towards inducing HRM policies aiming towards enhancing environment management tactics inside organisations. Today, advertisements of various job openings are posted through online platforms like company websites; job portals like Naukri.com, Timesjobs.com, etc.; social media sites like LinkedIn, etc. The traditional approach of posting jobs in newspaper is in miniscule. This definitely is a step towards lesser usage of paper and reduction in carbon footprint. The online-based selection procedure of employees helps in bringing more information about the organisation like vision, mission, values, branding, and most importantly environmental preservation practices and initiatives to the public domain. Further, applicants uploading or sending their resume or curriculum vitae through the above-mentioned online platforms or emails supports in saving hundreds of papers. Today, the onboarding of employees, starting from flouting the offer letter to the appointment letter, is also done electronically through the internal portal by use of digital signature in many companies amounting to an important step towards paperless movement. Thanks to the age of Internet that has changed our everyday lives by exhaustively sweeping the globe off its feet with its innumerable advantages. Also, another approach of green recruitment strategy is attracting talents who are familiar and well aware of the sustainability and conservation of environment. Eco-friendly recruiting also helps in reducing cost. Even web-based or virtual interviews which are becoming more common in today’s world contribute towards minimisation of carbon emissions as it minimises travel requirements. However, it would be inappropriate to discuss online recruitment and selection processes without also addressing the gender gap in the digital front. The Mobile Gender Gap Report 2022 points out how mobile phones have helped men and women especially in low- and middle-income countries to access Internet. It is the primary source of access to Internet for most women. This highlights the fact how those without access to mobile phones are left behind the development process. Currently, 315 million fewer women than men own smartphones based on the fact that they are 18% less likely than males to use them. Women are still 7% less likely than males

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to own a mobile phone in low- and middle-income nations due to the underlying gender gap in mobile ownership. So, 131 million fewer women own a mobile phone than men (GSMA, 2022). It is impossible for women to have equal access to career possibilities that involve digital platforms due to the enormous gender gap. If we dig into the 2021, Sustainability Report of one of the leading multinational companies, i.e. General Electric, we get the traces of the innovative measures undertaken by the employees towards mitigating challenges occurring due to climate change and energy transition. In this respect, the statement made by one of the top management officials of the company bears utmost significance. The flood of light the opening statement of this writeup throws closely resembles the following words: ‘We are taking steps today to further strengthen GE’s ability to lead on some of the defining trends of our time—driving decarbonization through the energy transition, enabling precision health and creating a smarter and more efficient future of flight’. This demonstrates how intensely environmental well-being is ingrained in their companies’ policies and practices. The 2021, Human Rights Report of GE is another initiative that is complementing the Sustainability Report since it outlines how meticulously GE is striving towards creating a strong impact on ‘People, Planet and Profit’. This has been rightfully pointed out in the Chief Executive Officer’s letter stating that ‘Respecting human rights around the world has long been a part of our culture of unyielding integrity and is embedded in our environmental, social, and governance priorities’. In order to ensure good governance practices, GE is consistently focussing on creating sustainability by respecting human rights. Thus, the Human Rights Report portrays the sense of accountability and transparency that is exhibited by the companies’ human resource policies and practices. (b) Green Training, Learning and Development As a part of the induction process, new employees are oriented with various environmental challenges thereby getting motivated towards adoption of greener policies. Older employees are further provided trainings on an ongoing basis to make them aware and educated about being socially responsible as well as sustainable. Pollution is caused not only by the vehicles but also it is created by the workforce in the organisation. The green training teaches how to inculcate inner richness and enrichment from within; so that the environment is conserved for future generations. As such, more emphasis is given on providing training on environmental awareness. Circulating newsletters, credit and awareness-based mandatory compliance trainings, displaying posters near to workstations, etc. on environmental challenges are part of training initiatives to minimise unnecessary wastage of natural resources. ITC Limited, a well-known Indian company, with varied set of businesses: traversing hotels, consumer goods, information technology, agriculture, etc., has adopted a knee-high carbon-development strategy. The human resource team is striving towards uplifting the green management practices of the aforementioned organisation. In this regard, imparting vocational training on an ongoing basis becomes an active firm initiative towards fostering the environmental growth. The commendable initiatives like leading ‘WoW (Well-being Out of Waste) programme’,

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‘Paperkraft Premium Business Paper’, etc. are evidence certifying their social responsiveness as corporate citizens. (c) Green Compensation and Reward System This system acts as one of the best practices of Green HRM as it aligns an individual interest with that of organisational interest. Financial incentives like bonus, cash prize, etc., motivate employees to work harder thereby increasing the overall efficiency of the company’s operation including its ecological activities. Even nonmonetary rewards in the form of additional leaves, gifts, etc. also aid in boosting the ecological consciousness among the employees. Non-monetary rewards also encompass recognition-based rewards like awards, huge publicity, movie tickets, dinners, or lunch coupons, etc. Green awards are given to the environmental champions in the form of merchandise like bicycle, saplings, etc. A question often rings: ‘Is the organisation doing a fair evaluation of environmental behaviour and performance of the employees?’ There is in fact no straightforward answer to this question. However, wrongdoings or malpractices often come into picture in terms of granting awards or recognition. Nevertheless, such a system acts as a strong motivational factor for encouraging green behaviour of the employees, subsequently influencing environment sustainability of the organisation. Royal Bank of Scotland won the prestigious ‘Better Society Awards’ for their employees’ substantial involvement in sustainable programmes. (d) Green Discipline Management and Green Whistleblowing Everyday activities like switching off the computer, air conditioners and lights after completion of work, use of mugs to drink tea or coffee instead of disposable cups, use of glasses or mugs to drink water instead of plastic bottles, recycling garbage at workplace, etc. determine the true attitude of a green employee. Unless a guiding force is created, there may be higher chances that employees may show lethargy towards discharging their basic obligations in an organisation. So, to control the attitude of the employees and also boost their moral values, regulations need to pitch in for exercising discipline. On a macroscopic level, the 3P’s, i.e. ‘People, Planet and Profit’ cannot be effective unless and until the 4th P comes into picture which is Policies. These policies when documented give birth to laws. Law and Human resource management apparently seems to be component of two separate baskets. However, law influences the arena of Green HRM to a very wide extent. Maintaining compliance is the basic obligation of every Human Resource Professional. Therefore, to streamline the Green HRM practices, the necessity of stringent laws and rules comes into place. Environmental sustainability cannot be implemented successfully unless and until a proper code of conduct is formulated within the organisations. A manual or handbook containing clear set of guidelines, rules and regulations pertaining to disciplinary structure regarding environmental sustainability goals is a pressing priority to tame the employees who do not abide by the green initiatives or green culture of the organisations. Green Discipline Management of the employees can be strictly implemented by formulating disciplinary actions like imposition of fines, suspension

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for a certain time period, refusal of promotion, pay-cut and in worst cases termination from jobs. As such many organisations have resorted to framing policies on discipline management so as to regulate the behaviour of the employees to achieve greater environmental management. ‘Green Whistleblowing’ has become another popular concept in today’s world. It simply means to blow the whistle or raise the voice against any environmental breach. ‘Green Whistleblowing Helplines’ have been introduced in the companies to report internal wrongdoings or malpractices. History is replete with episodes of severe consequences faced by employees for their courageous act of whistleblowing. So well-formulated policies need to be made for providing protection to the Green Whistleblowers. This is required to ensure that the green whistleblowers do not face any sort of retaliation for their courageous act of voicing concerns against any sort of misconducts.

3.3 Women and Green Economy Equality between women and men is a matter of human rights. Empowerment of women and their involvement in the society including their participation in decisionmaking process and access to power are crucial for the equality, development and peace of the economy. Women are a fundamental part of the society and their equal rights, opportunities and access to resources are essential for the advancement of the entire economy (United Nations, 1995). Several policies and legislations over the years have tried to reduce discrimination against women and aid them to achieve an equal position in the society. Universal Declaration of Human Rights (UDHR), 1948 assures fundamental rights and freedom to every human being without any discrimination. In 1967, the Declaration on the Elimination of Discrimination against Women was adopted by the United Nations member states where discrimination against women was considered as an offence against human dignity. World Conference on the International Women’s Year, 1975 designated 1975–1985 as the ‘United Nations Decade for Women’. Convention on the Elimination of All Forms of Discrimination against Women, 1979 has been a major step in establishing key rights for women. The United Nations General Assembly on 25 September 2015 had embarked on its ambitious journey towards a sustainable economy and environment in the form of ‘The 2030 Agenda for Sustainable Development’. In totality there are 17 Sustainable Development Goals (SDGs) and 169 sub-targets under this agenda which are applicable to all developing, developed and under-developed countries alike. Eradication of gender discrimination has been given special emphasis wherein besides dedicating an entirely separate goal for gender equality and empowerment of women (goal 5), separate targets for the same has been set up under each goal. Women and girls are an integral part of our society who are often denied the due importance and are instead provided with secondary status owing to the patriarchal dominance that is prevalent in several parts of the world. However, it cannot be overlooked that they are the key to achieving the targets set up in the SDGs. In order for economies to flourish, more women must enter the workforce and their skills must be utilised

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more fully. The promotion of economic growth, competitiveness, and capacity of economies and businesses globally depends heavily on achieving gender equality. Billions of people around the world are being threatened and adversely affected by the climate change. The widespread disruption on every aspects of life caused by COVID-19 pandemic along with the rising incidences of conflicts, such as the war in Ukraine, rising interest rates, inflation and the imminent debt crisis that many nations are facing, the problems have compounded. The impact of crisis is however not gender-neutral and women who are one of the most vulnerable sections of the society are worst affected in any form of crisis. Inadequate state provision of housing, water and healthcare services forces women to bear the task of ensuring provision of the limited resources for the household (Moser, 1989). Though the extent of discrimination might be different but all countries, developed, developing and leastdeveloped countries, are plagued by the same problem. No country till date has been able to achieve full gender parity. Women struggle to get equal access to resources such as healthcare facilities, nutrition, food security, education, land and employment to name a few. However, it would be wrong to categorise ‘women’ as a single group. There is a recognition among scholars that women as a whole do not belong to a homogenous group. Various forms of gender inequality get inter-mingled with inequalities at the socio-economic level such as class, caste, race, language and so on, which amplifies the injustices related with them. Women from poor and rural households are more vulnerable and insecure. Women constitute almost half of the world’s total population but are deprived of equal social, economic and political status. Women have increasingly contributed for the welfare of household, society and the entire economy but their role is still considered subordinate. They are discriminated in almost all spheres of life starting right from birth. Women’s education and employment outside home support and enhance children’s survival, education and standard of living. Ignorance towards the health, education and employment of women will have its repercussion effect on the lives of their children who are the future labour force (World Bank, 1979). Women constitute 40% of the 100 million people forcibly displaced due to conflict, change in climate and violation of human rights. Close to 400 million females live in extreme poverty globally (UN Women, 2022). Every one woman out of three face some form of food insecurity in life. Rising food price inflation is going to further worsen the situation. As of 2022, 68.1% of the gender gap has been closed but to eliminate the gap completely it will still take another 132 years (World Economic Forum, 2022). 1. Green Jobs for Women to Boost Equality The labour force participation of women is merely 50% compared to 80% of men. According to the Global Gender Gap report 2022, the gender parity achieved in labour force is only 62.9%. The labour force representation of women has been declining since 2009 and even for those who decide to continue being employed, the unemployment rate remains consistently higher for women. Economic empowerment thus remains a question with 2.4 billion women denied equal economic opportunities as men (World Bank, 2022). This snatches away the opportunity of higher labour productivity that the world could have achieved without inequalities. The

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value of global difference in lifetime earnings, $172.3 trillion, is twice the world gross domestic product. Equal access to employment possibilities not just empowers women but benefits the entire world in terms of reduced poverty, lower child mortality and better maternal health boosting the overall economic prosperity. The expected lifetime earnings of women are only two-thirds of that of men. Lack of equal access to education by women blocks their path to higher paid jobs with better security since they lack in basic skills and training compared to their male counterparts. This renders them less competitive in the job market and restricts them mostly to casual forms of labour in the unorganised sectors with lower income and lesser stability. Access to education being critically linked with access to employment, discrimination in the former acts as barrier to the later. A girl’s wages as an adult can rise by 20% for each additional year of education (United Nations, 2022). However, a closer examination will uncover more significant occupational and sectoral inequalities. Inequalities are not just restricted to the participation of women in the labour market. Gender stereotype which starts from the very beginning of a girl’s education, traditional norms that influence the choices of subjects studied at school level greatly influences their career opportunities later in life. The fields that women often choose to work in contribute to the issue. Women tend to favour humanities, health and education-related courses in secondary and tertiary education, whereas men favour math, science and engineering. Women consequently wind up in roles that are typically held by men, such as nursing and teaching, which are associated with lesser status and compensation. Women constitute 35% of students in STEM (science, technology, engineering and mathematics) education and 3% in studies related to Information and Communication technology. In technical and engineering jobs, women face a challenging environment with only 20% of such roles being held by them globally. These roles are perceived to be heavily male dominated. Naturally women are not considered to be best suited for such roles and steered away from taking such subjects by their parents. Agriculture forms the dominant economic sector in most developing nations and serves as the primary source of income in rural households. Women constitute 43% of the total agricultural labour force, but face discrimination in access to productive resources, credit, decision-making capabilities, ownership of land and livestock. An increase in agricultural yields of 20–30% could be achieved by closing the gender gap in resource access, leading to climate-smart agriculture. Introduction of updated labour-saving technologies puts women at high risk of unemployment. Men outnumber women in leadership positions. Globally, only around 37% of women are hired into leadership roles. One in three managers or supervisors are female. According to current data, parity on this front won’t be reached for 140 more years. Like their male counterparts, women strive to advance in their careers, but only 87 women get promoted to management positions for every 100 males. More women leaders are leaving their jobs due to unfulfillment of expectations. This is especially applicable to young women under 30, around 67% of whom aspire to work in senior roles in their career (McKinsey & Company, 2022). Only 15% of total of board roles and 4% of CEO positions worldwide are held by women. The under-representation

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of women at senior roles in companies is detrimental to the motivation of young women in the workforce. Women’s access to economic resources is not matched with equal distribution of unpaid care and domestic work. The burden of unpaid work and care activities at household level act as a catalyst to women’s under-representation in development and labour market whereas over-representation in poverty, illiteracy, unemployment and refugees. Women’s contribution to domestic and household work is three times more than men, in few countries such as Western Asia and Northern Africa the pandemic has led to around 512 billion extra hours of unpaid childcare work for women at a global level consequently resulting in a large drop in the female employment compared to men widening the gender gap in workforce. It reduces the chances of unemployed women’s access to job, increases high drop-out rate among employed women and makes it difficult for working women to maintain the additional stress of childcare activities along with retaining their jobs. The impact of COVID-19 is projected to bring the labour force participation of women below the pre-pandemic level and reverse the progress made by nations towards gender parity in labour markets. Access to employment is a crucial determinant of women’s economic empowerment. Income-earning opportunities help both men and women to overcome poverty, but women have more inclination to reinvest their income into the well-being of their families like nutrition, health and education of their family members thereby leading to increased standard of living and reduction of ‘non-income poverty’ in the long run. Sen (1990) has stressed on ‘gainful employment’ of women where working outside for wage and productive occupation can provide women with greater access to money, greater social respect, improved economic position and experience of the outside world. The three major challenges faced by women’s economic empowerment are firstly women are less likely than men to have a paid job; secondly women’s jobs are mostly in the vulnerable, informal sectors and low productivity areas and thirdly these jobs do not offer any basic right or social protection. Women’s barrier to equal participation in the labour market escalates the household poverty (Kabeer, 2003; Krogh et al., 2009). 2. Indian Labour Market—A Gendered Perspective India has one of the lowest rates of female labour force participation and performs very poorly when it comes to the economic empowerment of women. Indian labour market is not free from gender discrimination leading to a fall in the participation of women in the labour force over the years. Income earned by women in India is one-fifth of that earned by men, making them more exposed to the risks of poverty. There is an increased feminisation of agriculture in India, but the irony is that rural India also suffers from a considerable gender gap in wages. The average daily income for casual labour is different for men and women, according to the Periodic Labour Force Survey of the GOI et al. (2019). The discrimination in wages is evident, where the minimum wage of rural males is Rs. 253 and the maximum wage of rural females stands at Rs. 179 (difference of Rs. 74). Same scenario can be observed in urban areas, whereas the minimum wage at which urban

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males work is Rs. 314, the maximum wage that urban females receive is only Rs. 201 (difference of Rs. 113). The comparison here is not drawn at the same level, we are comparing the minimum wages received by males with the maximum wages received by females, and the huge disparity is something to worry about.

Source The Periodic Labour Force Survey, 2019 A comparison of the rural and urban gender wage difference shows that the problem is more evident in the urban areas. The difference in the minimum wages of males and females is Rs. 87 in rural areas, and Rs. 128 in urban areas. In case of maximum wage difference, the urban areas again fare poorly, it is Rs. 103 in rural areas whereas Rs. 134 in urban areas. Even though women are not treated at par with male workers in both rural and urban India, we can conclude that urban India which is more advanced in terms of employment opportunities, skill development and income generation as compared to rural areas has not been able to put its women workers on the same footing as their male counterparts.

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Source Author’s own calculation from The Periodic Labour Force Survey, 2019 3. Trend of Female Labour Force Participation Rates (LFPR) in India (a) Female LFPR Despite constant efforts by the government and the policy-makers, equality is far from reality in the Indian labour market. The difference between the LFPRs of males and females is striking and it only has increased over the years, owing mainly to the decline in female LFPR. The labour force participation rate (hereinafter referred to as ‘LFPR’) of both males and females of all ages in rural and urban areas, based on usual status (ps + ss)1 and current weekly status2 as recorded by the quinquennial employment and unemployment surveys of NSSO’s round 50th (1993–94), 55th (1999–2000), 61st (2004–05), 66th (2009–10), 68th (2011–12), and PLFS (2017– 2018), has been given in Table 3.1. ‘The estimate of the labour force in the usual status (ps + ss) includes (a) the persons who either worked or were available for work for a relatively long part of the 365 days preceding the date of survey and also (b) those persons from among the remaining population who had worked at least for 30 days during the reference period of 365 days preceding the date of survey’, NSSO. 2 ‘The labour force in current weekly status gives the average picture of the labour force participation in a short period of one week during the survey period. The estimate of labour force according to the current weekly status approach gives the number of persons who worked for at least 1 h or was seeking/ available for work for at least 1 h on any day during the 7 days preceding the date of survey’, NSSO. 1

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Table 3.1 LFPR (in percent) according to usual (ps + ss) and current weekly status (CWS) in NSS 50th, 55th, 61st, 66th, 68th and PLFS3 (2017–18) Rural

1993–1994 1999–2000 2004–2005 2009–2010 2011–2012 2017–2018

Male-usual (ps + ss)

56.1

54

55.5

55.6

55.3

54.9

Male-CWS

54.7

53.1

54.5

54.8

54.5

54.4

30.2

33.3

26.5

25.3

18.2

26.3

28.7

23.1

21.5

16.1

Female-usual (ps 33 + ss) Female-CWS

27.6

Urban

1993–1994 1999–2000 2004–2005 2009–2010 2011–2012 2017–2018

Male-usual (ps + ss)

54.3

54.2

57

55.9

56.3

57

Male-CWS

53.8

53.9

56.6

55.6

56.1

56.7

Female-usual (ps 16.5 + ss)

14.7

17.8

14.6

15.5

15.9

Female-CWS

13.8

16.8

14.1

14.8

15.3

15.2

Source PLFS 2017–18 (GOI et al., 2019)

3

Periodic Labour Force Survey (PFLS) The Periodic Labour Force Survey (PLFS) gives estimates of Key employment and unemployment Indicators like the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), Unemployment Rate (UR), etc.

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The labour force participation in rural areas for females is considerably lower than males according to both usual status (ps + ss) and current weekly status. In the year 2017–2018, in the rural areas according to usual (ps + ss) status 54.9% of males were in labour force as compared to only 18.2% of females and according to current weekly status, 54.4% of males were in labour force as compared to only 16.1% of females. The LFPR for rural males has remained at almost the same level between 2004–2005 and 2017–2018, however the LFPR for females have been declining during the same period.

Just as prominent in the rural areas, the labour force participation in urban areas for females is also considerably lower than males according to both usual status (ps + ss) and current weekly status. In the year 2017–2018, in the urban areas according to usual (ps + ss) status 57% of males were in labour force as compared to only 15.9% of females and according to current weekly status, 56.7% of males were in labour force as compared to only 15.3% of females. The LFPR for urban males has remained at almost the same level between 2004–2005 and 2017–2018, for urban females between 2004–2005 and 2011–2012, LFPR decreased by around 2 percentage points in both usual status (ps + ss) and current weekly status. In between 2011–2012 and 2017–2018 for usual status (ps + ss), female LFPR remained at the same level but for current weekly status it increased by 1 percentage point. Comparatively, the labour force participation rates of females in the rural areas have followed a decreasing

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trend and the fall has been much more as compared to urban females’ LFPR that has not suffered many fluctuations. The female labour force participation rates in India for the age group 15–59 years have declined by 7.8% from 2011–12 (33.1%) to 2017–18 (25.3%). The fall has been more in case of rural women though overall the female LFPR is higher in rural areas as compared to urban areas. For all social groups, the decline has been much steeper among rural women than urban women. A sharp rise in the landlessness among rural households and the fall in the availability of employment in agriculture in addition to a very small increase in employment of women in other sectors such as construction and manufacture of textiles are the major reasons for the shrinkage of employment among rural women. Barriers to mobility, problems of safety and lack housing facilities all combined lead to a decline in female employment as they do not normally migrate to urban areas in order to take advantage of the non-agricultural employment available there (Rawal & Saha, 2015; Economic Survey 2019–2020, 2019). The distribution of employment of both rural and urban women by area of residence under different categories of employment as recorded in different rounds of NSS can be construed from Table 3.2. (b) Per Thousand Distribution of Usually Employed Females Under Broad Category of Employment During Different NSSO Rounds Table 3.2 Trend in activity status of female employment Usual (ps)

Rural female Self-employed

Urban females Regular wage/ salaried employees

Casual labour

Self-employed

Regular wage/ salaried employees

Casual labour

38th (1983)

541

37

422

373

318

309

43rd (1987–88)

549

49

402

393

342

265

50th (1993–94)

513

34

453

372

355

273

55th (1999–2000)

500

39

461

384

385

231

61st (2004–05)

564

48

389

404

422

174

66th (2009–10)

503

55

442

354

444

202

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Rural females have shown a consistent pattern in all the NSSO rounds, with the maximum engagement in the labour force being in the form of self-employed labour perhaps because working in farms belonging to the family and engagement in livestock activities provide rural women increased opportunities for self-employment (Desai et al., 2018). It is followed by casual labour. The number of women employed as regular wage or salaried employees is drastically low in the rural areas.

However, urban females show a different trend, in the initial years, till 50th NSSO round, the number of women engaged in self-employed category has been more than regular wage or salaried, with the pattern reversing from the 55th round, having the highest engagement of females in the regular wage or salaried category and this category has been following an increasing trend. This is perhaps due to more availability of jobs in the urban areas. The lowest engagement of women in urban areas is in the form of casual labour which is following a declining pattern.

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The (Economic Survey 2019–2020, 2019) has shown that the share of regular wage/salaried employees has shown an increase of 5% from 2011–12 to 2017–18. The proportion of women in this category of employment has also increased by 8%, in absolute terms there has been an addition of 0.71 crore new jobs for females under this category. (c) Gender Differences in the Labour Force The LFPR arrived at through different approaches comes to the same conclusion that there is relatively much lower females than males in the labour force under every approach, the difference being more prominent in the urban areas. The sex ratio in the labour force, which is the number of females per thousand males in the labour force reveals the grim reality (Table 3.3).

Table 3.3 All India sex ratio in labour force (2011–12)

Rural Usual (ps)

Urban 317

Usual (ps)

221

Usual (ps + ss)

437

Usual (ps + ss)

253

CWS

377

CWS

243

CDS

323

CDS

226

Source Employment and unemployment situation in India, NSS 68th round

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The sex ratio has not crossed 450 in any of the approaches and for urban areas it has not crossed the mark of 255. The number of females in the labour force per thousand males is lower in the urban areas. It means that for every thousand males in the labour force there is less than 50% of females. The highest sex ratio of 44% in the rural usual (ps + ss) status is attributed to higher participation of females in subsidiary activities (NSSO et al., 2014). (d) Pattern of Labour Force Participation Rate by Age and Gender Age is an important determinant of labour force participation rates of both males and females. The initial years are spent in getting a proper and desirable job or work and the rates of participation in the labour force will naturally be low for both males and females. Similarly, at the age of 60 and above the capability to work reduces in most people as the probability of illness and weakness increases as a person ages. What is important to remark here is the pattern of labour force participation rates of males and females in there different age groups. The labour force participation rates of males and females in different age categories starting from 15 years, belonging to both rural and urban areas in the usual (ps + ss) status that is derived from the NSS 50th (1993–94), 55th (1999–2000), 61st (2004–2005), 66th (2009–10) and 68th (2011–12) round surveys, can be represented in Table 3.4. . Rural Areas

Source Calculated from Employment and Unemployment Situation in India, NSS 68th Round The LFPR for female is considerably lower than males in every age group. The labour force participation of males sharply increases in between 15 and 24 years and

48

42

48

45

55–59

60 and above

41

44

39

42

40

45–49

38

40–44

41

43

48

46

50–54

40

39

30–34

45

25–29

35–39

22

44

15–19

20–24

39

43

40

37

36

35

39

46

46

19

42

52

48

49

50

50

55

57

50

19

43

54

52

50

50

51

55

60

49

17

33

63

66

66

67

68

70

71

55

26

22

2011–2012

Urban 2009–2010

1993–1994

2004–2005

1999–2000

Rural

1993–1994

Age group

Table 3.4 Difference in LFPR of males and females by age

31

61

67

71

69

70

73

74

56

24

1999–2000

27

62

68

71

67

65

68

69

52

24

2004–2005

28

66

72

74

73

72

75

72

49

18

2009–2010

29

69

73

73

71

70

73

70

47

17

2011–2012

60 P. Biswas and S. Banerjee

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maintains a rate of above 90% from 25 to 59 years, after which there is a drop in the rates in the age group of 6 years and above. The pattern followed by the female labour force participation is different than males. For females, the increase is in a gradual manner from 15 to 34 years. The peak participation is in between 35 and 44 years after which, there is a gradual fall in the labour force participation rates with the minimum being at the age of 60 and above, with an average LFPR of 66%. Compared to males whose peak participation is attained at 25 years, the peak level of employment for females comes later in their lives at around 35 years and it is quite short lived from 35 to 44 years whereas males retain their high participation from 25 to 59 years. The overall average LFPR for females is 45.56% and for males it is 89%. . Urban Areas

Source Calculated from Employment and Unemployment Situation in India, NSS 68th Round The pattern of LFPR of males and females is consistent in all the years and for both rural and urban areas. The average LFPR for females is 23% and for males it is 82% in urban areas. As observed in the rural areas, the peak participation is in between 35 and 44 years but maximum participation rate for females never crosses 35% in any age group. The movement towards the peak participation rate is very gradual with no sharp rise in any age group, and overall the LFPR of females is very low. The labour force participation of males sharply increases in between 15 and 24 years and maintains a rate of around 95% and above from 25 to 55 years, after which there is a drop in the rates to around 80% and above, till 59 years and maximum decline is observed in the age group of 60 years and above with an average LFPR of 39%. The difference in the labour force participation rates (in percentage points) in every age group has been provided below and it clearly shows that male LFPR has always

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been much higher than female LFPR in every age group. This result is consistent in all the NSS surveys from 1993–1334 to 2011–2012. The maximum difference in the LFPR of males and females can be observed in the age group of 25–34 years in the rural areas, the minimum difference being in the age group of 15–19 years. The peak participation of men is observed at the age of 25 years but for females it starts from 35 years, which explains the huge difference in LFPRs in this particular age group. Activities outside the labour force such as domestic chores, household responsibilities and childcare activities keep women out of the labour force in their prime age. While men easily reap the benefits of the opportunities available in the labour market, women are held behind by their family responsibilities from enjoying the same. Thus, women are unable to gain benefits of the labour market in their most productive years as for most women the entry into the labour market is quite late, at around 35 years. In urban areas, the difference in the LFPR is much more than in rural areas. The difference gradually increases from 15 to 24 years and maintains a high level from 25 to 54 years. Majority of women contribute a significant portion of their income towards household expenses and welfare of the family members, especially children, and many women are the primary source of their family income. So, the chain of poverty set forth by lower access to education and employment of women is not detrimental just for the family, but to the economy as a whole. Women constitute the majority of the world’s poor, women and girls are 4% more likely than men and boys to live in extreme poverty and for women in the age group of 25–34 this risk increases to 25% (UN Women, 2019). Thus, empowering them economically will not only help in fulfilling the goals of poverty reduction but it will also help them contribute to their families, society and the economy that will have a great macroeconomic impact. (e) Key Challenges to Increased Women Workforce Participation Programmes to recruit women into non-traditional jobs must go hand in hand with labour market regulations that eliminate gender discrimination and promote female employment. Women workers feel they are not given enough opportunity to advance in their career path and constantly face gender bias in promotion of management roles. 48% women in a survey conducted by McKinsey & Company and 22% women in a Deloitte survey of 2022 have cited lack of opportunity to advance as the primary reason for leaving their former employer. Below is a quick comparison of the main reasons given by workers in the last 2 years for changing jobs:

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Source Author’s own calculation from report on Women in Workplace 2022 (McKinsey & Company, 2022) Women prefer jobs that help them achieve work–life balance without affecting their roles and duties for doing so. In a survey conducted by PwC of 1500 women aged 18–35 years in Middle East and North Africa, more than 80% respondents are confident about their skills and ability to take up leadership roles to advance in their career. However, 94% of them preferred to work for employers who helped them achieve a work–life balance. This is one of the qualities that women most highly value in an employer. Employers with strong ‘returnship’ programmes that focus on assisting women who have taken a career break owing to childcare duties, networking and helping them rebuild professional confidence will be valued by these women (PwC, 2022). Women leaders prefer flexibility in their jobs. 49% of women consider flexibility as one of the important criteria of joining a company, compared to 34% of male leaders. Flexibility in work is increasingly prioritised by women, mostly young women. 20% women have changed their previous jobs due to lack of flexibility. Companies that do not change their policies as per the needs of the workforce might risk losing out on the next generation of women talent. In a 2022 Deloitte survey of 5000 working women in 10 different countries, 94% women fear negative impact on their promotion for requesting flexibility at work. Though hybrid mode of working has gained immense popularity post-pandemic, 60% of women employed in hybrid mode have seen increased exclusion from significant meetings and less exposure to leaders (Deloitte, 2022). Both the willingness to act on climate and the effectiveness of work done in this regard are higher for female employees and leaders. In addition to focussing on diversity, equity and inclusiveness (hereinafter referred to as ‘DEI’), which all contribute to employee happiness and retention, women leaders devote twice as much effort to employee well-being than their male counterparts. In fact, when it comes

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to leaving a former position in favour of one with a stronger commitment to DEI, women leaders are more than 1.5 times as likely than males at their level to have done so. In the performance reviews, however, 40% of women leaders find no mention of their additional efforts, which demoralises them (McKinsey & Company, 2022). Unsupportive managers and unmanageable workload can lead to high burnout rates among female workers. Women struggle with added responsibilities, and this holds true for all women from entry level to leaders. Employers cannot expect to retain women if the issue of burnout is not addressed. Most women tend to leave their jobs because they find a wide mismatch in their expectations and reality. The widespread reduction in working hours and readjustment in roles taken up by women during the pandemic have taken a toll on their mental health. 70% women who have changed or reduced their working hours feel more stressed out compared to 31% women who did not. They are also three times more likely to burn out.

3.4 Few Initiatives Through ‘Green’ HRM Practices to Increase Participation of Women in Workforce Sustainability calls for several techniques of environment management and a conscious shift towards going green. Management should focus on orienting staffs towards environment-friendly policies and sustainability goals. Sustainability cannot be achieved without gender equality. Green HRM policies of the company should have specific policies aimed at a more inclusive and gender-equal work culture. A framework with a focus on employment, retention, promotion and support of women should be laid out by companies to bring a change in the pathway to success. By re-evaluating the hiring and retention practises, management should attempt to lower barriers to female employment. For businesses to ensure that women are not prevented from achieving their professional goals, a targeted strategy is essential. Company executives must work to include gender equality into their commercial strategies as well as their general organisational principles and culture. Few initiatives that can be taken by companies with regard to this goal are listed as follows: . Companies should train managers to address issues related to exhaustion, stress, over-work or demotivation with special focus on female employees who have joined back from maternity leaves. The suggestion is however not to reduce the workload as that itself will generate another bias, but to rebalance the workload, provide counselling opportunities, encourage physical and mental well-being to ease out and strengthen a new mother’s transition back to work. Young ambitious women in the age group of 18–25 are at the risk of having higher burnout rates than men of the same age. The fear of ‘not being available at work’ impacting future advances in career growth path has taken a toll on the mental health of workers. Implementation of policies towards a balanced work–life can help in the retention of female employees.

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. Companies should work in collaboration with academic and training institutes and invest in upskilling women to tap their talent. Since traditional norms predefine roles and responsibilities of women, it is essential for all sectors of the society to work in harmony towards the common goal of a gender-equal world. Transformation of technology can increase output and productivity when the entire workforce, without a gender bias, is skilled enough to reap the benefits of the opportunity. Companies should take up skill development programmes targeted towards women to bring them at equal footing with men in future. . Awareness programmes should be conducted at regular intervals by the management to orient employees towards gender-inclusive work culture and minimisation of unconscious bias. Equal efforts from male and female workers are necessary to guarantee equal career opportunities for women in the workplace. Male colleagues may encourage and mentor women’s skills in important ways. This change in attitude is possible through initiatives by the management. . Inclusive childcare services can work wonders in increasing female workforce participation. Management should be sensitive towards the needs of females to enable better productivity at work. The gender stereotype of parenting roles can be broken with the aid of gender-neutral parental leaves and benefits, which can also motivate women to prioritise their careers over obligations to their families and children. . Companies should invest time and resources to establish a diverse company profile with equal representation of females at all levels of management to motivate young female talent. In order to promote equality at work and ensure that all employees have equal access to advancement possibilities, organisations should have clearly defined recruitment norms and policies at every stage of the career path. . Employers in all sectors, both rural and urban, should take initiative in improving the transport facilities of women. Safe transportation will ensure higher participation of women besides enabling them to distribute their time more efficiently. . Equal pay should be of primary importance and management should strive to eliminate gender-based job division and wage disparities. In executive jobs, when women and men have extremely similar educational backgrounds and work experiences, gender wage discrepancies are most pronounced. Pay disparities are much worse in under-developed nations. According to the Women Empowerment Principles (hereinafter referred to as ‘WEPs’), this would mean that men and women are paid equally for work that may have different contents but is determined to have a similar worth based on standards like credentials, obligations, effort and working circumstances. In a study of 350 companies in G7 countries, United Nations Entity for Gender Equality and the Empowerment of Women have formulated seven principles that can be key drivers in gender equality and women empowerment (UN Women, 2021). The principles are as follows:

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Establish high-level corporate leadership for gender equality.

Treat all women and men fairly at work – respect and support human rights and non-discrimination

Ensure the health, safety and well-being of all women and men workers

Promote education, training and professional development for women education, training

Implement enterprise development, supply chain and marketing practices that empower women

Promote equality through community initiatives and advocacy

Measure and publicly report on progress to achieve gender equality

These WEPs were established on the principles of treating all employees equally and with respect, promoting non-discrimination and human rights. A clear correlation has been found in companies that have adopted these policies with higher percentage of female employees at all levels of management and leadership roles. Women make up 37.5% of boards on average for WEP participants compared to 31.3% for nonWEP participants. The principles can be looked upon as a guiding light for companies to embark on the journey of gender-equal workplace.

3.5 Post-pandemic Era: Green HRM and Women Employment—A Way Forward The pandemic has caused unprecedented challenge to health and well-being of an individual. Devising a human rights lens to understand the aftermath of COVID-19 has made it crystal clear that the pandemic has impacted us variably depending on our status as individuals in the society. COVID-19 upheaval has instilled an inner sense of consciousness among individuals, which has made us rethink and reconsider various facets of life in a deeper way. Two such aspects being: going green and staying remote have largely changed the way our business is done and our everyday lifestyle. Employee’s home becoming offices has invariably made pollution-choke skies almost invisible during the rush office hours. A surge in usage of physical space in home office environment has contributed to reducing a portion of the environmental damage. The requirement of daily commute to work in some of the professions has massively minimised the greenhouse gas emissions. Transportation transformation can be considered as a baby step towards energy conservation. Thus, work from home has not only increased productivity of employees but it has also acted as an instrument

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in cutting down on usage of plastics, printing paper, releasing toxic pollutants while travelling to office, fuel usage, etc. Since it has widened already-existing disparities and shown shortcomings in social, political and economic systems, the COVID-19 epidemic has posed a major threat to women’s jobs and livelihoods. The effects of COVID-19 are worsened for many women around the world in terms of access to health services, social safety and digital technology as well as a notable increase in domestic abuse and unpaid care work. One of the hardest hit groups are young people, low-income families, women with caregiving duties and informal workers. Many workers do not have access to paid family and medical leave and in the event of a pandemic, this could force working women, who are more likely to stay at home with a sick child or other member of the family, to choose between going to work and staying at home.

3.6 Conclusion Green HRM can be perceived as a never-ending exercise to create catalytic effect for bringing change in the process of developing workplace environmental conditions. It is a positive step towards effective human resource implementation. An important step to implement corporate social responsibility and sustainability is to educate and enlighten eco-friendly soul and spirit among every employee of an organisation. Remote working system adopted in different workplaces, which is very much considered as a green initiative, has profusely promoted healthier lifestyle, and achieving workplace environmental goals. Today, organisations can gain enormous achievement on the engagement, commitment, morale, quality of work life and retention by adopting fair and equitable Green HRM. Needless to say, by promoting 2 R’s in workplace, i.e. Reuse and Recycle the 2 L’s can be protected, i.e. Land and Life. The need of the hour is to adopt stringent provision relating to Green HRM into regulation on Labour Laws. Incorporating a clause in the Employment Contract: that employees who do not support the green movement will have to bear penalty, can also have a deterrent effect on the minds of the new prospective new joiners, thereby encouraging them to act in an environmental consciousness manner. Anonymous Green Whistleblowing may be encouraged within organisations as this will prevent retributions. Adding an element of ‘Go Green’ initiatives into the Mission and Vision statement of every organisation will also boost the environment-friendly culture in every organisation. Unless companies make sincere efforts towards a more inclusive, gender-equal workplace, the economy cannot reap full potential of women. More emphasis should be placed on enhancing employment opportunities since often lack of employment discourages parents from investing in education of their girl child and they prefer to keep their daughters home and get them married off at an early age. Majority of the women in the world today lack empowerment and are dominated in some form or other. Initiatives should be taken by companies to improve the lives of women and provide them the position and respect that they deserve. Social and cultural barriers

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to empowerment of women should be removed. As said by Kofi Anan, ‘There is no tool for development more effective than the empowerment of women’, the society should come forward as one to uphold the dignity of women.

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Chapter 4

Reflections on a Green Economy with Reference to Green Skills for Green Jobs Easwaramoorthy Rangaswamy, Choong Kit Leon, and Gemini V. Joy

Abstract The Green Jobs Initiative established in 2007 between United Nations Environment Programme (UNEP), International Labour Organization (ILO), International Organization of Employers (IOE) and International Trade Union Confederation (ITUC) have succeeded to draw considerable attention towards green economy and green growth. The discourse on green jobs became a natural follow-up on the debate of green economy and green growth. Moreover, these contemporary concepts in developing economies have proven to have several positive impacts on the country’s labour market, and economic development as a whole. For example, green initiatives in economies like Singapore, Brazil, and Germany were found to accelerate economic growth and employment creation. Since the turn of the millennium, it became clear that commitment to sustainable development has not been sufficient to curb global negative environmental degradation. The evidence of human-made climate change by the International Panel on Climate Change (IPCC) provided a case in point and further called for more action. Climate change and environmental degradation has been one of the key discussion points and concerns in almost every great government organisations and geopolitical groups across the world and what consequences in brings towards the swift development of green growth. In these contexts, various government and intergovernmental organisations are forced to seriously consider the argument for green growth and to a greater extent transitioning to a green economy. Such approaches towards green economy can be critically discussed along their policy initiatives in line with the green jobs and green skills which were seen as the basis to move towards green economy. Green economy is centred on the environmental economics and is influenced by whichever mainstream policy priorities of the government and intergovernmental organizations that dominate. However, it does not restore sustainable development but there exists a clear international policy E. Rangaswamy (B) Amity Global Institute, Singapore, Singapore e-mail: [email protected] C. K. Leon Amity Global Institute, Singapore, Singapore G. V. Joy VIT Business School, VIT University, Vellore, India © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_4

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agenda that has distinct linkages between a green economy and sustainable development. The transition to a green economy, however, depends largely on national regulations, policies, subsidies, and incentives, as well as international market and legal infrastructure, trade, and technical assistance. This chapter aims to produce a comparative study of the green economy growth and the governmental policies and initiatives taken by the Singapore and the German government towards building a sustainable future. Keywords Green economy · Green growth · Sustainability · Government · Initiatives · Singapore · Germany

4.1 Introduction Climate change and environmental degradation has been one of the key discussion points and concerns in almost every great government organisations and geopolitical groups across the world. There is compelling evidence regarding the impact of climate change with global warming being cited as a key reason for the gradual melting of Arctic ice, coral reefs being stressed, sea levels increasing and unusually erratic and intense weather calamities occurring over the years—all of which are highlighted in IPCC (2013). The reasons put forward are alarming. Those tend to lean towards invasive human activities such as Industrialization, deforestation and pollution resulting in climate change along with greater concentrations of greenhouse gases in the atmosphere. There also exists arguments related to environmental degradation and ecological footprint, as well as the rapid rate at which we are consuming finite resources and generating vast amounts of waste at the same time. Further it is debated if we are reacting at an adequate pace to ensure that the resources we utilise are being replenished responsibly. In these contexts, various government and intergovernmental organisations are forced to seriously consider the argument for green growth and to a greater extent transitioning to a green economy. These organisations face greater imperatives to work on strategies to achieve green growth. Under these circumstances, this chapter will reflect upon and critically discuss the various policy initiatives for green growth and transitioning to a green economy by intergovernmental organisations like United Nations (UN), International Labour Organisation (ILO), Organisation for Economic Co-operation and Development (OECD) as well as government reactions arising from Singapore and Germany. The analysis will also include policies related to green growth, green economy, green jobs, and green skills.

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4.2 Green Growth, Green Economy, Green Jobs, and Green Skills As there has been increasing references and particular mentions to the terms relating to green growth, green economy, green jobs, and green skills, it is important for conscientious government and intergovernmental organizations to arrive at an agreed definition of these terms, as these organisations would need to measure the impact of the policy initiatives proposed and implemented. Bowen and Kuralbayeva (2015, p. 5) argue that there is no single universally agreed definition for a green job. The definitions do vary across different perspectives, and these tend to not be uniformly acknowledged or bear consistent definition of these terms. In this context, there can be instances where green jobs can be seen to denote different standards or levels of greenness on environmental provisions—with some being more transformational than many others. The nature of jobs within the same company can differ vastly from various perspectives, yielding a wide-ranging assortment of both “green” and “nongreen” jobs. The particular divergence between these two types can be deduced from the treatment given to the respective employees. To cite an instance, a manager of a building retrofitting company may be seen as a green job but another staff working in the administration or accounting division of the same company may not be seen as a green job. An alternative instance would be for an employee working in the nuclear sector, which would be seen as an alternative energy sector but would give rise to issues related to toxic waste (Martinez-Fernandez et al., 2010, p. 24). To put specific emphasis, OECD (2011) argues that the definitions may vary as the context of the policies are likely to diverge and vary across different nations. This would as a matter of course reflect the local environmental conditions that each nation is facing, not to mention that the stage of their social and economic development among the prevalent institutional settings do also matter. However, irrespective of the above aspects, the policy initiatives would need to make the decision regarding economic growth within the context of any natural resource base integration vis-a-vis arguments of economic payoffs with reflections on natural resource focusing on mutual reinforcement of economic and environmental policy. For example, the German economy transited to green due to a stronger green political movement along with the deep-seated networks of social capital leading to the nurturing of high value-added economic activity which in turn lead to Good green jobs and skills development (Stroud et al., 2014, 2015). Moreover, OECD (2011) identifies Green Growth as an opportunity for the government and intergovernmental organizations to look for greater efficiency along with innovation opportunities and possible creation of new markets providing greater economic stability boosting investor confidence and ecological balance with reduced resource bottlenecks. Other arguments at the regional level highlight green growth, with the pre-requisite for building a green economy in the perspective of sustainable development and poverty reduction. This therefore leads to the adoption of green growth as a strategy for the achievement of sustainable development. At the global level, as part of Rio+20 Summit 2012, the Green economy is to be achieved

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through economic decoupling, where growth should not be achieved at the cost of the environment. United Nations defines a sustainable or ‘green’ economy as: “…improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive”. In a green economy, growth in income and employment should be driven by public and private investments that reduce carbon emissions and pollution, enhance energy, and resource efficiency, and prevent the loss of biodiversity and ecosystem services (UNEP, 2011: 2). There have been varied arguments when referring to green growth and green economy as a strategy that is been offered to counter the economic crisis or neoliberalism or failure of strategies like sustainable development (Brand, 2012, p. 29). It was further questioned whether western patterns of production and consumption resulted in failure in acknowledging the original environmental cost of products along with implementation of appropriate regulations and incentives. Similarly, the obstacles and opposing interests are hardly addressed. The alternative perspectives have always been ignored by the Political and Economic institutions as highlighted by Perkins (2007). Bailey and Caprotti (2014) highlight that there is a political consensus that blocking debate on alternative pathways to greening and thereby weakening efforts at ecological modernization with a view of growth at the cost of the environment with limited support for radical reform. It further argues that the organisations including government and intergovernmental would need to look into the functional domains in the green economy which includes domains that are namely financial, institutional, regulatory, and green cultural economy. Further, there has been failure related to the socio-ecological contradictions of capitalism and there have been arguments that the green economy may be seen as pre-mediated and orchestrated process but Bailey and Caprotti (2014) concluded that there exists an appropriate recognition of its likely significance for the global economy and sustainable development. The economic crisis across the modern industrial economies are inevitable and societal, economic, and environmental crises are the output of the earlier policies and the green economy would advance the poor with environmental riches with access to the recycled materials and renewable energy without environmental impact and technology to act as substitute when effected (Spash, 2012). The criticism of this is that the environment takes a back seat when there are competing discussions concerning growth, jobs, capital, and wealth accumulation across different organisations. In the above context, it’s essential to look at the green economy policies at national and international levels.

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4.3 Intergovernmental Organisations’ Policy Initiatives The various intergovernmental organisations approach towards green economy can be critically discussed along their policy initiatives in line with the green jobs and green skills which were seen as the basis to move towards green economy. There have been questions about the regeneration and transition towards green jobs in terms of quality and the quantity of the jobs as a result of such movements (UNEP, 2011). Green economy is centred on the environmental economics and is influenced by whichever mainstream policy priorities of the government and intergovernmental organizations that dominate. It highlighted that economic growth is not always achieved at the expense of environmental risks, ecological scarcities, and social disparities. There also exists evidence that the green economy has concrete economic and social justification. Overall, it can be deduced that the green economy allows us to progress from crisis to opportunity. However, the green economy does not restore sustainable development but there exists a clear international policy agenda that has distinct linkages between a green economy and sustainable development. The transition to a green economy, however, depends largely on national regulations, policies, subsidies, and incentives, as well as international market and legal infrastructure, trade and technical assistance (UNEP, 2011). ILO suggested that the shift towards green economy would lead to creation of jobs across different sectors rather than the job losses due to the shift. Most of the studies indicate that there will be 0.5–2.00% gains in jobs with growth in many areas including agriculture sector, energy, environment friendly buildings and waste management. Any sort of loss of jobs due to a green economy transition is much smaller in comparison than originally expected and these shifts are manageable considering the benefits that the green economy would produce (ILO, 2013a: xiii). In a similar context, OECD (1999) suggests that are: “activities which produce goods and services to measure, prevent, limit, minimize or correct environmental damage to water, air, and soil, as well as problems related to waste, noise, and ecosystems. This includes technologies, products and services that reduce environmental risk and minimize pollution and resources.” OECD also highlighted the policy priorities for the transition towards the green economy. It supported smoother restructuring of workers from the firms that are declining because firms would witness growth due to green economy transitioning along with a reduction in the adjustment cost that would adversely impact the affected workers. Another policy initiative is to support the eco-innovation and also ensure that the dissemination of green technologies to the needed organisations and institutions along with adequate strengthening of the reskilling and up-skilling initiatives is related to the education and vocational training. The prevailing regulations related to the product market should not be exaggeratedly strict that may result in organisations failing in their capacity of innovation. Similarly, tax and benefits systems should be reformed to ensure that green growth is encouraged and not that the cost issues of environment policies movements is hindered and

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the same should not also become the difficulty in fostering the green jobs. As such, OECD’s policy priorities greatly emphasize the movement towards ‘green-specific skill policies.’ ILO also highlighted that such a movement to the green economy would be an opportunity for social development and an inclusive transition would not only help in creating more jobs but also bring about an improved quality of jobs with massive opportunities for social inclusion. ILO (2018) when reviewing the World Employment and Social Outlook 2018 highlights that there are around 24 million jobs to opening up in the green economy. Moreover, such gains would be possible only with the national level policy initiatives by the governments to ensure the offsetting of the expected job losses of the green economy. This would be seen along with the short-term issues on the skill requirements due to the transition. As such training programmes for re-skilling or up-skilling would help in capitalizing the synergies between social protection and environmental policies leading to the stronger economic growth and fair income distribution. The requirement of investing in green skills by the countries for green jobs would further help them move towards the green economy. The key issues or challenges that need to be carefully looked at are the prevalent skills shortages that would hinder the transition towards the green economy. Similarly, there needs to be coordination between the skills and environmental policies for successful implementation of strategies related to green growth. The transition to a greener economy would also bring in shifts in the employment as it is noted that the polices need to be adjusted or renewed to reflect the state of the economy and the structural requirements on the prevailing employment conditions in the region (Stroud et al., 2014, 2015). As such the supply and demand of ‘green’ jobs is to be considered along with the importance of skills and training in the movement towards the green economy and will play a key role in formulating and developing regeneration strategies that support the green economy movement. Also, there exists the challenge that occupations do change at different rates and in different ways especially when the green economy movement happens. Such occupational changes also require new skills that are harder to acquire in the current employment market. The study conducted by Evans and Stroud () highlights the importance of skills and training as key factors of the transition towards of an economy as greener. These challenges may need to be countered with strategies such as policy coordination, better social dialogue, developing skills that are portable across different industries, training needs identification across the green jobs, career guidance being strengthened towards green jobs, skills development for the trainers, capacity building and policy learning in greening technical and vocational training (ILO, 2013b: 4–5). Green jobs should essentially be decent jobs that are productive with adequate incomes, social safety, honour the worker’s rights and collective bargaining on the matters and decisions that would affect them (ILO, 2013a: xiii). This view was further put emphasis upon by Stroud et al., (2014, 2015) who also explored the ways in which institutional frameworks at different levels and in different places are related to desirable jobs. This may be created as part of transitioning towards green jobs which is possible through the ‘green’ movement and regeneration strategies. However, there

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is only limited evidence to the argument about the job quality with reference to the green jobs and non-green jobs. Overall, the quality of jobs is better in the practice of “green” governance compared to similar jobs, but to duly acknowledge that there exist certain sectors like construction industry, re-cycling, waste management and to a certain extent agricultural sector that would definitely need further development on the job quality. 1. Singapore Government’s Policy Initiatives When we look at the policy initiates of the Singapore government, it gives a general notion that the initiatives are more or less state-led ecological modernization where the government’s views and assumptions on the green growth, environment and sustainability takes precedence over many other factors. In most of the cases the reforms related to the environment or green growth has very little or limited influence and intervention by other economic actors and market institutions. For instance, the Singapore government looks at the climate change strategy as an eco-economic problem rather than a socio-economic issue or a problem specifically inherent to the environment (Wong, 2012). Such approach of the Singapore government may not produce ideal results and there are certain disadvantages of the weak civil society involvement and better success would be achieved with the balanced participation from all the stakeholders. The developmental state model in Singapore works in such a way that government initiates and most of the agencies along with participants for the industry play a supportive role the government initiates and it is seen more as an economic model. Sustainability or sustainable business practices do hold no significance for business executives in Singapore and this may be due to the government taking lead in most initiatives (Rangaswamy et al., 2020). The Singapore government has seen this opportunity of Green economy, green jobs more as a business opportunity rather than a challenge. In 2017, the government has launched Environmental Services Industry Transformation Map and Skills Framework in 2017 where the government moved towards driving the innovation and adoption of wider technology to improve the productivity and at the same time assist the workforce to up skill to move towards better jobs with a projection of 30,000 high value jobs in the environment services industry by SkillsFuture Singapore and Workforce Singapore. Singapore is working towards green technology personnel, where Building and Construction Authority is projecting at least 18,000 to 20,000 green specialists required for the Building and Construction sector. From examples in these initiatives like Pneumatic Waste Conveyance Systems, robot cleaners and autonomous machines, it is clear that there is move towards new skills (National Environment Agency, 2017). The government initiatives are primarily working towards positioning of Singapore a Green Hub. An example of such initiative is the Cleantech Park project by Jurong Town Council Corporation and the Economic Development Board in 2010 which was estimated to create 20,000 green jobs by 2030 (JTC, 2011, 109 cited in Wong, 2012). Another initiative of the Singapore Government is to brand the nation as a model green city of the globe as it topped the 2011 Asian Green City Index.

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Further in these lines, the nation also promotes various initiates like Energy Week, International Water Week, Carbon Forum Asia, and World Cities Summit which in turn caters opportunities for creating business and this includes a Green mark which is Singapore’s standard for Green buildings. Apart from these initiatives, Singapore Housing Development Board (HDB) launched Punggol Eco Town in 2010, which boasts eco-friendly buildings that come with premium pricing. All these contribute to the argument of the Singapore government addressing the climate change as ecoeconomic problem. These arguments align with Wong (2012) who further argues that the policy initiates like climate change matters are addressed by the state technocrats and bureaucratic class, which was supported by the industry, but the state have been moving more on climate changes rather than green jobs. The various initiatives include National Climate Change Committee (NCCC) between 2001 and 2006, State of the Environment 2008 Report which worked on the economic sustainability issues as a small nation, 2009 Sustainable Singapore Blueprint which focused on reduction of the carbon footprint especially in the five strategic sectors. The Energy Market Authority (EMA) which funded the Intelligent Energy System project (which worked to develop a smart power grid) emphasises significantly on climate change rather than the green jobs or green economy. Another criticism is related to the polluter pays intervention of the government and the argument highlights that the Singapore government is not really regulating the issue of pollution (Giddens, 2009, p. 92 cited in Wong, 2012). Though Singapore utilizes mostly fossil fuels and natural gas to ensure minimum carbon intensity, it still accounts for 50 million tonnes of greenhouse gases, and as such Singapore lacks much other clean energy options like solar power due to geographical location and smaller size (Neo, 2019; Tan, 2019). Another study was conducted by Prakash and Chan (2012) brought to light that Singapore in its various policy initiatives agrees on the low carbon economy and that would lead to the sustainable development towards green growth, green technology and innovation with examples related to innovations in clean technology where Singapore did contribute immensely to the government-to-government mega projects such as the Sino-Singapore Tianjin Eco-City project. However, there is no real national strategy for the creation of the green jobs and as such the related concepts and strategies exist and are followed in the National Climate Change Strategy where government policies are structured around reducing the carbon emissions, reducing the pollution, increasing the efficiency, etc. and to an extent attract green industry investment. These initiatives are carried out in a wide range of entities including National Environment Agency (NEA), Ministry of Environment and Water, Workforce Development Agency (WDA), Singapore Manufacturing Federation (SMF) and government funded higher education institutions including public universities and polytechnics. These policy initiatives in Singapore would need to be holistically integrated as a national level strategy towards green growth and creation of green jobs. This would also need to include alignment to Singapore’s carbon emission reduction goals along with the required skills development that would facilitate the movement towards green growth and green jobs. Further delay in the movement would not be ideal for Singapore in order to be seen as the regional hub and leader for green technology and

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skills development for green jobs. The line of urgings indicates that in the context of Singapore government’s policies and initiatives towards transitioning into green economy, focussing on the green jobs and green skills development, there needs much of the integration of the aspects related to the environment into the skills initiatives is relatively uneven. This requires to be addressed in future policy initiatives, as this would help in the effective transition to the green economy, which would further present opportunities for new growth, with green and decent jobs as well as help to tackle the concerns related environmental matters. 2. German Government’s Policy Initiatives Germany follows the Coordinated Market Economy. There is no real comprehensive national level strategy by the German government focusing and centric round the green economy or green job or green skills. The system and practice highly resemble with countries like France, United Kingdom, Denmark, Spain, and Estonia (CEDEFOP, 2010, p. 8). In fact, there has been a general decline in the demand for STEM subjects at the secondary and tertiary levels along with the growing skills shortages in the engineering sector occupations in Germany, which has its implications in the sectors like environmental areas (CEDFOP, 2010, pp. 8–9). Studies also highlight that the integration of academic courses and vocational training has been quite uneven in Germany specifically in the environment (Stroud et al., 2014, 2015). Unlike in Singapore where Government has been taking most of initiatives, in Germany the policy implementation has been more of bottom up and somewhat dispersed. There has been a consultative approach and high levels of collaborations amongst the stakeholders (Stroud et al., 2015); where a partnership with municipalities and private actors in case of Ruhr, Germany. Extensive networks of the local state and the regional governance is readily involved in the development of green economy initiatives including the capabilities related to the decision making which plays a crucial role in the transitioning to a green economy. One such instance is IBA Emcher Science park, which is public–private partnership where Coordinated Market Economy is prevalent helping to cater and promoting initiatives by local municipalities, trade houses, business houses, experts in the planning and architecture; rather than a purely government led initiative (Trettin et al., 2011 cited in Stroud et al., 2015). The institutional approach is more towards adapting the industry/occupational skills demanded by employers rather than the Government initiating the tasks. This approach has in turn made the German government to arrive at a stronger policy towards environmental protection and also at the same time initiate activities to move towards sustainability, resulting in the development of strategies on a longterm basis which has helped in attracting investments from knowledge-based firms unlike the case of Singapore where government would tend to do the bulk of initial investments. This developmental perspective of long-term support by the government has made the coal mines sector in Ruhr into the manufacturers of equipment allied to geothermal energy and other forms of renewal energy including solar energy development. Gelsenkirchen city turning into a solar city is an impeccable example in this context, where the workforce has moved towards green job and decent jobs; the

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jobs have become high skilled and value added along with knowledge-intensiveness (Jung et al., 2010 cited in Stroud et al., 2015). Germany’s strength in the Vocational education system (hereinafter referred to as “VET”) has abundantly progressed, where VET systems on the engineering and technical skills are aligned towards the skills requirements of the environmental sector, further assisting in the movement towards green economy and green jobs. This can be noticed in case of Ruhr, Germany where regional skills infrastructure has significantly fostered with the assistance of the VET implementation in the existing universities. Another policy initiative related to Germany is that there exists as a political system in form of governance without government and governance by networks leading to high level of self-government. For instance, Emscher Park was able move former miners into 5000 estimated green jobs (Block, 2011 cited in Stroud et al., 2015). Continued debates on the differences between the Coordinated Market Economy approach versus the Liberal market economy approach though been continually prevalent, success or movement towards green framework would depend on the prevailing societal behaviour along with frameworks related to the economic and institutional differences. In case of Germany the green transition has been supported with public and private initiatives along with R&D investments, effective high skills route in the form of VET, national government policy that has been shaped with inputs from the industry and also the autonomy at the regional level.

4.4 Conclusion To conclude, the above chapter has critically discussed how the climate change has subsequently led to the foundation for the green growth and the transitioning to a green economy. As such, this transition presents the governments an opportunity for new areas along with addressing the issues related to climate change. It further underlines the various possible definitions and terms that are related to the green economy, green jobs, and green skills. There are no universally accepted definitions of “green” governance and the context of policies identified are likely to vary across different organisations reflecting on the local environmental conditions that the nation is facing. The various policy initiatives by the intergovernmental organisations namely ILO, OECD and UN towards green jobs, green skills and green economy and growth holds ample importance in this context. There has been significant research carried out by these agencies and that has been advocated in their policies, proposals and recommendations which not only highlights various green jobs opportunities but also the challenges that is faced. A comparative study of the “green” policy initiative between the government of Singapore and Germany adds sufficient value to the chapter. There exists a significant difference in the way each of the country’s approach towards green jobs, green skills, and path of transitioning towards the green economy. Both the countries’ approach towards effectiveness and success, but the German models show more autonomy with minimal support from

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the government, as the green job agenda is initiated at the local level where the local business houses, VET trainings, public–private partnership, long term support from the government, etc. is evident. In case of Singapore, the role of the government has been crucial in movement towards the green economy. The requirement for integration of the policies towards green jobs is important for the Singapore government as it would address the uneven green skills that are prevalent and ensure that the country would capitalise on the green economy transition and trailblaze as the “Green Economy hub” of the region. However, the green growth and movement towards green economy have been the key focus of government and inter-government organisations in practicality.

References Bailey, I., & Caprotti, F. (2014). The green economy: Functional domains and theoretical directions of enquiry. Environment and Planning, 46, 1797–1813. Bowen, A., & Kuralbayeva, K. (2015). Looking for green jobs: The impact of green growth on employment: Policy brief. Global Green Growth Institute & Grantham Research Institute on Climate Change and the Environment. Brand, U. (2012). Green economy—The next oxymoron? No lessons learned from failures of implementing sustainable development. GAIA—Ecological Perspectives for Science and Society, 21, 28–32. CEDFOP. (2010). Skills for green jobs: European synthesis report. Publications Office of the European Union. Evans, C., & Stroud, D. (2014a). Greening steel work: Varieties of capitalism and the ‘greening’ of skills. Journal of Education and Work, 29(3), 263–283. Retrieved December 08, 2022, from https://www-tandfonline.com.abc.cardiff.ac.uk/doi/full/10.1080/13639080.2014.907487 Evans, C., & Stroud, D. (2014b). Greening steel work: Varieties of capitalism, the green skills agenda, and the “greening” of the labour process. In M. Hauptmeier & M. Vidal (Eds.), The comparative political economy of work and employment relations. Palgrave MacMillan. ILO. (2013a). Sustainable development, decent work and green jobs. International Labour Office. ILO. (2013b). Meeting skill needs for green jobs: Policy recommendations. ILO. ILO. (2018). 24 million jobs to open up in the green economy. World Employment and Social Outlook 2018. Retrieved December 06, 2022, from https://www.ilo.org/global/about-the-ilo/ newsroom/news/WCMS_628644/lang--en/index.htm IPCC. (2013). Intergovernmental panel on climate change. Climate Change 2013. Retrieved December 03, 2022, from https://www.ipcc.ch/site/assets/uploads/2018/03/WG1AR5_Summar yVolume_FINAL.pdf Martinez-Fernandez, C., Hinojosa, C., & Miranda, G. (2010). Greening jobs and skills: Labour market implications of addressing climate change (OECD Local Economic and Employment Development (LEED) Working Paper Series). Paris: OECD. National Environment Agency. (2017). Stronger businesses and better jobs for the environmental services industry. Retrieved November 12, 2022, from https://www.nea.gov.sg/media/news/ news/index/stronger-businesses-and-better-jobs-for-theenvironmental-services-industry Neo, C. (2019, October 29). Singapore’s greenhouse gas emissions top 50m tonnes: report. Today. Retrieved November 6, 2022, from https://www.todayonline.com/singapore/singapores-greenh ouse-gas-emissions-top-50mtonnes-report OECD. (1999). The environmental good and services industry—Manual for data collection and analysis. OECD.

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OECD. (2011). Green growth strategy. Paris: OECD. Retrieved November 9, 2022, from http:// www.oecd.org/greengrowth/whatisgreengrowthandhowcanithelpdeliversustainabledevelop ment.htm Perkins, P. (2007). Feminist ecological economics and sustainability. Journal of Bioeconomics, 9, 227–244. Prakash & Chan. (2012). Skills development for green jobs in Singapore. In Martinez-Fernandez, C. Choi, & S. Giguere (Eds.), Skills development pathways in Asia. OECD LEED Programme. Rangaswamy, E., Raghuram, K. S., & Shukla, S. (2020). Do business managers in Singapore consider sustainability a sustainable proposition-construing the perception to overcome challenges? 6(2), 217–235. Spash, C. (2012). Green economy, red herring. Environmental Values, 21(2), 95–99. Retrieved December 12, 2022, https://www-ingentaconnect.com.abc.cardiff.ac.uk/content/whp/ev/2012/ 00000021/00000002/art00002 Stroud, D., Evans, C., Blake, J., & Fairbrother, P. (2014). Skill development in the transition to a ‘green’ economy. Economic and Labour Relations Review, 25(1), 10–27. Stroud, D., Fairbrother, P., Evans, C., & Blake, J. (2015, September 3). Governments matter for capitalist economies: Regeneration and transition to green and decent jobs. Economic and Industrial Democracy. Retrieved December 01, 2022, from https://journals.sagepub.com/doi/pdf/10. 1177/0143831X15601731 Tan, A. (2019, October 29). Singapore to ramp up solar energy production to power 350,000 homes by 2030. The Straits Times. Retrieved November 6, 2022, from https://www.straitstimes. com/singapore/environment/solar-energy-to-meet-4-of-singaporesenergy-demand-by2030-upfrom-less-than-1 UNEP. (2011). Towards a green economy: Pathways to sustainable development and poverty eradication. United Nations Environment Programme. Geneva: UNEP. Wong, C. (2012). The developmental state in ecological modernization and the politics of environmental framings: The case of Singapore and implications for East Asia. Nature and Culture, 7(1), 95–119.

Chapter 5

Decentralizing Climate Action In India—Lessons From Global Practices Naim Keruwala and Radha Karmarkar

Abstract Around the world, climate change is increasingly recognized as a major challenge. The effects are far-reaching and are intensifying more with the years. The global spread of urbanization accelerates such climate change. Being engines of economic growth, cities are also the largest greenhouse gas emitters and consumers of energy and simultaneously; they produce a large amount of waste; every year, 2.01 billion tonnes of municipal solid waste is generated by cities across the world. Urban areas generally exhibit significantly higher air and surface temperatures than their surrounding rural areas, resulting in urban heat islands. However, little has been done to synthesize existing knowledge and identify the key research gaps in such areas. Most of the disasters largely affect the weaker and marginalized sections and predominantly have larger consequences on the low-income groups or the poor in general. Poor people living in slums are at particularly high risk from the impacts of climate change and natural hazards. They live on the most vulnerable lands within cities, typically areas that are deemed undesirable by others and are thus affordable. Sustainable Development Goal 11 aims to make cities and human settlements inclusive, safe, resilient, and sustainable; therefore, there is a huge need for combined global determination in order to fight such climate vulnerability in the midst of expanding urbanization. The urban ecological trail in both developing and developed countries is on the rise with the increasing use of fossil fuels for transportation and construction, large-scale industrial pollution, deforestation, and land use changes, among others. In order to resort to sustainable practices with growing urbanization, the primary need is greater Global commitments at the local levels. The current chapter is a means to explore possible methods of social engagement for developing climate resilience that can be implemented globally with a specific reference to India based on learnings from global practices. The authors also focus on the combined effects of urbanization and climate change on the urban environment in India, and provide a comprehensive review of results, major advances, and the dominant direction of research. Keywords Climate change · Urbanization · Sustainable development · Urban population · India N. Keruwala (B) · R. Karmarkar Program Director-CITIIS, National Institute of Urban Affairs, New Delhi, India e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_5

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5.1 Introduction Cities play a pivotal role in the economic growth of developing countries. They offer the advantage of agglomeration economies and hence contribute toward the stable growth of the nation. Cities are also the centers of production and services in a country. Urban areas have economies of scale, diversity of industries, clustering of companies, and efficiency in producing goods and services, which catalyzes the process of growth and development in a country. Today, cities generate more than 80% of the global GDP. In developed countries, cities have a higher productivity per capita than their rural counterparts, whereas in developing countries, the contribution of cities to the national GDP is considerably higher (UN-Habitat, 2011). Being engines of economic growth, cities are also the largest greenhouse gas emitters and consumers of energy and simultaneously; they produce a large amount of waste; every year, 2.01 billion tonnes of municipal solid waste is generated by cities across the world.1 This makes cities vulnerable to the worst effects of climate change. As a flip side of economic growth, cities are facing climate risks like the urban heat island effect, natural disasters like cyclones and floods, and unseasonal climate events. During the United Nations Framework Convention on Climate Change 27th Conference of Parties (COP27), India submitted strategies for low-carbon development and building climate resilience for cities. This was done in the view that while cities have grown rapidly over the last few decades, there have been large repercussions for the environment. The natural environment is a public good, which is typically non-competitive and non-elusive (Li et al., 2018). Environmental protection has not been factored into policies for economic growth, and this has led to unplanned urbanization in India, which puts cities in a vulnerable position today. Due to haphazard and unsustainable development, cities are facing climate risks, like those mentioned previously which the existing urban infrastructure is not resilient to withstand. Most of the disasters largely affect the weaker and marginalized sections and predominantly have larger consequences on the low-income groups or the poor in general.

5.2 Urban Poor and Climate Change During Typhoon Ketsana in the Philippines in 2009, 90% of the total damage was solely borne by urban poor households. A third of Bangkok’s population was directly affected by the floods of 2011, with two-thirds of this population being the urban poor. In the same year, flash floods hit Cagayan de Oro in the Philippines, and 95% of the deaths and damage were suffered by informal settlement dwellers (United Nations, 2014). 1

Trends in Solid Waste Management. Accessed November 30, 2022. https://datatopics.worldbank. org/what-awaste/trends_in_solid_waste_management.html.

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As per the 2001 census, 22.6% of people in urban areas accounted for residents of slums in India. Currently, it is estimated that a third of India’s population lives in cities and contributes to 63% of the GDP. By 2030, the urban population is expected to increase by 590 million (CSCAF, 2021). Rapid urbanization and the future of cities’ growth mean they will face environmental degradation and climate risks. Urban poverty in India will go up to 25%, with 80 million poor people living in the cities and towns of India (NSSO). Globally, the urban sector’s share of poor people is rising as well.2 It is estimated that one-third of all urban residents are poor (Baker, 2008). The urban poor are largely characterized by infrastructure deficits and limited access to basic amenities. They face multiple deprivations and have inadequate income and asset security, a lack of shelter and tenure security, inadequate access to legal rights and protection, disproportionate exposure to climate hazards, and, most importantly, a lack of opportunity to participate in planning and decisionmaking processes. The problems of water, health, housing, sanitation, education, and social security affect the urban poor which include a cross-section of vulnerable populations like women, children, and persons with disabilities. The urban poor also have limited asset ownership. Additionally, their access to cash is limited, which is necessary for essential non-food items, like rent, transport, water, etc. This limits them when it comes to mitigating climate impacts. For example, to mitigate the harmful effects of the urban heat island effect, people can install air conditioners in their homes, which the urban poor cannot afford. Natural disasters, especially those caused by climate change, can result in the loss of basic amenities and shelter accessed by the urban poor, which is already nominal in consideration. They face the destruction of their homes and the loss of livelihoods in natural disasters. Poor living conditions and the lack of affordable housing put people in a vulnerable state during natural disasters like earthquakes and floods. Urban poor in India face a lack of tenure security, lack of basic amenities, exposure of living conditions to garbage dumps or open sewerages, occupational hazards, and lack of health and education facilities. A vulnerability assessment framework was formed by the Council on Energy, Environment and Water (CEEW) to assess vulnerability at different levels, like, physical vulnerability, socio-economic vulnerability, and hazard-specific vulnerability. While the existence of a biophysical hazard can affect everyone, different sections of the society respond differently to it and hence the intensity and impact are different on different populations. It has been observed that the capability to cope with extreme climate events is dependent on the level of economic development. Lower income groups are more climate-sensitive and their livelihood sources are limited. Even among the poor, different sections have different levels of vulnerability. For example, women, with more social constraints due to a patriarchal family system, have limited survival mechanisms. Similarly, persons with disabilities have limited mobility and access to their surroundings, making it more difficult for them to cope with extreme climatic conditions. 2

“Finance and Development.” Finance and Development|F&D. Accessed November 30, 2022. https://www.imf.org/external/pubs/ft/fandd/2007/09/ravalli.htm.

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Climate change adaptation is the capacity to respond to climatic conditions and reduce one’s vulnerability. Countries having very low GDP per capita have shown comparatively lower adaptive capacity. Between countries, it also varies depending upon social structure, culture, education, economic capacity, and environmental degradation. Within countries too, the adaptative capacities can differ between cities. For example, coastal cities are at a higher risk of floods and population pressure on land as compared to landlocked cities that have another set of climate risks. Similarly, the climate change adaptation ability of people is related to their vulnerabilities. In order to cope with the vulnerabilities, it is important for the urban poor to develop climate change adaptability. Cities will be resilient only when their most vulnerable populations develop adaptability to climate change hazards and disasters. And, in order to make cities resilient, global commitments should be localized through the mobilization and participation of the most climate-vulnerable populations.

5.3 Global Solutions For Resilient Cities Sustainable Development Goal 11 aims to make cities and human settlements inclusive, safe, resilient, and sustainable. The targets under this include the upgradation of slums, provision of safe and accessible transport, reduction of the adverse per capita environmental impacts (like poor air quality), provision of universal, safe, and accessible public green spaces, adaptation of disaster resilience strategies, and enhancement of the capacity for participatory, integrated, and sustainable human settlement planning. India’s urban population is rapidly growing. Metropolitan cities like Delhi, Mumbai, Kolkata, and Chennai have been facing huge overcrowding, which has put a burden on the management of energy, water, transport systems, climate, and air as well as land and water resources for urban local bodies. The Urban Regional Development Plans Formulation and Implementation (URDPFI) Guidelines recommend 10–12 square meters of open space per person. Out of the 126 cities surveyed under the Climate Smart Cities Assessment Framework (CSCAF) for Indian Cities, 65 meet the prescribed URDPFI norm for green cover in municipal bodies. Only 38 cities have formulated strategies and allocated budgets for the rejuvenation and conservation of water bodies, and 35 cities have initiated the preparation of disaster management plans. Only 14 Indian cities have developed City Climate Action Plans so far. In terms of climate resilience strategies, India has a long way to go. However, the existing infrastructure also needs to be made accessible and resilient to all since the lack of accessible infrastructure puts vulnerable sections of society at a higher risk of a climate-related adversity. There are several such guidelines at the global level that show how climate resilience can be accomplished in practice by the cities. The “Quick Guide for Policy Makers—Pro-Poor Urban Climate Resilience in Asia and Pacific”, published by UN-Habitat and Rockefeller Foundation, summarizes resilient cities in the form of five key elements: Aware, Diverse, Self-Regulating, Integrated, and Adaptive. To elaborate, what a city needs is to be aware of its weaknesses and strengths, and the

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vulnerabilities and the risks it faces. Further, the city should be diverse enough to be able to draw upon a range of capabilities, information sources, technical elements, people, or groups. At the same time, systems in the city should be integrated, thereby having the capacity to share information across various groups and entities. Finally, the city should be able to adapt quickly to the changing environment and needs of its citizens. The UN Environment Program defines environmental governance as “policy, rules and norms that govern human behaviour which also address who makes decisions, how decisions are made and carried out, the scientific information needed for decision-making and how the public and major stakeholders can participate in the decision-making.”3 Hence, policy and public engagement form the core of green governance. Even though green governance remains a fairly undefined space, since governance means an institutional setup, green governance can be understood as an institutional setup that has sustainability at its core. Some key measures taken to establish environmental governance are collecting environmental data and information and forming a supportive indicator mechanism, establishing early warning systems to identify emerging threats, identifying vulnerable populations, and providing technical assistance to local governments and building their capacity for implementing climate-friendly policies and laws. The World Bank has published an Environment and Social Framework (ESF) that puts areas like labor inclusion, gender, non-discrimination, community health and safety, and labor safety in focus. It provides standards and guidelines for protecting project-affected populations, environment, and social risk classification, ensuring ideal working conditions for labor, and managing air and water pollution. These ESF standards are not only set largely for the borrower countries of the World Bank but they also play a crucial role in development activities taking place in countries. One of the key guidelines by the World Bank in this regard is stakeholder consultation and participation. Since development work can deprive the indigenous population of their existing land and resources and disturb their lives, consultation with them becomes apparent. While such stakeholder consultations usually happen after project finalization, they rarely take place at the level of decision-making. A lot of data on vulnerable populations and informal settlement populations most affected by development projects is disaggregated and outdated. Moreover, the lack of relevant data in its collection, reporting, and updating hampers the monitoring and evaluation of projects, affecting the implementation of these environmental and social safeguards. Thus, while environmental and social frameworks are being adopted globally—India too has its own rules and laws to safeguard vulnerable populations.

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Environment, UN. “Environmental Governance.” UNEP. Accessed November 30, 2022. https:// www.unep.org/regions/west-asia/regional-initiatives/environmentalgovernance#:~:text=Enviro nmental%20governance%20includes%20policy%2C%20rules,participate%20in%20the%20deci sion-making.

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5.4 Global Social Engagement Practices For Climate Change Adaptability Before the great flood of 2011 hit the Wat Kao community in Nakhon Sawai, Thailand, there came several plans for relocating the community. However, no nearby land was available, and the people’s livelihoods were dependent on the river in that land. The community-organized relief teams further established a disaster center with a kitchen and developed communication systems with the local government and hospitals to tackle the floods. Collective savings were put to use to deal with the impending disaster, and they were supported by the local government, the Community Organisations Development Institute (CODI), and its network of slum dwellers. After the floods, the community cleaned up the area disrupted by floods, worked on rebuilding the livelihoods of people, and building houses on stilts. All this was done through a community savings program for community welfare by partnering with CODI’s Baan Mankong (secure housing) program. While all countries are getting affected by climate change, certain sections of society are inevitably going to be more affected by the impacts due to their vulnerability and multiple deprivations. Community engagement can turn vulnerable communities into resilient communities. During the Kerala floods of 2018, the fishermen community, with the help of their social networks and mastery of seafaring, rescued about 65,000 people, without worrying about their safety or getting monetary gains from the government. A study was conducted among the coastal communities of Atlantic Canada to understand community engagement in adapting to climate change from the lens of social capital. The elements of social capital, namely social trust, institutional trust, and social networks, were studied in climate events, like a storm in coastal areas. While the concerned population is highly dependent on the coastal resources, developing community engagement practices has been shown to build trust among the community members and also with the local governments in the area. However, it was seen that in a scenario with multi-level governments, the coastal population tended to trust members of the community to mobilize resources, provide aid, and for overall resilience during climate disasters. This community already exhibited a strong sense of volunteerism, due to which people were well aware of climate risks and developed volunteer networks or relied on existing networks during a disaster event. The shared experience of the storm events served to strengthen the community and make it more close-knit. Institutional trust in the local government also existed and the citizens acknowledged that the local government is doing as much as it can with the limited resources it has. This also shows the importance of transparency and accountability in building trust with citizens. The citizens showed mistrust of the provincial governments due to their disagreements with building permits and emergency measures. However, some citizens involved in the study expressed that they preferred to form networks with the provincial government instead of the local governments, due to the lower capacity of the local governments. The study concluded that participation and empowerment of the community by building social networks with them will help the government build resilience.

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While structural measures, such as embankments and stilts, for countering risks are effective, non-structural measures can be taken in the form of organizing and mobilizing people. In this case, vulnerable societies can become critical stakeholders who play an important part in managing and mitigating disaster risk, instead of being victims of the disaster. Systematic efforts can be taken at an institutional level, such as awareness generation, information dissemination, organization of people, warning, and evacuation, to engage and empower vulnerable populations for developing resilience. Timmendorfer Strand in Germany is located on the Baltic Sea and is not more than three meters above sea level. It is highly vulnerable to flooding and sudden storm surges. Local participation and comprehensive stakeholder workshops were conducted to decide the defense systems that can be built for protection from these natural disasters and also keep access to the sea since the city depends on tourist activities as well. Possible coastal defense measures were discussed with the citizens in workshops, and the financial constraints of the local government were also shared with them. Finally, a sheer pile wall was built and integrated into the natural ridge of the sea so that the city remains protected, and tourists and the local population can also access the water. The Sri Lankan coast of Batticaloa city is prone to floods, tsunamis, and cyclones, causing severe losses of human life and property. While local stakeholders held the knowledge to mitigate such losses, the area was largely isolated and gave rise to anti-social activities. By adopting a participatory design approach, green belts were developed near the coast to safeguard it from natural disasters. The participation of multiple stakeholders like community-based organizations, the city council, and NGOs led designing a multipurpose green belt on the coast.

5.5 The Way Forward For Participatory Climate Resilience Action In India Global practices provide important lessons for developing climate resilience in cities, pertaining to the protection of the urban poor. However, these need to be contextualized as per the socio-political and economic conditions of a country. India has a federal system of governance, and the existing mechanisms can be used for institutionalizing climate resilience as a concept at the local government by taking a combination of the top-down and bottom-up approaches. Global commitments for climate change can be integrated at the local level, and solutions can be co-created and implemented through local governments while keeping citizen participation in focus. This section will explore possible methods of social engagement for developing the climate resilience of a city that can be implemented in India based on learnings from global practices.

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A. Data on climate vulnerability Council on Energy, Environment, and Water (CEEW) has prepared a Climate Vulnerability Index for the states in India. It presents an analysis of states with different vulnerabilities, such as vulnerability to cyclones, droughts, and other disasters, based on their geographical conditions. The Climate Smart Cities Assessment Framework (CSCAF) puts forward a more comprehensive assessment of cities and their climate readiness and adaptability to judge their resilience on the basis of broader indicators. While this data is crucial, very less data on the types of communities, their conditions, geographical presence, and the severity of their vulnerability in India is prevalent. Most data collection institutions like Census India and the National Sample Survey Organisation do not collect data relevant to climate vulnerability. Hence, data on the same is largely disaggregated. In order to build the climate resilience of cities effectively, vulnerable populations and their vulnerabilities should be identified through the collection and aggregation of data. Making a comprehensive list of indicators that define vulnerability to climate change in terms of health hazards, exposure to risk, intersectionality and marginalization, levels of deprivation, access to legal systems, and access to emergency mechanisms will help identify the vulnerable populations better. This data can be put to use to increase mitigation, encourage participation in decision-making, and prepare policies for climate action at the city level. B. Decentralization of climate action planning—local governments in focus Local governments in India play a crucial role in identifying climate risks and hazards. They are also responsible for regulatory systems for development activities, like monitoring building bylaws, giving building permissions, and preparing master plans, which are significant mechanisms for the prevention and regulation of activities that might be detrimental to the environment. Local governments are also connected with the people since elected representatives are the primary contact of people with the government. As mentioned, and discussed above, data aggregation of climate vulnerability and vulnerable populations will inform policy. Local governments in India are responsible for various functions like preserving heritage areas and developing green public open spaces. Multipurpose green spaces can be developed by the local governments that are accessible to all. Local governments in India should constitute ward committees and area sabhas that provide a platform for citizens to participate in the decisionmaking process. The existing local governance system in India can be used to collect data, mobilize social networks, engage citizens, and inform local policy that can focus on climate resilience and disaster mitigation. This will help establish links between decision-making authorities and citizens. Self-help groups can also be mobilized to work on the ground to develop these linkages. Further, local governments can mobilize funds for climate action through taxation and levying user charges. For example, the Development Authorities of certain eco-sensitive zones like Mussoorie

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and Mahabaleshwar collect an environmental tax from tourists entering the towns. Measures like water metering can be taken to ensure proper usage of resources. Environmentally sensitive activities like construction can be levied charges. Sensitivity toward climate change and the capacity building of local governments is important to ensure climate action reaches the last mile. One of the limitations of environmental governance in India is the lack of decentralization of climate action policies. Only seven cities in India have allocated budgets and initiated the implementation of some of the measures identified in the City Climate Action Plans. Most cities in India are in the early stages of climate action planning. Many of the actions taken for building resilience are at the global and national levels. The adoption and contextualization of these at the local level, the co-creation of policies and laws based on that, and their implementation through the engagement of the last-mile citizen is a mammoth task, which local governments need to be equipped to do. Decentralization is imperative for effective climate resilience since local governments can only identify and engage with the most vulnerable populations, provide agency to them, and conduct monitoring and evaluation. C. Citizen participation in decision-making—a norm While disaster vigilance for communities is being accepted in India, the aim should be to take a collaborative approach with the citizens. It is important to note that vulnerable populations do not face adversity only in disaster situations but are also prone to other long-term health hazards related to climate. Hence, it is imperative that they become an integral part of decision-making processes. Development and economic activities have a social impact on vulnerable populations. While the informal sector is severely impacted by these activities, they happen to remain in the “last mile” when it comes to receiving the services of these activities, have a comparatively lower carbon footprint and support, and contribute significantly to the overall economy. I. Information dissemination There are several cities where information dissemination has helped control damage caused by climate-related disasters. An example is the former Yugoslav Republic of Macedonia, where, in extreme heat conditions due to climate change, a national strategy was developed. Activities were conducted to inform citizens about protection measures to be taken during the heatwave.4 In the coastal province of Thua Thien-Hue of Vietnam, which has been vulnerable to storms and flooding, the NGO Development Workshop France (DWF), with support from UN-Habitat and UNDP, instructed the local communities to strengthen the resilience of their houses. Instructions like planting trees around houses and angling the roofs of the houses were disseminated through platforms like the radio and television, and through schools and participatory training of residents. The results were seen when Typhoon Xangsane hit the region: only 5% of houses were impacted with minor damages.5 Information dissemination also leads to the creation of a primary point of contact between the local government 4 5

https://climate-adapt.eea.europa.eu/en/about/climate-adapt-10-case-studies-online.pdf. United Nations (2014).

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and the citizens, leading to the development of trust among citizens. Think tanks and research institutions can be engaged to prepare modules for community orientation on disasters, thereby making constructive use of the information disseminated. During the COVID-19 pandemic, guidelines on handwashing and maintaining sanitation were disseminated at the local level. Similarly, information dissemination coupled with methods of using the information in the form of modules on preparatory action is equally important. II. Mobilization of people The existing systems of governance in India should target the mobilization of people beyond stakeholder meetings. As mentioned above, local governments in India have an important role in activating systems like Ward Committees to mobilize people and encourage their participation. Existing social networks, volunteer systems, and NGO networks can be used to increase awareness on citizenship and the impacts of the same. Mobilization in vulnerable areas like informal settlements is crucial, and these areas should be the focus of action in terms of the elements of social capital mentioned in the previous section—social trust, institutional trust, and social networks. III. Participation in Decision-Making Institutional trust in the community will build accountability and encourage people to participate at the local level. Social networks can be used for the overall benefit, since much of the knowledge of disaster mitigation can come from the people whose livelihoods are dependent on the immediate natural environment. For example, the fishermen community in Kerala had the knowledge of seafaring, which helped rescue many people during a cyclone. Participation should aim at collaboration with citizens to understand the climate hazards and risks they face due to their vulnerability and cocreate preventive measures for them. This can make the identified victims of climate change resilience builders and mitigators. Participation in decision-making and the provision of agency to climate-affected and climate-vulnerable populations should define the framework of development activities and also the framework for monitoring and evaluation of these activities. Hence, this should go beyond stakeholder consultations. D. Integrating Existing Social and Volunteer Networks The aim of climate resilience is primarily to increase the climate adaptability of vulnerable populations. Social integration of vulnerable populations is necessary, but that will not be possible without adequate opportunities to do so. The agency for migration and adaptation in Prague started a project to integrate migrants living in Czech Republic through volunteering.6 This was done by involving people in social 6

“Integration through Volunteer Work–Inclusion of Volunteers in Social and Cultural Activities in Prague.” European Website on Integration. Accessed November 30, 2022. https://ec.europa.eu/migran tintegration/integration-practice/integration-through-volunteer-work-inclusion-volunteers-socialandcultural_en.

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and cultural activities, providing personal assistance, teaching English language courses, conducting handicraft workshops, and giving Russian conversation lessons for migrants, which were aimed at the integration of migrants into society. In India, there are several volunteer programs in the cities, however, an integrated system to access these volunteer networks can help mobilize people in a climate disaster event more efficiently and help people in need to access them on a single platform. Integrated volunteer networks can also be used by vulnerable sections and the urban poor for their inclusion. The representation of the urban poor in volunteer networks can help vulnerable communities access basic services provided by the volunteer networks.

5.6 Conclusion Volunteerism can encourage inclusion and belonging and foster cohesion, thereby nurturing the elements of the social capital of a community. A study was conducted to examine the role of volunteer experiences of Black African international students in predominantly White universities in the United States of America. Participants in the study did have a fear of not being understood, and of being incompetent, due to their marginalization. Volunteering activities undertaken by them had a positive impact on their social integration. Other than enhancing social cohesion, it also helped with their self-validation. Indian cities have many volunteer organizations that provide interventions in sectors like health, education, aid for persons with disabilities, etc. However, the approach also needs to involve the recipients in defining the needs of vulnerable sections and decision-making. An integrated system will enhance the access of vulnerable populations to the volunteer and NGO networks while building communication with the local governments. Strong networks between vulnerable sections and integrated volunteer systems and the latter with the urban governance can make disaster response and mitigation more efficient as it develops the elements of social capital of a community, which have been crucial for developing resilience. Overall, India has a long way to go in terms of decentralization in climate change resilience planning in cities. The capacities of cities need to be built for the preparation and identification of indicator frameworks for climate change planning and action, the implementation of plans, and social engagement practices to strengthen the social capital of vulnerable communities and their participation in decision-making processes. Global-level commitments can provide targets and guidelines for this; however, climate action starts at the local level where the populations impacted by climate change are involved in decision-making processes (Fig. 5.1).

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Image 5.1 Types of vulnerability assessment frameworks. *Source CEEW

Acknowledgements The authors express their gratitude to Poulomi Paul for proofreading the chapter, and Anshul Abbasi and Asif Raza for their support in giving their suggestions for sources and reviewing the chapter.

References Baker, J. L. (2008). World bank document. Climate change, disaster risk, and the urban poor: cities building resilience for a changing world. Choice Reviews Online, 50(05), (2013). https://doi.org/10.5860/choice.50-2769. Climate resilient action plans for coastal urban areas, Sri Lanka. European Climate Change Adaptation. De Silva, K., Chathura, Isabel Siefert, Mahanama, P. K.S., Jayasinghe, A., Mohanty, A., & Wadhawan, S. (2021). Mapping India’s climate vulnerability. Council on Energy, Environment and Water (CEEW). Environment, UN. (2022). Environmental governance. UNEP. https://www.unep.org/regions/westasia/regionalinitiatives/environmentalgovernance#:~:text=Environmental%20governance%20i ncludes%20policy%2C%20rules,participate%20in%20the%20decision-making. https://pib.gov.in/PressReleasePage.aspx?PRID=1875816. India submits its long-term low emission development strategy to UNFCCC. PIB. Press Information Bureau. Integration through Volunteer Work— inclusion of volunteers in social and cultural activities in Prague. European Website on Integration. https://ec.europa.eu/migrant-integration/integrationpractice/integration-through-volunteer-work-inclusion-volunteers-social-and-cultural_en. Joseph, J.K., Anand, D., Prajeesh, P., Zacharias, A., Varghese, A.G., Pradeepkumar, A.P. & Baiju, K.R. (2020). Community resilience mechanism in an unexpected extreme weather event: an

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analysis of the Kerala floods of 2018, India. International Journal of Disaster Risk Reduction, 49, 101741(2020). https://doi.org/10.1016/j.ijdrr.2020.101741. Li, W., Jian, J., & Zheng, M. (2018). Green governance: new perspective from open innovation. Sustainability, 10(11), 3845. https://doi.org/10.3390/su10113845. Manguvo, A., Whitney, S., & Chareka, O. (2013). The role of volunteerism on social integration and adaptation of African students at a mid-Western University in the United States. Journal of International Students, 3(2), 117–128(2013). https://doi.org/10.32674/jis.v3i2.505. Rep. 10 Case studies how Europe is adapting to climate change. European Environment Agency. Rep. (2017). Community-based flood management 4, vol. 4. Integrated Flood Management Tools Series. World Meteorological Organization Rep. (2015). Poverty and climate change: reducing the vulnerability of the poor through adaptation. African Development Bank. Rep. (2017). The environmental and social framwork. The World Bank. Rep. (2021). Climate smart cities assessment framework. National Institute of Urban Affairs. United Nations. (2014). Quick guide for policy makers: Pro poor urban climate resilience in Asia and the Pacific. Nairobi, Kenya: United Nations Human Settlements Programme (UN-HABITAT). Zhang, X. Q. (2011). The economic role of cities. Nairobi: United Nations Human Settlements Programme (UN-Habitat).

Chapter 6

Leverage AI in Green Governance: Potential For A Climate Reversal Mihir Kumar Shome and Uday Sankar Das

Abstract Mother earth is the cradle of the entire human race; it nurtures, feeds, and sustains mankind with abundance. The exploitation of these natural resources for advancement and industrialization powered by fossil fuel has wreaked havoc on the weather conditions and climate at large. Water, soil, and air have been polluted to such as extent that they have become toxic for all the species on the planet. This constantly deteriorating ecology has a drastic impact on the environment, on all aspects of food and survival capability of all living species. Such a drastic condition has also resulted in the alteration of the economy, and livelihood of humans globally. World Wildlife Fund estimates point that approximately 10,000 species are going extinct at 0.01% rate every year and Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) approximations suggest 1 million species of plants and animals are on the verge of extinction. All these could lead to a permanently climate-distorted world. Comprehensive policy level decisions backed by corporate compliance and adopting green alternatives are definitely a possible silver lining for revival. Industries, corporate sectors, and governments across the globe acknowledge the problems of climate change and have adopted ecological governance or green governance as a mechanism to adhere to climate-conscious choices and contribute toward climate sustainability. One of the important and solution-oriented areas of making climate-conscious choices backed by Environmental, Social and Governance (ESG) is Artificial Intelligence (AI) and data science. This chapter aims to evaluate the current green governance practices and their impact on climate sustainability. It also in a way seeks to evaluate Artificial Intelligence (AI) as a potential tool for the assessment of climate-conscious decisions along with Environmental, Social and Governance (ESG) investments and a way out to reverse climate change. Keywords Green governance · ESG · AIs · Climate sustainability · Climate altered world M. K. Shome (B) · U. S. Das Department of Management & Humanities, National Institute of Technology Arunachal Pradesh (Institute of National Importance under Ministry of Education, Govt. of India), Jote 791113, India e-mail: [email protected] U. S. Das e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_6

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6.1 Introduction Human species have existed on this planet for over six million years and are known to have started civilizing approximately six thousand years ago. The process of civilization was based on the foundation of clearing forest land for agriculture, habitat, and other amenities needed to sustain in a civilized manner. The progression of civilization was totally dependent on resources collected from nature (Wilford, 2002). However, it was not long before human societies grew to the extent that the need of the population started hampering the regenerative capacity of the ecology to replenish the abundance. Man as a species has not yet figured out the answer to ‘How not to be dependent on Nature?’ All of Man’s materialistic needs start their journey as raw materials derived from mother nature. This phenomenon has a definite cause-andeffect relationship with human civilization, and the consequences are tremendously precarious and fatal. The earth’s atmosphere (troposphere) extends up to about 6200 kms to outer space and out of the five layers of the atmosphere. The atmosphere is composed of a complex mixture of gases that provides the base constituent oxygen for all living beings. Troposphere, stratosphere, and mesosphere pay a very important role in maintaining the ambient conditions for the propagation of life and provide the safety net from external threats like meteors and ultra-violet rays. Human actions, fossil fuel usage, factories, industrial-scale farming, mining combined with natural factors like volcanic activities and forest fires, and so on have altered the complex chemistry of the atmosphere resulting in damaging consequences like ozone layer depletion, acid rain, and smog across cities around the world, etc. (Graedel & Crutzen, 1989). This is an analytical paper that has attempted to unearth the potential of Artificial Intelligence in monitoring, implementation, and evaluation of ESG and gauge the Green Governance practices in a contemporary context. The paper also suggests the application of Artificial Intelligence in Environmental, Social and Governance (ESG) through conceptual models to push the economy toward making green investment choices for a potential climate change. The authors have highlighted the major objectives of this paper as 1. To critically gauge the contemporary Green Governance practices and their impact on climate sustainability. 2. To evaluate the Potential of AI In ESG for making Green choices to reverse climate change.

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6.2 Industrial Revolutions and the Consequent Climate Alterations The investigation and an experimental probe of the constituents of ice in central Greenland showed a significant increase of heavy metals like copper, cadmium, lead, nickel, and zinc that were deposited post industrial revolution. The concentration was significantly high until the 1960s−70s before decreasing from the peak (Candelone & Hong, 1995). High concentration of lead in these polar ice during the decade of 1960s is traced back to the Lead (Pb) alkyl additives used in gasoline (Boutron, 1995) which amplified with the introduction and growth of fossil-fuel-based engine technology. Metals like tin, copper, and arsenic were found to have increased in Holocene peats of Southwest England that predated the pollution and traced it hitting a peak during the Roman occupation, while the concentration increase of lead (Pb) coincided with the mining activities of the Industrial Revolution (West et al., 1997). Another study conducted in various parts of Switzerland revealed that lead (Pb) concentration in rural peat bogs increased to 40−50 times during 1880−1920 which was further increased to 100 times during 1960−1980 (Weiss et al., 1999). Similar accounts of increased concentration of air pollution were reported across Europe in Sweden, Belgium, the Balkans, and Britain during the Industrial Revolution (Renberg et al., 2000; Akatsu, 2015; Mosley, 2014; Allan et al., 2015; Longmana et al., 2018). The traces of these industrial toxins of Europe also found their way into the Himalayan glaciers carried by the westerlies and deposited there changing the topography (Gabriellia et al., 2020). Overall, the progressing industrial revolutions kept on polluting the earth while changing the organic chemistry of the planet and making it more toxic through gradual alteration of the climate (Jarrige & Roux, 2020). 1. Climate Change Forming an Ecologically Volatile, Uncertain, Complex & Ambiguous (VUCA) World The climate crisis has arrived at an irreversible stage where damages done are beyond the perimeter of policy or ecological interventions. Even ‘Friday for Future’ is a futile effort and a whitewash at this juncture. An estimate suggests that it would take approximately 640 trees per American or 200 billion trees for America to step toward carbon neutrality. The earth has approximately 3.04 trillion trees for 8 billion people which is not an adequate carbon sink to tackle the level of global emissions and become carbon neutral. Actions like rampant reforestation, quick transition to renewable sources, and plummeting the emission of other greenhouse gases along with reducing the carbon footprint of individuals in developed nations may reduce the climate problem (Crowther et al., 2015). However, the constant deterioration of the environment has a trickledown effect not just on the ecology but also on the economy. Two-dimensional traditional farming is at the forefront bearing the brunt of the climate crisis. Changing weather cycles, unpredictable rain, hailstorms, floods, drought, locust plague, and uncontrollable pest cycles are

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robbing farmers across the globe of their efforts. This in turn has created an inflationary volatile situation across the world. Concerns of climate change have forced economies across the globe to adopt restrictions on the usage of fossil fuel while being heavily deepened on fossil fuel and further plummeting the markets into an uncertain locus standi. This complex situation is helping autocratic nations wage war over genuine democracies in a direct assault. Adapting Green governance has the potential to bring the world out of this ambiguous situation toward a clean economy and a win-win situation for democracies by slashing their dependence on autocracies. 2. Inception of Green Governance Scenarios Across the Globe The United Nations Conference on the human environment in 1972 led to the formation of United Nations Environmental Programme (hereinafter referred to as ‘UNEP’) the same year. The formation of UNEP had a far-reaching impact across the world as member organizations adopted environmental protection in their governance mechanism. For instance, the then Prime Minister Indira Gandhi upon her return from the conference formed the Department of Environment in India. The United Nations has been on the forefront of promoting environmental governance as an agenda. The inception of Sustainable Development Goals (SDGs) is a series in the same context. It has a holistic approach toward the environment and human development; out of 17 major goals, 7 goals (Goals 6, 7, 11, 12, 13, 14, and 15) are directly focused toward environmental protection.

6.3 Environmental, Social and Governance (ESG): Worldwide Scenarios The term ESG was popularized at the Who Cares Wins 2005 Conference organized by International Finance Corporation as a financial evaluation tool for companies; from there, it percolated into boardroom discussions and climate seminars. At the initial stage, around 63 investment companies with a $6.4 trillion assent under management committed to incorporating ESG which later increased to 2450 signatories with over $80 trillion assent under management. Major institutional investors have pushed for ESG in their holding corporations. World Economic Forum along with International Business Council and the big four auditing firms PwC, Ernst & Young, Deloitte, and KPMG have taken the responsibility for designing a framework that accelerates the adoption of ESG and introduced the WEF Framework. Several popular frameworks like Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Taskforce on Climate-related Financial Disclosures (TCFD), etc. also incorporated ESG into the core values. Overall company directors, C-level executives, and intuitional investment firms collectively need to embrace the macro trend of ESG as it benefits the community, customers, employees, investors, and stakeholders (Atkins, 2020).

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6.4 AI as a Change Vector Tool To Tackle Climate Change in Industry 4.0 Artificial Intelligence (hereinafter referred to as ‘AI’) and Machine Learning (hereinafter referred to as ‘ML’) have advanced to a stage where it is capable of detecting complex patterns and perform predictive analysis from complex data sets. Artificial Neural Network (ANN) can predict spatial patterns of climate change (Barnes et al., 2018). ML can be utilized to simulate the earth system model, and AI can then build upon it to predict extreme weather conditions, and climatic changes due to pollution. AI can also be aided by contemporary technologies to bring down the carbon footprint significantly through monitoring and reporting. Thus, it would help mitigate climate emergency through better preparedness (Huntingford et al., 2019; Luccioni et al., 2021; Cowls et al., 2021; Scola, 2021). A. Analysis I With the advent of Industrialization in Europe and America along with other colonized parts of the world, natural resources were heavily exploited to quickly fulfill the demand for raw materials for production. As such, it started hampering the quality of air, water, and other environmental factors surrounding these areas (Akatsu, 2015). Environmental regulation in the Indian sub-continent was put in place by the then British Government with the enactment of ‘The Easement Act of 1882’. Currently, India has approximately 32 different legislations in place to protect various environmental aspects like air, water, forest, etc. (see Table 6.1). Post-Independence environmental protection has become a part of the directive principles of state policy in the Indian Constitution. Despite all these regulations, the environment in India has been degrading due to various causes like population growth, economic growth, urbanization, energy consumption, etc. (Chopra, 2016; Pandey & Rastogi, 2019; Sehrawat et al., 2015). This continuous environmental degradation significantly points toward the lack of clear policy directives, multiple overlapping regulations, and segregating individual accountability and responsibility toward the environment. The United States of America has adopted environmental regulation since 1946 with the enactment of the Atomic Energy Act of 1946. The United States of America also has approximately 32 environmental legislations (see Table 6.2) targeting various aspects like nuclear pollution, air pollution, food safety, protection from invasive species, bacterial invasion, chemical pollution, promotion of clean energy, etc. The United States has the highest per capita CO2 (14.86 tonnes per capita) emissions (Ritchie & Roser, 2020). It is one of the leading contributors increase atmospheric CO2 followed by Canada, Russia, and China. The ‘State Water Resources Control Board’, a federal body of the Government of the United States of America, has highlighted long-term negative health consequences due to the degrading quality of the public water bodies that feed the city and the urgent need to take precautionary measures (Tilden, 2022). The historic drought faced by the state of California (U.S.

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Table 6.1 Indicative list of environmental laws in India (Teri, 2022) Year

Environmental law and focus area

1882

Easement act

1897

Indian fisheries act

1956

River boards act

1970

Merchant shipping act

1974

Water (prevention and control of pollution) act

1977

Water (prevention and control of pollution) cess act

1978

Water (prevention and control of pollution) cess rules

1981

Air (prevention and control of pollution) act

1982

Air (prevention and control of pollution) rules

1982

Atomic energy act deals with radioactive waste

1986

Environment (Protection) act

1986

Environment (Protection) rules

1987

Air (Prevention and control of pollution) amendment act

1988

Motor vehicles act

1989

Objective of hazardous waste (Management and handling) rules

1989

Manufacture, storage, and import of hazardous rules

1989

Manufacture, use, import, export, and storage of hazardous microorganisms/genetically engineered organisms or cells rules

1991

Coastal regulation zone notification

1995

National environmental tribunal act

1997

National environment appellate authority act

1998

Biomedical waste (Management and handling) rules

1999

Environment (Siting for industrial projects) rules

2000

Municipal solid wastes (Management and handling) rules

2000

Ozone depleting substances (Regulation and control) rules

2002

Noise pollution (Regulation and control) (Amendment) rules

2002

Biological diversity act

1991

Public liability insurance act and rules and amendment, 1992

1927

Indian forest act and amendment, 1984

1948

Factories act and amendment in 1987

1980

Forest (Conservation) act and rules, 1981

2001

Batteries (Management and handling) rules, 2001

1972

Wildlife protection act, rules 1973, and amendment 1991

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Table 6.2 Indicative list of environmental laws in the United States of America (U.S. Environmental Protection Agency, 2022) Year

Environmental law and focus area

1946

Atomic energy act

1969

National environmental policy act

1970

Clean air act

1970

Occupational safety and health

1972

Clean water act

1972

Federal water pollution control amendments

1972

Noise control act

1973

Endangered species act

1974

Safe drinking water act

1976

Resource conservation and recovery act

1976

Toxic substances control act

1980

Comprehensive environmental response, compensation and liability act

1980

Environmental response, compensation, and liability act

1982

Nuclear waste policy act

1986

Emergency planning and community right-to-know act

1988

Marine protection, research, and sanctuaries act

1988

Ocean dumping act

1988

Shore protection act

1990

Oil pollution act

1990

Pollution prevention act

1994

Executive Order 12,898: Federal actions to address environmental justice in minority populations and low-income populations

1996

Federal insecticide, fungicide, and rodenticide act

1996

Food quality protection act

1996

National technology transfer and advancement act

1996

Pesticide registration improvement act

1997

Executive Order 13,045: Protection of children from environmental health risks and safety risks

1999

Chemical safety information, site security and fuels regulatory relief act

2000

Beaches environmental assessment and coastal health act

2001

Executive Order 13,211: Actions concerning regulations that significantly affect energy supply, distribution, or use

2002

Federal food, drug, and cosmetic act

2005

Energy policy act

2007

Energy independence and security act

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Drought Monitor, 2022) has pushed for the need to change the way we think of environmental laws need adaption & improvisation (McDonald & McCormack, 2021) to match the need of climate change in order to tackle global warming. The European Union has unmatched environmental policy guidelines and legislation. The environmental policy in the EU is formulated in the Environment Action Programme, which decides the course of action for the member states. There have been eight Environment Action Programmes (see Table 6.3) in the EU each one consecutively improvised upon the previous one. The 8th action programme focuses on very long-term climate actions and aims to be climate neutral by 2050. The programme also intends to reduce carbon emission and achieve the stipulated targets by 2030. Decrease in material consumption footprint, fair environmental usage, preserving biodiversity, reducing fossil fuel dependency, use to science & technology for climate risk mitigation and looking beyond the GDP requirements for climate actions. The United Nations has held 21 climate conventions till now starting from the 1971 Ramsar Convention. The Montreal Protocol 1987 had a long-lasting impact on the emission (see Fig. 6.1) and reduction (see Fig. 6.2) of ozone-depleting gases. This reduction of the Ozone-Depleting Substances has helped the recovery of the ozone layer in a significant manner (Tian, 2022). However, the atmospheric carbon dioxide has been constantly rising over the decades (see Fig. 6.3). The annual CO2 emissions in 2021 reached a staggering 36.3 Gt with a 6% increase from pre-pandemic levels. The energy produced from coal, and coal to gas conversions were some of the major causes. The prime contributor to this increase was high energy demand in China in the post-pandemic economy (International Energy Agency, 2022). B. Analysis II The (ESG) environmental, social and governance values were first popularized in the ‘Who Cares Wins 2005 Conference’ under the theme ‘Investing for LongTerm Value’ as a value-driven financial asset management policy for very long-term Table 6.3 List of environmental policy in European Union (European Union, 2022) Year

Environment action programme

1973–1976 1st Programme of action of the European communities on the environment 1977–1981 2nd European community action programme on the environment 1982–1986 3rd Action programme of the European communities on the environment 1987–1992 4th EEC Fourth environmental action programme 1993–2000 5th Community programme of policy and action in relation to the environment and sustainable development 2002–2012 6th the Sixth community environment action programme 2014–2020 7th The Seventh environment action programme Up to 2030 The 8th Environment action programme

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Fig. 6.1 Reduction in emission of ozone depleting substances in ozone-depleting tonnes (ODP tonnes) (Ritchie & Roser, 2023)

Fig. 6.2 Reduction in Consumption of Ozone Depleting Substances (Ritchie & Roser, 2023)

investing (International Finance Corporation, 2005). The common consensus among the participants quickly popularized the values, and it got adapted into the existing financial disclosure frameworks like GRI, SASB, CDP, TCFD, and WDI.

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Fig. 6.3 Gradual increase of Atmospheric Carbon dioxide (CO2 ) over the decades (Lindsey, 2022). [The image is copyright free and is credited to NOAA]

However, the challenge posed by the varying degree of reporting mechanisms highlighted the need for a common ESG disclosure framework. The big auditing firms (Deloitte, Ernst & Young, KPMG, and PwC) under the banner of World Economic Forum pushed for a common reporting and disclosure framework. Thus, the WEF framework for ESG disclosure framework was adopted in 2020 (Deloitte, 2020; Bruce, 2020) (see Fig. 6.4). WEF IBC metrics for ESG disclosure are grounded on 4 pillars (1. Governance, 2. Planet, 3. People, and 4. Prosperity) covering 18 topics: Governance covers (Governing Motive Governing Body’s Competence, Participant Involvement Ethical Conduct, Oversight of Opportunities and Risks), Planet covers (Global Warming, Loss of Nature, Availability of Fresh Water Solid Waste, Water Pollution, Air Pollution, andnd Resource Availability), People covers (Equality & Respect, Overall Good Health, and Future-Ready Skills), and Prosperity covers (Creation of Wealth and Employment, Better Services and Product Innovation, Social and Communal Vitality). Each pillar has two bifurcated measures Core and Expanded. There are 22 critically important core metrics that are derived from the already existing reporting mechanism. The 34 expanded metrics are ways of measuring and communicating long sustainable practices for value creation.

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Fig. 6.4 Inception of the ESG and Formation of WEF framework (IFC Advisory services in environmental and social sustainability, 2008; Deloitte, 2020)

All these metrics cover 15 sustainable development goals in total (KPMG, 2022). Goal 2 (Zero Hunger) and Goal 11 (Sustainable Communities and Cities) are equally important goals in the context of communities in an operating environment for a very long-term investment strategy. A new improvised agenda is conceptualized adjusting Goals 2 and 11 in the value metrics of the WEF IBC framework and the WEF ESG Investing Framework is formed (see Fig. 6.5). A study conducted by the technology giant Oracle pointed to some fascinating facts that highlight the importance of AI-centric ESG. Approximately 93% of people believe that sustainability is an important goal for business and a staggeringly 78% are disappointed with the efforts of business. Approximately 91% of the business heads accepted challenges at tackle sustainability commitments while 96% had agreed to error of human emotions, out of which 93% agreed comfort atemploying technology (AI Bot) for making such a decision. Around 89% of the surveyed people wanted to see action in ESG commitments and the same number of business heads accepted ESG is important for long-term success of the organization (Oracle & Savanta, 2022).

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Fig. 6.5 SDG adjusted WEF ESG investment framework (Figure conceptualized by authors)

AI-enabled ESG is crucial for the future success of organizations as it has the capacity to dispute ratings by comparing and contrasting with other sources like satellite imagery, natural language processing, and other digital documents for ESG (Amundi & International Finance Corporation, 2021). The ‘AI-enabled SDG-adjusted WEF ESG Investment Framework for Corporate & Climate Citizenship’ (see Fig. 6.6) attempts to direct the organizational efforts at social commitment (Corporate Citizenship) channelized with the holistic societal goals of the SDGs in order to achieve the targeted goals and climate citizenship. AI is used as an intervention mechanism for reporting, monitoring, evaluating, and organizing ESG actions, while planning and decision-making capabilities are also handed to the governing body (Corporate Governance).

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Fig. 6.6 AI-enabled SDG-adjusted WEF ESG investment framework for corporate & climate citizenship (Figure conceptualized by authors)

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6.5 Conclusion The laws and regulations promoting green governance have been in place for over a century with a pious intention of preventing environmental damage in the United States of America, India (both in the colonial and post-independence), and Europe. Green governance practices had percolated from the bureaucratic hierarchy to the boardrooms of corporate governance as for term security and value in the operating environment. However, despite the progress made, fossil fuel consumption is still generating mammoth amounts of CO2 in the atmosphere. Hence, a holistic auditing measure like ESG with a common metric system provides a possible way out of this mammoth in the room. ESG disclosure alone will not suffice to fix a problem of this magnitude. Hence a technology-enabled ESG investment framework is necessary for making a dent in the climate problem and becoming climate neutral. The conceptual framework ‘AI-enabled SDG-adjusted WEF ESG Investment Framework for Corporate & Climate Citizenship’ is presented as a possible fix to this problem.

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Chapter 7

Traditional Knowledge, Sustainability, and International Intellectual Property Law: Biopiracy in Patent-Intensive Industries Anmol Patel

Abstract Innovation is a key driver in the growth of certain businesses since Patent law incentivizes it. However, certain business practices aimed to create value through patents tend to appropriate Traditional Knowledge (hereinafter referred to as “TK”) possessed by Indigenous Peoples and Local Communities (hereinafter referred to as “IPLC”). The Global North, over the course of the last century, promoted its methods of knowledge protection, which protect its commercial interests, through various International Intellectual Property Law (IIP) instruments. The enforcement of these instruments through national legislations has often facilitated unauthorized appropriation and exploitation without any regard for the interests of IPLC. The World Intellectual Property Organization (WIPO) constituted an Intergovernmental Committee (IGC) to proactively deal with the concerns of IPLCs regarding the threat to their Traditional Knowledge by Western Intellectual Property law. This chapter argues that appropriating TK is not a sustainable business practice. It then takes a Third World approach to examine the draft articles prepared by the IGC with regards to Traditional Knowledge, and Intellectual Property and Genetic Resources to argue that they fail to further the interests of IPLCs and the Global South and perpetuate the asymmetrical power relationships between the North and the South. Keywords Biopiracy · Sustainable business practices · Traditional knowledge · Genetic resources · International intellectual property law

Open African Innovation Research (Open AIR) is carried out with financial support from the International Development Research Centre, Canada, the Social Sciences and Humanities Research Council of Canada, and the Queen Elizabeth Scholars Program. More information about Open AIR’s current and previous supporters can be found at www.openair.africa. The views expressed herein do not necessarily represent those of Open AIR’s funders. A. Patel (B) Open AIR and ABS-Canada, Centre for Law, Technology and Society, University of Ottawa, Ottawa, Canada e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_7

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7.1 Introduction The 21st century is seen to be centering knowledge as a competitive factor in national and regional economies (Tödtling et al., 2006). Long gone are the days when Intellectual Property discussions were limited to legal departments of corporations. Industries have become far more knowledge-intensive and Intellectual Property is considered a valuable asset. This transition, from being exclusionary instruments to assets, has given them a key role in business strategy and value as transactional goods (Wang, 2010). Genentech Incorporated, one of the world’s oldest biotechnology companies, is one of the best examples of the role played by Intellectual Property in finding an industry and changing it over time. Founded in 1976, by Robert Swanson and Herbert Boyer, as a genetic engineering company developing therapeutic compounds, the corporation filed dozens of patents right from its inception (Lee, 2019). The founders of the company acknowledge the role played by Patent law in making their business, and the industry in the long term, a viable one (O’Connor, 2016). Although there were initial concerns regarding the patentability of biotech products in the United States of America (US), courts provided clarity on the issue in the interest of inventors (O’Connor, 2016). The company followed the principle of “patent, then publish” which soon became the mantra of this industry leading to its growth (O’Connor, 2016). In 2009, Roche, a global pharmaceutical firm, acquired Genentech along with its assets and research ecosystem since its patent licensing agreements with Genentech were set to expire (Lee, 2019). The same year saw a few more acquisitions by major pharmaceutical companies in a similar vein (Lee, 2019). An Intellectual Property system that once enabled a new entrant to establish and thrive using its knowledge assets later led to market consolidation for protecting the same kind of asset (Lee, 2019). In the Chemical, Pharmaceutical, and Biotechnology industries the patent is synonymous with the product and protects the large sums of money invested in research and clinical trials during the development of the product (Lehman, 2003). The nature of innovation in analytical knowledge-based industries like biotechnology and information and communication technology is quite different from that of others (Tödtling et al., 2006). The rate at which radical innovations come about is very high (Tödtling et al., 2006). In order to compete in the industry, research and development efforts are directed towards yielding radical innovations (Tödtling et al., 2006). This is not only a costly affair but also time-consuming at every stage right from research to regulatory reviews (Gertler & Levitte, 2005). This chapter will deal with those kinds of practices within knowledge-intensive industries that directly affect Indigenous Peoples and Local Communities (IPLC) who are creators and custodians of knowledge that is a key-driver for these industries. The practices termed as biopiracy, including commercial plant-breeding, utilise patent law (in case of plant varieties certain jurisdictions have separate legislations that accord protection similar to patents) to develop a competitive advantage in the pharmaceutical and agricultural (seeds) industries. Patents allow the appropriation of what is termed as Traditional Knowledge (TK) of the IPLCs. This chapter refers to TK in

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one of its broad connotations used by the World Intellectual Property Organisation (WIPO) which includes “knowledge, know-how, skills and practices that are developed, sustained and passed on from generation to generation within a community, often forming part of its cultural or spiritual identity” (WIPO, 2023a). It can be found in a variety of contexts like agricultural, scientific, ecological, medicinal knowledge, and biodiversity-related knowledge (WIPO, 2023a). This chapter argues that such business practices, prominent in patent-intensive industries are not sustainable and require a change of approach. Quassia Amara is a plant, found to be growing in French Guiana, with numerous medicinal applications among Paliku and Galibi people. The French Institute for Development Research (IRD) attempted to investigate the medicinal properties by first interviewing the people belonging to the two groups and then isolating the compound found in the plant with the said properties. In 2010, they filed a patent in the US and Europe based on this. On being accused of biopiracy and being challenged legally by non-governmental organisations, IRD refused to compensate the Paliku and Galibi people. However, after suffering severe harm to their reputation, they stated that they would work with authorities in Guiana to have a fair division of any profits out of the patents (Pain, 2016). No other details were revealed. The European Patent Office ruled in favour of IRD in 2018 permitting it to retain the patent, in effect arming them with the right to restrict even IPLCs from using it (Bullens, 2022). There are many more such instances of unauthorised appropriation and exploitation. Discussions on TK of IPLCs at the international level by different agencies of the United Nations (UN) began in the 1980s (Popova-Gosart, 2009) and finally culminated into the United Nations Declaration on the rights of Indigenous Peoples (UNDRIP) of 2007 which recognized a broad set of rights for the indigenous people of different parts of the world (UNDRIP, 2007). Despite efforts we lack a comprehensive understanding of what exactly do we need to protect and why (Popova-Gosart, 2009). Article 31 of the declaration acknowledges that Indigenous peoples have the “right to maintain, control, protect and develop their cultural heritage, traditional knowledge and traditional cultural expressions” and the intellectual property over them (UNDRIP, 2007). It puts the responsibility to recognize and protect these rights on the state (UNDRIP, 2007). The WIPO, a specialised UN agency, is an important global forum for cooperation and policymaking in the area of Intellectual Property law. It administers 26 International treaties governing Intellectual Property Rights. It acknowledges that there are three most important needs of Indigenous communities that could be met through national legislations (de Beer, 2006). The first one is to have intellectual property protection to support economic development (de Beer, 2006). The second one is the prevention of inappropriate and unauthorized exploitation (de Beer, 2006). The third one is to prevent non-indigenous parties from securing intellectual property rights over Traditional Knowledge (de Beer, 2006). At the international level, WIPO sees its goal for Intellectual property law in Traditional Knowledge as protection rather than preservation or safeguarding (Rama Rao, 2009). It also necessarily attempts to bring it under the paradigm of law and development. Even when it frames it in the language of Human Rights, it is only reducing the significance of and

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ignoring the context in which TK is created and sustains. The human rights paradigm for TK requires a separate analysis and is not a part of this chapter, although it is true that the political goal of Indigenous empowerment had its origins in the human rights movement (Wilson, 2004). While the UN and WIPO’s work has been under the Human Rights paradigm, there have been parallel developments in trade and international economic cooperation. One such development that included norm-setting activities in the area of Intellectual Property Rights was the Uruguay round of the World Trade Organization (WTO) negotiations (World Trade Organization, 2023). It culminated into the binding Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS, 1995). The application of this agreement in national legislations globally enabled businesses to engage in practices that posed a threat to the Traditional Knowledge of IPLCs and the people of the Global South. Countries of the Global South, where most of these businesses did not come from, managed to voice their concerns at the WIPO, which then constituted an Inter-Governmental Committee (IGC) (WIPO, 2023d). This chapter examines the draft articles prepared by the IGC with regards to Traditional Knowledge (WIPO IGC, 2022a), and Genetic Resources and Associated Traditional Knowledge (WIPO IGC, 2022b) (GRAATK) which will directly affect business practices of patent-intensive industries described above. During this perusal it also notes that they fail to further the interests of IPLC and the Global South and perpetuate the asymmetrical power relationships between the Global North and the Global South. It is not as if there has been no critical legal scholarship about the WIPO IGC’s work in the two decades of its existence. On the contrary, quite a few scholars have expressed their viewpoints (Robinson et al., 2017). This includes various stakeholder and standpoint perspectives (Dhar, 2017; Oguamanam, 2017; Solomon, 2017). Solomon argues that the IGC has since long given up the intention to accommodate Indigenous customs as part of the IIP and instead moved towards the maintenance of status quo as desired by the Global North (Solomon, 2017). The gap between the perspectives of the developing and developed countries over the object of the IGC at the time of its constitution have also been examined (Abdel-Latif, 2017). More generally, it has been claimed that IIP has been more beneficial for the Global North rather than the Global South (Ansong, 2018). This chapter comes from a Third World standpoint towards International Law to critique the WIPO IGC’s work on its most recent mandate of creating binding treaties. What brings it within Third World Approaches to International Law (TWAIL) is its objective to expose those features of the international legal system that help to maintain an unjust global order and its commitment to center the rest rather than the West (Okafor, 2008). The chapter is divided into four sections. The first section elucidates the gravity of the damage caused by business practices that use Western Intellectual Property framework to appropriate the knowledge produced by IPLCs. It demonstrates this in case of pharmaceutical and agricultural industries. It argues that such practices are not sustainable practices. The target audience for this book will find useful insights on the sustainability of certain practices aimed at innovating to build a competitive advantage in the market. The second section explains the TK and GRAATK-Intellectual Property law incompatibility and the work of WIPO IGC on it so far. It is crucial to

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understand the International regulatory developments that enabled and incentivised unsustainable business practices. It will also discuss the mandate of IGC with regards to these kinds of Intellectual Property subject matters. The third section will articulate that the language used in treaties on the subject that further the interests of the Global North are far more specific, and therefore universalize these principles and mechanism of protection, when compared to the language used in treaties that further the interests of IPLCs and the Global South countries. The fourth section will doctrinally examine the text of the two IGC draft treaties on TK and GRAATK. It will substantiate the claim that the IGC draft treaties are also abstract and less specific like the other instruments that further the interests of Indigenous Peoples and the Global South. It is important to clarify certain things at this stage in the interest of readers’ convenience while reading it. I am aware of the fact that the countries classified into the Third World are very diverse historically, socially, politically, and economically (Chimni, 2006). It would not be a good idea to group them together for many purposes. However, the context of this chapter, discussions at the WIPO IGC, allows making this classification. Intellectual Property demandeurs of the Global North at the Uruguay round of World Trade Organization (WTO) were opposed by the developing countries of the Global South in the constitution and imposition of a comprehensive and binding IIP treaty (Chimni, 1992). This kind of a distinction between the interests of the Global North and the Global South is visibly expressed at the IGC as well (Abdel-Latif, 2017; Oguamanam, 2017). Since only state members can fully participate in the activities of the IGC, interests of the IPLCs from the Global North, or even the South, are arguably not adequately represented (Gordon, 2013; Solomon, 2017). Indigenous groups and organizations representing the interest of Indigenous people are invited as “observers”. From a positivist perspective, and not necessarily from an Indigenous perspective, their role, which excludes the right to vote, make proposals, pass motions, or propose amendments formally, would not constitute as substantive participation in the same way that sovereign states can participate. They can only make pre-sessional presentations, observe the sessional proceedings, and participate in separate caucuses. However, based on their limited participation at the IGC and other forums, I group IPLCs together with the Global South in terms of their interests in Traditional Knowledge being threatened by Western Intellectual Property frameworks. This does not mean there are no differences in the opinions of different IPLCs and that of different countries in the Global South. They have been united in the assertion of their rights under article 31 of the UNDRIP (2007). IPLCs have been challenging the universalization of Western intellectual property law by contending that its application “threatens their social and cultural integrity” (Vermeylen, 2010). As has been pointed out by TWAIL scholars, developing countries have also tried to oppose the universalization of Western methods of governance at international forums. I have referred to bracketed, strikethrough, and underlined words and phrases in the draft treaties under discussion throughout this chapter. It is common convention to bracket phrases that are still up for discussion, strike words that are removed from one draft to another, and underline words that are added from

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one draft to another. The substantive content and the nature of language used in the draft treaties is discussed alongside each other in the relevant sections below.

7.2 Unsustainable Business Practices Among Patent-Intensive Industries It is important to clarify the meaning of sustainability before branding certain business practices as unsustainable. Conservation of nature is often associated and confused with the term “sustainability” (Marvel, 2012). A definition that is often cited and enjoys a broad consensus is the Brundtland Commission’s definition of sustainable development (Jacobs & Finney, 2019). It defines sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations, 2023). However, as an abstract definition it is difficult to envisage what it would mean in specific business contexts (Jacobs & Finney, 2019). There are more concrete specifications of what are sustainable business practices in metrics-based and ratings-based systems which measure different aspects of corporate activities. However, there is no consensus among them (Jacobs & Finney, 2019). Although the connotation of sustainability that I prescribe to in this chapter is also a fluid one, I will elucidate how certain business practices are not sustainable. My definition of a sustainable business practice includes a holistic approach towards integrating the society, economy, and ecology (Saiia, 2018). The concept requires an understanding of the interconnected and interdependent nature of all human activity and natural phenomena (Saiia, 2018). One of the political objectives of UNDRIP was framed in its preamble as, “respect for indigenous knowledge, cultures and traditional practices contributes to sustainable and equitable development and proper management of the environment” (UNDRIP, 2007). Despite having a very small ecological footprint, Indigenous communities are disproportionately affected by climate change and environmental issues since they live in and depend on sensitive ecosystems (Betzold & Flesken, 2014). They live on only 22% of world’s land while being around 80% of the world’s biodiversity (Oluwatobiloba, 2020). Traditional Knowledge can be instrumental in monitoring and finding solutions to climate change problems since it is shaped by and responsive to the natural environment. However, Indigenous peoples have been rarely considered for public deliberation on climate change (Oluwatobiloba, 2020). Their knowledge regarding climate change adaptation and mitigation is extremely valuable (Oluwatobiloba, 2020). The Afar pastoralists of Ethiopia, for example, use wildlife to understand and predict climate patterns (Oluwatobiloba, 2020). This kind of Traditional Knowledge needs to be understood inclusively and in its holistic cultural and social context. The business practices falling under the umbrella of biopiracy in the pharmaceutical and commercial plant breeding industries tend to have a detrimental effect on the production and sustenance of Traditional Knowledge in its original context. This section will use the most prominent examples of these practices to

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explain how these patent-intensive industries are engaging in unsustainable business practices. It will discuss how protection of patentable subject matter abates the sustenance of Traditional Knowledge production mechanisms. It will also argue that both these kinds of business practices, although seem to be profitable in the short term, are not sustainable business practices and rather thwart environmental conservation activities of IPLCs. Biopiracy is the act of stealing of biological materials and/or its associated Traditional Knowledge (Beare, 2012). It was a term coined by Canadian activist Pat Roy Mooney as a strategy to counter the allegations, of acting soft on Intellectual Property violations, made by developed countries against developing countries (Dutfield, 2001). In order to understand biopiracy it is necessary to understand bioprospecting. Bioprospecting is the “search for economically valuable materials, compounds, or genes from organisms living in their natural state” (Hine, 2019). When local knowledge about the utility of biodiversity is obtained and exploited by foreign bioprospectors with commercial motives it becomes biopiracy. It often involves unauthorised use, denial of sharing of benefits accrued, and plundering of natural resources in an unsustainable manner (Hine, 2019). One of the biggest culprit undertaking systematic bioprospecting to obtain drugs from wild plants and animals is the pharmaceutical industry (Hine, 2019). Biotechnology Corporations from the Global North try to find valuable natural resources in the Global South and attempt to obtain patent protection after carrying out Research and Development activities based on unauthorised use of Traditional Knowledge from the South. Not only is the knowledge obtained without prior informed consent but also without compensating the source communities of the Global South (Beare, 2012). Those favouring large-scale bioprospecting activities use arguments in support of globalisation and free trade. Discovery of useful natural resources and commercialised distribution of products made from them are seen as tools for competing in the global market (Beare, 2012). Opponents continue to claim that it amounts to exploitation of the resources and knowledge of the Global South and a transfer of their ownership from IPLCs to multinational corporations (Beare, 2012). The following paragraphs will provide some examples of the practices elucidating the effects they have on IPLCs. Dr. Conrad Gorinsky, a Guyanese-born British trained ethnobiologist who became a renowned authority on the medical use of tropical plants, was once accused of Biopiracy (Vidal, 2019). He had witnessed women of the Wapishana tribe chewing nuts of the Greenheart tree to control menstruation and preparing malaria preventing ingestible substances from its bark (Vidal, 2019). He was able to isolate the chemical compounds that had such medicinal properties and filed for patents in the US based on this (Vidal, 2019). Although he claimed that he wanted to obtain the patents to prevent their misappropriation by others and share the profits from the patents’ commercial exploitation with the Amazon tribe, he failed to obtain consent for making use of the tribe’s Traditional Knowledge (Vidal, 2019). His earlier efforts to advocate for the rights of IPLCs and supporting environmental conservation were unable to protect him from being branded as a “biopirate” (Vidal, 2019) who broke the trust of the Waspishana peoples. He ended up not utilizing the patents and leaving the benefits of

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registration to neither accrue to himself or the Wapishana people nor to the general public who are the intended beneficiaries of the patent system. Kava (Piper methysticum) is a crop found in the Pacific Islands (Lindstrom, 2009). Chewed, ground, or pounded stumps or roots of the plant are used to prepare concoctions which are ingested for its relaxing properties under certain social circumstances (Lindstrom, 2009). It has ritualistic significance in certain tribes as well (Lindstrom, 2009). A study has demonstrated that the crop was first domesticated in Vanautu nearly 3000 years ago and then farmers, traders, and migrants may have carried it to other Pacific Islands (Lindstrom, 2009). Its popularity had grown globally in the 1990s and pharmaceutical companies rushed to patent it (Lindstrom, 2009). By 1998, Kava concoctions were patented in at least 11 countries for a variety of purposes ranging from reduction of hair loss to treatment for stress and anxiety (Lindstrom, 2009). Instead of a continuation of the Traditional Knowledge-based moderate production and use of the crop within IPLCs in Pacific Island nations like Vanautu and Fiji, the surge in global demand accelerated by the patents lead to an increase in levels of cultivation of the crop in the islands. In early 2000s, the demand saw a slump due to the imposition of prohibitions on Kava products in some regions of the world including Europe due to various concerns regarding the ill effects of the products (Lindstrom, 2009). This had a detrimental effect on the local farmers and national economies of Kava exporting Pacific countries (Pollock, 2009). Although these restrictions have been lifted in most parts of the world, the environmental effects of the trade are now quite prominent (Markham, 2022). The trade encouraged by patent-protection required standardized Kava which greatly affected the biodiversity of the crop (Pollock, 2009). About one hundred and twenty species of Kava have been identified only on three Pacific Islands (Pollock, 2009). Traditional Knowledge related to the conservation, breeding, domestication, and development of such plant genetic resources among IPLCs in the region is threatened by a devaluation of biodiversity for commercial needs (Pollock, 2009). Rampant cultivation has also depleted the quality of soil of the region threatening their food security (Markham, 2022). The exchange of crop material, especially, although not limited to, seeds, is a common practice among farming communities across the world (Brush, 2005). It is also integrated within the traditional practices of many communities (Brush, 2005). This practice of exchange and mingling of plant genetic material allows farmers to adapt to changing environmental conditions and deal with pests and pathogens (Brush, 2005). Traditional Knowledge and its application in local conditions equips local farmers as breeders to improve plant variety to suit local conditions and conserve biodiversity (Haugen, 2007). Commercial plant breeding and patenting has a direct effect on this practice and the potential of threatening the livelihood and food security of the people dependent on it. The Basmati rice dispute (Rai, 2001) is a well-known example of this issue. RiceTec, an American multi-national company, had obtained patents over a variety of novel strains of Basmati rice (Dagne, 2012). This was done by crossbreeding of Basmati rice with an American variety. Since Basmati rice is grown in Northern parts of India and Pakistan, they challenged the patent and a claim that one of the patented varieties was similar or superior in quality when compared to Basmati (Lightbourne, 2003). They succeeded in challenging the patent registration of fifteen

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out of twenty such patents on the ground of absence of novelty (Woods, 2002). A grant of patents over such plant varieties would mean that farmers would be prohibited from using that variety for cultivating themselves and exchanging and breeding varieties for adapting to the environment. A more recent example of this detrimental effect is the multinational company PepsiCo suing farmers in the state of Gujarat in India for using a variety of potato (Bhutani, 2019) which was registered by the Plant Variety authority (under a law that grants protection for plant varieties similar to patents). It was due to a public campaign and upon the application of a farm activist that PepsiCo’s registration was revoked after Plant Variety authority’s indictment of its own procedural lapses (Fernandes, 2022) in granting PepsiCo protection in the first place (Jishnu, 2021). PepsiCo is pursuing the matter by way of an appeal in the Delhi High Court filed in 2022 (Lopes, 2022). These examples illustrate how practices falling within the meaning of biopiracy are not sustainable business practices. WIPO itself, which is committed to SDGs through its various programs, also recognizes that innovation and creativity, which are crucial in working towards realizing United Nations’ Sustainable Development Goals (SDG), are incentivized through Intellectual Property law (WIPO, 2023b). It is evident that the patent-intensive biotechnology industry is affecting both the biodiversity of species as well as the ability of soil and land to regenerate and support agriculture. Scholarship has pointed out that such practices may seem to serve short-term purposes but only aggravate environmental issues (Borsari & Kunnas, 2020). IPLCs’ knowledge production, conservation, and adaptation mechanisms are severely impacted by the entry of Western commercial interests. This is what makes biopiracy unsustainable. The effects of these business practices on IPLCs are a form of neo-colonization. Developing countries have been claiming since decades now that the Intellectual Property Rights system allows misappropriation of TK, biopiracy, and unsustainable use of biodiversity (Nunez, 2008). The IGC drafts that this chapter will discuss later, I contend, will maintain, and may even strengthen this status quo. The next section deals with the nature of incompatibility of the Intellectual Property Law and Traditional Knowledge of IPLCs.

7.3 The Incompatibility of TK-GRAATK and Western IIP At the heart of the TK-GRAATK and Western IIP incompatibility is the prominence of individual property in Western legal traditions (Söderberg, 2002). The ownership and exclusivity characteristics of Intellectual property law, although it is a creature of statute and policy unlike tangible property law which is based on the natural right of liberty, are attempted to be interpreted like those of tangible property law (Menell, 2007). On the other hand, Indigenous cultures do not have such a narrow conception of property (Brunsdon, 2015). The fact that they have entirely different knowledge systems based on their own epistemology, philosophy, and science and logic means that they will have different values of property (Brunsdon, 2015). For example, the

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Native American Zuni people attribute value in goods such as crops to a spiritual creator, and collectively make use of these goods (Soleri et al., 1994). Patents are temporary monopolies, with the possibility of extension of term, granted to protect inventions with industrial usefulness against a range of unauthorized uses for incentivizing subsequent innovations and protecting the inventor’s investments (Rama Rao, 2009). They are a set of exclusive rights (including right to make, use, and sell) granted to inventors in return for the public disclosure of their invention. Although there are regional variations, patents are generally granted for any processes, machines, manufacturing techniques, or composition of matter. Since inventions could include medicines, plant derivatives, fishing and hunting techniques, genetic resource uses, land or resource management systems, they include a host of traditional practices as well. This chapter focuses on the draft articles prepared by the IGC with regards to TK (WIPO IGC, 2022a), and Intellectual Property and Genetic Resources (WIPO IGC, 2022b) (TK and GRAATK). The subject matter of both of these kinds of draft treaties is patentable subject matter under Article 27 of TRIPS (1995). About 70% of Indigenous food and medicinal supplies and of various ecological needs is based on GRAATK (Oguamanam, 2015). These are the most economically lucrative components of Traditional knowledge that are sought by industry and academia (Assembly of First Nations, 2011). However, the benefit of obtaining patents on them does not necessarily accrue to IPLCs that hold this knowledge regarding use. The patent system itself becomes conducive to biopiracy. Patent law was not initially conceived with the intention of providing protection to life forms (Oguamanam, 2015). It was in the 1960s that countries who had advanced in plant breeding framed the International Union for the Protection of New Varieties of Plants (UPOV) and advocated for protection (Dutfield, 2008). A few decades later, the TRIPS agreement settled any doubts regarding the applicability of patents on life forms (TRIPS, 1995). American corporations had lobbied to influence the terms of the agreement (Sell, 2003). As a result, state parties must either include protection of plant varieties through patents or through sui generis legislations. As this agreement applies to all members of the WTO, it covers nearly the entire world (World Trade Organization, 2016). Patents are granted to the first inventor to file an application (who successfully meets the law’s requirements of novelty, usefulness, and inventive ingenuity). IPLCs around the world have been sharing their knowledge of medicinal plants with researchers and pharmaceutical companies (Brascoupé & Endemann, 1999). This knowledge is used to isolate and purify the compounds in the plants for testing the efficacy and safety (Brascoupé & Endemann, 1999). If the compound seems to have the desired effect, the pharmaceutical company goes ahead with applying for a patent and obtaining regulatory approvals for sale and manufacture (Brascoupé & Endemann, 1999). For Indigenous peoples who are farmers or traditional medicine practitioners, the use of plant genetic resources is a way of life rather than just a means of participating in market-driven economic production that WTO promotes through the TRIPS (Oguamanam, 2015). The process of creation, for the lack of a better word, of traditional knowledge in this area involves generations of

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contribution (Oguamanam, 2015). This creates a huge challenge for them to acquire patents by meeting the prerequisite of novelty. We must also remember that unlike the researchers, Traditional farming is based largely on random selection from accidentally occurring mutations in nature (Oguamanam, 2015). Ownership and sharing of TK within the communities is quite complex and subject to the customs of IPLCs. For example, there may be elaborate rules and rituals about sharing and use of TK which may have social, cultural, and spiritual significance for IPLCs. When sharing of such knowledge within the community itself is governed by complex rules, the limited term of patents and public disclosure requirements make matters worse for them. This would mean that IPLCs would have to make their knowledge publicly available even if they have customary rules about confidentiality and they will not only lose control of how their TK is used upon expiry of the patent but also forego the opportunity to earn through licensing even if they wish to do so (Erstling, 2009). The notion of public domain in patent law is also problematic as was expressed by NGOs and developing countries during the negotiations for the Convention of Biological Diversity’s (CBD) Nagoya Protocol (NP) (Siswandi, 2015). They argued that the free availability of Traditional Knowledge about genetic resources does not imply that it belongs to nobody (Siswandi, 2015). The public domain is seen by Indigenous groups as a construct of intellectual property law that does not respect the kind of protection of Traditional Knowledge that Indigenous systems require to continue pursuing cultural interests. Chander and Sunder (2004) caution against the romantic notion of the public domain that allows for free use of everything in the public domain. The Intellectual Property-public domain binary created by the notion of public domain obscures how it disadvantages and disempowers IPLCs (Chander & Sunder, 2004). Rather than being subject to the control of IPLCs, and perhaps to their customary rules, TK in the public domain can be appropriated almost effortlessly. It is easy to meet the criteria of novelty for corporations that misappropriate Traditional Knowledge since patent examiners primarily refer to electronic databases. Indigenous Knowledge is not looked into since it is not easily accessible (Brascoupé & Endemann, 1999). As a result, some countries have been taking proactive steps by starting to create inventories of Traditional Knowledge to document prior art and avoid misappropriation. India was the first country to begin such an effort in 2001 by creating a Traditional Knowledge Digital Library (Erstling, 2009). It attempted to document knowledge available in written form as well as shared orally through generations (Erstling, 2009). Its objective was to point patent examiners to texts that constituted prior art (Erstling, 2009). Other countries which were also custodians of historic medical traditions such as China, Taiwan, Thailand, Japan, and South Korea soon followed suit (Oguamanam, 2015). Two instances where disproving novelty has helped in opposing patent registrations are Pelargonium sidoides (and Pelargonium reniforme) and Neem in Europe. The German natural medicine company Schwabe pharmaceuticals attempted to patent extracts of Pelargonium sidoides and Pelargonium reniforme plants which are found in South Africa, for different medicinal uses (Daly, 2015). Several civil society groups opposed it citing absence of a

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prior informed consent and no benefit-sharing agreement (Daly, 2015). The argument claiming European Union’s obligations under the CBD failed (Daly, 2015). The patent was held to be invalid only on the ground that it lacked an inventive step compared to prior art (Daly, 2015). Neem is a tree found in the Indian sub-continent with varied uses. The fungicidal use of its seeds was sought to be patented by the US Department of Agriculture and the agricultural corporation WR Grace (Daly, 2015). The Indian Research Federation for Science, Technology and Ecology, the International Federation of Organic Agriculture, and a coalition of European Green political parties argued that Indian farmers had been using Neem seeds for fungicidal applications for at least many decades (Daly, 2015). While the patent was granted in 1994, it was finally revoked on the ground of the absence of an inventive step to distinguish from prior art only in 2005 (Daly, 2015). While this example is illustrative of the utility of database creation models, they are not a flawless method of protecting TK. They have been criticized due to their use of classifications within the Western knowledge tradition which undermines their intended purpose by decontextualizing TK and isolating aspects that are relevant for the purpose of documentation and discarding other aspects that are important to the IPLCs (Fredriksson, 2022). The WIPO constituted the IGC to deal with the concerns elucidated in the discussion above in 2000 (WIPO Background Brief no. 2). WIPO being a UN agency was influenced by the developments in other UN forums. Around the same time, the United Nations Permanent Forum for Indigenous Issues (UNPFII) was also established (WIPO Background Brief no. 2). The WIPO also adopted the development agenda in 2007 (WIPO, 2004). As noted earlier, it understands that innovation and creativity, which are promoted through Intellectual Property law, play a crucial role in working towards realizing United Nations’ Sustainable Development Goals (WIPO, 2023b). In 2007, the UN General Assembly made the UNDRIP (2007). All this while the mandate of the IGC was renewed until 2009 when its role changed from being a “forum for discussion” to one where formal negotiation for instrument adoption would take place (WIPO Background Brief no. 2). The initial years of draft-based negotiations did not see much progress but the introduction of tools like smaller inter-sessional working groups with experts helped to streamline this work (Wendland, 2017). The rights declared by UNDRIP, especially article 31, gave voice to the notion of a greater participation of IPLCs in the IGC (Lawson, 2017). They also withdrew from the negotiations for some time but returned back to the table under the condition of greater involvement (Lawson, 2017). At the early stages of the IGC itself it was also accepted that any negotiations at the IGC would be without prejudice to the work pursued in other fora (WIPO General Assembly, 2003, 2009). Although the IGC has been affected by the work carried out in other forums, none of them provide a comprehensive solution to the problem the way IGC claims that it intends to (Lawson, 2017). All other treaties deal with specific kinds of protected knowledge and do not offer to deal with interrelated issues surrounding different kinds of TK.

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7.4 Globalization of the Western Commercial Agenda Through IIP IIP, especially instruments dealing with patent law, were drafted after negotiations that represented a clear divide between the Global North and the Global South. Western Intellectual Property systems defined property in a manner that excluded TK and left the Global South looking Intellectual Property poor (Drahos & Braithwaite, 2017). Intellectual Property demandeurs were used to a WTO system that had been favourable to them to universalize Intellectual Property protection (Chimni, 1992). The WTO was a forum where the developing countries were not formally well organized and could be coerced to come on board more easily (Chimni, 1992). The TRIPS was in this way imposed for the benefit of industrialized countries who would greatly benefit from a universal protection of patent rights. The fact that it is backed by WTO’s dispute settlement and enforcement mechanism, makes it a strong binding piece of IIP. What it also did was bring the whole host of Intellectual Property law within the domain of trade and reduce the value of any goals other than commercial ones (Oguamanam, 2006). Before the Uruguay round, developing countries were trying to mould national Intellectual Property legislations to their own benefit, something that they had witnessed developed countries do (Drahos, 2002). The developed countries perceived the benefits accruing to the developing world through “unauthorised use” of Western Intellectual Property as their losses (Gervais, 2021). The Uruguay round helped undo these efforts by the developing countries. Drahos has proved, applying the theory of democratic bargaining, that the TRIPS negotiations were hierarchical, marred by information asymmetry, and facilitated by coercive threats made by the United States of America and European Commission to the developing countries (Drahos, 2002). The first international instrument to bring benefit-sharing to the debate on patenting plant genetic resources based on Traditional Knowledge was the Convention on Biological Diversity (CBD, 1993) (CBD). Its preamble uses the term “desirability” to refer to the equitable sharing of benefits from the use of Traditional Knowledge and is therefore only aspirational in this regard rather than binding (Rourke, 2018). Article 1 of the convention specifies one of its objectives as “fair and equitable sharing of the benefits arising out of the utilization of genetic resources” (CBD, 1993). Article 8(j) requires that state parties “respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices” (CBD, 1993). Despite using the term Traditional Knowledge in the preamble and in Article 17 as a subset of specialized knowledge, it is replaced by the phrase “knowledge…..embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity” here (Rourke, 2018). The “knowledge” referred to in the most important provision of the convention is much narrower (due

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to the specification of its purpose and of the kind of IPLCs) than Traditional Knowledge in the rest of the convention (Rourke, 2018). The obligations on the contracting parties under this provision are “subject to national legislations” and to be implemented “as far as possible and appropriate” (Rourke, 2018). This gives ample room to elude from applying the provision (Rourke, 2018). Article 16(5) of the convention states that state parties must ensure that patent rights “are supportive of and do not run counter” to the goals of the convention (CBD, 1993). While the objective of the phrase is clear, it is quite abstract and could be ignored in practice. The 2010 Nagoya protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity (NP, 2014) (NP) is the more concrete protocol containing detailed provisions regarding state obligations on access and benefit sharing. It recognises more broad kinds of circumstances in which TK can exist with IPLCs (Rourke, 2018), however, limits its scope to GRAATK within CBD (which specifies the purpose of TK in Article 8(j)). Article 5 (NP, 2014), Article 6 (NP, 2014), Article 7 (NP, 2014), and Article 12 (NP, 2014) provisions which introduce equitable and fair sharing of benefits on Mutually Agreed Terms (MAT) and Prior Informed Consent (PIC) are also fraught with caveats of being “subject to domestic law” and implementation “as appropriate”. It only encourages the incorporation of customary laws of Indigenous peoples and local communities applicable to traditional knowledge regarding genetic resources as part of the access and benefit sharing policy without discussing the kind of role customary laws could actually play (Article 12 of NP 2014). It also envisages benefit sharing in case of transboundary arrangements of access to genetic resources and in case it is difficult to obtain the prior informed consent of a single legitimate authority (Article 10 and 11 of NP 2014). Since the language of the protocol only requires parties to “take into consideration” and “endeavour to support” the rights of Indigenous peoples and local communities (Article 12 of NP 2014), it also lacks strong provisions regarding their rights pertaining to the use of Traditional Knowledge. Initially, plant genetic resources were considered to be the common heritage of humankind and freely exchangeable (Biber-Klemm et al., 2006; Isaac & Kerr, 2004; Mgbeoji, 2006). However, with the advancement of biotechnology and increase of commercial practices like breeding, the notion of their propertization picked up pace in developed nations (Biber-Klemm et al., 2006). While governments were moving towards reducing public funded research, researchers were willing to continue the work if there was enough commercial incentive in it (Isaac & Kerr, 2004). In order to address the market failure, a situation where innovation would not be the end result, a patent based incentive was created through Intellectual Property protection (Isaac & Kerr, 2004). While Article 27(3)(b) of TRIPS made it mandatory for the contracting parties to provide plant variety protection either through patents or through sui generis legislation, the UPOV convention, which predates TRIPS, provides one way to do so. In terms of its nature and language, the provisions of UPOV are quite specific and detailed (Dutfield, 2008). In the interest of its intended beneficiaries, commercial plant breeders, UPOV specifies the scope and length of their rights, the process of application for protection, and even the kind of evidence required for application.

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However, the rights of farmers find only a small place in its Article 15 exception to breeder’s rights only “after safeguarding breeder’s rights” and “within reasonable limits”. Developing countries were being forced to become members of this instrument that protects the interests of commercial breeders and multi-national companies (Adhikari & Adhikari, 2004). International Treaty on Plant Genetic Resources for Food and Agriculture (PGRFA) (PGRFA, 2004), administered by the Food and Agriculture Organization (FAO), also supported a benefit-sharing system, specifically for Plant Genetic Resources. The FAO passed resolutions in 1989 and 1991 proclaiming the need to balance the commercial breeders’ interests with those of the informal farmers’, both as innovators (Biber-Klemm et al., 2006). The PGRFA refers to farmers’ rights without directly referring to the commercial rights created under TRIPS or UPOV. Article 9 (PGRFA, 2004) only “recognizes” the contribution made by IPLCs and farmers towards the conservation and development of plant genetic resources. This is in contrast to the language that creates commercial value and affirms a right for plant breeders in Chap. 5 of the UPOV convention (UPOV, 1961). The remaining provision in the same article also directs contracting parties to “protect and promote” the interests of farmers “subject to national legislation” and “as appropriate” (PGRFA, 2004). Article 9.3 (PGRFA, 2004), however, does clarify that nothing in this article shall be interpreted to limit the rights of farmers to save, use, exchange, and sell seeds. That would, to some extent, prevent contracting parties from explicitly restricting the rights of farmers using the privileges described above. Part IV of the treaty, introducing one of its most crucial aspects, adds the obligation for creating a multi-lateral framework for Access and Benefit sharing. The provisions under this part are direct and detailed in terms of the mechanism to be adopted and unequivocal in their goal of fair and equitable sharing of benefits. This constitutes an exception to the kind of language used in treaties when it comes to the interests of IPLCs and the Global South. One last set of existing IIP instruments that deal with TK and GRAATK is the various Preferential Trade Agreements (PTA) that countries have entered into while IGC negotiations were going on. Countries of the Global South have failed to make their positions on TKGRs fully acceptable by their trading partners in PTAs (Roffe, 2017). The North America Free Trade Agreement and several other PTAs signed by the US do not find any mention about TK or GRAATK in their chapters on IP. Latin American countries, especially Peru and Colombia, have managed to get elaborate provisions for GRAATK added in their PTAs with US and European Union (EU) (Roffe, 2017). While certain provisions of these agreements still use more aspirational language, they are coupled with commitments towards national legislations which protect Access and Benefit Sharing rights of IPLCs. In case of agreements with China, New Zealand, and Taiwan though, only short provisions using abstract language recognizing the interests of IPLCs are added by their developing partners (Roffe, 2017). The more recent Trans-Pacific Partnership agreement mentions the importance of Access and Benefit Sharing but limits itself to the extent that it would only apply to parties that are internationally obligated to respect them, which excludes the US (Roffe, 2017).

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The provisions of the IIP instruments discussed in this section that promote corporate interests reflected by the Global North at international forums are concrete and determinate ensuring implementation across the board. However, provisions that reflect the interests of IPLC and the Global South are often abstract and not specific.

7.5 Analysis of the Text Used in the WIPO IGC Draft Articles 1. Draft Articles for the protection of Traditional Knowledge The iteration of the protection of Traditional Knowledge draft (WIPO IGC, 2022a) transferred to the next session for consideration at the 44th session of the IGC is the text reviewed in this section. The preamble begins by referring to UNDRIP and even borrows, in bracketed text, some of the text of Article 31 of UNDRIP. While it acknowledges the important aspects of the relationship of IPLCs with Traditional Knowledge, it also mentions its significance for “promoting creativity and innovation” and its dissemination for the “mutual advantage of holders and users”. When it comes to the utility of Traditional Knowledge for “social and economic welfare” the word “should” is used. As a form of the word “shall” it signifies the imposition of an obligation (Redux, 1987). This is absent in the preceding preambulatory clauses referring to the interests of IPLCs. This clause also brings the notion of building a balance between the rights and obligations under this treaty much like conventional IIP discussed earlier. The definitions article is heavily bracketed with quite a few alternative options. The objective of the treaty and the criteria for protection are wide enough to include a broad array of Traditional Knowledge. Alternative to the criteria of protection is the option to include a subject matter clause. This clause simply specifies that it applies to patents and Traditional Knowledge that are associated with the cultural heritage of the treaty beneficiaries and held collectively for a term, not less than 50 years or five generations, determined by the member state. In both the cases, a link or association with the heritage of IPLCs is necessary. This adds an additional criterion to the already defined Traditional Knowledge. Also, any Traditional Knowledge, that may not be proven to be as old as specified here or by member states, will not be subject to protection. There is also no specification about the process of dating Traditional Knowledge or how contracting parties should determine whether this criterion is met. In the next clause, the beneficiaries are defined as Indigenous people, local communities, and others determined under national law. However, there is no definition of Indigenous peoples and local communities in the draft. The clause on the scope of protection has three alternatives, one of which is abstract and only mentions economic and moral rights protection for Traditional Knowledge without any specifics of what it would mean in practice. The other two alternatives are specific in the exact nature of protection to be granted but one of them advises member states to take legislative measures in accordance with national law and in

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a reasonable and balanced manner. The next provision about defensive protection measures to be taken by member states includes the phrase “should endeavour to” of which “endeavour to” is bracketed. If the word “endeavour” ends up in the final treaty, it would reduce the binding value of the entire provision. The provision also has a caveat of being subject to “national and customary law”. Based on the use of the term “customary law” in the preamble and definitions clauses, it likely refers to customary law governing traditional knowledge. Since both National and customary law are mentioned, it would require state parties to make legislations complying with both and to resolve any conflicts between the two. However, it is quite possible that the national law will be given preference over customary law in practice. This is something that the provision does not account for. In terms of the remedies made available, one out of two alternatives is detailed but heavily bracketed and includes both “should” and “shall” as options. Interestingly, although there is no mention of customary law with it, the provision also includes “restorative justice measures”. All the alternatives available for the provision about disclosure of source or origin of traditional knowledge use the word “shall”. However, one of the alternatives frames it conversely as the absence of this requirement unless it would be relevant for determining patentability. Framing it this way will not put an obligation on states to necessarily include a disclosure requirement. The provision about the method of administration of rights under this treaty largely leaves it to the discretion of member states. There are two alternatives for exceptions and limitations and both of them require the approval of treaty beneficiaries. The second one adds specific exceptions for purposes like teaching and archival preservation. These exceptions are imported from conventional IP law. The term of protection is left at the discretion of member states subject to fulfilment of the criteria for protection under this treaty. An important question deliberated in this draft is regarding the requirement of formalities to be completed to get protection. All three alternatives are very different on their take on formality and leave open quite a few possibilities. However, there is no mention of accessibility in order to be protected or to avail remedies under the treaty. 2. Draft Articles for the Protection of Genetic Resources and Associated Traditional Knowledge The Consolidated Document Relating to Intellectual Property and Genetic Resources (WIPO IGC, 2022b) open for deliberation in the 43rd session of the IGC is the draft treaty text examined in this section. The preamble to this draft treaty does not, like the previous one, elucidate the relationship of IPLCs with GRAATK. It is more instrumental in terms of the objectives of the treaty to “recognize the principles of free and prior informed consent and mutually agreed terms” in relation to access and use of GRAATK, and the goals of the patent system to not only commodify Genetic Resources but also prevent misappropriation. The definition of the term “genetic material” is adopted from Article 2 of PGRFA, and the term “genetic resources” is similar to the one for “genetic resources for food and agriculture” in Article 2 of PGRFA (PGRFA, 2004). “Traditional Knowledge Associated with Genetic Resources” is defined similarly to the definition of “Traditional Knowledge”

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in the draft treaty discussed in the previous sub-section. A link to cultural heritage of IPLC and transmission across generations, without specifying any number of years or generations as it did in the above-mentioned draft treaty, is necessary. The objective of the treaty is to protect GRAATK within the IP system. Since one of the maladies it seeks to correct is the incorrect granting of patents, the inclusion of a disclosure requirement is one of the most important provisions. Among the three available alternatives for this provision, one firmly requires disclosure of the source, another does away with it, while the third leaves it at the discretion of the member states. The first one leaves it at the discretion of member states whether to require the details of Access and Benefit Sharing arrangements with IPLCs at the time of application of patent. None of the alternatives puts an obligation on the patent granting authority to verify the Access and Benefit details provided by the patent applicant. There is a provision for establishing a due diligence system, but it is only “encouraged”, and the only means suggested is through a database. Rather than involving IPLCs in constructing a due diligence system, or another defensive mechanism, the treaty proposes the involvement of IPLCs in the creation and use of a database. In all of these cases, the provision gives enough room for erroneous grant of patents, the very act that it seeks to prevent. Aside from this, there is an additional provision for exceptions to disclosure requirements at the discretion of member states. One of the alternatives to this provision requires state parties to create exceptions “in conjunction with” IPLCs but does not require their consent or approval. The addition of the provision of non-retroactivity has been under contention since at least negotiations for the NP. During those negotiations, the developing countries advocated for a provision on publicly available Traditional Knowledge to prevent misappropriation, benefit-sharing for continuing uses of knowledge that was accessed before the protocol, and a multilateral mechanism for creating legal obligations to benefit sharing for new uses of knowledge. These were opposed by developed countries, especially Canada and European Union, in order to ensure that no legal measures were taken which could affect their biotechnology industry (Schindel, 2010). The representatives of the biotechnology industry had expressed their concerns about the legal uncertainty regarding the innovation process and sharing of benefits that would ensue if proposals like these were accepted (Siswandi, 2015). In the IGC draft treaty, a prohibition of retroactive application of the disclosure requirement is almost firmly stated in Article 6 using the words “shall not impose” with “shall” bracketed and the title of the article as bracketed “non-retroactivity”. Since the treaty is meant to be within the patent system, the remedies available are also similar to what is conventionally available within the patent system. Apart from the mechanisms discussed in the previous paragraph to prevent the erroneous granting of patents, the specific provision to meet this goal “encourages” the creation of a “voluntary code of conduct and guidelines for users” about the use of GRAATK. This kind of a soft law strategy is hardly adopted when it comes to protecting commercial intellectual property interests in IIP instruments. For example, Article 28 of TRIPS uses the word “shall” and imposes an obligation to create statutory patent rights and specifies what should those rights include.

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Although there is much left to be deliberated upon in the coming sessions in terms of the text of the treaty, based on the amount of bracketed text and alternatives, the underlying direction adopted is not very different from the previous IIPs already in force. This is not to take away from the achievements of representatives of IPLCs and the Global South in progressing with treaty-based negotiations for the rights of IPLCs but to promote an introspection about the direction in which the draft negotiations are headed.

7.6 Conclusion Competition in markets and the need to innovate in order to develop a competitive advantage is often seen to be in the interest of consumers. However, patent-intensive industries in the biotechnology sector have resorted to problematic means to stay competitive. Biopiracy is one such means that may seem to be easy but has detrimental effects on the IPLCs in the short-term and on the environment in the longterm. In the words of Vandana Shiva, “granting exclusive patent rights amounts to stealing economic options of daily survival from the developing world” (Rai, 2001). Entrepreneurs will have to be more mindful of their actions. It is understandable to engage in business practices that are sustainable in the sense of remaining profitable for the shareholders over a period of time but equally important to address the social and environmental dimensions of one’s business activities (Laszlo, 2010). The IIP regime has induced and facilitated biopiracy that is adverse to biodiversity conservation and traditional farming systems (Shim, 2003). As Drahos rhetorically asked, “how many people would think that the rock they pick up in the park becomes an invention of theirs after they have washed and polished it?” (Drahos, 1999). There is a need to change this approach towards innovation and patents to make business practices socially and ecologically sustainable. It is evident that the international law only lightly nudges individual states to act to protect the rights of IPLCs. Leaving some discretion in their hands seems sensible since the exact measures to be taken for protection are dependent on the context which can be best determined within the national boundaries of the state (Rosanowski, 2015). However, in the absence of a strong direct language and detailed provisions in the draft treaties, individual states will only be able to protect as much as they could in the PTAs briefly discussed earlier. The international law ignores the asymmetrical power relationship between the Global North and the Global South which can be addressed. The status quo in the international order on TK and GRAATK will be perpetuated if these drafts are not substantially reexamined. With the intent to fulfil the TWAIL agenda to reform and remake international law by exploring alternatives to the problematic continuing legacy of colonialism in the treaty negotiations it may be worthwhile to briefly mention alternative directions that the IGC can take. Although it is not a subject of this chapter, there is scope for future work in this area. A solution suggested to the issue of enforcement of Indigenous customary law applicable to Traditional Knowledge is to recognise it as a valid source of law,

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as sovereign in itself (Caenegem, 2015). While it was considered as an option in Australia, it has been rejected (Caenegem, 2015). As a result, it would only apply if the parties are willing to be bound by it (Brown, 1999). There are instances where it would also apply if the Indigenous customary law meets, in Hart’s terms, the rules of recognition requirements (Hart, 2012), for instance, the law on Native or Aboriginal titles. However, such piecemeal recognition of some aspects of Indigenous customary law relies on political will to bring it and is founded in the supremacy of the Western legal tradition (Caenegem, 2015). WIPO IGC has the opportunity to give a more substantive recognition to Indigenous customary law rather than a mere mention on a couple of occasions. Given that the WIPO General Assembly has decided to convene a Diplomatic Conference in 2024 to conclude an IIP instrument regarding GRAATK (WIPO, 2023c), there is less likelihood of any substantive changes in the approach of the IGC. If the conditions that create and sustain Traditional Knowledge are not preserved, Traditional Knowledge will have no use (Gupta, 2004). As Anil Gupta puts it, plants become mere weeds if there is no knowledge about natural resources (Gupta, 2004). We are already losing local knowledge about biodiversity at a very high rate, and it will only get more difficult to conserve and utilize biodiversity (Gupta, 2004). Developing countries have been pressurised at international forums by developed countries with strong Intellectual Property protection to increase protection in their jurisdiction as well (Morin & Gold, 2014). I claim that this kind of subordination of the Global South continues at the IGC as well. While the TRIPS (1995) is a binding agreement that has seen a fair amount of compliance by state parties, instruments affirming the rights of Indigenous people over Traditional Knowledge have not witnessed the same kind of deference. While UNDRIP (2007) is not a binding agreement, International Labour Organization’s binding Indigenous and Tribal Peoples Convention (ILO, 1991) has only 24 ratifications so far (ILO, 2023). The NP (2014) and PGRFA (2004) are also not given the same attention by state parties that TRIPS has received. As demonstrated in this chapter above, there is a clear difference in the kind of language used in the treaties depending on the intended beneficiaries. The provisions of IIP instruments that promote corporate interests reflected by the Global North at international forums are concrete and determinate ensuring implementation across the board. When it comes to the interests of the IPLCs and the Global South, there is a stress on “balancing” the interests of IPLCs with the commercial interests furthered by conventional IP laws. The more substantive provisions that reflect the interests of IPLC and the Global South are often abstract and not specific. The IGC draft articles, in a similar vein, although seem to protect the interests of IPLC and the Global South, are likely to result in not being effective due to their abstract and indeterminate nature. In case the IGC continues to follow the path laid by preceding IIP instruments, it would only reload the arsenal of slow violence (Burgis-Kasthala, 2016; Chimni, 2006) effected by international treaties through globalization.

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Chapter 8

Social Credits, Recognition, and Tax Benefits for Green Business Growth: Companies Demonstrating Greater Green Governance and Their Social Stand Apoorvi Shrivastava and Shinjinee Namhata

Abstract Tax plays a significant role in every modern market structure. Many business concerns quote tax as a hurdle in the way of a company’s progress and economic growth (Gower et al.). However, this argument does not hold good. An effective and efficient taxation regime not only caters to the progress and economic growth of a company but also substantially contributes to the achievement of the Sustainable Development Goals (SDGs). Such a practice, in the long run, improves the financial performance of the company and brings it major market recognition. The interaction of taxation and business practice is important for achieving the SDGs. Revenue-raising alone is not enough to achieve the SDGs. Investment incentives are an important part of shaping sustainable development outcomes (Gowar et al.). The present piece is an attempt to analyse the social credits and recognition, sustainability brought into corporate governance practices, and how companies through an efficient fiscal policy and taxation regime can contribute towards the Sustainable Development Goals (SDGs). In aiming so, the authors would emphasise the alignment of corporate tax policy with the Sustainable Development Goals (SDGs). They would further rely upon the developments in tax facilities being offered to businesses by the Asia–Pacific business operations and the global surveys conducted by the Organization for Economic Co-operation and Development (OECD) as a comparative tool, to evaluate the fiscal structure and the framework of tax incentives sustainable business practices can benefit from in India. The authors have also referred to a notable case study which focuses on the multinational giant Vodafone and its tax contribution towards the SDGs. Subsequently, the authors would propose possible A. Shrivastava (B) Associate Professor and Program Chair (PG), Manipal Law School, (Manipal Academy of Higher Education), Bengaluru, India e-mail: [email protected] S. Namhata Research Scholar, IFIM Law School, Bengaluru, India e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_8

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actionable changes to the existing framework. With the enforcement of a progressive tax system, efficient tax collection mechanism, balanced tax policies, and incentivebased approach in today’s global world, a company can implement a radical approach towards the attainment of the Sustainable Development Goals (SDGs). Keywords Sustainable development · Taxation · Business · Financial performance · Economic growth · SDGs

8.1 Introduction United Nations has propounded 17 Sustainable Development Goals (hereinafter referred to as “SDGs”) which can pave the pathway for a better, transformed world but unfortunately time is running out and all the goals won’t be met at this momentum. UN Global Compact 20th Anniversary Report reflected that awareness regarding sustainable goals can be witnessed in the strategy and practices of the corporate sector. They are mapped in the policies of business communities to meet the desired target, but it is pertinent to move beyond the policy into the phase of action as most of the countries including India will not be able to meet several SDGs (Paliath, 2022). Sustainable Development Goals can be achieved in the most effective way when industry and corporate join hands with the government in this initiative by adopting and implementing sustainable governance within its system. Low-income countries raise a low percentage of GDP in revenue. As estimated by the World Bank, India will have a GDP of 6.9% for the financial year 2022–2023 which is not adequate to achieve goals like education, health care, sanitation, water, and governance. States’ major source of revenue is through tax, and it plays a pivotal role in the present economy. Amidst the revenue through tax, corporate tax is at the pinnacle. In India also, Corporate Tax constitutes the major portion of the total revenue, i.e., around 28.1%. Corporate Tax can be considered as companies’ foremost duty to contribute to the growth of society but is always painted as a hurdle to economic growth by various businesses. Tax though plays a key role in the sustainability picture but is often criticised due to a lack of good tax governance (TIMESOFINDIA.COM/Jan 27). To develop a favourable taxation system, it is required that law should be drafted considering the necessity of striking a balance between raising public revenue and allowing the creation of wealth by the business. Usually, experts believe that tax and sustainability cannot be merged as they will just impact business growth; a form of sustainability can be seen only during green or environmental tax, otherwise not. But after further contemplation, it can be realised that with incentive-based provisions and through proper tax governance, an element of sustainability can be inculcated in the entire taxation legislation. It is required that the taxation system should be designed in a manner that promotes the tendency of sustainable governance within the organisation and in lieu results in the achievement of sustainable development goals. Authors Howard Wagner and Scott Tarney also explained that like every action

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has an equal and opposite reaction, likewise, businesses shall also with the emergence of sustainability initiatives take the full leverage of the many incentives available at the federal, state, and local levels (Wagner, 2009). As stated by Oliver Wendell Holmes Jr- “I like to pay taxes. They are the price I pay for civilisation” (Pritchett, 2022). Similarly, business needs to create a social contract, through a taxation regime, and consider that as an investment for the future economy, workforce, stability, and infrastructure rather than a burden (Gower et al.). On the other hand, states should also not focus on the quantity of revenue raised but on how it is raised. With the enforcement of a progressive tax system, efficient tax collection mechanism, balanced tax policies, and incentive-based approach in today’s global world, states can support trade and investment, eradicate poverty, conserve the planet, and promote equality.

8.2 How Do Sustainable Practices Affect the Financial Performance of a Corporate Firm? Since these businesses are crucial players in the operation of the economy, there is a significant need for them to adopt sustainable practises (Beck et al., 2010). Joseph Stiglitz, an economist who won the Nobel Prize, highlights the significance of incorporating sustainability principles into the business models of financial institutions (Rahi et al., 2020). Doing so will have a considerable impact on the global economy. Corporate firms play a vital role in the economy, and it is crucial that they demonstrate a commitment to sustainable practices. This emphasis comes from research conducted by Beck et al. in 2010. Joseph Stiglitz, the Nobel Prize-winning economist, emphasises: The global marketplace will be greatly influenced by sustainable practices; hence it is imperative for financial firms to include such practices in their business strategies (Rahi et al., 2020). Let’s take an illustration. In terms of the situation and practises in the Nordic Region (Sweden, Norway, Denmark, and Finland), many financial institutions tend to incorporate ESG components into their business strategy (as said by Aleksi Lehtonenin, Head of Nordea Business Banking Finland, Nordea, 2020). Good sustainability practises have been empirically shown to be frequently essential for financial organisations since they are believed to increase the institution’s credibility by assuring dependable management and sensible resource allocation (Tsifora & Eleftheriadou, 2007). In the long run, they maximise the worth of the company (Fig. 8.1). A sound and appropriate taxation system is frequently a prerequisite for successful financial practises. While an individualised strategy that caters to the unique local contexts and demands of emerging economies is given greater significance nowadays, international standardisation and tax regulations in larger economies continue to receive far more attention (Subhanij et al.). For the purpose of helping experts and policy advisers to fully understand the complex interactions between tax policies

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Fig. 8.1 Relation between ESG practice and sustainable development of a company

and local conditions and understand the underlying justifications of the tax policy choices of these countries, there is a severe lack of qualitative literature reviews on case studies. Taxation and sustainable practices tend to be intimately interrelated. A vitality in one leads to the attainment of the latter.

8.3 Features of Taxation Regime for Fulfilment of SDGs It is paramount to create concrete tax-related policies. International organisations like International Monetary Fund (IMF), Organization for Economic Co-operation and Development (OECD), United Nations (UN), and World Bank Group are continuously emphasising that every country needs to design an effective and strong tax system which will increase their domestic resources including corporate tax percentage and finally be able to meet SDGs.

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A tax system having a component which promotes responsible tax practice, transparency, and the principle of a fair share of taxes is also appreciated by businesses and prevents the usage of tax avoidance mechanisms. 1. How Do Tax Structures and Administration Affect the Sustainable Development Goals (SDGs)? Annually, the UN Secretary General, based on the global indicator framework, delivers an SDG Progress report which is developed in cooperation with the United Nations (UN) System. Nearly 10 of the 17 SDGs have taxation as a major contributing component. Therefore, an improved taxation practice is essential for reaching the SDGs. Taxes have the potential to finance government initiatives aimed at achieving the SDGs for the following reasons: (a) Taxation has the potential of raising money; (b) It has a significant impact on equity and economic growth; (c) It shapes individual behaviours and decisions, which can have an effect on external variables, physical well-being, and gender equity as well; and (d) It can encourage trust in the government among the public and strengthen the social contracts that support development. People’s economic behaviour is significantly influenced by the way the revenue tax structure is set structured. The way that a tax system is set up has an impact on how people behave commercially. The value of a Medium-Term Earnings Strategy (MTRS) is frequently emphasised due to the most progressive and plausible tax system. One of the primary components of a MTRS strategy is Tax System Reform (TSR). In order to achieve their medium-term taxation goals, nations must structure their tax systems and increase their capacity for tax administration. This tax policy should be incorporated into the nation’s medium-term macroeconomic plan for inclusive, equitable, and sustainable growth (as highlighted in SDGs 1, 8, and 10). 2. Characteristics of taxation system which are usually appreciated by Corporate Sector a. Incentive-Based and Enterprise-Supportive Policies A taxation system aiming to raise revenue for public service as well as encouraging small, medium, and large enterprises will lead to wealth and job creation. Industry promoting green growth needs to be promoted so that a luring reason pushes the business society towards sustainable governance. Even the introduction of different incentives can also promote domestic, international trade and investment practices. A country like Ghana has also experienced the benefit of incentive-based tax regime. Ghana saw an exponential increase of 70% in foreign direct investment, and GDP increased by 1% after the major overhaul in the taxation regime in 1997 wherein tax holidays were eliminated and replaced with a 30% tax on corporate income coupled with capital allowances and reduction on import duties.

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b. Catering to Informal Sector Informal workers and industry often form a large part of developing countries’ industrial sector. But they neither pay tax nor have access to any social security and legal protection. These informal sectors are formulated mostly to avoid complex and burdensome tax systems. Therefore, it is essential that tax policies should be drafted considering the need of the informal sector, so that they can be brought into the formal segment without any complication. In 2006, Simples Nacional was established in Brazil, which instituted simple and less cumbersome taxes for micro and small enterprises. This reduced the tax burden and Brazil saw an increase of 15.6% in the formal employment paying due tax. c. Green Tax or Taxation Burden on Environmental Bads According to the World Health Organisation, climate change will cause an extra 250,000 deaths between the years 2030 to 2050. The WHO has a fact sheet on Climate Change and Health (WHO (2015), “Climate Change and Health”, Factsheet Number 266). As Muthukumara Mani, the World Bank’s Senior Environmental Economist, has observed, “Grow now, clean up later, really doesn’t work” (Financial Times (2013), op. cit.). Thus, taxation law needs to impose strictly environmental taxes on the goods and activities which affect the environment to discourage anti-ecological behaviour. Health and well-being can be prevented if heavy taxes and duties are imposed on goods like alcohol, tobacco, narcotics, etc. The importance of environmental taxes1 as a mechanism to foster a more equitable balance between the economic, social, and environmental aspects of sustainable development is being increasingly recognised. The vast majority of the time, they are imposed on market actions that have negative externalities. Such taxes simply internalise the true costs of providing goods and services by incurring the expenses that polluters impose on society and the environment (Subhanij et al.). Even the landmark climate agreement reached in 2015 at COP 21 in Paris sent a clear signal regarding the necessity for additional decarbonisation. Environmental taxes that are thoughtfully designed can ensure that consumers and businesses both consider environmental costs when making decisions and encourage innovation to progress towards decarbonisation and other environmental goals. These levies may also support the growth of new industries and competitive advantages (ICC Position Paper, 2018). Government of Denmark imposed taxes on the usage of harmful products like pesticides, scarce resources, and discharge of pollutants. Post introduction of these taxes in 1986 though the energy consumption remained constant, emission had reduced, and GDP had grown by 50% (Gowar et al.).

1

An environmental tax is a tax whose tax base is a physical unit (or a proxy of it) that has a proven specific negative impact on the environment.

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d. Transparency and Long-Termism The tax system should support long-term investment tools which are not detrimental to the environment, and propagate small, medium, and domestic industries. Such schemes and support will motivate corporate taxpayers to support the government in return. Imbibing transparency in the tax system will also lead to earning the trust of taxpayers and encourage timely payment. e. International Tax System: Support and Cooperation Tax reforms should not be limited to domestic practices but should ensure that tax authorities consider the international collaboration among the countries and international organisation. Existing initiatives like UN Transfer Pricing Issues in Extractive Industries, the Platform for Collaboration on Tax between UN, OECD, World Bank, and IMF should be supported as they help in directing the public and private money flow in the appropriate direction to achieve sustainability across the globe. G20/OECD Base Erosion and Profit Shifting Project (BEPS) project also recognises the value of effective international tax policies forming an integral part of the global tax framework which encourages business activities and job creation. It discourages double taxation and emphasises that corporate tax should be levied where economic value or profit is earned. Predictable tax rules are essential for cross-border trade. Even the Addis Ababa Action Agenda (AAAA), 2015, recognises that international income tax treaties could help businesses by reducing double taxation and fighting against tax avoidance practices. Governments should accept such international tax cooperation and distribution, and businesses should respect such principles running between the countries. This mutual cooperation will drive economic growth as business activity, cross-border investment, innovation, and production shall thrive taking advantage of international tax norms. Finance raised through an efficient taxation regime is key to the success of the 2030 SDGs. But apart from the state, the private sector also needs to put its best foot forward. Hence, business models also need to align themselves with sustainable practices to achieve a global objective.

8.4 Approach of Corporates Towards SDGs and Tax Ian Davis (Former Mckinsey’s Global Managing Director) suggested that businesses can flourish when they seize the initiatives and incentives of the government for their benefit in the fullest possible manner. Corporates need to let go of the tendency of merely complying law or considering corporate social responsibility but should make these governmental policies an integral part of their organisational structure and invest in them for holistic growth. The connection between commercial company practises and the taxation system is widely acknowledged as being essential to accomplishing the Sustainable Development Goals (SDGs). The SDGs, however, cannot be fulfilled just through economic

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advancement. Various incentives in investment practices play a significant role in achieving the goals of sustainable development. For instance, in recent years, a number of developing nations have reformed their tax structures in ways that boost hiring and company investment, while others have successfully used tax instruments to address certain negative environmental externalities. 1. Role of Corporate Taxation and the UN’s 2030 Sustainable Development Goals (SDGs) The ethical orbit of society has ominously changed. At present, sustainability, accountability, and openness serve as the standards for every other business. Being socially conscious and tax-compliant is a modern norm that corporations should meet to gain respect and succeed in the global market (Morgan, 2021). In order to promote investment, job creation, and economic growth, there must be a greater alignment between tax and investment policy. Taxation is closely tied to socio-economic progress and development since it provides the money that firms and businesses need to mobilise resources and enhance infrastructure. Taxation generates a consistent stream of income for government spending and aids in fostering an environment that is employment friendly. To enable transparency and accountability, a company must have implemented a tax policy aligned with its sustainability purposes (Valsecchi et al., 2022). Almost every essential public service is funded by tax revenues. Tax is undeniably the primary essential to raise revenue to pay for all development (of course, the sustainable developments). 2. Strategy Around Corporate Tax Effective strategies need to be formulated in order to cater to a healthy taxation regime and boost economic growth and development: (i) Businesses should develop and implement a long-term sustainable tax plan that is consistent with the framework for tax governance and sustainable tax, considering a variety of factors from the perspectives of the locale, the nation, the industry, and any other organisation (PricewaterhouseCoopers). (ii) The company concerned must decide on the tax opportunities and risks related to the SDG. (iii) It is necessary to identify the key SDG tax performance indicators. (iv) Both internal and external documentation must describe the tax implications for the SDGs. To encourage progress, there should be total transparency. (v) It is encouraged to use technology for data administration, strategic direction, analysis, and reporting. (vi) Assurance on GRI 207: tax and/or Total Tax Contribution reports shall be included in tax reports. ESG has been promoted as a strategic tool to help businesses increase profits (Albuquerque et al., 2012), and is also seen as a sign of corporate responsibility, goodwill, and customer confidence (Alsayegh et al., 2020). Additionally, adopting

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sustainable practises gives businesses a competitive edge over their industry counterparts by steadily improving production and intensity while lowering systemic risk exposure (Albuquerque et al., 2019; Lourenço et al., 2012). Further, ESG practises are linked to lower financial, operating, and debt expenses (Eliwa et al., ARJ 35,2 294 2019). Investors frequently tend to view ESG performance as a predictor of future stock performance and risk reduction (Broadstock et al., 2020). When both business and state work towards achieving sustainable growth through proper governance strategy, then it could be concluded that the world will be in safer hands and SDGs will be achieved in a very little time span. How transformation in society can be driven by a corporate through the taxes paid can also be understood through Vodafone Case Study.

8.5 A Peek into Vodafone’s Contribution University of St Andrews conducted a case study on Vodafone’s Role in Sub-Saharan Region based on the “Taxation and our total economic contribution to public finances” reports during 2012–2018. Vodafone is a publicly traded telecom company that has listings on both the UK and US stock exchanges. Established in 1991, the company falls under the category of a Multinational Corporation (MNC) and is one of the largest in the UK with a successful track record. Their workforce of 93,000, as of 2020, operates in approximately 45 countries around the globe. With its subsidiary Vodafone Global Enterprise, the company serves clients in over 150 countries, including Sub-Saharan Africa. This case study aims to assess the extent to which the contributions of one MNC can help increase access to rights for individuals in six different SSA countries. The purpose here is to emphasise how a contribution of the company (Vodafone) gives a push towards the achievement and progress of the SDGs (Hannah et al., 2022). Vodafone being involved in economic activities in Sub-Saharan Africa contributed a significant amount under various heads, namely direct revenue contribution tax, direct revenue contribution non-tax and indirect revenue contributions, capital investment, and direct employment. This comprises corporate taxes, business rates or similar charges, employers’ national insurance contributions or equivalents, as well as taxes specific to certain industries (such as “special” taxes or “telecoms” taxes), and other levies that contribute to the government’s revenue generation. The study analysed the impact of Government revenue, Vodafone’s contribution, and increased access to essential services, such as clean water, sanitation, and health care, using the economic modelling tool called Government Revenue and Development Estimations (GRADE). The projections indicated that an increase in Government revenue equivalent to Vodafone’s contribution would enable an estimate of three lakhs ninety-two thousand one hundred and thirty people to access clean water and six lakhs seventy-three thousand one hundred and nine people to have access to basic sanitation in six countries of Sub-Saharan Africa. Moreover, it would result in nearly about fifteen thousand one hundred and seventy-five additional children attending

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school for an extra year over five years and preventing nine thousand one hundred and sixty-five under-five deaths and one thousand three hundred and twenty-five maternal deaths. The tax contribution of one Multinational Corporation (MNC) has been found to have a strong positive correlation with improved access to essential components of health, like clean water, sanitation, and education, in six countries in SubSaharan Africa (SSA). These findings highlight the potential for a single MNC, such as Vodafone, to positively impact the progress of the Sustainable Development Goals (SDGs). This underscores the significant role that corporations, governments, consumers, investors, and international organisations can play in assisting low and lower middle-income developing economies towards SDG progress through healthy tax contributions. During the First Global Conference on the Platform for Collaboration of Tax, which took place during February 14–16, 2018, John Connors, Group Tax Director at Vodafone, remarked that since stable tax environments encourage business investment, corporate objectives eventually sufficiently align with those of international policymakers and tax authorities. William Morris, Partner at PricewaterhouseCoopers and Chair of the OECD Business and Industry Advisory Tax Committee (Taxation and SDGs, 2018), reiterated the idea further. Consequently, nations worldwide ought to boost their support for stronger tax systems and pay closer attention to the cascade of effects of their tax policies. Together with efforts to combat tax evasion and tax avoidance, governments and essential stakeholders must continue to collaborate with a view to maintaining a just and effective system of international taxation. The Vodafone case study in the SSA (Hannah et al., 2022) evidently highlights how a healthy taxation regime contributes to the SDGs and towards a better future. Countries in developing and emerging markets require economic growth that is robust, steady, and inclusive (SDG 8). The post-2008 financial crisis era has shown that many of these countries still rely excessively on the expansion of developed economies and that, to foster long-term prosperity, they must create their own internal markets and maintain peaceful relations with neighbouring countries. When tax systems have wide bases and low rates to fulfil revenue needs, they are at their strongest. Thus, a well-planned tax system can encourage and aid in stabilising growth, whereas one that is badly constructed can impede growth and increase its volatility (SDGs 8, 11, 12, 13, 14, and 15).

8.6 The Reciprocal Relationship Between Taxation and Corporate Image Building An efficient taxation system is, thus, essential to sustainable development because it encourages the core duties of an efficient government and creates the conditions for economic growth (Pritchard, 2016). The entire tax system, including its administration and structure, must be perceived as fair and effective in order to promote reliance and confidence in a tax system and support floating revenues to meet the

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SDGs. The presence of a fair adjudication mechanism is essential to resolve disputes and disagreements between the tax administration and taxpayers. Tax commissioners too should be equipped in a manner to interact with taxpayers in a competent and unbiased manner. Many of the developing nations continue to face a clear and definite challenge in dealing with this. Obtaining public trust in government is a considerable step to success, particularly in the tax system. In the realm of taxation, fiscal transparency plays a critical role by ensuring clear and comprehensible tax laws and transparent expenditure of tax revenues. As stated by Winifred Byanyima, the Executive Director of Oxfam International, transparency is crucial for establishing trustworthy institutions and attaining the Sustainable Development Goals. Corruption, a prevalent issue that hinders the fulfilment of the SDGs often has a detrimental effect on the tax system as well (Taxation and SDGs, 2018). Thus, it should be the inherent duty of corporate firms to resort to a healthy taxation regime and not indulge in any sort of corrupt and illegal practices. That degrades the very purpose of a taxation system or a fiscal policy. To promote sustainable development, taxation policies need to transcend the sole purpose of generating revenue and leverage the power of government incentives to guide private sector behaviour towards the common good. These policies should adopt a comprehensive approach, considering social and environmental implications, and use their leverage to secure sustainable development outcomes (Subhanij et al.).

8.7 Conclusion “Going green” is not only beneficial for a company’s reputation and public relations, but it also makes economic sense. Businesses should consider sustainability initiatives not only for cost savings and competitiveness but also because of the tax advantages that it entails. Incorporating tax incentives with the financial benefits of going green makes sustainability more cost-effective (Wagner, 2009). The possibility that the tax system is causing income or wealth inconsistencies could threaten societal cohesion. According to specific findings, the growing profitability discrepancies may ultimately prevent a monetary boom. Consequently, the difficulties of a fair tax system are linked to economic expansion as well. Social protection and taxation are therefore closely related (Taxation and SDGs, 2018). The Sustainable Development Goals (SDGs) set high standards for every nation, with the aim of eradicating all forms of poverty, addressing inequality, and combating climate change without leaving anybody behind. These objectives need significant financial resources to be met. The Addis Ababa Action Agenda (AAAA) acknowledges that a significant portion of the additional public funding needed to achieve these goals must come from domestic sources (AAAA, 2015). That’s where taxes have a crucial role to play in funding the SDGs. ESG considerations have become increasingly crucial for companies across all industries. Research from McKinsey Global Survey shows that 83% of C-suite executives and investment experts expect ESG projects to provide greater shareholder

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value in the next five years (McKinsey, 2020). Similarly, Accenture’s research on responsible leadership found that companies with higher ESG ratings enjoyed operating margins 3.7 times higher than those with lower ESG ratings (Accenture, 2022). The integration of sustainability into a company’s operations is an effective approach to creating long-term value, considering environmental, social, and economic factors (Haanaes, 2023). And a significant move to ensure whether the ESG measures are adequately complied to is through a healthy taxation regime, which consequently accelerate progress towards the SDGs. Companies that recognise that their business impacts the environment create accountability in society at large. It highlights the social responsibility of slowly and progressively ensuring sustainability. As Michael Rogers, Operations Director of USInsuranceAgents.com, puts it, “The benefits of sustainability, such as improved company image and competitive advantage, are encouraging consumers to embrace the sustainability trend. …” (Rogers, 2022). Often enough, companies undertake sustainability projects for profitable reasons and take advantage of tax rebates that can render their choice even more appealing. The impact of tax revenue, more importantly fair taxation, contributes to access to fundamental rights, progress toward the SDGs, and ultimately survival in several developing economies across the world. It can have a significant impact on the population’s access to rights. The rules and compliances of the home and host countries should thus be supported by every business enterprise. (Gjedrem, 2000) Prioritising it should come above any CSR initiatives. Prior to any CSR activity, it should be evaluated as well. There lies the benefit of a successful taxation regime.

References Accenture. (2022, November 10). 5 elements of responsible leadership. Accenture. Retrieved February 1, 2023, from https://www.accenture.com/us-en/insights/consulting/responsible-lea dership Addis Ababa Action Agenda of the Third International Conference on Financing for Development (Addis Ababa Action Agenda). (2015). Retrieved January 31, 2023, from https://sustainabled evelopment.un.org/content/documents/2051AAAA_Outcome.pdf Albuquerque, R., Durnev, A., & Koskinen, Y. (2012). Corporate social responsibility and asset pricing in industry equilibrium. SSRN1961971. Retrieved from January 2023. Albuquerque, R., Koskinen, Y., & Zhang, C. (2019). Corporate social responsibility and firm risk: Theory and empirical evidence. Management Science, 65(10), 4451–4469. Alsayegh, M. F., Abdul Rahman, R., & Homayoun, S. (2020). Corporate economic, environmental, and social sustainability performance transformation through ESG disclosure. Sustainability, 12(9), 3910. Annual report 2021. Cloetta. (n.d.). Retrieved February 1, 2023, from https://www.cloetta.com/en/ annual-report-2021/ Beck, T., Demirguc-Kunt, A., & Levine, R. (2010). Financial institutions and markets across countries and over time: The updated financial development and structure database. Academic.oup.com. Retrieved February 1, 2023, from https://academic.oup.com/wber/articleabstract/24/1/77/1735383

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Morgan, C. (2021, September 13). The impact of tax on delivering the sustainable development goals. KPMG Responsible Tax. Retrieved February 2, 2023, from https://responsibletax.kpmg. com/article/the-impact-of-tax-on-delivering-the-sustainable-development-goals Paliath, S. (2022, September 14). World not on track to achieve most sustainable development goals by 2030: Report. Indiaspend. Retrieved January 31, 2023, from https://www.indiaspend.com/ development/world-not-on-track-to-achieve-most-sustainable-development-goals-by-2030-rep ort-834783#:~:text=Projections%20of%20the%20Goalkeeper’s%20report,%2C%20and%20t uberculosis%20(TB) PricewaterhouseCoopers. (n.d.). SDGs and tax. PwC. Retrieved February 1, 2023, from https:// www.pwc.nl/en/services/tax/tax-transparency/sdgs-and-tax.html Pritchard, W. (2016, March 15). Taxation and state building: Towards a governance focused tax reform agenda. GSDRC. Retrieved February 1, 2023, from https://gsdrc.org/document-library/ taxation-and-state-building-towards-a-governance-focused-tax-reform-agenda/ Pritchett, A. A. L. (2022, October 12). Taxes: Price of civilization or tribute to leviathan? Harvard Kennedy School. Retrieved January 31, 2023, from https://www.hks.harvard.edu/centers/mrcbg/ programs/growthpolicy/taxes-price-civilization-or-tribute-leviathan Rahi, A. B. M. F., Akter, R., & Johannson, J. (2020, December 11). Do sustainability practices influence financial performance? Evidence ... Retrieved January 31, 2023, from https://www.researchgate.net/publication/353954491_Do_sustainability_practices_influe nce_financial_performance_Evidence_from_the_Nordic_financial_industry Rogers, M. (2022, October 19). 6 benefits of becoming a sustainable business: Corporate strategies. Environment + Energy Leader. Retrieved February 2, 2023, from https://www.environmentalle ader.com/2016/03/6-benefits-of-becoming-a-sustainable-business/ Subhanij, T., Banerjee, S., & Jian, Z. (Eds.). (n.d.). Tax policy for sustainable development in Asia and the Pacific. https://repository.unescap.org/bitstream/handle/20.500.12870/3093/ ESCAP-2018-RP-Tax-policy-sustainable-development-Asia-Pacific.pdf?sequence=1 Tsifora, E., & Eleftheriadou, P. (2007). Corporate governance mechanisms and financial performance: Evidence from Greek manufacturing sector. Management of International Business and Economics Systems, 1, 181–211. Tax and the United Nations Sustainable Development Goals. (n.d.). Retrieved January 31, 2023, from https://cdn.iccwbo.org/content/uploads/sites/3/2018/02/icc-position-paper-on-taxand-the-un-sdgs.pdf Tax policy for sustainable development in Asia and the Pacific. ESCAP. (n.d.). Retrieved January 31, 2023, from https://www.unescap.org/publications/tax-policy-sustainable-development-asiaand-pacific TIMESOFINDIA.COM/Jan 27, 2021. (n.d.). Union budget: Types of deficits & how they impact economy—times of India. The Times of India. Retrieved January 31, 2023, from https://timesofindia.indiatimes.com/business/faqs/budget-faqs/union-budget-types-of-def icits%E2%80%99-how-they-impact-economy/articleshow/80484803.cms UN Global Compact 20th anniversary report. DNV. (n.d.). Retrieved February 1, 2023, from https:// www.dnv.com/publications/UNGC-Report/decade-of-action.html United Nations. (n.d.). The 17 goals | sustainable development. United Nations. Retrieved January 31, 2023, from https://sdgs.un.org/goals#history Valsecchi, A., Ku´zniacki, B., & Damberger, R. (2022, February 9). Building a sustainability-driven tax environment in the EU area: Reality or wishful thinking? Kluwer International Tax Blog. Retrieved February 2, 2023, from https://kluwertaxblog.com/2022/02/10/building-a-sustainab ility-driven-tax-environment-in-the-eu-area-reality-or-wishful-thinking/ Wagner, H. M. (2009, April 28). Tax incentives make sustainability more rewarding: Green Development. Area Development. Retrieved January 31, 2023, from https://www.areadevelopment. com/taxesincentives/4-28-2009/sustainability-incentives.shtml World Health Organization. (n.d.). Climate change and health. World Health Organization. Retrieved January 31, 2023, from https://www.who.int/news-room/fact-sheets/detail/climatechange-and-health

Chapter 9

Green Dispute Resolution: A Sustainable Way of Resolving Disputes Akash Gupta and Arushi Bajpai

Abstract Green dispute resolution refers to a process of resolving conflicts in a manner that is environmentally and socially responsible, as well as economically viable. This approach is becoming increasingly relevant in the corporate world, where companies are being held accountable for their actions and the impact they have on society and the environment. In this chapter, the authors will explore the importance of sustainable dispute resolution in the corporate world and how this approach can contribute to the overall well-being of society. One of the key benefits of sustainable dispute resolution is that it promotes transparency and accountability in the resolution of disputes. This is essential for maintaining trust in the corporate world and ensuring that companies held responsible for their actions. By adopting sustainable dispute resolution practices, companies can demonstrate their commitment to social and environmental responsibility and can build trust with their stakeholders. Another benefit of sustainable dispute resolution is that it helps to minimise the negative impact of conflict on the environment. This is especially important in the corporate world, where many disputes are related to environmental issues such as pollution, resource depletion and deforestation. By adopting sustainable dispute resolution methods, companies can help to resolve these disputes in a manner that protects the environment and promotes sustainable practices. The chapter aims to discuss how can corporates benefit from sustainable dispute resolution practices in developing greater efficiency. Keywords Sustainable · Dispute resolution · ADR · ODR · Green arbitration

The authors would like to thank Ms. Anjali Tripathi (Law Student, Jindal Global Law School) for her research assistance. A. Gupta (B) · A. Bajpai Jindal Global Law School, O.P. Jindal Global University, Sonipat, India e-mail: [email protected] A. Bajpai e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 A. Shrivastava and A. Bhusan (eds.), Sustainable Boardrooms, Responsible Leadership and Sustainable Management, https://doi.org/10.1007/978-981-99-4837-6_9

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9.1 Introduction The quality of our lives depends not on whether or not we have conflicts, but on how we respond to them —Thomas Crum.

Sustainable dispute resolution refers to a process of resolving conflicts in a manner that is environmentally and socially responsible, as well as economically viable. This approach is becoming increasingly relevant in the corporate world, where companies are being held accountable for their actions and the impact they have on society and the environment (Purvis et al., 2018). Under this chapter, the authors aim to explore the importance of sustainable dispute resolution in the corporate world and how this approach can contribute to the overall well-being of society. The history of green dispute resolution can be traced back to the 1970s and 1980s, when the environmental movement was gaining momentum. During this time, there was growing concern about the impact of human activities on the environment, and a recognition of the need for more sustainable practices in all areas of life. This led to the development of the green dispute resolution movement, which aimed to provide a mechanism for resolving environmental disputes in an environmentally responsible manner (Agudelo et al., 2019). One of the early pioneers of green dispute resolution was the environmental lawyer, Christopher Stone. In 1972, Stone published an article titled ‘Should Trees Have Standing?’ in which he argued that the environment should be given legal standing in disputes, just like people and corporations. This idea was ground-breaking at the time, and it sparked a debate about the rights of the environment and the importance of sustainable practices in the resolution of disputes (Pavlik, 2015). Whenever there exists a dispute, there are different ways of resolving the dispute. Primarily, there are two different dispute resolution methods, adversarial and nonadversarial. In adversarial method, like litigation in court—there is adjudication by a third party and entire process revolves around strict procedures and formalities. However, in non-adversarial method, including some alternative dispute resolution mechanisms—there is no adjudication process involved and is more informal process in nature. Adversarial conflict resolution methods are often not described as sustainable due to excessive depletion of resources; hence through this chapter it is advocated that adversarial methods should only be employed in situations when it is determined that a dispute cannot be resolved through more socially focused and sustainable compromise-based dispute settlement procedures that is alternative dispute resolution. Hence in the subsequent years, the green dispute resolution movement continued to grow, and alternative dispute resolution methods such as mediation and arbitration began to be used more frequently in environmental disputes. These methods were seen as a way to resolve disputes in a more sustainable manner, as they were less adversarial than traditional court proceedings, and encouraged cooperation between the parties involved in the dispute (Ansari et al., 2017).

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In the 1990s, the green dispute resolution movement gained further momentum with the introduction of environmental dispute resolution processes in many countries. These processes provided a framework for resolving environmental disputes in a manner that was both effective and environmentally responsible. They also helped to raise awareness about the importance of sustainable practices in conflict resolution and encouraged the development of innovative approaches to dispute resolution. Today, green dispute resolution is an established field of practice, and it continues to evolve as new challenges and opportunities arise. With the increasing importance of sustainability in all areas of life, the role of green dispute resolution in promoting sustainability is more important than ever. It is seen as a key tool for resolving environmental disputes in a manner that is both effective and environmentally responsible, and it is widely recognised as an essential component of sustainable development. Alternative dispute resolution methods (hereinafter referred to as ‘ADR’) are arbitration, mediation, negotiation, Lok Adalat and conciliation (Xavier, 2006). These methods are often preferred over traditional litigation because they can be quicker, less costly and more confidential in approach. Additionally, ADR can be more effective at resolving disputes because it allows parties to find creative solutions that may not be possible in a courtroom setting. When disputes are resolved through ADR, the parties can find solutions that consider the long-term impacts on the environment, rather than just focusing on short-term financial interests. This can lead to more sustainable outcomes that benefit not only the parties to the dispute but also the environment at large. It can therefore be considered as a Green Dispute Resolution. One of the main benefits of green dispute resolution is that it can help to preserve and protect the environment (Maity, 2018). However, whether all alternative dispute resolution methods are sustainable or not is a debatable matter. The present chapter aims to discuss the meaning of sustainable dispute resolution, green dispute resolution, factors affecting the sustainability, role of online alternative dispute resolution in light of environment, relationships and trusts in between the disputing parties, initiatives taken by the courts and different organisations to reduce the carbon emission. Green dispute resolution refers to the effective and efficient approaches to resolve conflicts and disputes in a way which does not has harsh impacts on the environment (Mania, 2015). These methods aim to find mutually acceptable solutions that are both fair and environmentally responsible. The authors also purport to discuss how the holistic approaches to dispute resolutions can be incorporated by the business houses and its benefits in the long run. Green dispute resolution can be applied to a wide range of disputes, including commercial disputes and disputes related to natural resource management, pollution control and land use. It can also be used to resolve disputes between individuals, businesses and governments. The use of green dispute resolution is becoming increasingly important as the world faces a wide range of environmental challenges, including climate change, deforestation and biodiversity loss. By finding mutually acceptable solutions in line with environmental well-being, the parties can work towards a more sustainable and healthier environment for all. One of the ways through

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which parties can resolve disputes taking into consideration environment is online alternative dispute resolution or online dispute resolution. During COVID-19 stage, the physical courts were completely on hold, there was a complete shift of physical proceedings to the new normal—having things online. This has ensured that there is no hamper in the administration of justice. This has also reduced the impact on environment, and reduction in carbon footprints due to less involvement of travel and transportation. However, this is not the first time when the Indian courts have resorted to virtual reality. Way back in 2003, the Supreme Court of India held that evidence can be recorded using video conferencing and this is as per the procedure established by law (State of Maharashtra v. Prafulla Desai, 2003) Following the Supreme Court judgment, subordinate courts have also framed guidelines to take evidence using video conferencing (Model Rules on Video Conferencing, 2020). The judiciary has been employing the use of technology in handling the filed cases ranging from e-filing to virtual hearing (PEW Trusts, 2021). According to the Supreme Court, an open court is crucial to the administration of justice (Mate, 2015). The court has observed that all judicial proceedings, whether civil, criminal or other, must take place with complete transparency. (Naresh Shridhar Mirajkar v. State of Maharashtra, 1966). As a result, the Supreme Court ruled that hearings should be televised live since it is a requirement of Article 21 of the Indian Constitution to enable access to justice in the age of virtual hearings (Swapnil Tripathi v. Supreme Court of India, 2018). Several nations, including Brazil, England, Canada and Germany, broadcast live coverage of Supreme Court proceedings (Katju, 2020).

9.2 Online Dispute Resolution: Time for Action India is at the forefront of digital transactions in the world with 23 billion digital payments in the third quarter of 2022 (Economic Times Online, 2022). This indicates the invasion of global technology and internet in the Indian market. The expansion of internet usage among Indians has contributed to the success of companies operating in the digital market. These transaction means can be very convenient and opportune but at times can prove to be dangerous. These digital transactions are not completely safe and there exist high likelihood that some of the transaction leads to a dispute. And in order to resolve that, there needs to be an easy and convenient form of dispute resolution. Both the parties, including the customer and the company, should be satisfied with the dispute resolution mechanism. Otherwise, there may be subsequent challenges or non-performance of the outcome of the dispute resolution. In case the parties of a dispute reside in two different countries, litigation is not the most affordable alternative, and subsequently will prove to be highly expensive. There comes the demand for ODR. Online dispute resolution can be a convenient method of dispute resolution in such cases. In the peak evolvement of technology, online dispute resolution mechanism is the need of the hour (Chaisse & Kirkwood, 2022). Online dispute resolution is a

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form of dispute resolution where the proceedings are conducted online with the help of human intervention. Processes for resolving disputes are typically thought of as serving a single purpose, which is to solve issues. Online, probably more than offline, it has become clear that dispute resolution procedures serve two purposes: they resolve conflicts while also fostering trust (Rule & Friedberg, 2006). ‘The power of technology to resolve disputes is exceeded by the power of technology to generate disputes’ (Katsh & Rabinovich-Einy, 2019). However, approximately, 3–5% of online transaction ends up in dispute (Katsh & Rule, 2016). Online dispute resolution (hereinafter referred to as ‘ODR’) refers to the use of technology, such as the internet or mobile apps, to facilitate the resolution of disputes remotely (Federal Trade Commission, 1999). ODR can have a range of environmental benefits compared to traditional in-person dispute resolution methods. ODR enables remote participation by parties in dispute resolution, which can lessen the need for travel and the accompanying greenhouse gas emissions. ODR is frequently quicker and more effective than in-person dispute resolution, which can cut down on the total amount of time and resources needed to settle a disagreement (Nenstiel, 2006). ODR can provide access to dispute resolution for those who live in isolated or underserved locations, reducing the need for travel and also the environmental effect of conflict resolution (Katsh, 2001, 2006, 2012). Though the creation and disposal of electronic equipment, as well as the energy needed to run the technology employed in ODR, can also have some adverse effects on the environment. Overall, the environmental impact of ODR will be influenced by the particular technologies and procedures used and the degree to which they might lessen the environmental effects of conventional in-person dispute resolution techniques. The COVID-19 pandemic was a stir to the further use technological means. It served as a catalyst for more digitization of proceedings as the arbitration community transitioned to virtual hearings, which lower the carbon footprint of arbitrations. 1. ODR in Indian Context ODR is a new and innovative approach to dispute resolution that uses technology to resolve disputes in a manner that is fast, cost-effective and accessible. In India, ODR has been gaining popularity in recent years, with the introduction of several ODR platforms, such as the Centre for Online Resolution of Disputes (CORD), SAMA and Presolv 360. One of the key advantages of ODR in India is its accessibility. Many people in India are not able to access traditional court systems due to the high costs and long waiting times associated with traditional court proceedings. ODR provides an alternative to these traditional court systems, making dispute resolution more accessible to people who would otherwise not be able to afford it (NITI Aayog Expert Committee on ODR, 2021). In addition, ODR can also provide faster, and more efficient dispute resolution compared to traditional court systems. By using technology to facilitate the dispute resolution process, ODR can reduce the time and cost associated with traditional court proceedings, making it a more attractive option for majority of people (Katsh & Rifkin, 2001).

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One of the ODR Platform in India, Presolve360 portrayed their experience in ODR and highlighted that the disputing parties saved Rs. 362 million in costs by resolving online, more than 7.8 million days saved due to quicker dispute resolution, saved 6.5 million sheets of paper due to paperless dispute resolution, record settlement rate of 80% achieved in pre-institution mediation matters referred by courts, improved digital access to justice for 430,000 parties, one resolution at a time (Presolv360, 2023).

9.3 Sustainable Dispute Resolution ODR provides a chance to reimagine the dispute resolution system in a way that is user centric and sustainable as well. Despite the fact that the word ‘sustainability’ is frequently used these days, it should be underlined that the majority of people still relate it to an environmental context. Sustainability is often associated with environmental protection, living sustainably, energy conservation and reducing pollution. The words ‘sustainable environment’ and ‘sustainable development’ habitually appear in ordinary speech, not just among scientists but also among regular people. Thus, it is still unclear how widespread this idea is in society, and it is important to recognise that it goes beyond the simple desire to conserve natural resources (Kaminskien˙e et al., 2014a, 2014b). For a significant portion of 2020 and 2021, Covid-19 lockdowns made virtual hearings a need rather than a sustainability-driven choice, but the campaign was launched before the global pandemic. If everything is done digitally in the form of ODR and there is no travel involved, the exchange of requests, the search for and review of relevant materials, the preparation of responses, and the delivery of those responses occurring in litigation and arbitration will reduce the use of paper to complete the discovery (Doernhoefer, 2021). According to a study by the Campaign for Greener Arbitrations, approximately 20,000 trees could be needed to offset the carbon emissions from just one international arbitration. This startling number highlights the urgency of implementing more environmentally friendly procedures through virtual mode or use of innovative conflict mechanisms. The Green Pledge 2019 calls on participants to take concrete actions to lessen the impact of dispute resolution techniques on the environment. Some of the suggestions made include avoiding needless travel, using electronic packages for court hearings and taking public transportation to court. A business that operates in accordance with the province’s environmental rules can confidently avoid legal complications, such as paying offenders’ fines and other significant penalties and settling lawsuits brought against such corporate activities. In this context, resorting to Sustainable dispute resolution tactics holds a special significance.

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1. Essentials for a Sustainable Dispute Resolution There are certain essentials for being a sustainable dispute resolution, namely, privacy and confidentiality, preserving relationship, resources, convenience and cost. As an alternative to confrontational processes, dispute resolution techniques like mediation are interest-oriented, reasonably inexpensive, relationship-friendly, quick, and controlled by the parties involved, speaking of the processes’ outcomes. Even in situations when the parties are unable to conclude, the degree of satisfaction with these ADR processes is typically rather high. Because they aim to create social peace rather than legal peace, these processes might be described as durable. As opposed to other conflict resolution techniques like mediation strives to improve interpersonal relationships, making it more oriented to society requirements. Scandinavian model of mediation reflects the following perspective on mediation: Although it is obvious that mediation cannot ‘save the world’, it is nevertheless important to adopt a conflict resolution strategy that acknowledges the interdependence of society and the needs of the individual in both large and little disputes (Vindelov, 2012). Thus, the reflexive mediation model adopts a longer perspective and has a sustainable viewpoint. All of the criteria that were used to define sustainable conflict resolution are completely satisfied by mediation. Thus, the disputes in which virtual hearing is not an appropriate route of settlement then Mediation can be considered as sustainable dispute resolution practices instead of ODR. Advantages of mediation are slowly becoming clear, and corporate clients are perceived to be noticing it in present scenario. However, there are certain limitations to the growth of green dispute resolution. One of the key challenges is the lack of standardisation and uniformity in the field. This restraints organisations and individuals to understand and access the full range of green dispute resolution services and can limit the growth of the field (Abdullah, 2015). Another limitation can be the lack of awareness of green dispute resolution among some stakeholders, particularly in the developing countries (Shah et al., 2022). As a result, companies are reluctant to adopt sustainable practices in dispute resolution mechanisms. However, as awareness of the importance of sustainable practices continues to grow, the practice of green dispute resolution is likely to become more widespread, leading to further innovation and growth in the field.

9.4 Mediation: The Way Forward Mediation is more informal than its alternatives, requiring less physical infrastructure and supporting resources (Yeoh, 2018). In litigation, i.e., legal procedures include judges, staff, court reporters, bailiffs and jurors, in addition to the judicial system’s physical infrastructure (e.g., courtrooms). Even arbitration usually has more infrastructure and formality than the modest mediation process. In a mediation procedure, only the mediator, the parties and a few conference rooms—virtual or otherwise are required. The little staffing and infrastructure in

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mediation directly translates to less waste from consumables, a smaller carbon footprint and decreased energy use. Consider the effects of the expanding usage of videoconferencing for mediation. The necessity for parties to physically go to a central location for all the mediation session is also replaced via videoconferencing. Videoconferencing is the ‘green choice’ since the reduced travel costs result in a significant reduction in carbon emissions. There is, however, a downside to this too. While it is simple to see the environmental impact of paper, notably the felling of trees, it may be more difficult to picture and calculate the carbon emissions from the electronic gadgets required to view nonpaper documents. The sustainability issues with laptops, tablets and phones, both in terms of the resources required to create the gadgets and the electricity required to power them, are, nevertheless, becoming more widely recognised. Similar to in-person hearings, remote hearings conducted via platforms like Zoom also need power to function. These are not insurmountable issues, but they highlight the importance of the promises’ added emphasis on internal policies, such as urging signatories to consider sustainable energy suppliers, rather than just working procedures in actual dispute proceedings. Of course, in a case where a lawyer is defending a client in a heavily polluting sector, all of these activities could seem like small drops in the ocean. In fact, one could make the case that representing parties in climate actions against firms that participate in questionable practises is the best way a lawyer can contribute to more environmentally friendly dispute resolution. While a lawyer must always act in the best interests of the client, whoever that may be, there are many ways they can improve the environment during the dispute resolution process, including by using less paper, auditing their internal procedures and vendors, and giving virtual hearings preference whenever possible. The aim of such methods is to successfully sustain the outcome achieved after the dispute has been resolved. They address the relational and emotional damages that have arisen in a conflict in a collaborative and consensual manner. This approach to conflict resolution prevents feelings of injustice, ill will, resentment, anger and dissatisfaction to linger and cause escalation of the conflict (Runesson & Guy, 2007). In other words, sustainable dispute resolution is much more than deal making or fighting for interests. Emphasising too much on deal making or interests of the party could perpetuate the ensuing of a dispute, suppressing the issues that later emerge as feelings of ill will and resentment, which could affect the day-to-day lives of the stakeholders involved (Odidison, 2003). While legal processes and decision-making are seen as value-free, sustainability in dispute resolution also underlies the need to make ethically correct decisions (Lehtinen & Salmimies, 2022). It is believed that legal justice is not always actual justice. Law is often seen as indeterminate, conflictual, contested and manipulable that it cannot always do ‘justice’ while resolving disputes. In some situations, negotiated solutions or negotiated justice are more just than the legislated or court-decided justice, even if they deviate from general principles of law (as long as they are not unlawful) (Menkel-Meadow, 2004). Going forward, it is important to note the difference between the two terms ‘dispute’ and ‘conflict’. The term ‘conflict’ relates to the underlying problem and is often intangible and unstable. It relates to the emotional and relational aspects of a

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case. The term ‘dispute’, on the other hand, is about stable and concrete things such as interests of the party, liability, guilt and innocence. Dispute is often connected to an event with legal significance, for example, breach of contract. The outcome of a court proceeding resolves the dispute between the parties and not the conflict. The conflict between the parties remains and often gets escalated as a result of such proceedings (Centre for Sustainable Justice). The judiciary functions according to the rule of law and the extent to which it can contribute towards sustainable resolution of a problem or conflict is also bound by law. A judge is constrained by her duties and powers under the law and has little freedom to be innovative while offering solutions to resolve the dispute. Sustainability, which means ensuring a lasting solution to the conflict, could be brought about through Alternative Dispute Resolution (‘ADR’) processes. ADR processes such as mediation can be strategically prepared to establish a foundation for sustainable conflict resolution outcomes. This way of conflict resolution requires critical thinking and reflection. Critical reflection requires an open mind and heart, willingness to engage and question one’s own interpretation of the situation, suspension of blame and ability to slow things down (Odidison, 2003). This push for mediation, according to Damian Croker, chair of the Campaign for Greener Arbitrations’ Latin America group, could have a significant impact on the legal system’s environmental sustainability. By switching to mediation instead of litigation, the world will become much greener. And in terms of their clientele, legal firms have a considerable influence on that. The Mediators’ Green Pledge also offers a number of suggestions for signatories to consider during the mediation process, such as bringing the pledge up in professional conversations. By taking the Mediators’ Green Pledge (Doyle, 2022). The World’s Mediator’s Alliance on Climate Change (WoMACC) actively encourages mediators to find methods to make their mediation practises more eco-friendly. The pledge’s signatories are members of a global community of conflict resolution specialists who have pledged to taking concrete actions and exchanging advice on best practises in order to reduce their carbon footprints. The pledge’s potential to have a beneficial influence on mediators’ actions in a way that fundamentally strengthens an ecologically friendly method of addressing and resolving disputes (Doyle, 2022). They understood that the Mediators’ Green Pledge allows for the expression of a wide aspiration, therefore they encouraged their membership to join it both as individuals and as a group of professional practitioners.

9.5 Green Arbitration Among all the alternative dispute resolution mechanisms, the most opted mechanism by the companies and industrial sector is arbitration both on domestic and international levels due to the binding nature of its award. Though arbitration being adversarial nature is less sustainable way of dispute resolution. Therefore, experts

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have now proposed the use of green arbitration to serve the interests of both corporate and society. One of the major law firms of the world, Herbert Smith Freehills, has conducted a study which revealed that in-person hearing has a greater carbon footprint and entails higher expenses as compared to virtual hearings. As Counsel of DLA Piper Sanderson points out, ‘if you are cutting out photocopying, paper and flying, that not only reduces the carbon footprint but also potentially reduces the costs involved. It is a much more efficient way of managing a proceeding’ (Pollard, 2020). In many instances, customers are considering the carbon emissions policy of their suppliers themselves. Big multinationals thus will have to examine their supply chains and how their vendors are acting in their own reporting. Therefore, it is now important to adopt virtual sustainable dispute resolution. The case study contrasted in-person hearings with procedurally comparable virtual hearings and found that the in-person hearing produced 111 tonnes of CO2 equivalent (CO2 e). This is 19 times the carbon footprint of a similar hearing held virtually (estimated to give rise to 6 tonnes CO2 e). This CO2 e differential is similar to the average amount of CO2 produced by 15 persons in the EU over the course of a year. In-person hearings were also found to be around 6% more expensive than virtual hearings, a difference worth tens of thousands of pounds sterling. For inperson hearings, the top three sources of carbon emissions were found to be travel (92.7% of the hearing’s overall emissions), substantial hearing preparation (3.7% of emissions) and accommodation (2.5% of emissions). The top three sources of carbon emissions for virtual hearings were determined to be substantial hearing preparation (representing 70% of the hearing’s overall emissions), virtual counsel attendance (representing 12% of emissions) and virtual participant attendance (2% of emissions). The term ‘substantive hearing preparation’ refers to the time that the counsel teams invested in getting ready for the hearing (including, but not limited to, time spent on drafting submissions and crossexaminations but excludes time invested in getting ready for the hearing logistically). The study observed that in-person hearing or virtual hearing debate should be decided on each case-to-case basis. Two important factors need to be considered while making a choice in between in-person hearing and virtual hearing, that is, environmental impact and cost of the hearing. There are other factors which also affect this decision-making, namely, complexity of the dispute, availability of participants, the amount of evidence involved in the case, number of language used on the proceedings (Inside Arbitration, 2022) ‘If the international arbitration community is to stay relevant, it needs to address environmental concerns as they relate to international disputes and as they relate to each individual’s practice’ (Greenwood, 2021). In order to take into account, the realities of electronic submissions and virtual hearings, arbitral institutions have likewise modified their rules and guidelines. The Request for Arbitration and the Response are to be filed online, and written communications are to be made by electronic means, in accordance with Articles 4.1 and 4.2 of the LCIA Arbitration Rules 2020. The LCIA Arbitration Rules 2020’s Article 19.2 explicitly states that a case hearing can be conducted through conference call, videoconference or other electronic means of communication. The newly revised

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Article 26.1 of the ICC Arbitration Rules 2021 specifically states that the arbitral panel may choose to hold a hearing remotely. The new arbitrations must be managed in accordance with the Stockholm Chamber of Commercial Arbitrator Guidelines, which mandate that all parties, the arbitral panel, and the SCC all communicate and share files electronically (Section 2, the SCC Platform). The Guidelines also suggest that arbitrators may deduct the cost of their planes’ carbon offsets as expenditures (Section 3, Expenses). In addition, a provision (Article 8.2) in the Revision of the IBA Rules on the Taking Evidence in International Arbitration, introduced in December 2020, encourages tribunals to take time, expense and environmental considerations into account when deciding whether to hold an evidentiary hearing remotely. These innovative clauses in arbitral rules might be a reaction to the Covid-19 pandemic, but they also highlight the chance to reduce travel and waste in international arbitration proceedings as well as the significant role arbitral institutions and tribunals may play in case management in a sustainable way. After the outbreak, it was anticipated that travel and in-person hearings would partially resume. However, given the widespread and irreversible changes in working habits that resulted, as well as given the effectiveness and success of the technology available to conduct virtual meetings and put together e-bundles, it is likely that the use of paper and other single-use materials will continue to decline. 1. Campaign for Greener Arbitration Progressively businesses are additionally making ‘net-zero’ commitments and rethinking their activities, operating in a new regulatory landscape of increased environmental, social and governance responsibilities. (Indulia et al., 2022) Corporates and law firms have begun establishing their own sustainability goals. Herbert Smith Freehills, for example, recently announced its intention to achieve net-zero status by 2030. Collaborative legal projects, like the Chancery Lane Project, have risen to prominence in an effort to provide workable legal solutions that can aid communities and businesses in making the transition to net zero. (Alison) In addition, the arbitration community has established its own task teams to address the issue of reducing carbon emissions associated with their work, from court cases to conferences the practitioners attend. The international arbitration community has taken an interest in the independent arbitrator Lucy Greenwood’s Green Pledge in particular, pushing practitioners and arbitrators to think about the larger impact of their case management on the environment. The Campaign for Greener Arbitration initiative was started by Lucy Greenwood in 2019 and the vision was to reduce the carbon footprint of the arbitration community. She launched green pledge to reduce the effect of environment due to her arbitration practice. The commitment to greener forms of dispute resolution made by law firms, chambers and other legal service providers across the globe shows the legal sector’s concern about its practises’ carbon footprint while also pointing to a path forward (Pollard). The study recommended that the long-haul flights, use of hard copy filings, use of disposable cups can lead to reducing a substantial amount of carbon emissions (Campaign for Greener Arbitrations Impact, 2022).

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In 2021, the Campaign has launched a Framework for the Adoption of Protocols and six associated Protocols, namely, (a) Green Protocol for Arbitral Proceedings and Model Green Procedural Order. (b) Green Protocol for Law Firms, Chambers and Legal Service Providers working in arbitration. (c) Green Protocol for Arbitrators. (d) Green Protocol for Arbitration Conferences. (e) Green Protocol for Arbitral Hearing Venues. (f) Green Protocol for Arbitral Institutions (Campaign for Greener Arbitrations Protocols, 2022). In the Framework, the sustainability measures provide for the use of clean energy, reducing energy consumption, minimising printing, and use of paper, encouraging recycling, limiting use of individual use items, partnering with ‘green’ organisations, travelling responsibly, incentivising staff, engaging in social responsibility initiatives, offsetting carbon emissions (Campaign for Greener Arbitrations Framework, 2022). The Campaign looks to have gained the support of the entire international arbitration community. It has received the 2020 GAR Award for Best Development as a result. The GAR Campaign for Greener Arbitration Award for Sustainable Behaviour, which honours the accomplishments of individuals, law firms or organisations in promoting sustainability, has been added as a new ‘Green’ award category for the 2021 GAR Awards. With the recent introduction of the Greener Litigation Pledge, the Campaign has also sparked a comparable movement within the domain of litigation. As businesses adopt strategies to cut their carbon emissions, the legal profession has seen a move towards ESG practises. A network of legal companies established the Net Zero Lawyers Alliance in late June 2021, pledging to achieve net zero greenhouse gas emissions by the year 2050. According to the 2021 QMUL International Arbitration Survey (White & Case, 2021). More people are using virtual hearing rooms, with 72% of survey participants saying they do so ‘often’, ‘frequently’, or ‘always’. This contrasts with survey results from 2018, where 64% of participants said they had never used virtual hearing rooms. There are rules and regulations in place for less-carbon-emitting arbitration, but ultimately the parties must decide on their own greener methods. It is advised that corporate houses consider greener conflict resolution mitigation and resolution tactics. (Indulia et al., 2022) The epidemic has shown that arbitration proceedings can be changed to more environmentally friendly ones, and these quick and affordable changes will continue while also protecting the interests of the future generations. Future developments will have a greater impact from technological progress. Additionally, it will strengthen the process and lower carbon emissions.

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9.6 Lawyer’s Role in Sustainable Dispute Resolution A lawyer or a practitioner plays a very important role in reaching a sustainable resolution of a dispute. Lawyers have the primary responsibility to assess and analyse the issues to determine the aid the stakeholders may need to help them negotiate a sustainable outcome. Lawyers need to develop and learn strategies that will help the stakeholders with deliberation, self-reflection, brainstorming and value assessment while working towards a sustainable dispute resolution. These practitioners would need to be visionaries who can apply the futuristic concept of dispute resolution. They should be efficient at assessment of the conflict, identification of issues involved and analysing the conflict to design appropriate strategies. They should be able to aid stakeholders to change their perceptions about the situation without which it is impossible to dismiss hurt feelings. In order to change the outlook towards a situation, individual reflection and self-assessment by stakeholders is very important. However, not all disputes can be resolved through stakeholder-driven negotiations. Conflict resolution preparations can help determine whether or not it would be fruitful or possible to reach a resolution. A paper published in the Journal of Security and Sustainability Issues detailed several important characteristics of a dispute resolution method for it to qualify as sustainable. Such characteristics include privacy and confidentiality, outcome aiming to preserve the relationship between parties, opportunity for communication, autonomy and control over the procedure and outcome (Kaminskien˙e et al., 2014a, 2014b). To begin with, it is important for a dispute resolution process to be private and confidential, at least in cases involving civil disputes which are of private and personal nature. This helps the parties to be able to engage in open communication about their interests, needs, hesitations, etc. When the parties truly know each other’s reason for the conflict, they can amicably try to arrive at a mutually agreeable solution wherever possible. Court proceedings, which are open to the public and recorded, hinders effective exchange of complete information which is critical in resolving the underlying conflict (Rabinovich-Einy, 2021). Secondly, a sustainable dispute resolution method focuses on preservation and continuity of good relationships while solving the underlying conflict that is causing the animosity between the parties. Furthermore, an opportunity for direct communication between the parties can be very important in disputes involving family members. The dispute resolution method should make it easier to address the emotional aspects of the case by giving the parties an opportunity to be heard and express their views instead of third parties fighting on their behalf. In some cases, a mere apology or venting out the anger and frustration can help in restoring the bond between warring family members. The parties should be the ones responsible for their future and should be given the control over the procedure and conditions of the settlement agreement. This autonomy encourages voluntary compliance with the agreement reached and reduces hostility between the parties as the outcome is reached. There is greater legitimacy

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and longevity of the outcome reached by agreement. On the other hand, a courtdecided legal dispute is often favourable to only one party and disappoints the other party. A dispute resolution process that is efficient and affordable could also prevent worsening of the relationship between the parties already at loggerheads. Unnecessary delays and excessive costs deface a dispute resolution method, which in turn can never be sustainable. Therefore, this necessitates a method that is cost and time efficient. The resolution should be reached in a timely manner while the conflict between the parties still has not grown its roots (Kaminskien˙e et al., 2014a, 2014b). These criteria lead to the conclusion that court litigation or even arbitration cannot be classified as methods of sustainable dispute resolution, as also suggested by the authors of the paper. These forms of dispute resolution are adversarial in nature, involve insistence on the application of law, result in a binding decision by a third party, seek to arrive at a legally correct decision, etc. They do not focus on addressing the psychological aspects of the case or continuing or restoring the strained relationship between the parties. In other words, they aim to resolve the dispute and not the conflict. Although arbitration is based on the central idea of party autonomy, is less formal and more flexible, guarantees confidentiality and aims at quicker resolution of disputes, it is far from being called sustainable because of the above-mentioned reasons. Non-adversarial methods such as negotiation and mediation satisfy these criteria and can be classified as sustainable methods of dispute resolution. Mediation is the perfect example of a method that seeks to achieve sustainability by reaching a fair compromise through a mediated communication between the parties. The mediator, who is a trained practitioner with necessary skills, identifies the points of difference and disagreement between the parties and helps them see the situation with a different perspective so as to resolve the underlying conflict. The mediator does not make a binding decision but only aids the parties in better communicating their interests and needs to each other. Negotiation is another popular method of alternative dispute resolution which is also sustainable. Parties involved in long-standing commercial relationships always begin by seeking to resolve their disagreements through negotiations. However, it proves to be unsuccessful in cases of highly escalated conflicts. Moreover, it also does not involve a skilled third party assisting the resolution and requires active efforts and positive attitude by the parties themselves. Another specific example of a dispute resolution method that aims to achieve sustainability is transformative mediation, which is a newer concept of resolving internal disputes within businesses. This kind of mediation emphasizes on the use of voice within the companies. Robert Bush and Joseph Folger, the originators of transformative mediation, describe the transformative mediator as one who ‘helps the parties change the quality of their conflict interaction from negative and destructive to positive and constructive’. Bush and Folger highlight empowerment and recognition as two key elements of transformative mediation. Empowerment is defined by them as ‘the restoration to individuals of a sense of their value and strength and their own capacity to make decisions and handle life’s problems’. Recognition can be defined

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as ‘the evocation in individuals of acknowledgment, understanding or empathy for the situation and the views of others’. Such a method of dispute resolution promotes sustainable peace (Bush & Folger, 2005). Contrary to what is argued, the methods emphasising on sustainable peace do not distract corporations from shareholder value creation. On the other hand, they aid shareholder value creation and encourage peacemaking in the longer run. Methods such as transformative mediation help create a positive spiral and prevent conflict escalation or degeneration (Siedel, 2007). Sustainable dispute resolution strategies are often talked about and discussed in environmental or climate disputes. A contemporary example that highlights the need for a sustainable conflict resolution method is the Okavango Delta conflict. This is a conflict between the government and businesses trying to implement economic development programmes and traditional communities whose subsistence livelihoods depend on the natural resources in the delta. The government has enforced restrictions on subsistence supports while negotiations have been hampered by ineffective government interventions. This could result in some communities circumventing regulations to earn their livelihood (Mbaiwa, 2022). It is clear that such a dispute cannot be resolved by imposing sanctions or arguing law and delivering ‘justice’. Adversarial methods of resolution can never address the high emotional stakes involved in the case. The underlying conflict needs to be resolved by providing a lasting solution for such a dispute to be sustainably resolved. Sustainable conflict resolution strategies such as mediation or negotiation can help in understanding the interests and needs of the parties and in reaching a mutually agreeable solution, which may not necessarily be grounded in law. Sustainable dispute resolutions are a new way of thinking about ADR practices. They are seen as agreements which have been negotiated to meet both the present and the future needs of the parties (Odididon, 2003). The agreement would be supported with outlines which help in sustaining the outcome. This new field of study can be drawn by a recent spate of scholars looking at the relationship between justice and sustainability. This includes Langhelle (2000), Barry (1999), Dobson (1998) and Thompson (1996). There are three major works Spiroska (2014), Siedel (2007) and Kaminskien˙e et al. () which are more oriented to such practice to have a sustainable dispute resolution process. The Lohman Cabbage Conflict Model is one of the accepted descriptions of a sustainable conflict settlement procedure. Each disagreement is compared to a head of cabbage in this approach. The outer leaves are enforceable legal rights and responsibilities. The inner leaves stand in for the still unresolved and tangled web of feelings, power struggles, unspoken goals, competing interests and expectations. The conflict’s centre or core is where all of the leaves emerge. The young plant’s core and inner leaves form it, while the outer leaves that protected it throughout the winter will eventually die. Therefore, a sustainable legal strategy permits the core to develop and the flexible outer leaves to unfold. Judicial judgements only consider the conflict’s outermost layers. They obstruct growth that occurs naturally.

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9.7 Conclusion In a world, where disputes are inevitable, the resolution should be sustainable in nature. The dispute resolution should be sustainable in both the ways, environment and relationship. Starting with the environment impact, the courts, mediators, arbitral tribunal, arbitration institutes and online dispute resolution platforms are taking steps to major portion of the proceedings to the virtual mode. Moving on to keeping relationships and trust intact, the non-adjudicatory methods like mediation provide a good platform for the parties to try out keeping their relationship alive and find out a potential solution to the dispute. Online Dispute Resolution has indicated that majority of the commercial disputes have the potential to be resolved through the virtual platform without involving the courts. However, digital gap and digital awareness remains one of the potential issues which needs to be considered by all the stakeholders of online dispute resolution. Starting from the filing till the settlement agreement or arbitral awards, the entire process is done online which does not require any considerable travel. As a consequence of this, the carbon footprint in resolving these disputes is considerably lower than any physical hearing in court. Also, if mediation is used, this can also satisfy both the meanings of sustainability relating to environment as well as relationships. The Campaign for Greener Arbitrations has been one of the strong steps to work in a green way while conducting arbitrations. Before this initiative, there was no direct guidance to the law firms, law chambers, arbitral tribunal, arbitration institution and other service providers. A majority of law firms, law chambers, independent arbitrators have signed up to this Campaign. The Supreme Court of India has introduced with e-filing, virtual conferencing to attend the proceedings in certain cases, live streaming of cases. There are some pilot projects with respect to virtual courts in traffic challan and cheque bounce cases in Delhi. Also, there has been a constitution of a Green Bench by Hon’ble Dr. Justice D.Y. Chandrachud in which paper submission is not allowed. There have been arrangements made with the Registry and IT Cell to train the Senior Advocates in technology. The dispute resolution shall not come with a cost to environment. In addition, if the dispute resolution can be done while keeping the trust and relationship in between the parties, that is a more sustainable way of dispute resolution. Businesses who are able to adopt sustainable practices in terms of dispute resolution stand to gain significantly. Arbitral institutions have also made a remarkable contribution in moderating and addressing environmental issues through institutional rules and guidelines. The combined efforts and cooperation at the industry level of practitioners globally can assist in making dispute resolution mechanisms genuinely sustainable. Thus, eventually, the idea of environment sustainability and sustainable dispute resolution will become one of the core assets of every corporate firm’s sustainable governance.

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