Rob de Laet is a philosopher, climate activist, rewilding a damaged part of the Brazilian rainforest and working to avert the dieback of the Amazon Rainforest by strengthening the biotic pump over the area. Co-author of the book ‘Cooling the Climate – How to Revive the Biosphere and Cool the Earth Within 20 Years’.
As a principal member of the EcoRestoration Alliance and fellow of the Global Evergreening Alliance, Rob is developing the Cooling the Climate project together with Peter Bunyard and others, to reverse the climate crisis fast, working from the Lovelockian Gaia perspective to restore the Earth’s metabolisms through the restoration of the water cycles and regeneration of the biosphere.
Three tipping points need to be averted fast to avoid wholesale civilizational collapse, emphasies Rob: the dieback of the Amazon Rainforest, the collapse of ocean biology and the collapse of Arctic Sea ice. This can be done if the world wakes up and acts at the speed and scale needed. For the first tipping point, Rob designed the ARARA digital-financial platform and project to scale forest protection and regeneration.
Praveen Gupta (PG): Earth’s air conditioners are breaking down?
Rob de Laet (RDL): They are, and the phrase is close to literal rather than metaphorical. A large tree in a tropical forest transpires hundreds of litres of water a day, and the cooling that produces is roughly equivalent to several household air conditioners running continuously. Multiply that across a forest and you have a natural cooling mechanism of enormous capacity, running on sunlight and available water.
We have destroyed a large part of that capacity. Our own analysis puts ecosystem degradation at somewhere between 23 and 38 percent of total human forcing on the climate, and there are around two billion hectares of degraded land where that capacity could be rebuilt. More than half of that is in the tropics. Clearing a tropical hectare reduced that cooling capacity dramatically (the cooling goes down by roughly forty watts per square metre).
Set that against the global 2.72 watts per square metre of total human forcing and you see the scale of what is being left out of the accounts. The result shows up as hotter surfaces, disrupted rainfall and expanding heat domes. The tropics hold well over half the restorable land and close to four fifths of the cooling that restoring it would recover. A hectare restored in India or Indonesia or Brazil does roughly ten times the climate work of a hectare restored in Finland.
What makes this more than a nice image is that the loss is both huge and quantifiable. That is not a footnote to the carbon story. It is a comparable term, and it is the only part of the problem that can be reversed upward on a decadal timescale rather than a centennial one, which goes for CO2. So the question is not whether the air conditioning is failing. It is whether we are going to keep pretending the building only has a heating problem through GHGs or also a cooling problem through the breakdown of ecosystems, particularly in the tropics.
PG: Cloud formation, evapotranspiration and biological aerosol production are fast-acting climate levers that carbon accounting simply cannot see. Would you please explain?
RDL: Carbon accounting measures a stock: how many tonnes are stored in wood and soil. However, these three are flows. They are things a living landscape does every day, and a stock-based instrument is structurally incapable of seeing them.
Look at the energy involved. Carbon stored in the biomass of a tropical hectare is worth roughly half a watt per square metre of avoided forcing. The evaporation happening on that same hectare moves about eighty watts per square metre off the surface. The sunlight its canopy and the clouds above it reflect is worth about a hundred. We are pricing the smallest number in the stack, and we are pricing the slowest one.
“A large tree in a tropical forest transpires hundreds of litres of water a day, and the cooling that produces is roughly equivalent to several household air conditioners running continuously“
Each of the three works differently. Evapotranspiration converts heat into water vapour and carries it upward. Some of that heat is released above most of the greenhouse layer and radiates to space, which is a genuine planetary loss rather than a local rearrangement. Satellite data calculations by Ali Bin Shahid this year puts that fraction at between 13 and 21 percent, which is the first observational constraint we have on it.
Biological aerosols are the strangest of the three. Forests emit volatile compounds, spores and bacteria that act as the nuclei clouds condense around. Forests are, in a real sense, seeding their own weather. And clouds are the most powerful shortwave lever on the planet, because a cloud returns sunlight to space before it ever becomes heat.
None of this is exotic physics. It is the standard surface energy balance. It is simply not in the accounts.
PG: Biophysical cooling from ecosystem restoration is at least 3 times carbon sequestration on the critical 10 to 20 year timescale, with restored ground cover delivering 2 to 4 °C of local surface cooling in hot areas or hot months?
RDL: The multiplier is right, and I should say up front that it is our own number. We took the biophysical cooling from restoring two billion hectares, compared it with the carbon those same hectares would store over ten to twenty years, and the cooling came out two to four times larger. The physics is standard. What was new is that nobody had put the two side by side.
Here is the simplest way to see why. Carbon is a bank deposit. A young tree puts a little away each year, and after twenty years there is a useful sum. Cooling is a machine that is running now. The moment the leaves are there, they are pumping water into the air and pushing heat off the surface. Over ten or twenty years, which is the window that actually matters to us, the machine has done far more work than the deposit has accumulated. That is the whole gap.
The 2 to 4 degrees is the difference between a standing tropical forest and the bare ground next to it. It belongs to a canopy that has closed over. Ground cover, mulch and soil work do cool, and they cool within a season, but by less. Peak temperature differences can even be larger.
That distinction matters, and not only to scientists. If you protect forest that is already standing, you keep the full 2 to 4 degrees till you cut it. This is extremely valuable natural climate infrastructure. If you replant you get the effect again after new canopy grows, and that takes ten to twenty years in the tropics and longer in cooler places. That is why we need a 100% moratorium on remaining old growth forests NOW!
Planting matters enormously. It is just the second thing you do, not the first.
PG: The best course of protecting assets from stranding is to upgrade the planet?
RDL: The stranded asset conversation has been almost entirely about coal and oil reserves, and that framing is far too narrow. Every financial asset is ultimately a claim on a functioning biosphere. A mortgage assumes the house stays insurable. A sovereign bond assumes the country can feed itself. A food company’s valuation assumes the rain arrives roughly when it used to.
PwC put a number on that in 2023: 55 percent of world GDP, around 58 trillion dollars, is moderately or highly dependent on nature. They also found that more than half the market value of listed companies across nineteen major stock exchanges is exposed to material nature risk. That is not a sector. That is the market.
What makes this concrete rather than theoretical is that the largest investor in the world has now said it in its own disclosures. Norway’s sovereign wealth fund publishes a climate and nature report every year. Three things in the 2024 edition are worth knowing.
“A restored watershed produces water, food, timber and a cooler working landscape while it is protecting your balance sheet”
First, they ran two different models on the same portfolio and got answers ten times apart. Their bottom-up model said physical climate risk would cost their US equities about 2 percent of present value. Their own top-down model said 19 percent, and 27 percent at the tail. They state plainly that they believe the higher number is the more credible one.
Second, and this is the part that matters most to me, they list what neither model includes. Tipping points. Cascading effects. Feedback loops between the climate and the carbon cycle. And, in their own words, climate impacts on natural resources and ecosystem services. The world’s largest fund is telling you, in a published document, that the collapse of the systems we are talking about is simply absent from its risk models.
Third, they tested one small piece of it. They modelled what happens if just three ecosystem services fail by 2030: wild pollinators, timber, and marine fisheries. Three, out of dozens. The answer was about 2 percent of global GDP, some 1.7 trillion dollars, and a 4 percent hit to their own equity holdings. Their chief executive summarised the whole thing in one line: the global economy cannot outrun climate change, so neither can our investments.
So the conclusion sounds strange in a finance meeting and is arithmetically ordinary. There is no sector to rotate into. You cannot diversify away from the biosphere, because every position you hold is written against it. Repairing it is not an ethical add-on to a portfolio. It is the cheapest available way to protect the collateral behind everything you already own.
And unlike most climate spending, it is not a pure cost. A restored watershed produces water, food, timber and a cooler working landscape while it is protecting your balance sheet. You are not buying a green asset. You are repairing the ground the whole portfolio stands on.
PG: We need less than one percent of global GDP to repair the planet? The largest investment after AI?
RDL: Our estimate is around half a percent of global gross domestic product, annually, for twenty years. That is roughly 550 billion dollars a year. A key part of what it buys is support for something like five hundred million smallholder and Indigenous families, who between them steward around a billion hectares, to move to regenerative agriculture and to protect and restore forest and other biomes.
They need to be paid to protect and restore. And let me add one more warning here: agriculture is not something you can learn overnight and everywhere the people working the fields are getting old or leaving for the cities. Food does not grow in supermarkets. But let me get back to the question.
Set that half percent against the shortfall the United Nations Environment Programme (UNEP) already reports for nature-based adaptation finance, which is somewhere between 187 and 359 billion dollars a year. This is not a novel category of spending. It is closing a gap everyone already acknowledges, and getting considerably more for it than adaptation alone.
PG: We desperately need to cool down our planet. I must congratulate you for the brilliant work at the EcoRestoration Alliance and your leadership. Looking forward to your first hand insights on India.
Sanctuary
August – September, 2026
Link to the article: We Are At The Apex Of A Cliff
PS: hyperlinks to follow.
TOI Blogs
July 26, 2026
Link to the full Op-ed: https://timesofindia.indiatimes.com/toi-blogs/money-matters/risk-of-skipping-the-hard-part-of-change-management/articleshow/132636139.cms
Judy Lu recently completed her PhD at Henley Business School, where her research explored how organisations learn from shareholder activism and how these learning processes influence corporate governance and long-term organisational adaptation. Her work bridges academic research and business practice, with a particular focus on corporate governance, sustainability, shareholder management, and organisational learning.
Alongside her academic achievements, Judy is Associate of the Chartered Insurance Institute (CII) and has built a successful career spanning nearly two decades in multinational insurance. As a Multinational Network Manager at QBE Insurance, she has developed deep expertise in global insurance programmes, international insurance regulations, local market practices, and cross-border insurance solutions. This frontline experience has given her a deep understanding of enterprise risk management, international business operations, and capital optimisation, providing valuable practical insights that complement her academic research.
She is passionate about translating rigorous academic research into practical insights for businesses, demonstrating how organisations can turn external pressures – such as shareholder activism – into opportunities for organisational learning, stronger corporate governance, and sustainable long-term value creation.
Praveen Gupta (PG): What is the relationship between organisational learning and shareholder activism?
Judy Lu (JL): Organisational learning is closely linked to shareholder activism because activism acts as an external feedback mechanism that triggers firms to reassess and adjust their governance and strategic practices. Although shareholder proposals are not legally binding, firms cannot ignore them due to reputational, market, and stakeholder consequences. These pressures incentivise firms to learn from activism experiences in order to reduce future targeting. My thesis shows that this learning occurs not only through direct activist engagement but also through observing peer firms and industry-wide activism trends. Overall, shareholder activism functions as both a governance monitoring tool and an organisational learning mechanism that shapes how firms adapt over time.
PG: Did you focus on any particular geography, segments and timeline?
JL: I focus on US Russell 3000 firms from 2006 to 2020 using ISS Voting Analytics data across 68 industries. The US is a leading market for shareholder activism with strong institutional investor participation and well-developed governance mechanisms, making it an ideal setting to study activism behaviour. The Russell 3000 allows me to capture a broad cross-section of firms, including large and small companies, which is important for analysing heterogeneity in learning and responses. The 2006 – 2020 period covers the post-financial crisis expansion of governance activism and the rise of Environment Social & Governance (ESG) and Socially Responsible Investing (SRI) activism, allowing me to study evolving patterns over time.
“Shareholder activism functions as both a governance monitoring tool and an organisational learning mechanism”
PG: How do firms and boards adapt to activism pressures?
JL: Firms and boards adapt to shareholder activism through three main channels: direct experience, peer observation, and governance transformation. First, firms learn from their own activism exposure, which reduces the likelihood of future targeting, particularly in governance-related activism. Second, firms also learn vicariously from peers, with an inverted U-shaped pattern showing that industry-wide activism initially increases exposure but eventually leads to adaptation and reduced targeting. Third, at the board level, activism and governance co-evolve: governance activism is associated with increases in board independence, while board characteristics also influence future activism. However, these learning and adaptation processes are conditional on firm size, age, and industry context. In summary, adaptation to activism is dynamic and multi-layered rather than uniform, involving both behavioural learning and structural governance change.
PG: In what ways is shareholder activism both a challenge and a catalyst for organisational learning and corporate governance change?
JL: Shareholder activism is both a challenge and a catalyst for organisational learning. As a challenge, it acts as an external governance mechanism that exposes weaknesses in boards, management, and corporate practices, increasing reputational and monitoring pressure. But it is also a catalyst for learning, because firms do not just react once – they learn from their own activist experiences and from observing peer firms. My findings show that activism creates cumulative learning processes, where prior exposure reduces future targeting and peer experiences shape industry-wide behaviour through spillover effects. Importantly, these effects vary across governance and SRI activism and across different types of firms. Therefore, activism functions not just as an intervention, but as an ongoing information environment that drives continuous governance adaptation.
“Activism creates cumulative learning processes, where prior exposure reduces future targeting and peer experiences shape industry-wide behaviour through spillover effects”
PG: Whether and how companies targeted by shareholder activism learn from prior experiences?
JL: Yes, companies do learn from prior shareholder activism, but the learning effects are not consistent across all firms. I find that firms with previous activism experience are significantly less likely to be targeted again, suggesting they implement governance or strategic changes that reduce future activism. However, learning is contingent on both the type of activism and firm characteristics. Governance activism generates stronger learning because it addresses core governance issues that firms can respond to relatively quickly.
In contrast, learning from SRI activism is more limited because environmental and social changes often require longer-term organisational transformation. I also find that smaller firms, older firms, and firms in non-environmentally sensitive industries exhibit stronger learning in different contexts. To sum up, organisational learning from shareholder activism is heterogeneous rather than uniform, demonstrating that firms’ ability to learn depends on their organisational characteristics and the nature of the activist demands.
PG: Vicarious learning was also part of your study. What were the findings?
JL: The key finding is that firms learn vicariously from the shareholder activism experiences of their peers. I found an inverted U-shaped relationship between peer activism and subsequent activism. Initially, as activism increases within an industry, firms are more likely to be targeted by the shareholder activists. However, over the time despite a continued increase in industry-wide activism, firms demonstrate a reduction in their activism levels. This nuanced finding underscores the complexity of how firms assimilate and respond to the activism experiences of their peers.
I also found that firms do not learn only from better-performing peers, as the performance gap was not significant. This suggests that shareholder activism functions as an industry-wide information environment, where firms learn broadly from peer experiences rather than selectively from financially superior firms.
“Shareholder activism functions as an industry-wide information environment, where firms learn broadly from peer experiences…”
PG: Why do you need to distinguish between governance activism and SRI activism?
JL: I distinguish between governance activism and SRI activism because they differ in their objectives, historical evolution, and the mechanisms through which they influence firms. Governance activism focuses on traditional governance issues such as board independence and executive compensation, whereas SRI activism addresses broader environmental and social issues. These differences mean that firms learn from them differently. My findings confirm this: governance activism can influence governance structures, particularly board independence, while SRI activism primarily targets firms that already possess stronger diversity characteristics rather than creating demographic change. Separating the two therefore reveals heterogeneous learning processes and governance outcomes that would be hidden if shareholder activism were treated as a single construct.
PG: How significant were ESG and DEI in your study?
ESG and DEI are significant themes in my thesis, but they are not the primary phenomenon under investigation. The central focus of my research is shareholder activism and how firms learn from activism over time. ESG and DEI provide the governance context through which these learning processes operate, particularly in my third empirical study.
In the third study, I investigate the reciprocal relationship between activism and DEI-related board characteristics over time. My findings demonstrate that ESG and DEI matter in two important ways. First, they influence activist targeting. Firms with more gender and ethnic diversity are more likely to attract subsequent SRI activism, suggesting that activists perceive these firms as more receptive to ESG-related engagement rather than using activism primarily to create diversity. Second, activism itself has different capacities to influence governance outcomes. Governance activism can produce modest improvements in board independence, whereas demographic diversity changes much more slowly, indicating that structural governance reforms are more responsive to activism than demographic characteristics.
ESG and DEI help explain why activism should not be treated as a single homogeneous phenomenon. Different activist objectives interact with different governance dimensions, leading to distinct patterns of corporate adaptation and learning.
“Structural governance reforms are more responsive to activism than demographic characteristics”
PG: What would you say are the key learnings from your thesis – for managers, investors and policyholders?
JL: The findings suggest that shareholder activism should be understood as an ongoing governance process rather than a one-off event. For corporate managers, the key implication is that activism provides continuous learning opportunities. Firms that treat activist interventions as signals of governance expectations – both from their own experience and from peer firms – are better able to strengthen governance structures, improve stakeholder engagement, and reduce future vulnerability to activism. Managers need a balanced approach: selectively learning from activism while maintaining firm-specific strategies. The evidence also highlights that governance activism is more effective in driving changes in board independence than demographic diversity, while SRI activism tends to focus on already diverse firms, suggesting boards must ensure diversity translates into substantive governance outcomes rather than symbolic representation.
For investors, the key message is that activism history and responsiveness are important signals of governance quality. Firms that learn from activism tend to demonstrate stronger managerial accountability and lower long-term governance risk. Importantly, activism also generates information spillovers, meaning peer responses within industries are informative for assessing broader governance quality.
For policymakers and regulators, the findings show that shareholder activism complements formal regulation by supporting market-based governance and organisational learning. Policies should therefore enhance transparency and disclosure so that firms and investors can learn from activism outcomes, while avoiding herd-like or symbolic compliance. At the same time, regulators should recognise that board diversity alone does not guarantee effective governance, and focus instead on ensuring that diversity leads to meaningful oversight.
PG: Could you give examples of companies that did well or not so well regarding shareholder activism, learning from peers or DEI?
There are several good examples that illustrate the patterns identified in my research.
One of the strongest examples is ExxonMobil. In 2021, activist hedge fund Engine No.1 succeeded in electing three directors to Exxon’s board despite owning only a very small stake. This became one of the defining examples of shareholder activism influencing corporate governance and climate strategy. From my research perspective, it demonstrates that activism can act as an external learning mechanism, forcing boards to reassess governance practices rather than simply responding to a single proposal. Interestingly, subsequent research has shown that markets generally viewed the board changes positively, particularly for firms facing environmental risks.
A second example is Disney. In 2024 Disney successfully resisted activist investor Nelson Peltz’s board challenge after making strategic and governance changes ahead of the proxy contest. Although management prevailed, the campaign arguably accelerated governance improvements and shareholder engagement, illustrating that firms often adapt before activism succeeds formally.
“Firms benefit from organisational learning because improving governance and transparency early may reduce both activist pressure and future litigation risk”
Looking specifically at DEI, Disney also provides an interesting recent example. In 2025 shareholders overwhelmingly rejected a proposal asking the company to withdraw from the Human Rights Campaign’s Corporate Equality Index. This suggests that even during a period of political backlash against DEI, many shareholders still distinguish between ideological debates and long-term governance considerations.
My research would interpret these cases as evidence that activism is rarely about “winning” or “losing”. Rather, it creates an information environment that encourages firms to reassess governance, anticipate stakeholder expectations, and learn from both their own experiences and those of their peers.
PG: Did you come across any class action suits and trends that relate to your study?
JL: Although class action litigation was not the focus of my thesis, there are interesting connections. Both shareholder activism and securities class actions are external governance mechanisms that increase managerial accountability, although they operate differently.
Activism is generally forward-looking. Investors seek governance reforms, board changes or strategic improvements while remaining shareholders.
Class actions are generally backward-looking. They seek compensation after alleged disclosure failures, securities fraud or governance failures have already occurred.
Increasingly, however, both mechanisms intersect around ESG and disclosure quality. For example, companies now face litigation relating to alleged “greenwashing” or misleading ESG disclosures. These cases reinforce one of my central arguments: firms benefit from organisational learning because improving governance and transparency early may reduce both activist pressure and future litigation risk.
“Issues such as climate risk, cybersecurity, human capital, supply chain resilience and board oversight remain material business risks regardless of political trends”
PG: Any noticeable shift between Trump 1.0 and 2.0?
JL: My data ends in 2020, so I cannot make empirical claims beyond that period. However, viewed through the organisational learning framework, the environment has clearly evolved.
During the latter part of my sample and into the Biden administration, ESG and DEI became increasingly prominent topics for shareholder proposals. More recently, under the return of the Trump administration, the emphasis has shifted. Rather than simply seeing more ESG proposals, we are also seeing more anti-ESG and anti-DEI shareholder proposals.
What is interesting is that shareholder activism itself has not disappeared. Instead, the issues being contested have changed. Activism remains a mechanism through which investors express competing views about long-term corporate strategy.
This actually reinforces one of the broader conclusions of my thesis. Organisational learning is not about responding to one political cycle. It is about developing governance systems that allow firms to adapt to changing stakeholder expectations over time. It is interesting to note that anti-DEI shareholder proposals have roughly tripled since 2020 and ESG proposal support from large US investors has declined significantly since its peak around 2021
The governance landscape has become more politically polarised, but the need for firms to learn, adapt and engage with shareholders has arguably become even more important.
PG: Do well-governed companies continue vigourously practicing ESG today – eventhough regulators tend to be generally muted?
JL: Yes. I think ESG has evolved rather than disappeared.
During my study period, ESG increasingly became a focus of shareholder activism. Today, the language around ESG may be less prominent in some jurisdictions, particularly in the United States, but many well-governed companies continue to integrate environmental, social and governance considerations into mainstream business strategy.
The reason is practical rather than ideological. Issues such as climate risk, cybersecurity, human capital, supply chain resilience and board oversight remain material business risks regardless of political trends.
From the perspective of my research, ESG should be viewed as part of organisational learning. Firms that learn from shareholder feedback tend to build stronger governance systems, improve transparency and become more resilient over time. Whether companies label these activities as “ESG”, “sustainability” or simply “good governance” is arguably less important than whether they genuinely improve decision-making and accountability.
In other words, the terminology may change, but the underlying governance principles remain highly relevant.
PG: Many thanks for these brilliant insights, Judy. Once again, hearty congratulations for the very inspiring work in pursuit of a well earned doctorate.
illuminem
July 14, 2026
Article link: Can insurers help bypass a stalling Earth System by deploying geoengineering? | illuminem
illuminem
July 11, 2026
illuminem link: https://illuminem.com/illuminemvoices/the-environment-does-not-figure-anywhere-in-business-decisionmaking
This article is also published on the Diversity Blog. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy Thought Leaders, their opinions do not necessarily represent those of illuminem.
illuminem
July 8, 2026
#ESG is alive, kicking and more relevant than ever before!
https://illuminem.com/illuminemvoices/top-10-thought-leaders-in-esg
Meena Raghunathan has been involved in the impact sector for four decades, with extensive experience in CSR, sustainability education, health, livelihoods, skilling, and community development. She was Executive Director, CSR, at GMR Varalakshmi Foundation, where she set up and led the CSR function for the GMR Group. Earlier, she worked at the Centre for Environment Education on national and international projects supporting sustainable development.
The Responsible Manager: Building Blocks Of An ESG Perspective is Meena’s latest book. She is also the author of Doing Good: Navigating the CSR Maze in India (HarperCollins, 2022) and co-author of To Every Parent, To Every School (Penguin, 2024). Meena also writes for children and educators, and blogs regularly. She serves on corporate and non-profit boards and is Visiting Faculty at MYRA School of Business.
Praveen Gupta (PG): Let us start from where we left the last time – during our conversation on your book ‘Doing Good’ you mentioned: “But I would say that ESG and CSR are not two journeys…”?
Meena Raghunathan (MR): Yes, I agree. They are part of the same journey towards Responsible Business. I see this journey has three key requirements:
- Shift of mindset from maximisation of profit to optimisation of value across profit, people and planet. If we continue to weigh businesses only in terms of financial outcomes, we will never achieve sustainability.
- Shift of mindset from shareholder focus to stakeholder focus. Businesses basically play to the gallery made up of shareholders. They other stakeholders are very, very secondary. They take salience only when there is a good chance their actions or reactions can disrupt profits. And while customers or employees are somewhere on the radar, affected communities and the environment often bear the brunt, but have no voice.
- Shift of mindset from short term to long term. Quarterly financial results are what move the corporate world and financial markets. So, anything for a good result, every quarter. And environmental and social good are seldom going to show up in these. In fact, in the short run, they may seem like taking away from profits!
The traditional mindsets are ingrained, and the challenge is to move the corporate world away from these.
PG: From a “tragedy of horizon” – climate breakdown is now at our doorstep. Do we have a plan of action for how we educate our coming generations and managers, are there any signs of it embedded in our business practices?
MR: I would say at the school level, Education for Sustainability, under one name or the other, has been around for four decades. As part of Centre for Environment Education, I myself have been part not only of developing model nationwide programmes and innovative materials, but also of policy development. The National Policy on Education also pays service to this. There are efforts to address these issues through curricular and co-curricular routes. However, it is also true that while we have seen some increase in environmental awareness and even action, it is also true that the devastation of the environment in this period is also very real! So, have we educators been having an impact? The answer is a bit depressing.
Environmental Studies is a compulsory subject in all Indian colleges due to a landmark Supreme Court directive from the 1991 Public Interest Litigation (PIL) filed by environmental lawyer M.C. Mehta. Following this, the University Grants Commission (UGC) mandated that all undergraduate students must complete a six-module course on the environment to graduate.
I am not sure how seriously this is taken. I again fear that it has not really not had a great impact.
And while some business schools have started modules on sustainability etc. in their curricula, it is not across all schools. And definitely not embedded in a way that makes thinking about these issues and an integral part of their business decision-making DNA.
“So, have we educators been having an impact? The answer is a bit depressing.
PG: “The economy is a wholly owned subsidiary of the environment” – the great Herman Daly stated the obvious. Doesn’t it remain a blind spot? Just as corporate social responsibility looks a mirage, and DEI is off the radar? Corporate environmental responsibility is generally not in sight.
MR: You can’t be more right. The environment does not figure anywhere in business decision-making. The laws offer some protection, but even these measures are rolled back sometimes in the effort to bring in ‘ease of doing business’.
Why go as far as DEI? Look at worker pays and working conditions. We want to say that we are a good destination for mass products and offer good prices. But those prices are at the cost of someone, and that is usually the worker. Look at the job security of workers – very often, smaller set-ups don’t even give appointment letters; they don’t give a break of salary and other elements of their pay; there are no means of redressal. Think of a not-very educated woman who depends on that salary. Will she speak out? So yes, the ‘S’ angle is not something that is taken seriously. Even when a company in itself is ‘good’, do they really get into the working of their supply chain, which is in fact what they are supposed to do?
PG: Is there too much emphasis on ticking-the-box rather than the substantive issues? Do you believe quarterly reporting could be an impediment?
MR: Yes, while some companies do things by the spirit and not by the law, many do not. Take the example of even CSR – the scramble to ensure 100% mandatory spend by March 31 leads to a frenzy of hardware projects (easier to spend and larger amounts are spent) sanctioned in January, as well as donations to eligible entities. Or the exercise of the BRSR. I have seen this being filled by junior people in different departments, without understanding the importance or the larger picture. To most of them, it is just one more format that trickles down from the top with a deadline. And few people at the higher levels look at it to see a coherent picture or using it as a means of feedback and areas of improvement.
“Yes, while some companies do things by the spirit and not by the law, many do not.
PG: The climate window is rapidly narrowing. Seven of the nine planetary boundaries have breached; Earth systems are wobbly; are we being good stewards for the coming generations? Is it just business as usual (BAU)?
No, we are not being good stewards. We do not even fully recognize, understand or accept that we are stewards. At some level, corporates do not even see their role in all this. They think it is the business of governments. This is because managers do not even register that the environment is where they get ALL their raw materials and inputs, and that it is where they dispose of ALL their wastes. And that both these aspects, environment as source and environment as sink, have their limits. And we have surpassing some of these limits, and have even surpassed them, and we are all in danger.
PG: A new UN brief courtesy Potsdam Institute for Climate Impact Research highlights governance challenge of Earth system tipping-points risks. It requires governance approaches that can anticipate long-term change and account for interactions across different parts of the Earth system. Doesn’t it take the governance level way beyond current level of imagination?
MR: Absolutely! But where is this to come from? Not the international level – the intergovernmental mechanisms are arguably at their weakest at this point in time. The world is facing armed conflict, disruptions and fractures at a scale I don’t remember. Countries are trying to hold their heads above the waters. I don’t see anyone trying to rise above this and take on a statesman-like role. So where is this governance going to come from?
“Although the book is written in a business context, there is also the hope that it will prompt some reflection on how these issues relate to us as individuals… ESG has to be in the DNA of every executive, every manager. That is the purpose with which I wrote my book.
PG: Do you believe extra-territorial regulatory demands like CBAM will compel – our exporters in designated products – to become environmentally conscious?
MR: If I were to take an example, I have seen that suppliers to multinationals like Walmart or Primark definitely do follow better labour standards, health and safety measures as well as environmental standards, than factories which are not in these value chains. So yes, extra-territorial regulations such as CBAM can encourage exporters of covered products to become more environmentally conscious because they create clear economic incentives. Exporters with lower emissions will incur lower compliance costs, making investments in energy efficiency, renewable energy, cleaner technologies, and emissions monitoring commercially beneficial.
But most firms may comply merely to retain access to the European market rather than from genuine environmental commitment. Smaller exporters may struggle with the cost of emissions measurement and verification, while firms with limited exposure to EU markets may have little incentive to alter production practices. Furthermore, the ability to reduce emissions depends on access to affordable clean technologies and supporting infrastructure.
Personally, I have concerns that such extra-territorial regulations may disproportionately affect developing economies and function as non-tariff trade barriers.
PG: I pick this red alert from my interaction with Dr. Mark Trexler (an authority in climate risk knowledge management space): “Focusing on shareholder concerns implicitly gives a company permission to heavily discount the future, to take advantage of economic externalities, to play down worker health and safety, et al. of which are fundamentally at odds with the stated goals of ESG.” Without the guidance of public policies and measures would this be achievable – as the SEBI struggles with the BRSR even for a limited few?
MR: Yes, BRSR is only the first step. But it is a necessary step. I have mentioned earlier how the form is filled. So, we know that just compliance and filling forms does not do it. We have to change the mindset and perspectives across the corporation. It is not enough to have an enlightened leader. ESG has to be in the DNA of every executive, every manager. That is the purpose with which I wrote my book.
The purpose is to sensitise managers to these issues and help them relate ESG concerns to their everyday work…
The purpose is to sensitise managers to these issues and help them relate ESG concerns to their everyday work, whatever their domain or sector. It is founded on the premise that integration of these concerns is the right thing to do and will, in the long run, benefit the business as well as all stakeholders. Once every manager internalises the need to incorporate these perspectives into their business approach, ESG concerns will start getting addressed, and the company also establishes a more ethical foundation.
It tries to bring about three mindset shifts, which I mentioned earlier, that I think are fundamental to the change process:
- The realization that the success of a business must be measured not on profit maximisation alone but on benefits to people and planet as well.
- From Shareholder Value to Stakeholder Value.
- From Short Term to Long Term Perspective.
Although the book is written in a business context, there is also the hope that it will prompt some reflection on how these issues relate to us as individuals. What are the personal decisions and actions we can take and the changes we can make for a more sustainable and just world.
I want to end with a quotation from Gandhiji (1937): True economics never militates against the highest ethical standard just as true ethics, to be worth its name, must at the same time be also good economics. True economics…stands for social justice, it promotes the good of all equally, including the weakest, and is indispensable for decent life.
PG: Many thanks, Meena! I really appreciate your candid insights, as always. With best wishes in all your ongoing endeavours.
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