Prima facie the above three appear to be unrelated and independent of each other. World economy does lead to more industrialization and release of carbon dioxide and other gases and effluents that pollute the environment and the greenhouse gases increase the global warming. Right? But where in this whole thing does the Indian Capital market fits. To understand the same I’ll like to structure my thoughts in three broad aspects, namely;
1. the inter-relation between the world economy and the issue of global warming;
2. secondly, the unique position that the Indian capital market enjoys to spearhead a movement to drive the world economy towards sustainable development and
3. lastly the probable initiatives that can be taken in this regard.
Vasudhaika Kutumbum, is a term that no one knows better than we Indians. It means the world is one family! Sadly, we today stay in world that is divided across political and regional divides and borders. However, even then two most prominent factors that to my mind keep this age old saying still alive in today’s world are none other than – first, the World Economy; and… second, the common threat of economic catastrophes as a result of global warming and environmental degradation. These are two forces that pay no heed to any political border or racial divide. Their effect may vary from one region to another but sooner or later they leave no one un-affected. In short, they reiterate the ‘one world-one citizen’ theory. To give an example of this commonality of concerns that we have, as citizens of a globalised world –assume the following examples. A financial institution which fails in Boston as part of the economic meltdown had its shocks felt in Bombay. Dubai World shakes the world and a debt crisis in Greece has the potential to make the world come to a stand still. The environment too is not far behind in making its impact felt across the globe. The Icelandic ash stalled international trade and movement for days together. An oil leak in the Gulf of Mexico is making news in our homes in India. The world, as Thomas Freidman says….is FLAT, indeed!
Coming to the unique position that the Indian capital market is in, I’ll like you to see it from the eyes of the outside world. Billions of dollars are waiting today to be invested in India to serve its fast growing economy and an equal number wanting to flow outside by its new-age ‘acquisition hungry’ corporations. All this money passes through nowhere else but the great Indian capital market. And this is where I see it in a position to make a meaningful change towards environmental protection. At the position that it occupies it has the power to make the world follow its commands. To bring a ‘meaningful’ change, I propose a simple ‘Carrot & Stick’ policy. The carrot for the protector, the stick for the polluter.
It makes sense to hit the wrongdoer at the place where it hurts most and reward the good doer, where it matters most - and in a capital market nothing is dearer than the Capital itself. To succinctly put across my suggestions, __ steps can be essentially vital:
1. Initiatives for reducing carbon footprints, building green infrastructure and the like projects should be rewarded with tax concessions, compliance relaxations and fast track issue options. On the other hand, the polluter should face restrictions on capital inflows, heightened taxation obligations and constraints on financing.
2. Credit rating of corporations on parameters of ‘environmental friendliness’ to be made an essential element of the rating process.
3. Contributions made by directors and employees in the form of research or intellectual property focused towards environmental protection should be rewarded with Sweat equity options.
4. Carbon credit markets should be given an impetus, especially to encourage the contribution of Small and marginal enterprises (SME) sector towards the initiatives taken by them for reducing their emissions.
These are only an iota of steps that corporates can take to contribute towards a better environment. Before concluding I would like to mention that saving the environment is one of the duties of every citizen under the Indian Constitution. The Corporate citizenry has a duty equal to the citizens of this country to meet this fundamental duty. Dear fellow leaders and workers of these corporate entities it’s not just a long way ahead……but its also a dry, hot and barren one…… Lets start making it Greener!!!
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