This is Killing your Sustainability Efforts.

Any sustainability initiative to work, would require commitment and transparent disclosures beyond fanfare, emanating from half-baked knowledge. There is no one effective measure to combat greenwashing. Instead, it would require a practice of combined efforts of government, regulators, corporates, stakeholders including investors and the public at large.

•      Impact of policy and regulatory bodies towards sustainability

Need for integrating government and regulatory think tank to compulsively consider issues of climate change & human rights into their policy making.

First step in this is to make an assessment of impact which current projects have on the environment. Lot of state projects in the garb of development are negatively impacting ecology, in many cases causing imbalance to concerned habitat and its inhabitants.

Identification of ongoing harmful projects and their subsequent roll back, wherever possible will be helpful to the cause of sustainability.

Deeply consider the sentiments and practices of the tribal community, especially in a diverse landscape as that of India, while moving forward towards inclusive development. It is imperative to base sustainability modules without impacting cultural & ethnic sentiments.

•     Financial implications:

Not only funding of projects which are not aligned with the climate action, should be deprived of any incentive, rather punitive measures should be taken to stop greenwashing attempts.

Increasing the ‘cost of capital’ of projects which are high emitters, thereby reducing their profit margin and economic viability. One example is the introduction of ‘green tax’ on the GHG emissions.

Impose sanctions and recover compensation from organisations which are carbon giants. Reputational damage along with financial penalties may be imposed on instances of human rights violation, high GHG emitters, child labour etc.

Incentivise essential & large-scale projects which use renewable energy, or are at least impactful in carbon sequestration. There are a lot of large-scale industries in sectors like Oil, gas, energy, constructions etc., whose operations are necessary for the economies’ survival. Simply putting a blanket ban on them would in fact be counter intuitive & have detrimental impact on the societies at large. However, incentivising those who are aligned towards use of greener energy, would encourage the industry as a whole to move towards sustainable measures.

Also, the stakeholders and investors in this field need to have a basic understanding of categorization of GHG emissions (scope 1, scope 2 and specially scope 3).

•      Development of Green Taxonomy Framework

To ascertain science-based definitions of what is green and what isn’t for a country, global investors rely on green taxonomy. Formulation of green taxonomies provide a clear pathway to invest in sustainable sectors. There is a need for the financial sector stake holders and the regulators to come up with a roadmap for streamlined taxonomy for sustainable finance in the finance sector globally.

Development of a fully operational taxonomy takes time e.g., the EU taxonomy took several years to materialize. However, for a market characterized with size and diversity like India would require ‘transition’ taxonomies instead of ‘pure-play green’ taxonomies. These transition taxonomies are much wider in scope and also are not expected to cater to the high standards set in pure-play green taxonomies.

For a country that is culturally sustainable, India’s taxonomy would have to stem from India’s own climate goals, keeping in mind its cultural riches, diversity & sensitivities.

•      Climate change litigation -Global trends.

With the increasing cases of greenwashing/climate-washing globally has led to the emergence of a cottage industry of climate litigation.

A form of activism litigation which challenges inaccurate government or corporate narratives regarding contributions in the transition to a low-carbon future.

These include cases that aim to hold both governmental and non-state participants accountable legally for their actions or products that misleadingly claim to address climate change.

•      Role of Accountants

Any new corporate development has always seen Accountants lead from the front. Be it taxation, auditing, governance, advisory not to mention accountancy, his role is quintessential in development of the organization.

Development of corporate sustainability lays a lot of reliance on Accountancy profession for its strong ethical foundation and ability to maintain public confidence.

SEBI has mandated new reporting requirements on ESG parameters called the Business Responsibility and Sustainability Report (BRSR), seeking disclosures from top 1000 listed companies. This puts alpha responsibility on & opportunity for the professional accountants to contribute to a more sustainable world.

Conclusion

However critical you’d want to be of this space, “sustainability” no doubt is certainly a beautiful & much needed consciousness. It is the utmost need of the hour to make businesses more responsible and sustainable. Of late, this awareness seems to be getting digested into just ‘a capital raising tool’ and in this materialistic pursuit, is mired by cases of greenwashing.

One thing to be noted is that sustainability as a corporate concept is still in its nascent stage, a lot is to be analysed and reformed.

Widespread knowledge of the long-term impact and benefits of sustainability and harms of greenwashing needs to be imparted in a localized manner for it to be accepted in the mainstream. This knowledge can be spread through balanced impactful marketing. This marketing needs to be truthful to give a balanced impression. If not, there always will be a risk of greenwashing, resulting in stakeholders making uninformed incorrect decisions.