I recently read an article about BSE introducing BSE Greenex, its sustainability index, the first of its kind in India. On the other hand, Dow Jones along with the SAM Group has had its sustainability index, DJSI for a long time and they have carried out a lot of research on how markets can be made more sustainable, how projects can be sustainably financed, how CSR activities can be grown and the like. Organisations like UBS are also working towards sustainability. UBS is celebrating its 150 years of existence by teaching people about sustainability. Such kind of initiatives are lacking in India. How do you see such initiatives gathering momentum around the world and in India? In my individual capacity, I believe that the purpose of business is to do business. As long as you do a good job which you are mandated, you do well. Sir, if a business’ job is to do business, where do CSR activities fit in? CSR activity is a misnomer in itself. If one is a good corporate citizen, treats every stakeholder fairly, does their task with utmost sincerity, then they are taking care of CSR as well. Why doesn’t anybody ask rich sportspersons this question? Why is a sportsperson so respected? Is it because of their ability to play a sport well or because of their ability to participate in social welfare? CSR is a feel good thing. There are many companies which undertake CSR activities, but their conduct has been far from ethical. It is fashionable for businesses to undertake CSR. As a money manager, if I do a very good job of giving returns to my investor, be very ethical in my conduct with the market regulator, authorities and stakeholders,
I believe that I have done more than my share of the job. Nowadays, companies engage in CSR activities mainly for branding purposes. The challenge, however, is how to educate big business houses about sustainability, so that they take care not to harm environment and society by their activities. How to make companies design their CSR initiative in such a way that changes their way of doing business in a manner to make it more conducive to society and environment? Let us consider a hypothetical situation. There is a company which makes a lot of money and engages in both ethical and unethical behaviour. Over a period of time, the money keeps circulating. So however hard this company tries, it cannot have the competitive advantage to make more money. Flow of money is both ways. The earnings of a company is taxed and also distributed among investors as dividend. But there are some things which cannot be reversed, like effect on the environment. For that, there has to be an effective mechanism between the government and the corporates to work on this. The government has to encourage the right kind of behaviour and the corporate to support that kind of behaviour. For instance, if a company sets up a project in a way that it minimizes the damage to the environment; it behaves sensibly and responsibly.
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In my opinion, there is huge sustainability in India and that will remain as long as a proper policy framework is put in place.
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other hand, if we invest in equity, we can at least expect a nominal rate of return. The future value of commodities is uncertain because we do not know what applications it might have in future.
There is another company which does not care about the environment at all. What will the regulatory body do to differentiate between these two entities? The former company would have a better image. But, in reality, a company’s image is built by its performance in the market and its profits. So how can one reconcile two conflicting interests?