Grow with Governance: ESG essential to repair the damage economic activities caused to the earth, says CA Shailesh Haribhakti
Bharathy Iyer & Jescilia Karayamparambil
30 Jul 2021
A role of an Independent Director (IDs) is more than just a guide. He or she is an enabler of good governance and improving corporate credibility. To highlight the role of such enablers, MentorMyBoard (MMB) and the Free Press Journal (FPJ) is organising a series ‘Grow with Governance’.
The series commenced with career Chartered and Cost Accountant Shailesh Haribhakti. He is the Chairman of Blue Star and serves on the Board of L & T Financial Services. His career spans over four decades and is a member of the board with several companies.
Haribhakti in conversation with MMB’s Bharthy Iyer and FPJ’s Jescilia K talks about the role of IDs in giving direction to various companies.
What are the few highlights of your journey as a Director?
The highlight has been to be completely committed to service and that is the overwhelming feeling that has persisted in my journey.
I serve companies with AUM around a few lakh crores -- this humbles me and commits me to service -- and team with the other board members. These board members are a great source of learning and inspiration. This is truly the highlight.
It is only when you deeply commit yourself to the board that you can provide the oversight and fiduciary relationship.
Today, the entire story is pivoting to purpose, planet, people and profit.
At times, Independent Directors are seen as an interference. What is your take in here?
I do not like the distinction between Independent Directors and other Directors. We need to have a mindset to be part of the team which is together committed to the purpose of the organisation. Every institution/organisation should earn a license from society to operate which is possible with better governance and ethical behaviour.
ESG is a nascent concept for MSMEs. How will they measure their metrics?
Every economic entity must get involved with good governance. Today, ESG is essential to repair the damage economic activities have caused to the earth. For metrics, there is a need for a new-generation ERP for ESG. Not just financial capital, one needs to track other capital as well. We need to create a Netflix of sustainability through interactive content, Tedx-like talks that will influence board, public policies and others, to engage in the change and transformation.
How has the pandemic changed things?
The pandemic made me take a pause. It made me evaluate my entire set of assumptions. It helped me re-evaluate my activities. I spent 500 hours studying sustainability and getting certified to be India’s first ESG-certified board director. I spent 500 hours understanding converging technologies and how they can help companies to operate in the real world.
The importance of spirituality has gained momentum too. It is about one's attitude towards various approaches and gratitude, moving towards the path of accountability, and most importantly being sincere to purpose.
Do you think Indian companies will lose among foreign multinationals?
These are just myths. The way we have foreign multinationals, we have Indian multinationals too.
What would your suggestions be to the Government on ESG?
We do not have to advise policymakers most of the time. They usually know more than us. It is important that everyone works as a partner. The whole idea of partnering with the Government has to take shape in India. The idea of collaboration should exist.
My only suggestion would be ESG thoughts should be included not just in the Indian budget but State Governments' budget too.
What is your take on carbon credit for the service sector?
My mind has now shifted from this. I want to see climate action and ESG action. I am not interested in halfway measures anymore. Carbon credit and carbon tax are good. But there are other influencers that are bigger than these.
Now, let us focus on getting the world-class framework of ESG from the Value Reporting Foundation which was started this year. It happened after the merger of SASB and IIRC. Now, the world has a single framework developer.
In September, for the first time, we will have a Sustainability Standards Board that will draw up all the accounting standards.
What piece of advice would you like to give to other Independent Directors?
There are only three things that are needed to be a Director.
First, you need to be bold and ask whatever question you must ask. Unless you do not receive a satisfactory answer or satisfactory disposition of idea does not take place, continue questioning.
Second, you should insist that best practices are adopted in whatever time or form possible, as long as your intent is clear.
Third, there will be accidents and transgression but you need to boldly pursue the path of 'purpose'.
Which books will you recommend to professionals?
The book that changed my thought process is ‘The Singularity Is Near: When Humans Transcend Biology’ by Ray Kurzweil. It is an old book but still relevant.
The other author (also an entrepreneur) whose writing inspires me is Peter Diamandis and his latest book ‘The Future Is Faster Than You Think’.
Another book is Paul Hawken’s Drawdown, which talks about the need for plant earth to draw down 1,000 gigatons of carbon that we have emitted.