Who’s Safeguard Anyway?

Safeguard

(Cover image sourced from http://mart21.ru/components/com_virtuemart/shop_image/product/5saf.jpg)

It’s clear that the world needs development banks both to scale up the level of investment  and to give developing countries better representation in the world of development finance. Yet these new banks need to play another role: championing sustainability as they usher in more development. Will this really happen?

The Asian Infrastructure Investment Bank (AIIB) was proposed by China in 2013 and was  launched at a ceremony in Beijing in October 2014. AIIB was to be fully established by the end of 2015.

AIIB is considered by some as a rival to the IMF, the World Bank and the Asian Development Bank (ADB), which are regarded as dominated by developed countries
like the United States. The United Nations has dubbed the launch of AIIB as ‘scaling up financing for sustainable development’ for the concern of Global Economic Governance.

As of April 15, 2015, almost all Asian countries and most major countries outside Asia had joined the AIIB, except the US, Japan (which dominated the ADB) and Canada. China is a major contributor to AIIB followed by India and Russia.


It was late in the night in Mumbai. There were sixty people in the banquet room of the  legendary Taj Mahal Hotel having a buffet dinner. Out of the sixty, fifty seven were Ministers of the member countries who represented the newly-formed Asian Investment  Infrastructure Bank (AIIB)

The meeting was chaired by the two Premiers – of course, of China and of India. (China  holds nearly 29% of the stake in AIIB and India enjoys around 9%)

The sixtieth person in the room was my Professor Friend who had recently assumed the  position of the Advisor to AIIB on Environment and Social Safeguards (ESS). He was
sitting next the two Premiers.

I was also around, but was not officially included in the list for obvious reasons. I was  asked to be disguised as a waiter and serve a blend of Chinese and Indian (means Gujarati) food. Fortunately, the members of the AIIB were cooperative and tolerant of such a terrible cuisine combination.

Strict instructions were issued to ensure that there was no American presence inside and  outside of the Taj property. All American tourists in the Taj Mahal hotel were evacuated and sent to hotels in Kabul at discounted rates. This was because Americans were not supporting AIIB and, in particular, the World Bank Group had considered AIIB as a threat.

To sabotage AIIB, I was told, the World Bank had instigated a host of international NGOs to ask AIIB questions on their Environmental and Social safeguards. A special capacity building program for NGOs was launched to this effect, under the Technical Assistance of some Trust Funds. I was told that these funds generally dump money and don’t look at the outcomes.

In an interview to the Wall Street Journal, the President of the World Bank had said that AIIB will be diluting the ESS while funding trillions of dollars of infrastructure projects. This will cause unevenness across development financing institutions of the World and pose risks to the very sustainability of the planet. He sounded concerned.

The management of AIIB strongly disagreed with the President’s statement.

My Professor friend had completed a research investigation and had found that it was in fact the World Bank (WB) that was systematically diluting the ESS over the past two decades. The new draft ESS of the World Bank was a glaring example of how one can make a clever blend of dilution and complexity a maze of ambiguous procedures and of passing the buck when it came to the accountability.

A Chinese version of the Professor’s report was intentionally leaked. This led to a fierce global discussion and arguments on AIIB vs. WB safeguards. Several people undertook lessons in Mandarin just to read and understand Professor’s findings and participate in the debates. The percent of population ‘able to read and speak Chinese’ was in fact expected to increase over the next three months. I was really impressed with Chinese Premier’s strategy. I suggested to my Professor friend that India should also leak this report in the national language Gujarati, Oops! Hindi.

While the dinner was getting served at the round tables, the Premiers opened the meeting. The Chinese Premier introduced the purpose of the meeting and Indian Premier welcomed the members of AIIB. Discussion on AIIB’s environmental and social safeguards was the  focus. My Professor friend presented his investigative report on what’s happening on ESS across institutions like the WB, Asian Development Bank, European Investment Bank, JICA, and KfW etc. It appeared that most of these institutions were (happily) following the WB ESS. WB was the ‘big daddy’.

The first question came from the representative from Russia while he was having Chinese  soup with a dash of Methi. “How do we handle Environmental activist organizations? We want to do what we want to do. But then how do we ensure that these activist organizations remain quiet?”

The Indian Premiere smiled and said “Look, it’s easy. First put all the environmental activist organizations under the scanner of Ministry of Home Affairs. Get their books of accounts checked by the Enforcement Directorate. More than 80% of such organizations would have flouted the rules under Foreign Exchange Regulations Act (FERA) one way or other. Issue notices and freeze their accounts/funds transfer. Once done, no activist organization will raise a voice against what AIIB will do. We have already done this in India and this step has removed all the barriers to the investment flows in India’s infrastructure sector. There is now a queue of international investors. There are no public protests anymore! In fact the other day, leaders of Indian media approached me in despair that there were no more stories to tell about people protesting infrastructure projects even if the projects posed risks to our natural reserves. Media is now asking me for alternate news bytes. I am helping them by exposing some of our own scams and scandals! But that’s another story”.

Member from Russia got convinced.

“How about the process of public consultation and conducting of analyses of alternatives  etc.” The member from Brazil said while sampling Undhiyo. I served another portion of  Undhiyo to the Member to show my appreciation for the pointed question he asked. I also placed a glass of Lassi on his table because I knew he did not know the impact of the spice in Undhiyo.

My Professor friend interjected:

“AIIB will mostly support refinancing of the projects. In refinancing, most of the water  has already flown under the bridge. The project is already halfway so most of the steps of  ESS cannot be executed. There is no public consultation to be done nor are project  alternatives to be explored and evaluated. We will still say that public consultation and alternatives are hallmarks of AIIB’s Environmental and Social Safeguards – but when situations are beyond control and when the interest of the development of the country is to be looked at, we will abide by what is proposed and getting implemented. For the sake of completeness, however, we will conduct an Environmental and Social Due Diligence (ESDD) and if gaps are found we will provide Technical Assistance (TA) to address them and will encourage the borrower to comply”

Wow! I was impressed. This was a great example of avoidance and passing the buck.

“And remember”, the member from Netherlands said, “Let us all continue to focus more  on project preparation (i.e. application of ESS to create documentation) and less on the supervision (i.e. implementation of ESS). We should follow the World Bank here. The WB and most of the development financing institutions spend 70% of the resources in getting project approvals and use 30% or even less sometimes, to check whether ESS is actually implemented in letter and spirit. I like this style as it shows the rigor at the superficial level, provides green jobs to all the (brown) environmental and social consultants and creates employment with hefty pensions to all the Bank staff. We must keep producing smart documents, upload them on our website (anyway hardly anyone reads them) and create records so that we can defend ourselves should anyone question us – of course if at all”

I found this approach really strategic. I decided to add a scoop of chocolate ice cream with Chinese wheatgrass on the gentleman’s plate.

The question & answer session continued further and several bright ideas emerged on AIIB’s comprehensive ESS. My Professor friend was taking meticulous notes. Meet me tomorrow to write down the minutes, he whispered to me while gobbling a piece of crunchy Chinese chicken rolled in amsul sauce.

As the meeting was about to end (and so was the food), the member from Mongolia asked a question.

“How about application of ESS to the Treasury department of AIIB? Will there be any restriction or guidance on where our own Treasury will invest? In order to multiply our own money for infrastructure investments, we will need to put our money in funds of funds that will provide at least 20% of returns and AAA rating. I reckon that investing in funds of funds that may, in turn, invest in mines will be good as the mines today are giving great profits. But will mines be in the exclusion list of AIIB’s investments?”

“What about the environmental and social mess the mines create – how can AIIB invest in  mines?” I was about to ask this question but realizing that I was supposed to be in disguise, simply zipped my mouth.

The Chinese Premiere smiled like Buddha

“Oh, no worries, we will apply the principle of exclusion selectively to the Treasury department. We will keep the money in the funds of funds and won’t go too much downstream to investigate where money will actually be invested. So the downstream projects could well be mines. And my friend – don’t ask this question again”

He then turned to the Professor “Get me details on where does the Treasury of the World Bank, IFC, KfW etc. invest – which sectors, which fund of funds and markets are their favorites and to what extent do they apply Environmental and Social safeguards for their own investment operations. Let us copy their style in toto. We will have to stay consistent. After all, we have to take care of our own safeguards”


Well, this is just a satire and not the real story!

I would recommend that you visit http://www.wri.org/blog/2015/04/asia%E2%80%99s-investment-bank-new-chapter-sustainable-development

This page poses a number of critical questions to the ESS of Development Financing Institutions and these questions are worth pondering over.

You may also like to read letter to the World Bank by US Senate

http://www.inclusivedevelopment.net/wp-content/uploads/2014/12/Senate-World-Bank-Safeguards-Letter-12-15-14.pdf

Advertisements

Game of Indicators

baseline-indicator

My Professor friend and I walked into the waiting room of the Minister of Environment in Delhi. The secretary asked the Professor to insert his Green Card in the slot machine. When Professor did, the machine made a chuckling sound like the R2D2 of Star Wars and flashed a number. That number was the sequence number for us to see the Minister. Professor’s Green Card must be highly respectable or valued as we were ushered right away to the Ministers Cabin.

When we finished our meeting (which was typically inconsequential) and reached the elevators, I asked Professor about the Green Card. Professor explained that this was Ministers pet subject and a pilot that he is soon thinking of launching all over the country.

The Green Card was proposed to be linked to the Aadhar card and pool into the central database, all the environment related parameters or attributes of the person. The Card when used for transactions (e.g. for purchasing goods at the stores, making payments at a hotel or restaurant, purchasing fuel at the petrol/diesel station, buying an air ticket etc.) will assign appropriate “green points”  and calculate the person’s Green Index and rate between 0-10. If your Green Index is less than 5 for example, then you will be considered as an irresponsible citizen, and penalized so that you will be encouraged to behave responsibly. For this your Green Index should cross the minimum of 5.

Other day, one of the top executives of a Company (who was in the pilot project) realized that each time he went to the restaurant to dine, his bill was taxed 10% more as his Green Index was less than 5. When he started ordering organic food on a regular basis and chose restaurants who had energy efficient fixtures, the Green Index moved a bit beyond 6 and he got out of the 10% surcharge.  So to save money and at the same time protect the environment, he had to make a behavour change. Imagine the impact once the first lot of 10 million Green Cards is issued to India’s rich and high middle class citizens. Launch of Green Card with Green Index will tame our highly consumptive and carbon intensive lifestyles. Professor said.

I thought this was rather visionary and very impressive. Perhaps, Professor’s Green Index must be close to 9 and that’s why we were the priority visitors to the Minister. (I was later told that the Visa and MasterCard companies were already holding talks with Government of India, how to bring in these elements on a universal basis on their card chips.)

“You know this Environment Minister is very fond of indicators. He likes to bring in data together and make a number out of it as an Index and disseminate the Index to the people so that they become aware. Have you read about his announcement on Air Quality Index (AQI) in Indian cities? This index has been developed by IIT Kanpur. It provides one consolidated number after tracking eight pollutants and uses color coding to describe the severity in terms of associated health impacts”

I looked up on the web and found the description of AQI and also articles that say that the Indian AQI is not so easy to understand and is not so much action oriented. (See http://www.thehindu.com/opinion/blogs/blog-datadelve/article7083985.ece ).

When I mentioned about this observation, Professor said that making complicated indices is the current state of the art (or science). How can you have a simple index for complex issues on environment?

I suggested that why don’t we show data on the sale of respiratory drugs and inhalers instead of measuring PM10 and PM2.5? Higher is the level of PM10/PM2.5, more will be the sale of the respiratory drugs and the inhalers. So the sales statistics will serve as an Index.

I continued

We could speak to Cipla Pharmaceuticals as they have nearly 50% of the market share on such products and would be happy to sponsor a number of display boards that will post their sales each day. We will save moneys on the expensive automated air quality monitors and in fact instead earn advertising revenues. In any case, veracity of the data collected at the automated air quality monitors is rather questionable and data is as good as random numbers” I said

But the Professor probably did not hear me. He continued.

Few years ago, a Comprehensive Environmental Pollution Index (CEPI) was developed by the Central Pollution Control Board (CPCB) to rank India’s industrial estates. This index was developed by IIT Delhi that made use of several complicated variables such as pollutant, pathway, receptor and additional high risk elements. (see the full report at http://cpcb.nic.in/divisionsofheadoffice/ess/NewItem_152_Final-Book_2.pdf ). Indeed, CEPI was complicated to understand but was applied over 88 industrial estates. The index was actually used for policy and taking actions. For example, the analysis showed that there were 43 industrial areas/clusters out of the 88 estates that had CEPI crossing 70. These estates were  declared as critically polluted. These critically polluted industrial clusters/ areas were recommended for further detailed investigations to assess the extent of damage and a formulation of appropriate remedial action plan. In this process, several action plans got created. Don’t know how many were implemented though.

I recalled the criticism on CEPI, its questionable formulation of aggregation (e.g. additive function) and the poor quality field data that was used in arriving at the Index. The impact of publishing and using CEPI was however high as a freeze was brought on expansion and modernization of industrial units in the critically polluted areas. The Industry Associations protested. CEPI was pushed as a Policy without a proper scientific debate and stakeholder consultation.

I was wondering why simple data points could not be used to develop indicator for industrial estates/clusters. These data points could have been – overall water consumption as against water available, energy and fuel consumption, materials brought in (with octroi collected as proxy), number of workers/staff in the estate and in the neighborhood of say 1-2 kms, presence, functioning and disposal point  regarding common environmental infrastructure (like common effluent treatment plant and common hazardous waste treatment and disposal facility), number of public complaints received, issues and severity etc.

The Professor was continuing as we took a taxi. He asked the taxi driver to take us to the Neeti Ayog – new avatara of the earlier planning commission. “Hope you will join me there” He said. The Primate Minister has asked me to develop an Environmental Performance Index (EPI) for each State. The EPI, like usual, will range from 0-10 and higher is the value, the State will be considered as better performing on environmental matters. EPI will be used to allocate the State budgets. Todays meeting is to finalize the parameters that will be used to arrive at the EPI apart from the mathematical function (e.g.linear, weighted linear, maximum operator etc.) and the weights. It’s a high level meeting as it has the “money stake”. This approach will however transform India from an “unsustainable nation” towards path for sustainability. I have come with a fuzzy formulation of EPI to account for the foggy, manipulated and incomplete data.   And I feel that this kind of formulation will make EPI look “state of the art” or contemporary and impressive.

I was overwhelmed. I realized the importance of environmental indicators in the progress of India, in environmental management (like using CEPI), in environmental communication (like the AQI) and in influencing our lifestyles through mechanisms like the Green Card.

Professor paid the taxi bill, looked at me intensely for a while and then said with his characteristic serious tone “Prasad, its finally a game. Minister wants me to develop that structure of EPI which will somehow provide least central allocation to the States ruled by the Opposition – I am identifying therefore those parameters that are representative and defensible and yet help me achieve this differential objective”

I wasn’t then envious of Professors job.

I also realized how and why such indicators were developed – essentially to fudge the real data and project the outcome what we want…. Clever.

(Cover image sourced from http://www.lamiloproject.eu/establishing-baseline-sustainability-indicators-2/)

 

More than 2%

2%

I was researching India’s recent enactment on Corporate Social Responsibility (CSR). I found that there were mixed views. Some opined that the very concept of CSR is controversial as it is fundamentally an aspirational exercise, and it is very difficult to legislate aspirations. Some however believed that making CSR mandatory was a good step to ensure that business behaved responsibly, contributed to the interest of society and complemented the government’s efforts by channeling part of its profits.

India is taking pride in the fact that it is the first country in the world to have made CSR mandatory. The question to ask is why other countries have not done so? There must be good reasons. In fact, India is actually not the first country mandating CSR. Attempts have been made in Indonesia, as early as in 2007, and not been so effective because of ambiguities, poor guidance and involvement of overlapping agencies. (See Manager’s Perspective on Corporate Social Responsibility: A Case in Indonesia, Kartika Dewi Sri Susilowati, World Journal of Social Sciences, Vol. 4. No. 1. March 2014 Issue. Pp. 207 – 223, http://www.wjsspapers.com/static/documents/March/2014/16.%20Kartika.pdf)

The new Companies Act of India requires companies above a certain size to ensure that they spend at least 2 percent of annual profits on CSR activities. (Why 2%? Perhaps, the Ministry of Corporate Affairs wanted to follow the magic figure of Income Tax surcharge levied on the rich income bracket of India) Some precedence!

In many ways, this 2% imposition is kind of a ‘cheeky’ way to increase corporate tax. The corporate tax rate in India is 32.45 percent—already one of the highest, compared to the global average of 24%. The Income Tax Act does not yet allow CSR spending as a deduction from profit.

Estimates have been made regarding how the CSR requirement will translate into spending. Around INR 270 billion per year are estimated to be spent as CSR by India Inc. Just to compare – the annual budget of the Ministry of Environment is close to 17 billion and the budget for Ministry of Social Justice and Empowerment is INR 70 billion. So, the estimated CSR spend is a whopping three times more than the combined budgets of the two relevant Ministries. It is expected that India Inc. will deploy their organizational and  managerial capacity to play a significant role in activities where government has failed to deliver. That is the hope.

Of course, it is not easy to spend the money as projects that qualify for CSR are often  difficult to identify. Further, companies are required to engage not-for-profit agencies  (NGOs) that are competent – a combination that is often not easy to find! The NGO community in India is indeed not yet ready to help companies deliver CSR projects in the required time and quality. That is a constraint.

The Indian Institute of Corporate Affairs (IICA) has launched training and capacity  building activities with support from several reputed training institutions in the country.  According to Dr. Bhaskar Chatterjee, Director General of IICA, some 30,000 professionals  need to be trained. By July, IICA was able to train only 200. Clearly these efforts need to be substantially scaled up and a market needs to be created. The course fees of the training courses are high.

The CSR mandate under India’s Company’s act is rather project oriented, more an  accounting and reporting exercise than a strategic approach.

It is also averse to linking CSR with the creation of shareholder value. Many activities that  companies undertake are both profitable and good for society. Companies undertake these activities regardless of the law, since they are profitable activities. According to Dr Chatterjee however “CSR must have an altruistic motive and not end up in making profits for the company” (http://www.indiacsr.in/en/report-on-what-qualifies-as-csr-and-what-does-not/)

Would making a profitable investment in an energy-efficient operation qualify as ‘ensuring environmental sustainability,’ even if the firm made that investment on purely  financial grounds? What about working with social enterprises where innovations,  replications, up-scaling are good possibilities for creating entrepreneurship, employment and investment flows? The law however says a company can undertake its CSR activities only through a registered trust, a registered society or a non-profit (section 8) firm and not through social enterprises.

Given its narrow interpretation and ‘play’, I wonder to what extent the CSR mandate is going to improve environmental and social sustainability and help demonstrate sustainability-related interventions for the attention of the government.

Companies would mainly use CSR as a brand-building exercise, appeasing local communities around their factories or project operations. If CSR is under the brand  function, then the emphasis will be on how prominently the company’s logo is displayed  at the location of the activity. I won’t be surprised if the CSR budgets are used to satisfy the politicians, by launching initiatives in their constituencies. Every politician has an NGO and the easiest way to support them is to hand over a grant to their NGOs. There is a risk therefore that the new law would promote green washing and act as a vehicle for illegitimate transfer of funds.

I have had many occasions to speak at ‘sustainability conclaves and summits’ of some of the top Indian corporates. My experience has been thoroughly disappointing. The so-called sustainability cells of these companies are staffed with people who are not adequately trained or experienced in the domain and are generally ‘irrelevant’. If the top  companies do not have the vision and capacity, then is it too optimistic to expect results of change on the ground?

The Schedule 7 under the Company’s Act provides broad-brush guidance on CSR and most  companies go where they can shine in the media, establish a brand or go by the feelgood proposals of their employees. Amongst the 10 items, only item (IV) suggests ‘ensuring environmental sustainability’. The guidance is rather biased towards social (health, water, sanitation) infrastructure. Typical ‘investment chunks’ of projects therefore include construction of check dams, water treatment plants and toilets. I worry how these assets will be managed, especially with the use or handover phase requiring commitment and ownership from the communities. The need to ensure proper institutional arrangements for project sustainability has been a weak link in the CSR Act and guidance, and the main emphasis seems to be on spending or projectization.

Companies are following several sustainability-related initiatives. In fact, sometimes it’s like a maze for communicating sustainability to the internal and external stakeholders and even to the top management. There is too much of a ‘vocabulary’ used. CSR is just one of the vehicles.

A corporate needs to take a holistic view, develop strategies and practice a code of conduct. One needs to consider employees, neighborhoods (especially the youth), customers, suppliers, investors, regulators, media and academic and R&D institutions. There is a need to envelop the CSR engagements, investments and operations in the code of sustainability. Strategies such as greening of supply chains, extended producer responsibility and practices such as sustainability reporting must be woven. The focus should be on building skills and promotion of innovations that can foster sustainability.

Figure below shows a depiction for your comments and inputs.

 

CorporateCodeConduct_PrasadModak

 

Indeed, we have to think and practice sustainability beyond the 2%. Limiting to ‘2% thinking’ is not going to be enough!

 

 

The National Anthem, Me and Cleaner Production

item_3 Intl flags

I got into the “business of Cleaner Production” in 1989 courtesy my good old friend Fritz Balkau at the UNEP, Industry and Environment office in Paris. I had just completed a short booklet on Low or Non Waste Technologies (LNWT) for Friedrich-Ebert-Stiftung (FES). Stephen Paulus at FES had coaxed me to do this project in the context of Indian industries. This book argued a business case for environment by practicing pollution prevention. It cited examples from 100 odd Indian industries where innovative approaches were used. These stories were new to many industries and hence it excited the readers. (I still hold this database of 100 case studies– old stuff but if interested, do write to me)

Fritz had read my book on LNWT. He invited me to Paris for a workshop. That one invite opened new vistas for me on Cleaner Production.

Cleaner Production became a “fizz” phrase in the 1990s. A bunch of us at the office of UNEP in Paris coined this term in one of the late evening sessions. Don Huisingh was the facilitator of this session and Jacqueline Aloisi de Larderel was the Director. Don is still very active, editor of the Journal of Cleaner Production and we are in touch.

Jacqueline was a phenomenal visionary and a leader. She steered the era of Cleaner Production (CP). We must give her all the credit and kudos for bringing in a change in the environmental profession.

Larderel2

(Jacqueline Aloisi de Larderel – image taken from http://johnelkington.com/about/personal/others/)

The Cleaner Production program of UNEP led to ripples all over the world. Programs like WBCSD’s Eco-efficiency and APOs Green Productivity etc. followed later. These programs tried to find their own identity but could not “compete” with the expanse of the term Cleaner Production.

There were several “high level” seminars on CP conducted on biannual basis starting from Canterbury, Paris, Warsaw, Melbourne, Prague etc. I was one of the regular speakers in all these Seminars. This gave me an opportunity to make lots of friends and network across the world.

Few countries where I worked extensively on CP were Thailand, Egypt, Indonesia, Bangladesh, Mauritius and Vietnam. In these countries, I had an opportunity to work at policy as well as practice levels (demonstration projects) and run training programmes for capacity building. The period between 1996 to 2008 was a golden period for me to do something innovative, demonstrative and impactful in the area of Cleaner Production.

The Cleaner Production project In Thailand was at Samutprakarn, one of the highly industrialized clusters near Bangkok, funded by the Asian Development Bank (ADB). It was captioned as 20/20 (targeting 20% water use reduction and 20% energy consumption reduction). In Egypt, it was Support for Environmental Assessment and Management (SEAM) financed by DFID, UK that had a Cleaner Production component. SEAM program ran over six years and brought out several key publications. Indonesia operated a project called ProduksiH Bersih (means Cleaner Production in Bahasa) that was funded by the German Government. I used to travel to all these countries at regular intervals and typically spend a week – mostly working in the field.

I was involved in most of the CP activities in India. The CP activities were led by the National Productivity Council (NPC) with its National Cleaner Production Centre (NCPC) at the helm. Operation of Waste Minimization Circles (WMC) was one of the very unique and interesting program that was carried out by the NPC. I participated in the evaluation of WMC on behalf of the World Bank who did part financing of WMCs under the Industrial Pollution Prevention Project.

Frequent travelling –now looking back – was tiring but then I had a motto.

Don’t just travel for work; go a day early and stay two days more (if you can). Feel the place, relax, make new friends and plan for the next visit that is not connected to work. And spend the money you earn – Pamper yourself. You don’t live twice.

I did not follow this motto in my initial travels – but as I grew older and wiser, I started following it diligently. And it worked.

I love listening to live music, especially the jazz. In most (or almost all) of my travel therefore I spent time of late evenings at the jazz clubs. After a daylong work, retiring at these fountains of music was very refreshing and exciting.

So I never missed spending time at some of the great music pubs and jazz clubs. Places I used to frequent were Minh’s Jazz in Hanoi, Nui’s Blue Jazz in Bangkok, the Cairo Jazz Club and the Jaya Pub in Jakarta. Of course top in the list was the legendary jazz club Duc des Lombards in Paris. I would love to write one of these days on the experiences and encounters I have had at these great places.

LeDurcdesLombards

(Duc des Lombards in Paris – taken from http://www.directmatin.fr/loisirs/2014-06-08/paris-le-top-5-des-lieux-ou-ecouter-du-jazz-680747)

But let me return to the subject of Cleaner Production.

I liked the idea of setting targets for a Cleaner Production program such as 20/20. In Egypt, we worked with Micro Small and Medium size industries and much of the work was to help protect the industries towards exports. So we helped sectors such as textiles where exports were hit because of requirements such as Eco labels (Oeko-Tex) from the markets in EU and Americas and cheese making industries who were losing exports to Saudi Arabia due to excessive salt. In Indonesia, we promoted Cleaner Production in locations such as Jakarta, Bandung and Semarang and implemented demonstration projects with facilitation through Cleaner Production Counseling Clubs. This idea was similar to the WMCs in India.

I had opportunities to revisit countries where I worked and see the impact and sustainability of the various CP programmes. In most cases, including India, I found that the results were dismal and discouraging. There was hardly any replication of the CP demonstration projects. Further, capacity building of CP professionals was not taken up on a scale and on a programmatic basis. The activities lasted only till the “donor assistance” was available and there was no local or national ownership.

I was expecting Cleaner Production to get spread into practice on its own or “steam” as it made a good business case. Instead, I noticed that subsidies and concessional loans were offered to make CP happen!   That was strange. Economic benefits could have been the principal drivers – environmental and social benefits could have been just the icing on the cake! Indeed, why the industry does not take the path of simultaneously improving productivity and achieving environmental protection is still a puzzle.

Few years ago, I was working on CP in Bangladesh. I visited a textile processing unit near Fatulah at the outskirts of the Dhaka city. The Owner of the factory showed me all the departments and explained the various water and energy efficiency improvement measures – right from housekeeping, recycling, process and chemical change etc. These measures undertaken as a “system” were very impressive. I asked the Owner what made him implement these projects. I was expecting his answer as “.. Because of economic benefits”.

The owner instead simply said “I did this for my country”. And I was simply shocked, awed and speechless. I never expected such an answer.

I had a talk to be given on Cleaner Production at the Dhaka Chamber of Commerce the next day. I asked the Owner of the textile factory whether he could join me there, show a few slides on the CP projects that he implemented and then end saying what made him implement these projects. The Owner agreed to my request.

The next day I was at the Dhaka Chamber of Commerce. There were some 50 participants from industries. After my talk on CP, I asked the Owner to give his short presentation. When he finished, I asked him the question “why did you implement these projects” and he answered in Bangla “for my country”

The audience was stunned. There was silence.

And then a man in the front row got up. And he said in a low tone  “Amar sonar Bangla, Ami tomay bhalôbashi”. He was singing the National Anthem of Bangladesh.

Another man in the third row got up and continued. Soon more men in the hall stood up and joined. And within minutes, all the 50 participants were standing and singing the national anthem. They did this in prompto – as if someone was orchestrating – invisible

This was simply a hair raising experience to me. I was just overwhelmed to witness this outburst of emotions.

When the meeting was over and I was returning to my hotel, I was thinking. I realized that economic reasons cannot be the only drivers for bringing in the change – especially when we talk about change in the behavior, practice and investments we do. This matters for paradigm shifts like Cleaner Production.

It has to be something much more – closer to the heart, in the interest of the country and towards the good of the world. Not just “material”

If many think and act the way the Owner of the textile factory in Fatulah did, then the world we live today would have been so different!

(cover image taken from http://www.anglimflags.com/)

Lunch between Obama and Modi – A Deep Secret for India’s Smart Sustainable Growth

Modi_Obama_lunch_650

One of the prominent newspapers covering the recent visit of President Obama to Mr Modi featured the lunch hosted by Government of India at the Hyderabad House. The lunch menu included Shatwar ka Shorba, Shrimp Karavalli, Neza Kabab, Mahi Sarson, Bhuna Gosht Boti, Mixed Vegetable Kalonoji, Gujarati Kadhi, Matar Pulao, Gajar ka Halva, Gulab Jamun, Fresh Fruits ending with South Indian Coffee/Herbal Tea.

Some said that this Menu was a reflection of Modi’s geo-political preferences and deserves a deeper analysis. I was also told that the menu was fast becoming a model for all high level weddings in Gujarat. All top chefs in Gujarat were practicing hard to do a fine job with these menu items. Books were written and videos were produced especially for housewives who wanted to please their husband’s bosses with the Obama-Modi or the OM Lunch Menu. I called on my Professor friend to discuss the menu in these perspectives.

Lunch_Hyderabad.jpg-large

The Professor pooh poohed my observations. He said that a lot gone behind the lunch and very few know about it. He then asked me to come to our usual coffee shop for a long session. “Come with a pack of cigars for me” he said. “I will give you some amazing dope – all top secrets”

When we took our seats, he lighted his cigar, took a deep puff and said- “Prasad, I was the Chief Consultant appointed to plan this lunch by none else than Mr Modi himself. As soon as Obama’s visit got fixed, I was called by the PMO to work on the Lunch Project as an important National Mission. My institute relieved me from all teaching responsibilities. The PMO gave me unlimited budget to hire staff, take on travel or conduct/ sponsor any studies or research as needed. I had to meet Mr Modi every week in his personal gym while he used to be on the tread mill and therefore would only listen and not speak”

I could not comprehend how could a Lunch Project be equivalent to a National Mission. Looking at my jinxed face, the Professor continued

“Please understand the gravity of the Lunch. Take the venue itself. Obama is used to eat only in the Green Rated Buildings. Six months ago when the lunch was fixed the Hyderabad houes, it was not a Green Rated building. So I commissioned an agency of national repute to assess the building and come up with an action plan for Green Retrofitting. This plan got actually implemented and today we are saving at least 1.5 million Rs of electricity bill every month. This experience led to a national program for building retrofitting following an aggressive business model. Do you know that four metros of the country are implementing this program, saving around 10,000 MW of power and 50,000 tons of GHG emissions on annual basis? The Green Building programs earlier focused only on green-field or new constructions – successful greening of Hyderabad house triggered retrofitting of the existing buildings – that was most needed.

Hyderabad_House

I was impressed.

“Now take the Lunch Menu itself. For this lunch, all the vegetables sourced for cooking were brought from local organic farms. Obama eats only organic food and gets a skin rash and an upset stomach if non-organic food is eaten. So I went to the organic farms personally to check. I realized that many of these farms did not have formal certification. So I developed a national program. This program included development of criteria, establishment of laboratories for testing, raise consumer awareness and impart education, provide financial incentives for promotion of organic food etc. Next week, after the Obama lunch, Mr Modi will be announcing National Program for Organic Farm Certification that will be operated by the Agricultural Ministry.  In the next 10 years, Indians will get only organic food!

I was about to ask that getting just food first was more important than organic, but the Professor was in no mood to listen.

“Design of the menu itself was a complex mathematical exercise. We were told that the total calorie intake for Obama was to be 1500 and the bread units were to be between 7 to 8. (I later found out that bread unit parameter was relevant as Obama has a mild diabetes). So I set up a 0-1 Mixed Integer Programming optimization problem with Multiple Objectives. My problem statement considered 107 possible dishes or food items and picked only those 11 that added to 1500 calories and 7.5 bread units! With this application experience, I got a mobile phone application developed. Given the rising number of incidence of diabetes in cities in India and the growing serenade lifestyles, this application will help the citizens immensely. By next 2 years you will see that all Lunch and Dinner menus in India will be based on my optimization algorithm. There will be a fall in the diabetes incidences in urban India”.

I was overwhelmed by Professors national vision. Taking an ordinary lunch (that’s what I thought) to the mode of national missions was something too far fetched …

The Professor was extinguishing his cigar – “and many more such things Prasad he said. The napkins used on the Lunch table were as per the GOTS standard. If a conventionally bleached and finished napkin is used then formaldehyde sitting on the fabric gets leached as you sweat. Obama is very allergic to such fabrics and sweats profusely even in a room with 220C. So I flew to the GOTS headquarters in the Netherlands and got the napkins GOTS certified. I then developed with the Ministry of Textiles a National Eco-labelling Program. This program is expected to help the textile industry (and especially those coming from Gujarat) to meet the international eco-labelling requirements. This will lead to increase in exports to the EU and Americas by a whopping 30% over the next 2 years.  As a side benefit, health and safety of the consumers will also improve”.

I could now clearly see how one lunch with Obama was triggering smart sustainable growth in India. Sadly, few knew that my Professor friend was behind this transformation,

I had a number of questions though and wanted to learn more about other ramifications. So I called Professors office. “Oh he is not available. And not for the next six months” his secretary said in a tired voice (must be telling this to the numerous callers asking for her boss). When asked about his whereabouts and reasons for a sudden disappearance – she said “Actually, he has strict instructions not to tell anyone – but only to you Dr Modak. Government of France wants to get on to smart sustainable growth. To achieve this goal, the French Government is hosting a lunch for Mr Obama and Professor has been appointed as the Chief Consultant. He will stay in Paris for the next six months”

God knows how many such lunches Obama will need to join if the United States of America wants the world to get into sustainable development for a change – I exclaimed

Cover image sourced from www.ndtv.com

 

_______________________________________________

Note: This piece is a fiction and NOT a real story. No offence to Obama, Modi or the PMO – only pun intended. I am writing this note as some of my blog readers wrote to me asking whether “the Professor” was indeed hired by the PMO!  I wish he was!

Who reads Sustainability Reports?

Reading

 

Corporate sustainability reports have been around since four decades. The first reports were perhaps published by the chemical industries that polluted the environment and faced bad reputation and penalties. Sustainability report was more of a savvier!

Since then, more than 10,000 companies have published more than 50,000 reports, according to CorporateRegister.com, which maintains a searchable database of reports.

The Global Reporting Initiative has basically cornered the market on sustainability reporting, with 78 per cent of the companies applying the GRI guidelines. This statistics rises to more than 90 per cent in some countries, like South Africa, Chile and Sweden. India has seen the biggest rise in reporting, from 20 per cent in 2011 to 73 per cent in 2013. But who really reads sustainability reports?

I was speaking last week at one of India’s leading corporate’s Sustainability Conclave. The conclave was attended by 50 sustainability champions of the Company. When the Chief Sustainability Officer (CSO) asked – how many of you have read the company sustainability report – only 5 showed up their hands.  The number was astonishingly low but I was surprised to see their candidness.

The CSO then asked, on page 3, we have featured a group photo where we have our Managing Director (MD). Is the photo of MD, sitting or standing? One sustainability champion ventured and said “sitting”. The CSO smiled and said that there is no such photo on page 3!

Sustainability is not yet woven into the fabric of the corporations. Sustainability reporting provides increased knowledge on the sustainability related efforts taken by the company but this has not yet changed the behaviour of investors, R&D and product designers or regulators. Regulators continue to focus on non-compliance, investors on the financial performance and the product designers limit to the conventional and large volume markets.

And how good are these sustainability reports? KPMG rated the reports of the top 250 biggest companies worldwide, and gave them an average score of 59/100. Construction and building materials did the worst of any sector, with an average score of just 46/100. So indeed there is a need to improve the way we write the sustainability reports.

Time and time again research, data and information that that goes into their sustainability report is not put to the best use. Often a company’s most interesting sustainability work is left buried in these dull but important publications that no one really reads.  You do see a new era of “sustainability designers” who use their skills in choosing fonts and colours that are appealing, present “info-graphics” and plug in “touching photos” of the poor, underprivileged women and children. Paper used is FSC certified, elemental chlorine free and even embedded with seeds.  That makes the report look special.

The reports contain annexes that contain time series data, indicators and benchmarks – especially for those who want to see details.

But most readers are not interested in tables and graphs and such statistics. They are also tired of the “touching photos”. Readers are looking for “sustainability stories” to understand company’s true sustainability credentials. Stories tell a lot – and they are sometimes more ”viral” than the numbers.  But then not many companies have good stories to tell. And to get the stories you need to talk to people.

Some companies are taking a lead in communicating sustainability more innovatively. The Co-operative 2012 Sustainability Report is one good example. It exemplifies a new trend in video storytelling to illustrate sustainability reports. Other such examples are Novo Nordisk – The Danish healthcare giant that uses hand-drawn animation to explain its commitment to fighting diabetes –  a major theme of the company’s 2012 Report.  SAP has created a dedicated Twitter hash tag #sapintegrated to help shepherd conversation around its 2013 integrated corporate and sustainability report. Visit the new SMI-Wizness Social Media Sustainability Index update that is available online. (see http://publisher.wizness.com/reports/the-smi-wizness-social-media-sustainability-index-2012)

Sustainability reporting is a “process” that must involve all the concerned stakeholders. Report itself is not the only objectives. The reporting “process” brings in collective ownership, data flow optimization, identification of improvement projects and fosters innovation. Everybody in the domain knows that. But in reality the reports are mostly consultant-driven with low involvement of the company staff. So reporting becomes more of  ritual.

I asked my Professor friend on these concerns about sustainability report – especially that these reports are not prepared the way they should and are hardly read.

The Professor said that he just received a contract from a large corporate to fix this problem. “The company has two large halls for lunch. I converted one of the halls as a reading room. In this room, I keep several copies of the sustainability reports that the company produces. Folks are made to wait in this hall before joining the second hall where lunch is served.  They browse and read the reports as there is nothing else to do”

I wasn’t sure whether this was going to work. So I asked. “Are you sure they will? They may not even pick up the copies…”

The Professor smiled as if he expected this question. “The lunch coupons are kept inside the sustainability reports and at random locations. You really need to browse pages of the report to find these”    

 

Cover image sourced from www.thelearningark.blogspot.com

Utmost Good Faith

handshake-570x386

 

The TSR Subramanian Committee in India came up with several radical recommendations  to improve India’s environmental governance

The new concept of ‘utmost good faith’ has been proposed through a new legislation,  Environmental Laws (Management) Act (ELMA). ELMA would oblige an applicant to  disclose everything about a proposed project. The disclosure will need to include a project’s potential to pollute and its proposed solution – in short, everything that is  relevant for making a decision on granting or refusing the environmental clearance  applied for. The project proponent, and the experts who support the case, will be required by this law to certify that ‘the facts stated are true and that no information that would be relevant to the clearance has been concealed or suppressed’.

If at any time after the application is received – even after the project has been implemented and is in operation – it is discovered that the proponent had, in fact, concealed some vital information or had given wrong information or that the certificates issued by the experts suffer from similar defects, then severe consequences will follow under ELMA. They include heavy fine, penalties including imprisonment and revocation of the clearance, – and in serious cases arrest of the polluter.

‘Utmost Good Faith’ shall have the same meaning as understood in the law relating to  Insurance; and the principles underlying Section 20 of the Marine Insurance Act 1993 (Act 11of 1963) shall apply

_________________________________________________________________________________

The court room was packed. The judge called the court to order. The case involved breach of Utmost Good Faith by the Agyani Group. Newly-enacted ELMA was triggered. An environmental NGO called Facts and only Truth (FoT) had filed the petition.

I took my seat. I was keen to attend the case as my good Professor friend was leading the Technical Counsel on behalf of the giant Agyani Group. This was the first ELMA case in the
country.

Agyani’s thermal power plant was discharging hot water into the sea. This had led to migration of the fish that the local fishermen were dependent upon. FoT found that at a distance of 12 km to the south (where the currents were heading) breeding of turtles was also affected. These turtles were a rare species.

Agyani had underplayed information on the impact of thermal discharge and indicated the impact to be minor and adverse but reversible. The EIA report was then prepared by my Professor friend.

Data from FoT (supported by direct measurements as well as satellite data) showed that Agyani’s discharge was carrying temperatures around 4 0C more than the mean sea temperature with its present 25% of operations.  The EIA report had stated that the temperature of the discharge will not cross 70C per requirement of the Ministry.

FoT argued that when 100% of the plant will be operational, the temperature of the discharge will certainly be more than the 70C threshold.  The EIA report should be have addressed such possibilities clearly and come up with a robust environmental management plan. Information on the turtle breeding ground was also suppressed with no consideration  given to the thermal discharge.

The charge was that of nondisclosure. The FoT had demanded that the environmental  clearance to the Power Plant must be revoked, corrective action be taken or the plant be shut down.

In response to the petition, my Professor friend rose from his Chair. He said ‘Non-disclosure can be classified into three types – Innocent, Negligent and Deliberate. The case of Agyani (not because the name suggests so) was that of ‘innocent non-disclosure’ and hence they should not be punished harshly under ELMA.

First of all, the baseline data collected in the EIA report showed an existing decline in the fish population over past 5 years. This trend was thus present much before Agyani’s operations. How can then Agyani be blamed for the continued decline in the population of fish, especially when the thermal discharge from Agyani was only at 40C elevation as against the threshold of 70C?”

“The EIA study was scoped, as per Ministry’s guidelines, to a 10-Km radius. Obviously, the  EIA followed this guideline and did not look into anything beyond the 10-Km radius – and thus missed looking at the turtle breeding ground that was at a distance of
12 Km– something that was not intentional!”

Professor then submitted to the Court statistical data on the fish population over past 10 years that indeed showed fall in population prior to Agyani’ s discharge. The computations were done using Mann-Kendall (M-K) test using MATLAB. He also spoke about literature demonstrating thermal resistance of the coastal fish and that the 70C elevation was of oncern only if temperature was high continuously for over 30 days.

 “When occasions of 70C happen only for a week; the fish of the kind we have are not that severely affected. This is an on-going research however and one should wait till definitive
conclusions can be drawn.” He said flashing some of the recent articles from the Journal of Marine Ecosystems.

“Regarding the turtles issue – we are sponsoring a research project being carried out by marine ecologists and marine hydrographers at the Institute of Marine Sciences. This three-year study will tell us about possible impact of our discharges. We will submit to the Honorable Court this independent assessment report in 2018 so that a view could be taken”

“What about the chemical composition of the discharge,” I asked the Professor when we were exiting the swamp Court corridor. The Professor, while joyous of his victory in stalling the ELMA case for a few more years, said “I knew you will ask me such kind of questions – in fact, a representative of FoT also asked the same question.”

Taking a deep puff from his favorite cigar, he said “I told the Judge that in the cooling water we use chemicals that have been certified by the Global Association of Green Chemicals based in Atlanta, USA. We simply trust them for their competencies and reputation. The chemicals they certify must indeed be safe. We are unable to disclose the chemical composition as it is proprietary and we have signed a Non-Disclosure Agreement to this effect – I thus pleaded for innocence and it worked! “

 e-court-system-India

(Image sourced from www.littleabout.com)

I took a taxi home with Ultimate Good Faith in my Professor friend.

 


 

 

Making use of the concept of Ultimate Good Faith for ‘speedy Environmental Clearance’ is  a recommendation that we should actively debate. To me, it violates the precautionary  principle, simply passes the buck and questions the very sustainability of development. Its application will do more harm to our environment, resource security and the economy – than otherwise!

Facts in the environmental domain are difficult to establish and will always remain a challenge.

You may like to read

Utmost faith in corporations? You must be kidding me! http://www.greenpeace.org/international/en/news/Blogs/makingwaves/utmost-faith-in-corporations-you-must-be-kidd/blog/51569/

Panel on changing green laws puts ‘utmost good faith’ in industry. Is that good enough?http://scroll.in/article/695328/Panel-on-changing-green-laws-puts-‘utmost-good-faith’-in-industry.-Is-that-good-enough

(cover image sourced from http://zhivovlaw.ca/insurance-companies-and-the-duty-of-good-faith/)