The Role of Environment
Any organization or economy is an intricate part of the society and environment in which it exists. The success or failure of an organization, an institution, or a nation depends on how it is governed and steered forward in an environment that is conducive and sustainable for growth. It is natural then to infer that as the nation progresses with the right Environmental, Social & Governance (ESG) practices, there would be more employment opportunities.
India, in particular, has tremendous scope, to generate new jobs in the coming years, due to two reasons. One, the green sector itself is poised for growth with momentum building up in tapping solar energy for electrification; generating clean drinking water for the country’s exploding megapolises and solving the water crisis for farming in the rural hinterlands; and Two, large enterprises realizing the importance of reducing carbon footprint, stricter regulations in pollution control and corporate social responsibility; better governance with an increasingly educated workforce; all adding up to a possibly more health-conscious nation.
Health is Wealth: Literally
A healthy nation can lead to an increased workforce as against when more people are sick and dependant on a smaller working population. The private sector also starts flourishing when there is more disposable income in the market as healthy people work and contribute to the growth in GDP. Organizations that follow ESG practices are widely respected and consumers tend to buy from them out of respect and inspiration. Being sensitive and empathetic is far more valued than many, million-dollar worth of, advertisements. More customers lead to better revenues, expansion, and more jobs. As per Mc Kinsey’s Digital India Report for March 2019, the fast track penetration of digital devices and Internet access across the country is also hastening the process.
ESG & Jobs
The need for good governance can no longer be undermined. The fall of some of the biggest corporations such as Satyam, Yes Bank is attributed to poor governance and controls. ESG practices are no longer underdogs as the pandemic has clearly shown that ESG investee companies have outperformed non-ESG investee companies. In the first quarter of 2020, ESG stocks gave superior returns as compared to other stocks. Ergo, ESG is projected to play the role of a key differentiator for private equity and other investors who are moving away from pure profit-driven investments and taking holistic mid to long-term views when pumping in growth capital into private sector enterprises. This is also endorsed in the Brookings Indian Report 2019.
As per a United Nations report, the world can save about US$26tn, if all nations come together and take action against the climate change crisis. This can further help create 65mn new jobs that are environment-friendly. In India too, millions of jobs can be created if there is stricter enforcement of environment & pollution guidelines in the manufacturing sector. Almost all governments in any state or country support and encourage industries that switch over to green technologies. This leads to speedy approvals, tax incentives, and even subsidies on many fronts. This will improve profit margins, generate jobs, help overcome poverty, and uplift several present and future generations.
Green Jobs, also termed decent jobs, by the International Labour Organisation (ILO), comes from both conventional as well as newer sectors such as renewables, water, and waste management, etc, and also helps preserve the environment. Green jobs may relate to opportunities in renewable energy, electric locomotion, water and waste management, etc.
As per the ILO, the green economy, in India, that currently employs around 0.5mn people, itself could add 3mn jobs by 2030. The ILO’s report titled, World Employment and Social Outlook, projects that news jobs will be generated in the energy sector, electric vehicles segment, and construction of energy-efficient buildings. India’s pursuit of inclusive growth that reduces poverty and creates jobs without disrupting its policy on climate change are key challenges that need to be addressed. The ILO aspires to build on to these goals to create sustainable, gainful employment alongside the regeneration of natural resources.
The Natural Resources Defence Council (NRDC) reports that solar and wind projects together generated 69,000 jobs during 2011-14 and galloped to about 1lakh jobs in the year 2019.
The recent pandemic is only the tip of the iceberg. Severe climate shocks, health issues are likely to happen more often testing the nation’s preparedness in disaster management and risk mitigation. A hot planet will reduce working hours, lower water levels, disintegrate road surfaces, damage sewerage systems due to floods, cyclones that will eventually also destroy physical infrastructure. Investments made into developing environment-friendly, disaster-resilient, urban, and rural infrastructure will stimulate job creation and lead to sustainable employment even in rural areas. This will also reduce stress on the already over-populated Indian mega-cities such as Mumbai, New Delhi, Bangalore, Chennai and Kolkata. The UN office for disaster risk reduction estimates losses to the tune of approximately US$80bn incurred in the last 2 decades due to India’s under-preparedness to tackle climate-related catastrophes. The amount would be significantly higher if lost opportunities are also quantified and included.
Keep up the Momentum
Although the progress has been satisfactory, there is a lot that can be done to push employment generation in the conventional and green sectors. It is a multipronged approach and requires dedicated, genuine efforts from all stakeholders including corporate enterprises, citizens, the local governments at each level, and the green solutions providers.
India is counted amongst the developed nations when evaluating progress in the renewable energy sector. The US, China, India, and Japan are considered some of the biggest markets in this space. These are followed by Germany, Turkey, Korea, and Australia. It is equally intriguing to note that the top solar equipment manufacturers have production bases in 23 countries, thus clearly demonstrating the serious competition in this space.
It is a misconception that development and environment protection cannot go hand in hand. Better governance can enhance brand perception leading to faster growth. Similarly, investments in renewable energy can not only bring down the negative after-effects (which in turn impact health and employment) but also create more opportunities within the sector. With India adopting more of clean energy and with the enforcement of stricter governance standards, there is bound to be bigger investments in the country which will catapult economic development in the coming decades.