Pavan Sukhdev is a banker who has taken due diligence to new heights and given a new meaning to corporate responsibility to the environment.
Welcome to this edition of CNBC-TV18's The Forbes India Show. Pavan Sukhdev is a banker who has taken due diligence to new heights and given a new meaning to corporate responsibility towards the environment. In his book 'Corporation 2020' he argues that companies should ensure sustainability of the natural environment and fairness in the social environment in the interest of their own survival.
Below is an edited transcript of the interview on CNBC-TV18.
Q: You have forecast that 'business-as-usual' won't work. Can you really argue against the profit motive?
A: Yes. The narrow profit motive is what I am worried and concerned about. Corporations have to think of profit with a wider outlook of not just financial capital for shareholders, but also capital for society and the planet.
Q: How should Corporate India plan for 2020? What should be the main features?
A: According to research, by 2030 humankind will be close to reaching the plantet’s limits of resources. And the reason for that because today's corporations are designed only for profit, having abandoned their original design for social purposes. years ago.
Q: In your book you argue for green taxes, green profit and loss accounts, green subsidies, green accounting standards and green actuaries. How would you have a green profit and loss account?
A: The green P&L is actually the idea of increasing wealth for society not just from the view point of share-holder profits but towards human capital. Infosys , for instance, has actually created human capital for the use of society. Another example is Natura, a company in Brazil which makes cosmetics based on natural products and sells USD 3-billion worth of cosmetics and personal products through housewives.
Q: How do you conduct an audit of a green P&L?
A: That is the challenge, especially with corporations going global. So you need a global set of calculations and that is actually what the TEEB Business Coalition is all about. It is a global five-year collaborative to create standards and guidelines for major corporate sectors that impact the environment and society.
Q: What is the solution to ensure equal distribution of wealth?
A: Offering a bonus only after accounting for profits, reserves, provisions for the long-term, cost of capital and credit, and distribution of team bonuses is not a standard procedure. So we need to reform this culture. Despite controls, the economic crisis occurred and refuses to abate .
The problem is not control of capital at the level of the intermediary - the bank - but the control of capital at the level of the too-big-to-fail corporations. Politicians are worried what will happen if the corporations fail as that will result in face high unemployment and reduced corporate profit taxes. The focus on political survival has caused this vicious cycle which needs to be broken.
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