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Greenwashing, ESG and the urgent need for conscious leadership

Navi Radjou is famous around the world for promoting frugal innovation. In this conversation, he tells Hindol Sengupta what’s going wrong with current ESG frameworks and why, above all else, conscious leadership can save the planet.

Hindol Sengupta (HS): This is Global Order, I am absolutely delighted to have somebody join me from Paris in this conversation today. Someone’s book I read a few years ago and it was called Jugaad, many people must have read it. He and a bunch of other people wrote it but Navi Radjou is not only the author of this famous book, since then he's gone around to teach the world about conscious business, conscious living and sustainable business and a better way to look at the world. I have invited Navi Radjou today, to talk to me about the world he sees and the world he wants in the future. Thank you for joining me.

Navi Radjou (NR): Thank you for inviting me

HS: I want to begin, Navi, and I have to begin here because for somebody as thoughtful as you, it would be wonderful to hear, living as you do in Paris now and having lived through riots which nobody thought would actually happen in the streets of Paris, how do you reflect on what's going on in that society and in that city? Because, you know, as you were discussing just before this conversation began, while riots and this kind of violence and attacks constantly make news about Paris, on the other hand there's all this talk about how that city is becoming cycling friendly, more environmentally conscious and so on. To me, that's a very interesting dichotomy about what can be papered over and what spills out as far as societies are concerned. Perhaps you could begin by talking to us about your thoughts on Paris.

NR: We should understand that France like India is a land of paradoxes and I think that's what you are referring to. This made an incredible paradox where on the one hand we saw a kind of display, a traumatic display of violence in Paris and on the other hand, we also saw these cutting-edge innovations to fight climate change.

And as a matter of fact, it's called the Paris Treaty, the climate treaty as it was signed in Paris. It's kind of interesting because what we saw in Paris recently is not something new. I came to Paris in the 90s. I studied here and I have seen different waves of this kind of eruption of violence. But the source and the root cause of all this is a sense of marginalisation which is felt by predominantly I would say immigrants that came from the Northern African part of what's called the Maghreb which could be Morocco and and to a lot of extent Algeria. In France, we have this famous term called the integration so it's kind of like a melting pot like in the United States (US) where it doesn't matter where you come from and you just have to learn to speak the language and language is important because that's kind of the the indicator, the measurement to see how well you got assimilated into society. The problem is that when these immigrants came right from the beginning rather than integrating them geographically within the cities like Paris we kept them outside what in the United States we call suburbs. In the US, suburbs are the kind of nice places where you want to live as middle class. But in France, the suburbs became synonymous with the underclass, the people who essentially didn't have any opportunities in the cities so they were kind of relegated to a kind of second class citizen status. This has been going on, as I said, for about almost 3 generations now. That's why we should put this what happened recently in Paris in its kind of historical context, where over many decades this country has struggled to find the relevant way to integrate this kind of waves of immigrants.

I think what is happening right now creates some nuance. During COVID, a lot of kids living in the suburban areas, poor kids from immigrant families, ended up actually working as, for example, delivery boys. The problem is that these are petty jobs. They're not very stable and well paid. There is a kind of growing frustration among a large minority of people here that feel like essentially they will never get assimilated into French society even though they might be partially into the French economy, as I said, by doing these menial jobs. So that's one part of a story.

The other part of the story is the fact that in Paris, we have what I consider a progressive mayor, Anidalgo. She was the head of the 40 cities around the world, the major cities that are committed to responding to climate change so she wants to lead by example. Paris has been indeed investing massively in dedicated pathways for bicycling, but next year we have the Olympics in Paris and that's supposed to be also an interesting opportunity to showcase French know-how in terms of building eco-friendly lodges for athletes. Paris has been called the city of lights, but also it's a city of great paradoxes, which makes it very interesting.

HS: One of the paradoxes is the state of the economy overall in Europe, concerns about inflation, jobs, whether adequate technology advancement is happening and so on. You made your name first by writing this wonderful book on frugal innovation using an Indian, Hindi language term called Jugaad, which made news around the world but I want to ask you, your other areas of interests especially in conscious living, there are great concerns today about how far Europe, which was always seen as a beacon of a particular kind of lifestyle would be able to maintain this lifestyle considering economic pressures and stresses that has unfolded around the world, especially after the Ukraine war, talk us through how you’re seeing this.

NR: In France itself , last year the term that became popular is the French equivalent to frugality which is called soubrette, it doesn't translate well in English as it means sober but it's actually from a Latin origin and it makes sense because it means sobering up so it's actually understanding that the era of abundance is coming to an end and we need to consume and live more carefully. It began with the energy crisis last year, where the government had to impose a 10 percent reduction in consumption of electricity both for households and businesses so that was a rude wakeup call. I remember how traumatised people were. I begin with this because first, we have to accept that the reality is resource scarcity which is not a theoretical thing, we saw this with energy last year and this year the major concern is going to be water. I have a sense of deja vu, we have 70 percent of France this year which could be facing water shortage due to drought.

This year French people are waking up to this, which in the long term could have devastating consequences for the wine industry. It's creating an existential angst because unlike America, France is not known for profligacy, it's not a wasteful society, broadly there's a sense of parsimony, people save a lot, saving rates are high in France, so you should be cautious. We should note, starting from France and then we can talk about other European countries, I think last year there was a wake call that we have to learn to live better with less that's why the notion of conscious living and that has actually not been bad, as this is what I really want to convey this message across, there's a difference between french people and french business/institutions. If you look at the conception of products, broadly speaking we are not that wasteful or as consumerist as American but there’s a gulf between citizens' habits and businesses.

The real challenge will be more for businesses, private sector and how will they do better with less that means having in one hand, natural resource scarcity but then there’s another ticking time bomb in France, which already started in the UK, which is the fact that the public deficit is going to explode, which means that the government of France will have less and less money to spend at the time when the population is aging, where we have to find solutions for climate change etc. I think that's where we will get to see a lot of tension emerging in the public sector, colonies, and buildings in France. I am just baffled to see how badly insulated they are, in winter they are really bad in terms of preserving heat and energy so there’s a lot to be done with the public infrastructure and fiscal management. Overall the culture of France is well adapted for this frugality but if you go to other places, like Germany, it might be a very rude wake up call, they are more generous social services system than in France, it's also aging much more rapidly than France which has a high fertility rate so I would say that countries like Germany will have a rude awakening, interestingly the UK as you know had the austerity era, in a way there are used to it.

Even though you must have seen in the recent news that there are a lot of cuts in public spending in the UK coming up. It's also the beauty of frugal innovation that it's only when you face constraints that you’re forced to innovate frugally. I was frustrated a couple of years ago because I was promoting frugal innovation in Europe for several years now and starting last year it had its take off phase, so you see in the UK, the national health system embracing frugal innovation, Germany in different regions setting up frugal innovations labs and then in France there are companies embracing it. There's a silver lining in this dark cloud: it's going to create a conscious living paradigm on the consumer side, get on the supply side as well, a lot of business but also the public sector to learn to do better with less by embracing these frugal principles.

HS: Not just frugal innovation but you also have been promoting for many years this idea that there has to be a certain consciousness in living and also in doing business and that actually stems from a certain wisdom in leadership. Talk about how you see this, what do you mean when you talk about conscious leadership, how can principles in consciousness be applied in doing business and how would you like to see this pan out.

NR: I think the notion of consciousness is essentially means having this awareness, we all are a web of interconnected beings, so we are all interconnected and I start with this because before we talk about nature and having the sense of we are a part of nature, I consider myself being a humanist before being an ecologist therefore being more conscious is to understand that we are not interdependent entity, we all are connected. This is the first awareness and then the second awareness is that we are not separate from nature, we are a part of it so by preserving nature we are preserving ourselves and also by regenerating nature we are regenerating ourselves. These are the two aspects of being conscious.

But awareness alone as in Buddhism is seen as a virtue, the high pellucidity is great but this high pellucidity not combined with compassion is useless so being super aware of what's happening is great but a conscious leader is also driven by compassion and this compassion compels him or her to action.

When we talk about conscious leadership there are three aspects of leadership - this is where it's fascinating to see how different languages interpret consciousness differently. In the West, consciousness is primarily mental but if you look from India or other nations, consciousness has three dimensions, there’s a thinking aspect of it, feeling aspect and the acting aspect.

Therefore a conscious leader and this is why it's important because we are seeing more and more around the world, leaders becoming conscious more mentally about climate change but I am not sure of them having this conscious feeling - that we are a part of the world let alone this active consciousness which makes you act. Conscious leaders will be people like Paul Polman, in Unilever who started this program called Sustainable Living Plan in 2009 before climate change was a big issue and so here’s a person who not only has an understanding of what's going to happen to the planet but he also created a plan to get the company to become more sustainable in the CPG sector by 2020 by reducing the carbon footprint by 20 percent and by improving the livelihood of small farmers that they buy from while also improving the health and nutritional level of the consumers worldwide. These were the pillars of the sustainability plan that Paul Polman implemented at Unilever. That is something great which looks like a very successful business story but if you come deconstruct this and see what were the ingredients of the success, here we identify different things, first a sense of compassion, Paul Polman was playing to be a catholic priest so in a way he has his heart open when you talk to him, a person who's humane and empathetic so that helped but compassion has to go with something else which is missing right now - courage. One thing that made Paul Polman famous is that he pushed back who complained that he cared more about the planet than the company’s profitability. So he had the courage to fight back , push back investors and actually got private equity investors to diversify from his company and he got more funds to invest in his company to think more long term and in a sustainable way. I think this courage is important, you need to have a strong belief. That is what I don't see these days, I see leaders talking the talk very rarely walking the walk and that's why I came back to the three dimensions of consciousness, because I am really worried about as I see a lot of adopting the lingo of sustainability like circular economy, regeneration, these are all nice words so it's kind of verbal greenwashing. When it comes to action, I don't see this publicly happening. I am mentioning this for the first time with you or with anyone actually, I decided this year that essentially I would no longer do talks or consult large companies who are not aligning with the actions to what they are saying publicly and that is sad to say this but thats whats happening right now. A time when it was easier, certain companies would use lobbying to fight off any corrupt environmental standards and things like that but now I see a turn of events where I see more and more of companies co-opting the language of the ecologist but not actually acting upon what they are saying in public.

HS: I am glad you brought up this topic of greenwashing because it leads me to the next thing I wanted to discuss with you, there are concerns about big corporations talking the talk but not walking the talk, the other concern in the Global South which is being expressed again and again is the ability of the Global North to weaponise many of the norms, ESG norms and other norms without really stepping up to bring forth the kind of climate finance that would make these transitions equitable in the Global South and therefore there are a lot of concerns in India and other parts of the world that in the absence of the finance that would actually allow these transitions to happen effectively without affecting ten and millions of people, then it almost becomes a weaponisation of these norms that the Global North unilaterally decides and everybody has to follow, I wonder what you think about that.

NR: The latest data from the United Nations (UN) shows that there’s a shortfall of 4 trillion dollars in the Global South in achieving the Sustainable Development Goals (SDGs) by 2030 and given the climate urgency we need to step up in terms of impact. I think the question is going to be whether the ESG is discredited and you see all the backlash especially in the United States right now, many Republican candidates running for the next year’s election and how they are lambasting ESG but also the people who like Larry Fink right, at BlackRock, who has been actually a strong advocate for investing in companies that adhere to these sustainability standards, whether it's EHE or others.

There is no doubt and several studies, including one by a French business school, has proven that the the indicators used in the ESG benchmark actually are not just biased or falsified, but actually include things that are not totally green. And that's when it started creating a lot of mistrust in the ESG indicators. There are two issues, one is whether these indicators apply primarily to a business environment that is specific to the West and therefore is not universal, especially for the Global South and then there is a second problem, that the so-called indicators that the North is promoting themselves are not credible. So what I've been thinking and the UN itself, especially the Jungtag, which is the trade and development arm of the United Nations, as well as United Nations Development Programme (UNDP), which is also the development investment arm of the UN, they've been actually doing something interesting. What they are saying is that their view is that money is important, capital is important, so we have to figure out a way to raise more money. There are different ways we can go about doing it. But again, we go back to the frugal idea, which is how do you make sure that every dollar we are going to invest in fighting climate change goes a long way? And I think, for example, if you look at what UNDP is doing it is very interesting, they have created something called the UNDP Accelerator Labs, which is present in 90 countries and supporting 115 countries worldwide. What they are doing is that they are looking at which solutions actually work locally to achieve these Sustainable Development Goals and then because they know it works, then it's easier for them to convince different financing partners to say can we scale up the solution either locally or replicate that elsewhere? And this goes back to the notion that I've been promoting for 20 years and I think it will be particularly relevant maybe for India. Let me share this, I think it's time for financial institutions, it could be banks, it could be like private banks, it could be World Bank, it could be UNDP, etc. which view themselves as only the financier, essentially playing one role. Think like a movie, In a movie you have one character, the hero villain and the side actor so the financiers think that their role is to bring money. And I've been saying for many years that they need to play three other roles. Yes, you bring money, but you can also bring knowledge, you can bring interesting ideas. That's the role of the inventor, which brings new business models, new paradigms for deploying industrial development and things like that. And then there's a second role they have to learn to play is the role of the transformer. This is what the UNDP accelerator Labs is doing.

This is a big problem with these foreign agencies. They think they are smart and they bring a solution developed in New York and London, and then they try to do a pilot project in Africa and India and that fails miserably. Instead, if you say no, actually I'm going to come with humility, see what works already locally, and then I'm going to transform that. This is an interesting other role they can play.

And then the third important role is the role of a connector or like a broker, where they say I'm going to bring $1, but then I can broker connections with other institutions, foundations and whatnot and then collectively we can invest in this solution that I've already validated with NGOs or other partners, right, in a particular region. So you can see that this is why I think the real issue is for the financial sector to invest in development programs to become more versatile, more multidimensional, and that requires a complete change in their identity and maybe also new competencies, new kinds of skills they have to develop. They can develop themselves homegrown, or they can team up. But the fact is that I think the problem of achieving Sustainable Development Goals and fighting climate change, I think it goes beyond just the issue of finding more capital and it's more than just a financing problem, in my opinion.

HS: One of the things you mentioned is very interesting. On one hand, you correctly point out that all these problems, especially in measurement and assessment and ESG norms have been discovered. People are questioning many of these norms in the Global South. There are questions about them being weaponised in an absence of finance being available. But at the same time, we should be wary of throwing the baby with the bath water because in America, for instance, if you use this as an excuse to completely dissociate from the very real and urgent danger that climate change poses for all of us, especially in a country, especially in the Global North, which is the prime creators of the problem. It's the consumption of the Global North. And indeed, a large part of the problem is America, where excessive consumption of all kinds, including of energy, has caused the problem in the first place.So if we use the problems of the framework of ESGS to dissociate from trying to find any solution, we are going towards a very perilous future, isn't it?

NR: Yes. But in America, remember that the motivation behind, especially the right-wing politicians, the Santis and others who are actually kind of bedabling and kind of belittling ESG is because they believe in Milton Friedman's adage that the business of business is business. So it's the fact that essentially focusing on social issues is very important because in America, the moment you say social, that's the realm of government and either federal or local and business should not get involved in that.

I would say, with Obama being in the White House when he set up this White House Office of Civic Innovation and Social Development, that actually we begin to see more companies beginning to understand that they have a role to play, they have a corporate social responsibility. So what's really happening is not just ESG. This is why I'm saying behind ESG there is a tectonic shift that certain people in America are trying to bring in, is to say that the company should completely get away from the involvement in social issues.

They are thinking from a financial standpoint because it takes away the energy efforts and capital of the company that can be used to keep doing what they're doing, which is essentially developing products and services and totally ignoring social issues. But where this is going to create a big problem is that, as Paul Pullman said, is that a company cannot remain profitable. It will be societal, he said, for a company to believe that it can be viable in a society that is collapsing.

Let me give you certain statistics because this is something that many viewers may be shocked to hear, two-thirds of Americans don't have $500 in their bank account to face a medical emergency so it's just one among many shocking statistics. So what it means is that if businesses don't step up and do something about what's happening to the middle class in America which is essentially getting poorer year after year and this American Dream. According to the Pew Trust survey, I've been studying every year for the past couple of years, what we are seeing is that the current generation of Americans think that the American Dream is just a dream. That means that for the first time in 100 years, they think that their children will have fewer opportunities than their generation. They will be financially poorer than who they are. So this is creating a ticking time bomb, in my opinion. This is why you're absolutely right, we should not throw the baby with the bath water. And this is also where I come back to consciousness because I think the reason viewers may not know that I left the US after living there for 22 years. And I came back to France for one main reason, and I never shared this publicly. But I didn't find it morally right that when I was living in New York, especially during COVID, they had to pay $100 a month in medical insurance because as you know, health insurance is privatised in US whereas if I get hit by a car in the street in France, I know an ambulance will pick me up and take to the hospital and I won't be bankrupt because I have to pay the hospital bills. So that's why I think that in Europe, what I find interesting is that the social consciousness is relatively more advanced, especially among companies, but it's less so in the US. When we talk about the West, I just want to bring some nuance that there is a growing gulf between even Anglo Saxon, we know, UK and America. There is the US which is a whole world by itself, and then there is Europe. I think that if India and the Global South is looking for allies to come up with better indicators, better models of financing the Sustainable Development Goals, I think they might find allies, in my opinion, more in Europe than the US.

HS: To come to the end of this conversation, Navi, I want you to talk a little bit about the world that you would like to see. You just mentioned that after living in the US for a long time, you were born in India, you lived in the US for a long time, you lived in France, and then you came back to France for a particular kind of life, in a sense, a particular kind of thought about living, so to speak. Talk to us a little bit, in conclusion about the world that you hope to see.

You work with companies around the world, you train students in universities, you work with think tanks. What is the world that you would like to see?

NR: I think the world I would like to see is what Sri Aurobindo talked about, right in the ideal of human humanity. It's a world where we transcend the differences of being.

Even the term Global South and Global North goes away. We realise that we are part of one humanity, which is facing what I call problems without borders. Whether it's climate change, water, energy, we are all in the same boat. This global awareness, in my opinion, this global consciousness, as I said earlier, has to be transformed into action. And for me, the action would be that Anadi Saxenian, who is a professor at Berkeley, has written a lot about this notion of brain drain and reverse brain drain between India and Silicon Valley. And then she talked about brain circulation, this notion that essentially ideas have to travel across boundaries because at a time when boundaries are coming back right, countries are becoming more insular, more naval gazing.

I think it's imperative that we learn to share ideas and knowledge across the world, and not just ideas, knowledge, but also wisdom. And this is where I would conclude by saying that this may be controversial, but since we are going to celebrate 77th Independence day in India in a few days, I have to say this, I think I'm a bit frustrated that India is not taking a global leadership role in sharing its ancient wisdom. The richness we have in terms of philosophy, spirituality is extremely relevant today to deal with these global problems we are facing and I'm a bit frustrated by the fact that India has declared this ambition to become a developed economy by 2047. But my dream would be that India also has an ambition or an aspiration to become a conscious society by 2047. To actually become a role model, an inspiration for other nations to evolve into conscious societies as well and this would be my dream. Essentially we have this kind of a global exchange of ideas, knowledge, but also wisdom between East and West, because clearly I doubt China will try to do that because they're embarking more in a confrontational posture vis-a-vis the West. But India has always been syncretist. We absorb things from different sources but I think being a syncretist is not enough. It has to be complemented by being confident enough to share our wisdom with the rest of the world so that we can build a conscious humanity in the coming decades.

HS: That is wonderful and on the promise of India showing a new path to humanity. Navi Raju, thanks very much for joining me from Paris. It was a real pleasure hearing your detailed views on a wide range of subjects. And I completely echo with you the dream and desire for a conscious humanity that could enrich every individual. Thank you very much for your time.

NR: Thanks for having me. Bye.

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