climate literacy helping businesses make informed decisions

(MainsGS3:Conservation, environmental pollution and degradation, environmental impact assessment.)

Context:

• ESG (Environmental, Social, and Governance) parameters have become popular with businesses across the globe with their increasing recognition of the need for imbibing sustainability concerns in their core operational strategy.

Sustainable business:

• The myopic perception of “profit” in the corporate sector, therefore, is changing with the notion of “sustainable business”. 
• This is because businesses have begun appreciating the fact that long-term survival of their endeavours depends upon the natural resource base that is subject to degradation and depletion due to short-term rent-seeking behaviours.
• Corporates now understand that there is a need to invest in future human capital to create more sustainable value-chains.
• Businesses that invest in the four forces of capital, namely, human capital, social capital, physical capital, and natural capital, thereby, embarking on the path of “sustainable and green” business models, will be more competitive in the medium and long run, with the results reflected in their long-term bottom lines.

Address the UN SDGs:

• The businesses need to understand that they need to address the UN SDGs while talking about ESG parameters. 
• In the process, one needs to appreciate that there is a two-way causality between business performance and SDGs. 
• While, for businesses, ESG is the avenue through which they address the SDGs, research has shown that SDGs create enabling business conditions.
• Addressing SDGs help in diminishing long-term “transaction costs” through the reduction of risks emerging from future shocks that may impact the environmental, political, and social dimensions of their endeavours, thereby, helping their competitiveness. 
• Addressing SDGs helps in better governance practices due to the inherent transparency in sustainability risks and impacts, which further helps in reducing information asymmetries.
• While addressing SDGs, new business solutions and opportunities are created, helping market expansion, benefiting bottom lines, and leading to eventual job creation through partnership creations at various levels. This also brings in company goodwill and helps corporate branding.

Climate literacy:

• The force that has emerged as the perennial stressor for the social-ecological system at all levels, in the attainment of the SDGs, is definitely global warming and climate change. 
• The intersectionality of climate change and SDGs is complex and multifaceted and occurs with a bi-directional causality. 
• On the one hand, climate change affects the achievement of the SDGs, while on the other hand, SDGs offer a promising framework for addressing climate change, as many of the targets are related to climate change mitigation and adaptation.
• ESG parameters can be severely affected by climate change, thereby, affecting long-term business prospects and competitiveness.
• This makes climate literacy important for Indian businesses. Climate literacy refers to the understanding of climate change’s (if not the science) impact and the solutions to this in the form of adaptation and mitigation. 
• Such literacy will play a crucial role in helping businesses make informed decisions and take meaningful actions to address future risks.

Conclusion:

• It becomes imperative for Indian businesses therefore to invest in nature-based solutions, green energy transitions, low energy-consuming technology, and creating less resource-consuming practices will only help in combating the “global commons” of climate change which has long-term impacts on the business’ bottom lines through various avenues.