HYDERABAD: Time has come to move away from ‘boom and bust’ economy model and bring in ‘green and clean’ corporate governance with social accountability for creation of sustainable wealth and environment, says President of World Council for Corporate Governance (UK) Madhav Mehra.
Speaking to this correspondent, Dr. Mehra, who is founder chairman of Institute of Directors (IoD), said the bail out package announced by the US government should in fact be a ‘green bailout’ to encourage investment in renewable energy, R&D, subsidies for harnessing solar, wind and tidal energy and moving away from fuel dependency as oil resources would not last beyond 60 years.
Companies would gain more through ‘clean and green’ agenda, by regenerating rural areas and turning natural resources into a natural capital and allowing people to bid for them. When companies invested on natural resources, they would get automatically protected and go a long way in fighting climate change menace which along with terrorism and cyber security posed challenge to the world.
Dr. Mehra who had been advocating change in business organisations globally covering each dimension of business activity-economic, environmental, social and ethical-says the present downturn in global economy gave valid reason for the corporate sector to reorient its philosophy. Lauding strong regulation policy in place in India, Dr. Mehra said the global financial crisis had proved once and for all that the so-called self-regulation theory of the West would not work and ‘there should be strong regulations in place’.
Lack of transparency was main reason for the 60 trillion dollars of credit default swaps in US market as banks were given a leverage of more than 6 times their deposits, he said. If the debt GDP ratio in Great Depression of 1930s was 250 per cent today it was at 350 per cent.
