Adequately prioritizing sustainability or ESG considerations for the benefit of society

Dr. V. Raghunathan is an academic, author, corporate leader, columnist, and hobbyist.

He has served as a Professor of Finance at IIM Ahmedabad, President of ING Vysya Bank, CEO of GMR Foundation, and Director of the Schulich School of Business, Toronto (India Campus). Additionally, he has been an adjunct professor at SDA Bocconi University in Milan, Italy, and the Schulich School of Business in Toronto, Canada.

Raghu’s books include The Lion, The Admiral and A Cat Called B. Uma Vijaylakshmi, To Every Parent, To Every School, Irrationally Rational, Return to Jammu, The Good Indian’s Guide to Queue Jumping, Beyond the Call of Duty, Duryodhana, Locks, Mahabharata and Mathematics, Ganesha on the Dashboard, The Corruption Conundrum, Don’t Sprint the Marathon, and the national bestseller Games Indians Play.

Raghu has one of the country’s most varied collections of old and ancient Indian locks.

PG: The book title sounds intriguing?

VR: Well, it is! The Lion and the Admiral find a chapter unto themselves in the book. To know about the Cat called B. Uma Vijaylakshmi, you’ll have to read the book!

PG: It sounds like a sequel to your autobiographical Return to Jammu?

VR: Well, not quite. For one, Return to Jammu is not entirely autobiographical. While shaping the character of the protagonist, Balan, I drew heavily from my own childhood and those of my friends, blending these experiences to create a new character. The latter part of the book, however, is purely fictional.

The Lion, The Admiral…on the other hand, is purely based on my professional memoirs.

PG: The public and private sectors tend to be positioned as one versus the other?

VR: It is generally believed that the Indian public sector is more robust in terms of systems, processes, and employee welfare, while the private sector is recognized for its productivity and efficiency. Unfortunately, neither sector has adequately prioritized sustainability or ESG considerations for the benefit of society as a whole. Just yesterday, someone shared with me in Bangalore that a large lake near CV Raman Nagar was encroached upon and developed by DRDO until the early 2000s.

“The absence of genuine commitment to sustainability and ESG – beyond mere lip service and legal compliance, regardless of how that compliance is achieved – afflicts both sectors.”

Additionally, the private sector is rife with issues such as deforestation, excessive water usage, river pollution, air pollution, and the indiscriminate application of chemicals and pesticides. Unsustainable mining practices are another pressing concern. Thus, the absence of genuine commitment to sustainability and ESG – beyond mere lip service and legal compliance, regardless of how that compliance is achieved – afflicts both sectors.

PG: How did early disruptions in life nurture your mobility?

VR: In fact, these are the elements I drew upon to shape Balan’s character in Return to Jammu, rather than in The Lion, The Admiral. However, my personality was certainly influenced by the disruptions you mentioned. For instance, my struggles as a young adult, first in the Indian Navy and later in Coal India, stemmed from graduating at just 17. This early graduation was a result of our family’s move from Ambala to Jammu, which led to an unforgivable miscalculation by my father regarding the appropriate grade for me to be admitted into. Being significantly younger than my peers compelled me to work harder and, perhaps, made me more aggressive in asserting myself, and less adept in physical sports.

PG: How purposeful is our management education?

VR: Indian management schools have produced a wide array of business leaders – entrepreneurs, policymakers, CEOs, regulators, public administrators, and more. Many have been extraordinarily successful, while some have, unfortunately, been equally unscrupulous. Personally, I’m not convinced that management schools have made a significant impact on the ethical values of their students who go on to become leaders. This may be due to two key reasons: 1) By the time students enter business school, they are already adults, and much of their moral foundation has been shaped during their formative years, primarily by what they learned at home on the lap of their parents. And 2) The ethical challenges of leadership often arise years after students leave business school, so it’s hard to determine how much the curriculum really influences their values later on.

“I believe ethical values are largely shaped by the broader society.”

While business schools should certainly emphasize the importance of socially responsible corporations, sustainability, and environmental, social, and governance (ESG) principles, I believe ethical values are largely shaped by the broader society. I recall that during interviews for admissions at IIMA, I would sometimes ask candidates a hypothetical question like, “Imagine on your way to this interview, you jumped a red light and were stopped by a traffic cop. The officer is not responsive to your urgency and has you waiting on the roadside. What would you do?” Some candidates were quite “candid” and would respond, “Sir, I’d be practical and maybe slip a 100-rupee note to the cop to ensure I make it to my interview on time.”

I would subtly penalize such responses because I believed that if a 21-year-old already lacked idealism and was leaning toward being “practical,” there was little hope for them by the time they turned 30. On the other hand, I rewarded responses that focused on doing the right thing, as I valued integrity over expediency.

Setting ethics aside, I think the success of leaders from our top management schools has less to do with the education or curriculum they receive and more to do with the rigorous selection process they undergo before admission. The intense competition fosters a cutthroat mindset, and I’d prefer to see a greater emphasis on cooperation rather than competition, both in the selection process and within the management curriculum itself.

PG: What are its shortcomings?

VR: Management education in India dates back nearly 70 years. It is not widely known that the country’s first business school, and indeed the first in South-East Asia, was the Indian Institute of Social Welfare and Business Management, established under the University of Calcutta. This was soon followed by four other universities: Andhra, Bombay, Delhi, and Madras. In the late 1950s and early 1960s, the vision of Pt. Jawaharlal Nehru led to the establishment of the IITs and two IIMs, laying the foundation for IIM Calcutta and IIM Ahmedabad, in collaboration with the MIT Sloan School of Management and Harvard Business School, respectively. As a result, IIM Calcutta adopted a lecture-based pedagogy, while IIM Ahmedabad focused on a predominantly case-study-based approach.

In the years that followed, MBA programs emerged at other universities, including the Xavier Labour Relations Institute (XLRI) in Jamshedpur. However, Indian management education largely modelled itself after the American system. Most of the management literature studied in these business schools remained heavily American in focus. While Indian case studies appeared sporadically over the years, the theoretical foundation continued to be predominantly American, with the U.S. remaining the gold standard for research and management education. Contributions to management theory from India, or elsewhere outside the West, have been limited.

I believe that the adoption of the American curriculum has been somewhat misaligned with India’s specific needs. For instance, many control systems and process improvements are meant to improve competitiveness and efficiencies after the basic productivity issues have first been addressed, as the industrialised world did with shop floors and production lines. If our shop floors lack consistency in workflows, if our tools are not ergonomically efficient, or if our safety standards are inadequate, then concepts like 5S, ISO 9000, Six Sigma, GMP, Lean, or Cellular Manufacturing are of little relevance.

“Even when the CEOs of our largest banks and stock exchanges have been found to be seriously compromised, they have been let off with barely a rap on their knuckles.”

In my experience, I can’t recall the last time I saw a shop floor supervisor using a stopwatch to optimize production lines, as the American system presupposes. Similarly, the idea that businesses will face bankruptcy for not meeting their debt service obligations, a common theme in American management literature, does not reflect the reality in India. Here, many defaulters continue to lead a comfortable life without consequence. Our high levels of retail corruption seriously undermine regulatory systems, which, on the other hand, function reasonably well in the U.S. Even when the CEOs of our largest banks and stock exchanges have been found to be seriously compromised, they have been let off with barely a rap on their knuckles. I could go on, but the gap between the theory taught in our management schools and reality is there for all to see!

PG: You’ve been a maverick or more appropriately an outlier? Did management education prepare you as a leader?

VR: This is by far the most challenging question you’ve posed, Praveen. The first part of your question feels reminiscent of asking, “Have you stopped beating your wife?” It forces me to reflect on whether I even consider myself a leader! In my view, management education provides a skill set that allows individuals to integrate various disciplines and knowledge into a cohesive understanding of how to manage and operate organizations. So, yes, management education has certainly equipped me to navigate the complexities of running an enterprise as a CEO.

Regarding leadership, I often mention that while Dr. Manmohan Singh served as Prime Minister, he was not necessarily a natural leader. In contrast, I vividly remember Anna Hazare, the anti-corruption activist from 2012-13, who was once a mere driver with the rank of Havaldar in the Indian Army, while General V.K. Singh, a General, no less, stood by his side while he was making his foray into politics. This illustrates that rank does not equate to leadership. I may have been a CEO, but whether I was a leader is something I cannot determine myself.