India will push back on West monopoly over ESG aims, asserts Modi economic adviser

India needs to resist efforts by some western ratings companies to push ESG norms on emerging markets even as Prime Minister Narendra Modi’s government is committed to zero out green house gas emissions by 2070, a key economic adviser said.

“The issue is not so much about the need for some norms, but about who will be monitoring these targets,” Sanjeev Sanyal, a member of Modi’s economic advisory council said in an interview.

“The existing credit rating ones already have serious biases and failures. Allowing the emergence of a new bunch of exclusively western agencies to monitor ESG targets is problematic.”

India has been championing the issues important to emerging economies as it hosts the Group of 20 nations this year. In the first meeting of finance ministers and central bank heads in February, New Delhi took up the cause of debt relief for poorer nations, reforms in multilateral institutions and climate financing.

The South Asian nation needs to seek a review of the methodologies that international think tanks and global credit rating agencies employ, Sanyal said.

There have been concerns about how global rating agencies view India. Do you think there needs to be an overhaul of their systems? There are a tiny group of international think tanks and agencies that effectively de-construct other countries and pass judgments on them. Sometimes it is done on opinion-based issues like democracy and academic freedom, and sometimes they do it based supposedly on hard data. In both cases there are serious problems.

Yet, these indices are taken reasonably seriously, and indirectly find their way into concrete things such as sovereign ratings. In the past, the thinking is to ignore them since they are biased. “We cannot ignore them, in my view, because they have impact on real world decision-making. Therefore, we need to look into their methodology.”

Is there a plan to raise the issue in G20 deliberations? “The issue is not so much about the need for some norms, but about who will be monitoring these targets. The existing credit rating ones already have serious biases and failures. Allowing the emergence of a new bunch of exclusively western agencies to monitor ESG targets is problematic.

“Moreover, there is a danger that the norms and their application will be decided by a small clique of western agencies. This is a form of neo-colonialism. We need to push back against it, whether on G20 or any other platform,” Sanyal said

Which focus areas could help India reach net zero by 2070 and reduce emissions intensity of its GDP by 45 percent by 2030? “We want to certainly transition away from hydrocarbons. We must remember in India’s case we are not a country blessed with large amounts of fossil fuels, but we are blessed with sunshine. We are a technology capable country that can take advantage of various types of renewables, including nuclear power and solar. So, there is no conflict of interest for India in transitioning to other forms of energy production and storage.

“As for the 2070 net zero target, as fast as we can do it without compromising on energy security and stability of supply, we will do it,” he said.