A transformational leader par excellence, Mr. Shailesh Haribhakti needs no introduction. An ExTech (Exponential Technologies), ESG (Environmental, Social, Governance) & IR (Integrated Reporting) evangelist, Mr. Haribhakti is a Chartered Accountant, with over four decades of experience in developing and leading one of India’s most respected and diversified Chartered Accounting firms – Haribhakti & Co. He is a Board Chairman, Audit Committee Chair, and Independent Director at some of the country's leading organizations. During the recently held Fireside Chat hosted by Celerity, Mr. Sanjay Desai, Co-founder & Regional Director, Humana International (S) Pte Ltd, brought forth the many facets of Mr. Haribhakti as he offered his inspirational insights on topics ranging from governance, sustainability, technology, and the bright future that India is yet to witness. Excerpts…
You have a lot of firsts to your credit. You are the first ESG certified Board of Director in India. You are the first certified internal auditor in the country, and you have also been one of the youngest professors at IIMA at the age of 25 years. Is it a family DNA? How hard do you work at it?
The one lesson that I have always kept very much on my mind is that ‘Hard work never killed anyone’. I work extremely hard even today. It is not unusual for me to keep 16 hours workday. It was my Maths teacher in the early years who had once remarked to my mother that he may not be the most brilliant student in my class, but he works so hard that he makes up for what he lacks in terms of dazzling brilliance. I have always kept that warning in mind and therefore coming first is not something that I plan to do. It just happens. There have been many occasions when I am not first as well. For example, I did not get the first position in the CA examination, which will be a lifelong disappointment for me.
Yes, there are always exceptions. You said that hard work never killed anyone. I completely agree with that. However, from an academic perspective, it is not so easy to score first almost everywhere. Besides the hard work, it is also the natural ability or being there at the right time which makes a difference.
Absolutely, it is so important that life’s every chance must be welcomed and embraced. You should go at it as the opportunity arises. It is like a data set. If it is not captured when it is happening, it’s lost forever. That is why I say to everybody that make sure you don’t regret a single opportunity that comes your way, and you don’t grab it.
I know someone said that opportunities are never lost. Opportunities are taken by people who are ready and willing. In your case, you are always ready and willing.
Yes. Even today I feel I get obsolete so rapidly that if I am not open to ne topics, for example, five days ago, I didn’t truly know what the whole epoch that we are going through today meant. But as soon as I got curious about it, I listened to multiple hours of video on it and today I can fluently speak about it.
It’s all about being sustainable and ahead of the game preparing all the while. You have three facets and I have been following you for a long time – accountant; Board Chairman of many companies; and an ESG practitioner at heart. Among these three, which is that one aspect you would like to lean on to the most?
What comes naturally to me is to be a learner. In whatever role I can learn more through exposure to people who are brighter and better than me and that happens at my role as Board Chairman very often. Today Board Members are so much more knowledgeable, wise, and full of ideas. I learn a lot from them. Equally in the field of ESG, every day I live and learn. Every day there’s a new insight. Today’s insight for me came from supply chain. It just struck me that if you don’t think of supply chain, you will simply run out of things that you must have. Take the case of having to produce EV vehicles or windmills or take the case of just simply making sure energy transition to hydrogen, all these need metals that are in short supply and Copper being one of them. Now if you don’t have the means to access more Copper that the world will need to go green, our go green program can be stalled. All this is supply chain and all it needs is technology and time to overcome.
Taking the ESG angle further, there are 17 SDGs where Sweden ranks as number one. India is way behind. However, India has set up an ambitious goal to be under 50 by the year 2025. How difficult it is and what pathways do you see to achieve this target?
We have three pathways. India is a blessed country in terms of natural resources. It is also blessed in terms of sunlight, and we also have wind so that we can generate sustainable, economically viable quantum of power from all the natural resources. Good news for India is that the cost per unit for generating solar and wind power has fallen below the cost of generating fossil fuel-driven unit of power and that is an inflection point, which is going to lead us to becoming the country which does a very rapid energy transition. Second, we naturally don’t have large consumption power because the per-capita income of our country is low. If we can democratize production and make it more efficient and make goods available, then India might become the first country, which will have ‘Haves’ and ‘Have More’ rather than ‘Have Nots’. We can bring in converging technologies into our manufacturing. We can distribute what we produce in a way that it becomes affordable at low per capita income, and we can do it in a clean and lean way. We have this opportunity to create a fresh ecosystem, which other countries may not have the opportunity to do because of the stranded assets, which would arise as you work towards transition and make the change. It could be of such a large magnitude that they would gawk at it. We don’t have that problem.
Someone mentioned at the UN that India’s growth and India’s ability to be under 50 by the year 2025 is very critical for the world. How can we decipher that statement?
It is very critical. It is so true and relevant. The path to below two degrees Celsius lies through India and China. These are the two large highly populated nations on Earth. India and the Anthropocene Epoch, the extent to which we needed to take out from the mother Earth, was at an extremely high level. We have now learnt how to get back towards Clean Tech
Revolution. China is way ahead. They have discovered the holy grail much ahead of us. They have integrated supply chains. They are the Manufacturing Hub of the World. They have adopted technology. They have the means to obliterate all cash dealings in their economy. They have got enough infrastructure to do that. We need to build up to it. The good news is that we are at a midpoint in this evolutionary process and now we need to accelerate.
Taking it forward, can you tell us a bit about GovEVA Consulting and what are the activities you are associated with?
GovEVA was initiated by the inspiration of Mr. GN Bajpai, the ex-chairman of SEBI. He had this driving desire to create a platform which would make sure that governance, social responsibility, and environmental stewardship could happen in a single integrated platform. Then Mr. J Dalal joined us in this mission and three of us decided to start. Five years ago, we set out on this journey. It took us two years to get our platform for governance ready and now we are working to anoint that platform with the social responsibility and environmental stewardship angle. Hopefully, within 6-8 months, we should be able to give the world its first automated platform, which will enable them to get on to the ESG path in a facile way. What is helping us is that the whole world is getting uniform. For example, we have the Value Reporting Foundation, which is going to combine the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). All these initiatives are happening in the US. Then we have the sustainability standards getting established in the UK to harmonize the way the measurements of all these impacts will be. When we have access to all of that, we need to integrate all the aspects and bring to the world a unified metric that will set out to achieve the desired objective. GovEVA stands for Governance, Leading to Economic Value Add. We are still focused on adding economic value.
How do we stop technology from crossing the ethical line in our social & personal lives?
This is something that we wrestle with so often. I would point you to a book that I read a month ago, ‘Physics of God’. What has happened is, as the human race has made more and more discoveries of string theories, metaverses, the beginning of life, big bang, they have been able to relate it back to the original force, which kept sustaining things. That answered to me the fact that ultimately, we as a human race will have to discover that we need to come in harmony and peace with nature. We will need to acknowledge that there is something that is beyond us, and we will have to learn to live with it in a harmonious manner and simply not allow it to domineer over us as we attempted to domineer over nature and failed.
When we talk about ESG, there are a few more factors speaking from supply chain standpoint. Are we able to achieve the environmental governance?
Unfortunately, the answer is a clear NO. We have got used to linear thinking. We are not able think exponentially and out-of-the-box. That is a big pivot that the world must make. There is no path to the pivot. It just has to be wished and executed and that’s how it happens. There are companies which have given us dramatic result over their previous year’s performance. How do they do it? There are technologies, mindsets, and frameworks, which can drive this. We need to plug in to those frameworks, mindsets, processes as an economic entity to acquire that massively transformative purpose and take the moonshots. It’s no longer going to be easy for us to keep growing incrementally and think that that’s going to be life as usual. That epoch is over. That epoch gave us zero growth for over 11,200 years, but today we simply can’t afford that. We must have the fastest growth both in GDP and in per capita. Therefore, we need to start thinking exponentially of how technologies are converging. Therefore, we will get this exponential growth curve.
What are your views on Indian companies taking up the sustainability path? Where do they stand currently? What more needs to be done to push the green agenda forward?
They are taking to this path in droves. The drove definition comes from the fact that a thousand top market cap companies are obligated by SEBI from this year onwards to voluntarily disclose their sustainability reporting (BR-SR). Once that happens, then it becomes mandatory to follow India. That gets a thousand companies already off the starting line. What that is going to do is it’s going to get everyone else who has still the opportunity to think and stay at the side lines to jump in. That has happened at a superlative pace. I am pleased that there are over 8000 companies in India today, which are pursuing the ESG holy grail. Everyone is on a steep learning curve. As we progress gradually, policies will be ironed out and we will definitely see the emergence of a new corporate world which has ESG ingrained in its vision & mission. The phenomenon also extends to the MSMEs as well because for any large company to report scope II & III challenges, they need to have the connectivity to their entire supply chain ecosystem. Eventually large companies are bringing the MSMEs into the whole process. This is a great example of synergistic collaborative atmosphere that is evolving constantly. I think the extent of attention that is being paid today to MSMEs is appreciative. Not all of that is resulting in them getting saved, but the moment is towards encouraging them, to come together, to consolidate, to do virtual merger, to become responsible parts of the supply chain, to adopt technology, to access money, and so on.
We are currently trailing this change and not quite leading it. The next phase seems to be on including suppliers and stakeholders in the ESG framework of the companies. India as the world’s manufacturer / back office and many more, is there an area where we can lead this change?
I think we should lead the change in bringing technologies which are converging to life. We should start with getting the stem cell sample of every child born in India. We should be able to have every moving vehicle and every moving machinery or every manufacturing unit having an IoT enabler in it. We need to have a brain computer interface device embedded in those either as an external additive or a wearable or an embedded chip into our bodies. Today for measuring continuously blood sugar, this is already a feasible option. Ultimately what will happen is the doctors will not have to get this entire set of diagnostics done as soon as the patient comes, and they send them back for tests. All of these will get transformed because the record of a person’s parameter is going to trendline and available right there where it is required. The same phenomenon applies to machines or automotive. We need to start thinking on the digital autonomous world where a car is completely autonomous. One can imagine the entire governance process surrounding a DAO will be very different from the governance process in MSME. This is the new experimentation we are all working towards.
What is the recent approach of investors towards governance, especially in the start-up space?
I think we need to get to the start-ups who can suddenly become unicorns. We have already seen a few decacorns who are emerging out of India, ex. Paytm, Zomato or Swiggy. We are seeing multibillion dollar enterprises emerging and the idea that good governance can risk manage the flight path is becoming very much embedded in the mind frames of these start-ups and the people who have this driving exponential mindset taking the moonshots which they believe in, having this massively transformative purpose, looking at technology as an enabler, they are the ones who are truly making artificial intelligence their partners. They are talking and thinking about it as augmented intelligence and are not fearing it. They are embracing the change. That is what is leading to this exponential change in India. The number of digital transactions we are doing, the extent to which we are now able to deal with things at a molecular and cellular level, is astonishing.
What is the number one capability today for a board member to possess to enhance all the six capitals of an enterprise?
The answer is equally simple. It is to be able to ask the right question boldly and do not rest until you get a satisfied response. The entire ecosystem should realize that Board members are not going to get satisfied by an answer that we will let you know next time. Information should be available right there for the Board when they walk in. We are now at an inflection point where every board member realizes that we are all in this together. There is no difference between an independent director, non independent director, executive director, or non-executive director. They all have the same purpose.