Kuldip Maity

Reading a report on the performance of S&P 500 companies, a specific graph caught my eye. It showed that when it came to 10-year returns, companies with women CEOs at the helm outperformed those with men in similar roles. Interesting!

Harvard Business Review also reported a study with the conclusion that “Going from having no women in corporate leadership (the CEO, the board, and other C-suite positions) to a 30% female share is associated with a one-percentage-point increase in the net margin—which translates to a 15% increase in profitability for a typical firm.”

But what comes as an anticlimax is the fact that in the same graph, we find that women hold only 41 of the CEO positions at the S&P 500 companies. The surprise does not end with this. I found that back in 2018, the year had ended with 31 female CEOs in S&P 500 companies. Which means that in the last five years, we have seen an addition of only 2% to the number of female CEOs in S&P 500 companies!

We need to find out why the score got worse and understand the rationale behind the gender-based pay gap in the industry.

Gender inequality has always been an issue since women started to work in corporates that are perceived to be modern in their mindset. While diversity norms have kept the numbers at a decent level, most women have been given roles involving lesser grade administration. It has been only recently that we have started to see women getting represented at the board level. But unfortunately, data shows that CXO positions still seem distant.

It will be difficult to find out why female CEOs have performed better, but even without getting into the analysis, I feel that diversity can only bring in a positive change.

I have read several articles that suggest women may bring a longer-term vision to the business when they join the leadership. To cite examples, PwC’s 2022 Board Member Survey found 66% of female directors prioritize climate action, even at the cost of near-term financial gains. Two academic studies (Al-Najja & Salama, November 2022 and Altunbas et al, 2022) have mentioned that having more women in senior leadership roles helps better corporate environmental performance.

Approaches like these might translate to greater value to the business in the eyes of its investors and other stakeholders, because, as I have been writing in my other blogs, all of them give more importance to long-term sustainability than short-term profits.

So, I strongly feel that the day is not far when we start seeing investors using their power to ensure a better gender ratio at the CXO levels.

With the Celsius soaring, it is getting extremely uncomfortable working outdoors under the scorching sun. Well, “uncomfortable” might be an understatement, as I gather from the news that people are dying from heat stroke in the hotter parts of the country.

Other than heat-related health issues, there was also a study published in the journal GeoHealth, stating that extreme climate change has a vital role to play in the outbreak of COVID19 variants in India, where the majority of the cases are clustered in regions where people have to endure extreme heat.

But this is not new. Even last year, we had to bear a long span of heat waves starting end-March. I read that last April was the hottest in Northwest India in 122 years. Uttar Pradesh, Bihar, Jharkhand, West Bengal, and the other states were no less. From the reports that were published after last summer, the preceding eight years were the warmest eight years and June 2022 was the warmest June on land since records began in the mid-1800s.

The question that arises today is if 2023 will break all records.

Experts and common sense say that global warming backed by greenhouse gas emissions is resulting in the intensity and frequency of heat waves. However, the question that we all face today is what we are doing about it. A bigger question is if we know what needs to be done.

Many people blame urbanization as the main cause of our depleting green cover. We need to plant more trees and if we join hands with the cause it will be the best thing to do. But the question that always rises in my mind is the awareness that our air-conditioning also has a similar or maybe bigger effect.

Even if I accept that air-conditioning is becoming an integral part of urban living, we need to be aware of how we can do so in a responsible manner. Back in 2020, the government’s Bureau of Energy Efficiency mandated that all room air conditioners have a default temperature Setting of 24 degrees Celsius, which means that we need to manually change the settings if we need a lower temperature. This increase from the conventional 18-21 degrees will cut electricity consumption, which also will have an impact on climate change.

Countries such as Japan and the US have already implemented such regulations. Japan has a default setting of 28 degrees Celsius and in the US some states have enforced limits against lowering the temperature below 26.

All that I am trying to point out through this example is that our efforts need to be holistic throughout the year. Complaining only when the temperature rises and acting only during those days may not bring much of a result.

I end this blog with hopes that the first rain will cool us and that summer will go back to being an enjoyable season.

As we end another Bangla New Year (Poela Boishakh), I would like to take this opportunity to wish everyone a prosperous year ahead. Throughout West Bengal, this occasion is marked by numerous festivals and events. As for the other parts of the country, Poela Boishakh also coincides with other regional festivals, Baisakhi in Punjab, Vishu in Kerala, Puthandu in Tamil Nadu, and Bihu in Assam. Best wishes to them as well.

Whenever I find time, I try to revisit history through books or ‘Google research’. Bangla New Year is no exception. There are several interesting facts that I came across and wanted to share with you. Feel free to share any knowledge that you may have on the topic so that we all can be enriched.

We will be entering the Year 1430 (or Bangabdo, as it is known) in the Bangla calendar. Most states follow the Hindu Vikrami calendar, starting in 57 BCE. But the Bangla calendar started in 594 CE and is said to be based on Surya Siddhanta, a Sanskrit text on astronomy. Though I read that we have evidence of the word Bangabdo on the walls of a few ancient temples, the most common perception is that the Bangla calendar was started by King Shashanka, the emperor of unified Bengal (then called Gauda Desh). Coincidentally, the Bangla language was also known as Gauḍiya Bhasha earlier.

Coming back to the occasion, Poela Boishakh, the first day (Poela) of the first month (Boishakh) is said to be later realigned with the climate of the region. The Hijri calendar used by the emperors did not align with the harvest season of eastern India. The lunar dates came a few days earlier making it difficult for the farmers to pay taxes when the entire income was dependent on agriculture. The realignment meant that the taxes would be paid on the last date of Chaitra and Poela Boishakh will be celebrated with a clean slate.

The tradition, with the changes of time, continues through the ritual of ‘Haal Khata’, where customers visit shops and other businesses and pay off their dues so that both sides can enjoy the New Year together. I find this a unique display of brotherhood between the provider and the customer, something we should be proud of.

As I end this blog, and as no blog on Bangla traditions can be complete if we leave out our eastern neighbours, I would like to make a mention of ‘Mongal Shobhajatra’ that is celebrated in Bangladesh, which has found its place in the list of intangible cultural heritage made by UNESCO, categorised as a heritage of humanity.

As I have been discussing the impact of factors other than just finances on business performance, I cannot give Nature a miss, especially in today’s world of global warming and climate crisis.

The impact of any business on nature is inextricably linked to the impact of nature on business in general. Stakeholders, especially investors, treat and evaluate this issue very seriously. The Integrated Reporting Framework has included Natural Capital as one of the six pillars of a business.

To define Natural Capital, we need to discuss natural resources, energy, and others including renewable and non-renewable materials used by the business to provide its services and products. We also need to understand that when we discuss these we need not focus only on their absorption in the business. Businesses also may have processes to neutralize the effect of the waste it generates or recycle the resources to have minimal impact on nature.

Other than the fact that we only have one planet and destroying it is tantamount to our extinction, solely from the long-term business perspective it is critical to evaluate the impact of a business on nature owing to the rapid climate change caused by environmental damage. Unless we consider the relevant parameters, the regulations brought in to restrict the negative effects damaging the environment may pose a high risk to the business.

As with the other aspects we discussed, it is not only the direct in-house operations of the business that we need to consider here. We also need to be cautious of our other stakeholders to avoid unforeseen supply chain disruptions and volatile changes in the cost structure.

This is the reason why at VFS Capital we always prefer women entrepreneurs who bring in business ideas built around sustainability and environmental good. I love ideas related to recycling, refurbishing, or any other business that boosts the circular economy and gives waste a new life. We need to understand that it is high time we come out of the linear model that includes only manufacture, use, and disposal. As with most of the things we see around us in nature, this is also a cyclic process. Only then can we keep the usage of natural raw materials in a closed loop.

In this way, resources are used to their full capacity, disposal is in a form that has downstream value, the need for new resources is reduced, non-manageable waste is avoided and the life cycle of natural products is increased. In short, waste transforms into raw material, even if it is for a different purpose. Just like it happens in nature: leaves incapable of photosynthesis become manure, but still, contribute to plant health.

These are the concepts that investors and other stakeholders see as viable and sustainable in the long term.