- ESG is a framework for evaluating environmental, social, and corporate governance aspects of organisations, originating from the UN’s “Who Cares Wins” initiative in 2004 and growing to a $30 trillion phenomenon by 2021.
- Criticism of ESG includes issues like data quality, lack of transparency, and greenwashing, which can lead to a trust deficit and low compliance.
- Marine Spatial Planning (MSP) is a process for allocating marine activities to achieve ecological, economic, and social objectives. It was initially focused on sustainability and climate change risk management.
- Marine Spatial Planning (MSP) is a process for allocating marine activities to achieve ecological, economic, and social objectives. It was initially focused on sustainability and climate change risk management.
- Underwater Domain Awareness (UDA) is crucial for ESG due to significant challenges and opportunities below the water’s surface. It requires tools suited for tropical conditions rather than outdated Western-designed sensors.
- A proposed MSP-based approach using Modelling & Simulations (M&S) with Digital Signal Processing (DSP) algorithms can build accurate underwater scenarios, enhancing transparency and trust in ESG.
- The MSP maps can support various applications, including strategic security, and can be categorised into people, economy, and nature, aligning with the ESG framework.
- This approach ensures efficient resource deployment and fosters institutional mechanisms that enhance effectiveness across sectors and stakeholders.
Introduction
Environment, Social and Governance (ESG) is a framework to evaluate compliance of environmental aspects, social aspects and corporate governance aspects of an organisation. ESG became a responsible investing or impact investing benchmark for investors. It first came into prominence in a 2004 report titled “Who Cares Wins”, which was a United Nations (UN) triggered joint initiative of financial institutions. However, by 2021, it has become a global phenomenon worth US $ 30 trillion from its initial UN-driven Corporate Social Responsibility (CSR) initiative.
Criticism of ESG has also been significant, as all such mega global initiatives. The criticism ranges from data quality, reporting standardisation, evolving regulation, politics, greenwashing and even definition & assessment of social good. Lack of transparency is the biggest challenge that directly impinges on the trust deficit. We all know, trust deficit is the biggest culprit for low compliance.
Another way of looking at the ESG framework is the balance between people, economy and nature. In more clear terms, the three entities can be described as follows:
People
Corporate entities need to ensure their activities enhance local communities’ livelihood. Their actions should positively impact the socio-cultural well-being of the local communities. It is often seen that mega projects result in large-scale migration of the local communities from their native location. Such migrations cause disruption in their traditional practices, leading to serious loss of livelihood. The traditional socio-economic & socio-cultural practices are always in sync with the site-specific local realities to make them sustainable.
Economy
Corporates must ensure effective and efficient utilisation of resources (both human and material), technology, and strategy to achieve the best economic output. The supply chain must be effectively networked to get the best value for the output. The corporate governance must be strong to bring effectiveness and efficiency in the operations and supply chain. Alignment with the geopolitical and geostrategic factors will also play a role. Navigating the local, regional and global political factors will be a key to economic growth.
Nature
The environmental sustainability and climate change risk management will be extremely critical. One needs to appreciate that extreme weather events can hamper our own survival and business continuity. Large societal well-being is certainly critical in the long term, however in the short and medium term our own business losses could be an important consideration. Greenwashing has become fashionable. However, one needs to consider that 75% of the earth is water, so blue needs to be prioritised. Climate change monitoring and prediction can be best done with ocean or freshwater analysis. A more nuanced approach is important, and a review of the conventional means will be required.
Typical Western modus operandi of pushing their products across the developing world has been a serious concern. Too much security boogey has ensured massive military build-up, even at the cost of socio-economic priorities. Irrespective of their relevance, they build narratives to push their products and services at a very high cost. Objective reasoning is thrown out of the window.
The west is in the temperate and polar regions. However, the Indo-Pacific region is the ongoing geopolitical and geostrategic centre of gravity. The Indo-Pacific strategic space is the tropical waters of the Indian Ocean and the Pacific Ocean. The West developed massive UDA capabilities during the Cold War, largely for security requirements. Thus, the military industry complex is now on an overdrive to monetise its products across the globe. It is important to note that the underwater sonar designed and developed in the Greenland Iceland United Kingdom (GIUK) gap, suffers 60% performance degradation in the tropical waters. In the 21st century, security has a very different connotation. Food security, water security, energy security, economic security, cyber security, and many more dimensions are added to the strategic security framework. Thus, the role of corporates has become significant even in the strategic security matrix.
Challenges and Pitfalls in Global Marine Spatial Planning Implementation: A Critical Analysis
Marine Spatial Planning (MSP) has now become a popular tool for marine governance. As defined by the UNESCO’s Intergovernmental Ocean Commission (IOC),
The IOC organised the first international workshop on MSP in 2006 and became recognised as the leading institution to promote science-based, integrated, adaptive, strategic and participatory concepts worldwide. In Mar 2017, the IOC adopted the Joint Roadmap to accelerate MSP processes worldwide with the European Commission’s Director General for Maritime Affairs and Fisheries (DG-MARE), aiming to triple maritime areas under national jurisdictions benefiting from MSP by 2030. The EU allocated funds for the larger global implementation of MSP.
The conventional MSP implementation has largely been restricted to the deployment of sensors, followed by data analysis and interpretation. These hardware and software, largely supplied by Western corporate entities, are designed and developed for the temperate and polar regions. Western corporations have a serious manpower issue as these regions suffer demographic crises. They largely supply canned solutions with outdated hardware. They do not have the time to customise their solutions to suit the local tropical conditions. The developing world, which has a large coastline, cannot afford to deploy sensors across the entire sea area. So, small pilots remain pilots with no scaling up due to bad intent and planning. The receiving end is not even involved in conceptualising the project strategy. The Western supplier comes with their product, deploys it as per their own understanding of the local requirement and walks away with the money.
Another big problem is the narrow appreciation of the application.
The nuanced approach will be to bank on Modelling & Simulations (M&S) for building the MSP using land-based data on the underwater domain and then using Digital Signal Processing (DSP) algorithms to build the underwater scenario. Limited field experimental validation in select locations will build confidence in the M&S effort. After multiple such iterations of field validations, the accuracy of the M&S effort will be high and could be a replacement for the actual deployment of sensors. M&S will also allow the prediction of infinite variations in the underwater conditions, both spatially and temporally. The tropical variations can be precisely modelled in 3-dimensions (3D) using such M&S techniques. This will be truly the digital transformation that can be used across varied applications.
The conventional IOC and EU-driven MSP is limited to sustainability and climate change risk management. The resource mapping has been limited to some extent. However, the M&S-based approach can be used across unimaginable applications. Even strategic security and oceanography will be included to make it all-encompassing.
Integrating ESG Framework with Marine Spatial Planning: Towards Enhanced Objectivity and Efficiency
Finally, the ESG framework can be built on the MSP backend. The MSP maps can be categorized into people, economy, and nature or even conventional environmental, social, and governance maps. We can build DSP algorithms to combine such maps to get another layer for ESG that will provide the most optimum ESG-compliant output. It can drive or evaluate ESG as per the requirement.
This MSP-based approach will bring significant objectivity to the ESG framework. Transparency and objectivity will enhance the trust factor and thus positively impact compliance.
Dr (Cdr) Arnab Das
About Author
Dr (Cdr) Arnab Das is the director and Founder of MRC, Pune. He is an ex-Naval officer with two decades of active service and PhD holder from IIT Delhi with a specialization in Underwater Acoustics. He has worked on several projects and has many publications to his credit.