EESG Pillars: Economy
Inflation, the rising gap between rich and poor, debt etc. are some of the most hotly debated topics in the world. Many people have blamed such issues on capitalism, lack of government regulation and such related reasons. But what many don't realise is that the root cause of such problems is actually poor sustainable economic development. And that is the need of the hour. This article is the second of the 4 part series- EESGPillars, where you will be introduced with the 4 pillars of the EESG framework. The focus of this article will be the Economical aspect.
Let us first take a dive into what is the economical aspect I am talking about. EESG-aligned economics refers to the Sustainable economic growth that does not compromise future resources or social stability. This aspect of the frameworks aims to achieve its goal by:
Promote inclusive growth.
Ensure long-term resilience (against climate, political and financial shocks).
Use resources efficiently (avoiding overconsumption and waste).
Balance profitability with purpose.
Supports innovation, entrepreneurship and fair competition.
You might wonder as to why the economy is so important that it is treated with the same urgency as climate change. Poor economic development can create a multitude of problems that can lead to disastrous long term effects. Over exploitation of fossil fuels, water, and minerals without replenishment depletes natural resources. This unsustainable model accelerates resource depletion and long-term economic vulnerability.
Infrastructure, services, and opportunities remain concentrated in urban centers, marginalizing rural areas. This inequality hampers balanced national growth. Economies dependent on non renewable commodities like oil face sharp growth-contraction swings. Such instability causes inflation and disrupts economic development. Automation in industries, while boosting productivity, reduces employment. This leads to GDP growth without proportional job creation, leading to an increase in unemployment. These are just a handful of the vast problems we shall face. To truly understand the impact of these principles, let us take some examples.
1. Sri Lankan Economic Collapse
Sri Lanka's economic crisis was caused by years of heavy borrowing, poor fiscal planning, and sudden tax cuts that reduced the government's income flow. A nationwide ban on chemical fertilizers disrupted farming and worsened food shortages. With foreign reserves nearly gone, the country couldn't afford to import fuel, medicine, or essentials. Inflation soared, and the economy collapsed.
2. 2008 Financial crisis
The 2008 crisis was triggered by excessive risk-taking in the financial sector. Banks and investors ignored long-term stability in favor of short-term profits, leading to a housing market collapse in the U.S. As major financial institutions failed, global credit markets froze, causing a deep recession worldwide.
Now that we have understood the gravity of the situation, how do we remedy this situation? Here are some solutions that will improve our situation:
Encouraging green bonds, EESG ratings, Ethical Banking and impact investing to fund long-term sustainable and responsible growth.
Implement incentives and regulations that promote sustainability while ensuring equitable, balanced economic growth across all regions.
Invest in renewable energy and eco-friendly industries while building a green workforce.
Foster eco friendly startups with EESG-integrated incubation programs.
Leverage digital initiatives like UPI and Aadhaar to enhance Public digital infrastructure.
By employing these, we can sustainably develop the economy while meeting the needs of today. Integrating the economical aspect of the EESG framework will help us maintain a happy and sustainable world.