Context:
Markets are at the heart of the economy, having evolved from the barter system to today’s digital platforms. The dynamics of supply and demand largely dictate pricing and consumer preferences. Climate change disrupts the supply side, causing an imbalance between supply and demand, which affects consumer demand and the overall economy.
Relevance:
GS3- Inclusive Growth, Environmental Conservation
Mains Question:
For India, to reach its pledged state of net zero emissions, every economic sector must contribute to greener means of production. Discuss. (10 Marks, 150 Words).
Corporate Sustainability Reporting:
- In 2023, the Securities and Exchange Board of India introduced a framework for corporate sustainability reporting.
- The updated Business Responsibility and Sustainability Report requires companies to account for the environmental impact of their value chains, promoting transparency, combating greenwashing, and ensuring that sustainability benefits extend throughout the value chain.
The Competition and Sustainability Scale Globally:
- Globally, competition authorities have raised concerns about the need for competitors to offset potential drawbacks of being early adopters of change while also achieving sustainability goals.
- Many authorities were hesitant to incorporate sustainability considerations, fearing that competitors might use it as a pretext for collusion.
- Nevertheless, authorities should focus on encouraging companies to jointly pursue sustainability goals and assess cooperation where enterprises can demonstrate the aim of achieving sustainability objectives.
- Japan’s Anti-Monopoly Act introduced guidelines to assist private businesses in engaging in horizontal collaborations for a “green society.”
- These guidelines indicate that most activities aimed at environmental sustainability are unlikely to restrict competition, and they often have pro-competitive effects that can benefit consumers.
- The European Commission recently released a draft of revised guidelines on horizontal agreements, which now include a specific section on sustainability agreements.
- Concerns will only arise if these agreements impose serious competition restrictions by object or create significant negative effects on competition contrary to Article 101(1).
- The goals are to tackle climate change, reduce pollution, limit natural resource use, and promote resilient infrastructure and innovation.
The Competition Commission of India (CCI) and Sustainability:
- While many countries worldwide are incorporating sustainability policies into competition law through cooperation among competitors and guidelines, the Competition Commission of India (CCI) might also consider integrating sustainability policies into its evaluations.
- India has committed to achieving net-zero emissions by 2070, but in 2023, it ranked fifth in global warming contributions.
- The CCI chairperson, Ravneet Kaur, recently mentioned that the CCI will explore sustainability policies for markets.
- During the pandemic, the CCI issued an advisory acknowledging that COVID-19 disrupted supply chains and noted that businesses might need to share information to ensure fair distribution of products and services.
- The Competition Act, 2002, has safeguards to protect businesses from sanctions, and the CCI only considered businesses necessary to address COVID-19 concerns.
- The CCI could release advisories exempting collaborations aimed at sustainable goals or greener technological innovations when necessary and proportionate.
- Under Section 49(3) of the Competition Act, 2002, the CCI can take measures to promote competition advocacy and awareness and participate in formulating economic policies related to competition and sustainability.
- The CCI could focus on sustainability policies and enterprise collaboration for greener innovations, releasing guidance notes on sustainability agreements and exemption methods under the Competition Act, 2002.
- In the U.K., the Competition and Markets Authority launched a market study into the electric vehicle charging sector to explore the development of competition alongside innovation, choice, lower prices, investment, and quality improvements.
- A similar comprehensive study on green initiatives and market feasibility would benefit the Indian market.
- In 2011, the TRAI released recommendations that sustainability practices be included in the proposed National Telecom Policy, promoting an environmentally friendly telecom sector.
- The CCI might consider incorporating sustainability practices into the National Competition Policy in the future.
Way Forward:
- Competition cannot be separated from sustainability. Addressing climate change requires adopting new technologies that reduce resource consumption and promote innovation through sustainability policies.
- For India to achieve its goal of net-zero emissions, every economic sector must adopt greener production methods.
- The CCI can implement competition policies that enhance innovation while taking environmental concerns into account.
- Competition policy should incorporate sustainability economics while addressing market failures and collective action challenges.
Conclusion:
By issuing guidelines, the benefits of sustainability can outweigh potential negative impacts on competition. Including sustainability considerations in evaluating cooperation among competitors can significantly enhance sustainability in markets.
