Syllabus
GS Paper III – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Context
India is making strides in green steel technology by establishing a consortium that includes research labs, IITs, steelmakers, and equipment manufacturers.
Green Competition
Introduction
Green competition is a distinctive form of competition that highlights the ecological aspects of companies’ strategies. It involves promoting goods and services with the aim of achieving specific entrepreneurial goals through an organization’s promotional mix. The need for such competition arises from the fact that sustainability cannot be ignored. Addressing climate change necessitates the adoption of new technologies that reduce resource consumption and foster innovation through sustainable policies.
Strategies
- Integrate Sustainability Economics: Competition policy should incorporate sustainability economics while addressing market failures and collective action problems.
- Issue Guidelines: By issuing guidelines, the benefits of sustainability can outweigh potential negative effects on competition.
- Assess Cooperation: Including sustainability considerations in assessments of cooperation among competitors can significantly benefit sustainability in markets.
Importance
- Promote Environmentally Friendly Strategies: Helps to promote environmentally friendly strategies and implement sustainable development goals.
- Solve Environmental Problems: Aims to solve both global and local environmental problems.
- Reduce Anthropogenic Pressure: Works to reduce anthropogenic pressure on the environment.
- Save Resources: Focuses on saving resources.
- Competitive Development: Aids in forming the competitive development of the country and the business sector as a whole.
Comparison of Competition Law and Sustainability
| Aspect | Competition Law | Sustainability |
| Primary Objective | Promote consumer welfare and ensure fair competition | Achieve long-term environmental, social, and economic balance |
| Focus | Market efficiency, preventing monopolies and collusion | Reducing environmental impact, conserving resources |
| Key Considerations | Prices, market share, consumer choice | Carbon footprint, resource usage, ecological impact |
| Regulatory Tools | Anti-trust laws, merger controls, anti-collusion measures | Environmental regulations, carbon pricing, sustainability reporting |
| Assessment Criteria | Economic efficiency, market power, consumer harm | Environmental benefits, sustainability metrics |
| Challenges | Balancing market dynamics, avoiding over-regulation | Measuring sustainability impact, integrating into business practices |
| Potential Conflicts | May restrict collaborations that could lead to innovation or efficiency gains | May require industry-wide cooperation, which can conflict with anti-collusion laws |
| International Examples | EU Competition Law, US Anti-trust Laws | Paris Agreement, UN Sustainable Development Goals |
| Implementation | Legal enforcement by competition authorities | Voluntary initiatives, government policies, and regulations |
| Sector Impact | Direct impact on market structures and business practices | Broad impact across all sectors, focusing on long-term sustainability |
Global Practices of Green Competition
- Japan: The Anti-Monopoly Act approach aims to realize a green society by helping private businesses navigate horizontal collaborations.
- European Commission: The revised guidelines on horizontal agreements focus on addressing climate change, reducing pollution, limiting the use of natural resources, and promoting resilient infrastructure and innovation.
- Singapore: Provides information to ensure businesses can safely collaborate in pursuing environmental sustainability objectives without harming competition.
- Netherlands: A cartel prohibition does not apply if the competitive process is not significantly impeded or if sustainable production offers consumer benefits.
- Australia: Authorized the Tyre Stewardship Scheme to promote recycling and the use of recycled products.
Status of India in Pursuing Green Competition
- SEBI: In 2023, the Securities and Exchange Board of India introduced a sustainability reporting framework called Business Responsibility and Sustainability Reporting (BRSR).
- BRSR: A reporting framework under which the top 1000 listed companies (by market capitalization) are mandated to disclose their Environmental, Social, and Governance (ESG) performance. It requires businesses to:
- Indicate the sustainable issues pertaining to environmental and social matters.
- Mention the percentage of inputs sourced sustainably.
- Inform the presence of any specific committee to oversee sustainability practices.
- Revised BRSR: It requires companies to:
- Account for their value chain’s environmental impact.
- Enhance transparency.
- Combat greenwashing.
- Ensure that sustainability benefits permeate through the value chain.
- TRAI: In 2017, the Telecom Regulatory Authority of India released its recommendations on the ‘Approach towards Sustainable Telecommunication’.
- Role of CCI: The Competition Commission of India (CCI) can:
- Explore the possibility of including sustainability policies in its evaluations.
- Participate in formulating economic policies that address competition and sustainability.
- Release guidance notes on sustainability agreements and exemption methods under the Competition Act, 2002.
- Enforce competition policies that improve innovation while considering environmental concerns.
Challenges
- Complex Trade-offs: Balancing environmental and commercial interests can be challenging.
- Conflict: Sustainability, as a public interest objective, often conflicts with competition law’s primary goals of consumer welfare.
- Disincentive to Cooperation: Competition law can discourage beneficial collaborations for sustainability.
- Inconsistent Goals: Multiple objectives in competition law can lead to inconsistent application and reduced regulatory independence.
Way Forward
- Encourage Innovation: Support agreements that promote innovation and sustainable consumer preferences.
- Align with Constitutional Values: Ensure competition law aligns with constitutional values and sustainability goals.
- Learn from International Examples: Draw lessons from international examples to balance economic growth and environmental sustainability.
- Emphasize Sustainability Policies: Focus on sustainability policies and enterprise collaboration to foster greener innovations.
Conclusion
Green competition represents a transformative approach that integrates ecological considerations into the competitive strategies of businesses. By aligning competition law with sustainability goals, encouraging innovation, and learning from international best practices, we can achieve a balance between economic growth and environmental stewardship. Emphasizing sustainability policies and fostering enterprise collaboration will not only drive greener innovations but also ensure that the benefits of sustainable practices permeate through the entire value chain. This holistic approach is essential for addressing global and local environmental challenges, reducing resource consumption, and promoting long-term sustainable development.
Reference: TH
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Practice Question
Discuss the concept of green competition and its significance in promoting sustainable development. Analyze the challenges and opportunities associated with integrating sustainability into competition policies, with examples from international practices and India’s initiatives. (250 words)