The New Dehli based Development Alternatives Grouṕ has almost 40 years of data to demonstrate costs and benefits to Indian and comparable economies. Development Alternatives builds eduction, training and research and development into business models which generate employment with green technologies. Until now, with the development of True Value Development Alternatives (TVDA) project, this data has not been taken up by finance and investment strategy and tool innovations, such as to challenge the financial risk-reward equation and the design of national bonds, indices and global investment portfolios.
Dr. Ashok Kholsa tells his background in the context of founding the business incubator, subsidiaries and non-profit support (now Development Alternatives Group),.‘I had the opportunity to work in the mid 1960’s with one of the finest scientists of the twentieth century, Prof. Roger Revelle, at Harvard University. His knowledge was eye opening. Aspects of his research were instrumental in identifying anthropogenic climate change. Returning to India, I created the first government environment agency in a developing country.
We soon learned that in a poor country, saying ‘no’ to development to conserve the environment was not an option. What was needed was better ways to do development in harmony with nature.In some ways sustainable development emerged from that experience.
At the same time, because I was among the few from the Third World who had the background knowledge to negotiate on these issues, I became deeply involved in new global discussions from the time of the Stockholm Conference in 1972. In the months and years that followed, the topic of environment exploded on the international stage. I found myself in international meetings every few weeks and got to learn a lot from other parts of the world and also provide inputs and insights from a poor country. At that time, in 1975-6, the United Nations was setting up the UN Environment Programme (UNEP) in Nairobi, and they asked me to become the director of Infoterra, the first international information system on the environment. It was a wonderful job and I got to meet political leaders and environmentalists and scientists in more than 100 countries. I did that for five years before setting up Development Alternatives in India, to put into business practice all that I had learnt.
Range Values Towards True Value
Almost forty years later, and the noble prize for the environment, the Sasakawa Award, on route, Khosla’s proven better ways of ‘doing development’ have crossed paths with the work of Long Finance. Prof. Michael Mainelli explains,
during our research setting up the Long Finance programme in 2007, one of the critical barriers we identified was the lack of tools to assess the financial risk-reward equation over the longer-term.
Amongst solutions Long Finance has led the research ‘Confidence Accounting’ with the global accountancy umbrella groups ACCA and CISI. Confidence Accounting brings range values to financial accounts, profit and loss, cash flow and balance sheets. In contrast to the simple point values of financial accounting, range values enable scenarios such as ‘unburnable carbon’ and the extent to which investment banks’ risks are costed and covered, to inform on fundamental questions such as ‘is this company a going concern?’.
By working through the (now) Clarity Coalition, comprising of leading sustainable development and economist collaborators worldwide, confidence accounting has been adapted to include modifiers to economic output indicators such as GDP for scenarios for entire national economies. The modifiers are generated from national and granular ‘resource accounts’ and include employment, skill sets, carbon emissions, water use, waste, land disturbance and private contribution to education and preventative health. Dr. Malcolm McGarvin, Clarity Co Founder coined the name CLARITY as an acronym for Confidence (Limit) Accounting + Resource Information = True Yield (Value).’
Khosla highlights that the solution to sustainable development from his experiences is to create jobs with green technologies. This has involved building education and training, particularly for women, into business models, and empowering small business with technologies suitable for green job creation in poor countries. ‘We have plenty of business and people success stories’ he reflects and also comments ‘Since setting up 38 years ago, the world has changed enormously, it has changed as much as it probably did in the previous 380 years and we are changing with it. He continues,
‘Looking to the future, the True Value Development Alternatives Framework retains data variation for producing range value measurement and management. We can create economic projections for a range of technological innovations and sustainable practices and compare them to ‘business as usual. In a rapidly changing world we can further assess scenarios for human demographics, resource access, depletion and substitution and tax regimes, such as for carbon emissions and waste removal. This allows us to approach investors with a revised risk-reward equation which favours and facilitates vastly scaled expansion of Development Alternatives type business models.’
Amongst his influence beyond India, Khosla is also working on future design with entrepreneur and Clarity leader, Mr.William Kwende, the founder and CEO of Agritech Holdings and Burkina Golden Oils. Clarity’s Co Founder Dr Sarah Jones remarks ‘Dr Khosla’s information from almost 40 years of Development Alternatives Group activities is unprecedented to inform finance and economics with the sustainable development agenda. This is a significant step forward in the challenge to adapt the risk- reward equation for the longer term and to achieve viable mainstream investment by institutions such as the pension and insurance funds in developing and emerging economies.’
Khosla concludes ‘Future design is a good idea, if it includes the extreme poor. Only then will we create a genuinely inclusive global society.’
Returning to the question of Long Finance ‘When will we know our financial system is working’, surely the answer is ‘When it serves all the people’.
For the interim results associated with TVDA contact the Clarity Secretariat firstname.lastname@example.org
SNJ Updated 3 April 2020