Innovation & Knowledge Management Academy

“When ESG Forgets Behavioral Economics: The Hidden Bias”

What if I told you that most ESG audits fail not because people don’t care about ethics—but because the system forgets how people actually survive?

In emerging economies—especially among small subcontractors and micro-entrepreneurs—ESG frameworks often punish the very resilience they should reward. Formal codes demand written proof, digital logs, and polished compliance theatre. Yet, trust, oral contracts, and informal governance sustain livelihoods where formal systems fall short.

This article explores the behavioral blind spots and cultural dissonance at the heart of ESG’s struggle to reach the margins—where survival instinct meets sustainability, and informal wisdom outpaces formal metrics.
It is not a plea to dilute ESG standards, but a call to evolve them—so that the next wave of sustainability audits measures lived ethics, not just paperwork.

📜 Read on if you believe ESG must move beyond checklists and toward context.
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🔍 The Behavioral Blind Spot in ESG Compliance Abstract Despite the growing adoption of ESG (Environmental, Social, and Governance) frameworks across global industries, their application in the informal economies of emerging markets—especially in small-scale construction enterprises—remains poorly theorized and under-researched. This paper i...

🔗 What can a once-mighty shepherd dog teach us about the silent drift in our economy?
When we breed for show, but forget the work — we lose the bone, the gait, and the purpose that made the pedigree worth keeping.
Sri Lanka’s economy, too, risks becoming a decorative breed: strong in signals, weak in substance.
This essay reflects on how selective breeding, behavioural incentives, and moral hazard shape not just dogs — but our future prosperity.
May we learn, prune, and restore our working lines before the orchard fails to bear fruit.
👇 Read. Reflect. Share.
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📖 Pedigrees and Policies: What German Shepherds Reveal About Sri Lanka’s Economic Drift A White Paper — A Reflection in Behavioural Economics In the living shape of the German Shepherd — robust in mind and frame when true to its purpose — I find a striking reflection of how an economy, too, must be bred, tested, and pruned to retain its genuine productive strength. When the Germa...

A must read for anyone who wanders around the ethics, morals, government, peoples behavior and along those lines.

1. Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia. By James C. Scott.
1976.

2. The Prince
Book by Niccolo Machiavelli
16th century

Two perspectives of ethics & morals. One from the elite / rulers and the second from the rulers. I know there could be better works than this.

But these two clear up bigger portion of the confusion.

🚨 Sri Lanka 🇱🇰 opens its doors visa-free to 35 countries starting October 1st!

1. 🇬🇧 United Kingdom
2. 🇩🇪 Germany
3. 🇳🇱 Netherlands
4. 🇧🇪 Belgium
5. 🇪🇸 Spain
6. 🇦🇺 Australia
7. 🇩🇰 Denmark
8. 🇵🇱 Poland
9. 🇰🇿 Kazakhstan
10. 🇸🇦 Saudi Arabia
11. 🇦🇪 UAE
12. 🇳🇵 Nepal
13. 🇨🇳 China
14. 🇮🇳 India
15. 🇮🇩 Indonesia
16. 🇷🇺 Russia
17. 🇹🇭 Thailand
18. 🇲🇾 Malaysia
19. 🇯🇵 Japan
20. 🇫🇷 France
21. 🇺🇸 United States
22. 🇨🇦 Canada
23. 🇨🇿 Czech Republic
24. 🇮🇹 Italy
25. 🇨🇭 Switzerland
26. 🇦🇹 Austria
27. 🇮🇱 Israel
28. 🇧🇾 Belarus
29. 🇮🇷 Iran
30. 🇸🇪 Sweden
31. 🇰🇷 South Korea
32. 🇶🇦 Qatar
33. 🇴🇲 Oman
34. 🇧🇭 Bahrain
35. 🇳🇿 New Zealand

🇱🇰

Let's take the current issue of the UK,

So the entire riots were about the stabbing right ? Actually it's Not.

I wanna question the crime rate, the statistical data, study the reasons and see who is engaged in violence in society in general, then at this riot ; their probable IQ & EQ Or their proper brain development and intellectual capacity.

The far right is on the rise because of the mistakes or the wrongful act of few immigrants; as some may argue.

But I believe the support for the far right is on the rise due to many reasons, including but not limited to
the competition of the resources, jealous towards the successful migrants, inbuilt suspicion of human towards the unknown, personal bad eexperiences with imigrants, their own inferiority Or superiority complex and the list goes on ; thus White washing an issue or carpet statements won't solve anything.

Do these rioting far right have a solution ? What do they want ? Let's say ; take all the immigrants out.

Then what, I can assure you UK will struggle to perform as a nation if that happen. So what's the point ?

So why there riots ? I wouldn't reject the suspicion as; These are part of any authoritarian regime's first move to secure the power Or cover up for the existing governments poor performance.

Take Srilanka as an example:
We have seen anti-minority sentiments were growing for a decade , specially against muslim in the past. It raised alongside their totalitarian rule and regime. Which followed by An authoritarian to get into Power. One of the highest foreign dept in the history as well as the highest mismanagement of funds were recorded at these times.

It took a nation's bankruptcy, severe famine, unlivable conditions including but not limited to inflation, scarcity food, medicine and fuel ; for the majority of the people in srilanka to realise that the rulers were keeping their attention elsewhere in order to cover up their poor performance while continue to loot the nation, treasury and the resources.

As "Olfactory fatigue" for sense of smell, the people of srilanka are in fatigue of "Crime & corruption news" to a level - it's too overwhelming in scales they first became normalised then continued exposure to such - insensitive most of our brains to 'any & all act of such nature'.

I doubt, the same goes for any nation where the far right uprising goes.

If the government did their job right - if they govern the system propery, people would have lived better.

I've lived in foreign nations and seen people who genuinely want to integrate and make a better living for them & their host nation; Then there are people who exploit the system. But unfortunately the most affected people by such far right ideology among the indigenous are the regular immigrant folks who try to integrate and make a peaceful living.

The Journey of PhD sometimes makes the researcher feel inferior Or an imposter due to their lack of ability.

Remedy : Speak to your Old Buddies, people who hate you, and people who look down on you Or Even people who admire you. (Technically a socialising time ) They all will make you realise you are far better intellectually than you though.

Not everyone is a born scientist or researcher, But every process will take its time. Depending on the material what we are - the time for a sculpture will vary.

It's a process not a destination.

Unaffordable housing, healthcare and living standards are not sustainable for humanity in the long run regardless of the GDP OR WHATEVER.

Most of the Corporates are recording the highest ever profit while the average citizens are facing a serious living crisis.

Governing models have to realise that the governments are for peoples benefits not for Corporate benefits.

As for srilanka, this could be the best time to start from scratch. A New Beginning.

Srilankan government firing the Railway station masters &

consequently, their immediate withdrawal of their "union strike" in order to cancel their 'termination of service' announced by government is a double edge sword.

It is true, government shall engage to Hire and Fire policy based on meritocracy, pragmatism & honesty of the staff.

On the other hand, the unions shall not misuse their abilities to threaten government and put the citizens life in line for political benefits or self interest of few individuals in the time of distress.

Also this gave a clear message to. Government : these unions are barking dogs with no real teeth. Plus these people can be simply replaced by few efficient army officers in emergency basis.

Now it is a good time for government to establish realistic KPI's to any and all the employees and who consecutively fail it more than three times ( without external uncontrollable environmental factors such as natural disasters, pandemics and etc) shall be fired. The next person in line shall be put to that place.

This shall be a fast process.

I have drafted a complete framework for this. If anyone from Gov. reach me out officially - i could give complete roadmap.
(Based on my years research for ERODING ETHICS IN ECONOMY book)

Revving Up Sri Lanka's Economy: The Power of Zero-Tax Vehicle Imports for SMEs

Small and Medium Enterprises (SMEs) are the driving force behind Sri Lanka's economy, contributing over 52% to the GDP and employing a staggering 45% of the workforce. Yet, their growth is stifled by exorbitant import taxes on essential vehicles. In 2022 alone, the government raked in LKR 110 billion from motorcycle import taxes and an additional LKR 90 billion from taxes on commercial vehicles like vans and trucks.

Imagine the economic transformation if these taxes were eliminated for SMEs. The impact would be monumental:

1. Unleashing SME Potential:
Freed from the burden of exorbitant vehicle costs, SMEs could invest in growth, innovation, and job creation. This would directly translate to a more vibrant and resilient economy.

2. Economic Boost:
Even a conservative estimate of a 10% increase in SME activity due to zero-tax vehicle imports would inject a staggering LKR 910 billion into the economy. This potential windfall dwarfs the estimated LKR 200 billion in foregone tax revenue.

3. Job Creation and Poverty Reduction:
Increased SME activity translates to more jobs, particularly in rural areas where transportation is a major barrier. This would uplift countless families out of poverty and strengthen the economic fabric of the nation.

4. Environmental Benefits:
By incentivizing the import of electric vehicles, Sri Lanka can reduce its carbon footprint and promote a cleaner, greener future.

The time for bold action is now. By eliminating import taxes on motorcycles, three-wheelers, small cars, vans, and trucks for SMEs, Sri Lanka can unlock a wave of economic growth that far outweighs any potential revenue loss. This policy shift, coupled with stringent measures to eliminate corruption in the customs department, would usher in a new era of prosperity for all Sri Lankans.