The writer is the Honorary Secretary, Indian Institute of Public Administration (IIPA), U.P. Regional Branch. He is also former chairperson, UP Forest Corporation; formal principal secretary, forest & environment; former chairman, UP Pollution Control Board
As a result of increasing concerns about environment at national and international levels, the idea of Environmental Corporate Social Responsibility has gained ground. It is a part of larger concept of Corporate Social responsibility (CSR) which envisages that business and industrial companies have responsibility not only towards shareholders but towards society at large. This means that positive social and environmental impacts should form a part of the normal activities of businesses. Their bottom-line should have three parts— profits, social impacts on people, and environmental impacts on the planet. In short, three Ps – Profits, People, and Planet- should be of primary concern.
Archie B. Carroll in 1991 published CSR framework with four domains: economic, legal, ethical, and discretionary (Philanthropic). These four domains serve as a guide to how businesses can discharge their social responsibilities including environmental responsibilities. Environmental impacts may range from emitting hazardous pollutants to consuming vast amounts of natural resources.
India became the first country to legally mandate corporate social responsibility when it passed amended Companies Act on August 29, 2013 and, subsequently, provided new rules in Section 135 of the India’s Companies Act in April1 2014. These rules make it mandatory for companies of certain turnover and profitability to spend two percent of their average net profit for past three years on Corporate Social responsibility. The suggested areas of activities for companies to implement their CSR in Project Mode Are provided in Schedule 7 and are:
a-Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swatch Bharat Kosh set up by the Central Government for the promotion of sanitation and making available safe drinking water;
b- Promoting education, including special education and empowerment enhancing vocational skills especially among children, women, elderly and the differently-able and livelihood enhancement projects;
c- Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
d- Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set up by the Central Government for rejuvenation of river Ganga;
e- Protection of national heritage, art and culture, including restoration of building and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;
f- Training to promote rural sports, nationally recognized sports, Paralympics sports and Olympic sports;
g- Contributions to the Prime Minister’s National Relief Fund or any other fund set up by the central government for socio economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
h- Measures for the benefit of armed forces veterans, war widows and their dependents;
I- Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
j- Rural development projects; and,
k- Slum area development.
In most of the countries of the world, CSR is voluntary. India has taken a lead and provided a legal mandate for eleven types of activities by private companies under CSR, and environmental protection and allied activities are among these activities. But environmental corporate responsibility is voluntary even in India to the extent that a company may opt for spending funds on education or poverty alleviation, rather than environment.
Companies try to minimise their environmental impacts in many ways. Some aim at reducing greenhouse gas emissions by reducing energy consumption, generating or using green energy, or offset their emissions by carbon credits. Some companies try to reduce or eliminate polluting or toxic substances in the environment including air, soil and water. They generate solar energy by installing solar panels on company’s office buildings or manufacturing facilities. They try to make manufacturing techniques more energy efficient. They also save energy by energy efficient shipping and transport. In addition, they can use their influence on their supply chain partners to save energy. They adopt the principles of “reduce, reuse and recycle” and avoid creating waste. They are also replacing single use plastics by biodegradable substances. They use less toxic chemicals or dyes. Some companies also endeavour to protect or restore biodiversity through better land management practices, cleaning up of former mines or other ways of restoring ecosystems.
However considerable gaps often exist between intentions to preserve environment and actual results. Many companies announce CSR and environmental protection as priorities but actually resort to unethical and environmentally damaging practices and green-washing. Many oil companies overstate their contributions to climate change mitigation efforts. Programmes like carbon trading allow companies to pollute environment if they finance emissions elsewhere. This is not really a socially responsible conduct. There are many opportunities for green-washing and therefore we cannot take any company’s sustainability claims at face value. A wide range of sustainability schemes are available to help companies gain an accurate assessment of their social and environmental impacts.
The International Chamber of Commerce has created a Business Charter for Sustainable development. This contains 16 principles that the private companies should follow to achieve sustainable development. One important principle relates to compliance and reporting. Every private company must give all information related to environmental initiatives to the board of directors, shareholders, employees, authorities and the public. Further, employees are to be encouraged to adopt environmentally-friendly behaviour and promote products and services with less environmental impact. Environmental CSR creates responsibility for private companies to be more environmentally friendly.
Private companies should integrate environmental protection into their business strategy and in their daily activities. They should also inform the public and the workers on their environmental impact and the latest improvements in this area. They should also prepare an “environmental impact assessment” report. They should constantly improve the environmental impact of their different activities by improving their products and reducing GHG emissions. They should inform on their environmental impacts as stated by the Rio Declaration on Environment and Development. Meanwhile, private companies should reduce their costs by conserving energy. This will also result in enhanced customer satisfaction and improve reputation of the company.
Companies have the legal as well as ethical duty to participate in the society’s welfare by participating in the mitigation of climate change. Environmental CSR is not as efficient as it could be because the measures are more voluntary than mandatory. Private companies are also not incentivized to prioritize strong environmental protection.