Gujarat National Law
University
Gandhinagar, Gujarat
GNLU Indian Business & Commercial Laws
Academy Summer School -2017
Research Assignment
Topic: “Corporate social responsibility and
environment protection – An Analysis”
Department of law, university of
Kashmir
Table of Contents
Introduction.
Significance of the Study.
Objective of Study.
Research Question.
Scope of the Study.
Research Methodology.
Scheme of Chapterisation.
CONCLUSIONS AND SUGGESTIONS.
"Let us be good stewards of the Earth we inherited. All of us have to share the Earth's fragile ecosystems and precious resources, and each of us has a role to play in preserving them. If we are to go on living together on this earth, we must all be responsible for it." Kofi Annan Introduction
beyond consideration of profit. It refers to business decision making linked to the ethical values, compliance with the legal requirements and respect for people and communities and environment.
All economies depend on the abilities of business to manufacture produce, make available services and carry out other economic activities. In pursuance of this, they generate employment and several other benefits. Despite the numerous benefits, they also contribute to the destruction of the environment by contaminating and depleting natural resources. Globalization, besides offering opportunities for economic development, has also resulted in a number of concerns in the social and environmental realms. In the wake of these concerns, numerous attempts are being made in the field of corporate social and environmental responsibility to induce the companies to act in a socially responsible manner by abiding to laws, rules and regulations, self-regulation and other voluntary initiatives.
governance in respect of corporate environmental and social responsibilities in India, legislative and otherwise.
Significance of study
sustainability thereby it will help to reduce the ill effects and destruction caused to the environment.
The topic is of great significance also because as today the whole world is debating to find out the measures and means to protect the environment at the global level. Therefore it is the need of the hour to find out that how the corporations across the globe will also have to play their key role in achieving the goal of sustainable development. It is also necessary to find the grim areas in the field of environment where the corporations have to focus. All human beings and other living creatures are dependent upon environment in which we live. A safe, healthy, clean and sustainable environment is vital for the fullest enjoyment of wide range of human rights which include right to food, health, water, and sanitation. Without a healthy environment it is difficult to fulfill the aspirations of life or to live with minimum standard of human dignity.
Objectives:
1. To examine the corporate social responsibility in the light of environment protection.
2. To discuss the impact of organisation’s activities on the environment.
3. To study why the corporate social responsibility principle needs to be adopted
Scope of study
The scope of the study is as
follows:- The study is restricted to corporate social responsibility with regard to environmental protection.
The study revolves around the concept of sustainable development
which came into light in the United Nations conference on environment and development.
The study is also aimed at as to how Indian judicial system developed the concept of corporate social responsibility before any legislative enactment.
The study clarifies the present position of mandatory corporate
RESEARCH METHODOLOGY
Scheme of Chapterisation
CHAPTER 1
1. Concept of Sustainable development and international agreements
2. Role of business in Sustainable Development milestones at international level
3. How the Paris Climate Agreement Impacts CSR and the Private Sector
CHAPTER 2
1. Business engagement key to achievement of climate change objectives
2. Corporate reporting and alignment of business practice with the climate change schedule
3. Corporate climate change-related reporting schemes introduced by G20 governments
4. Use and force of reported climate change-related information
CHAPTER 3
1. Elements of Environmental Protection and Sustainability under CSR
2. Environmental aspects of Corporate Social Responsibility (CSR)
3. Environment protection and corporate social responsibility: Reality or a myth
4. Gearing up for responsible growth: India’s top companies for Sustainability and CSR 2016 – Report
CHAPTER 4
1. CSR and sustainable development: Do Indian companies care about the environment?
2. Focus on sustainable projects with long-term impact
3. A shift from philanthropy to responsible business and strategic CSR
4. Mainstreaming sustainability into business operations and the rise of share value projects
5. Environment protection is still not mainstream among a majority of companies
CHAPTER 5
Conclusions and Suggestions
CHAPTER 1
Concept of Sustainable development and international agreements
societal concepts, it defies a concise analytical definition, although one can often point to examples that illustrate its principles.
In Our Common Future, the World commission on environment and development (WCED) recognized that the achievement of sustainable development could not be simply left to government regulators and policy makers. It recognized that industry had a significant role to play. The authors argued that while corporations have always been the engines for economic development, they needed to be more proactive in balancing this drive with social equity and environmental protection, partly because they have been the cause of some of the unsustainable conditions, but also because they have access to the resources necessary to address the problems.1
Industry’s response to the WCED’s call came in stages as everyone wrestled with what sustainable development in action should look like. The first serious sign of support came from the International Chamber of Commerce when it issued its Business Charter for Sustainable Development in 1990. This was followed in 1992 by the book Changing Course, by Stephen Schmidheiny and the Business Council for Sustainable Development World Business Council for Sustainable Development. Both publications focused on the role of corporations in sustainable development, and the authors argued that supporting sustainable development was as much an economic necessity as it was an environmental and social necessity. Since then, many business leaders and corporations have come forward to show their support for the principles of sustainable development.
1 Report of the World Commission on Environment and Development: Our Common FutureTransmitted to the General Assembly as an Annex to document A/42/427 - Development and International Co-operation:
Role of business in Sustainable Development milestones at international level
1972
United Nations Conference on the Human Environment (Stockholm Conference)
• Focus on states' duties, only reference on responsible conduct by individuals, enterprises and communities in protecting and improving the environment in its full human dimension (United Nations, 1972, Principle 19).
1987
Report on the World Commission on Environment and Development - Our Common Future(Brundtland Report)
• Reference on responsibility of private enterprises, from the one-person businesses to the large multinational companies, which have more economic power than that of many countries (United Nations General Assembly, 1987, p 8).
1992
United Nations Conference on Environment and Development (UNCED), Earth Summit (Rio de Janeiro)
• Emphasis on the role of major groups. Business and industry, including transnational corporations, large and small enterprises play a crucial role in the sustainable development (United Nations Sustainable Development, 1992, p 289).
1994
Barbados Programme of Action (Barbados)
by micro-enterprise loans at the community level (United Nations General Assembly,1994, XV. 68, 75).
1997
Special Session of the General Assembly to Review and Appraise the Implementation of Agenda 21 (New York)
• Corporate responsibility and involvement, including large corporations are important. They should promote more sustainable consumption, apply sustainable technologies (United Nations General A.,1997, II.12; III. 28 (b); IV. E (iii))).
2002
2002
World Summit on Sustainable Development (WSSD), Johannesburg Summit
• Focus on collective responsibility. Both large and small companies have a duty to contribute to sustainable development. Corporate social responsibility and accountability are needed (United Nations, 2002, p 10).
How the Paris Climate Agreement Impacts CSR and the Private Sector
The 2030 Agenda for Sustainable Development climate change and corporate sustainability into mainstream news channels. Most years, these agreements alone would constitute a banner year for climate policy, but 2015, by most accounts, was hardly a conventional year. The aforementioned measures, while important, paled in comparison to the hype, scale and media attention of The Paris Agreement, a comprehensive climate accord signed by 195 countries at the conclusion of the Conference of the Parties 21 (COP21) in December. The agreement was the culmination of years of negotiation between governments, the private sector, NGOs, UN agencies and intergovernmental organizations -however, the real undertaking, especially for businesses, is only just beginning.2
Forward-thinking corporations have already formed sustainable, low-carbon strategies, which will further align these plans with nationally
determined contributions (NDCs) and industry-specific
regulations. Procter & Gamble, for example, recently published its 17th annual sustainability report to update its progress toward reaching self-mandated sustainability goals. P&G is also among the several community shifting to a more sustainable, low-carbon environment, the Paris Agreement should, at a minimum, encourage top executives to discuss long-term sustainability. Though the climate pact won’t be available for signature until April 22, 2016, and will enter into force even later, businesses risk falling behind if they don’t consider the agreement’s impact on their sustainability strategy. So what actions, if any, should the private sector examine to align corporate strategies with the Paris legislation?
It’s of crucial importance for stakeholders to first understand the Paris Agreement’s basic components, including which elements are legally binding. According to the official compact, the major objectives of the agreement are:
To curb the global increase in temperature to 2 degrees Celsius
compared to pre-industrial levels. Ideally, to reduce potential negative consequences of climate change, all parties should aim to restrict the rise in temperature to 1.5 degrees Celsius.
To expedite the peaking of greenhouse gas emissions, and begin in
the second half of the century to achieve a balance between GHG emissions and “removals by sinks of greenhouse gases.” Experts have
called this language a “net-zero goal,” and acknowledged that realizing this balance will likely involve using technologies capable of removing carbon from the atmosphere.
To require all signatories to publish NDCs official climate plans
-every five years. Most governments submitted intended nationally determined contributions (INDCs) prior to COP21 and these blueprints may be used as their first official NDC.
Despite these unprecedented, ambitious goals, it’s important to note the limited ability with which the agreement can enforce its stipulations. Under the terms of the Paris Agreement, countries are legally required only to submit NDCs, and to report their progress toward achieving specific NDCs. This is a positive development, but it’s potentially problematic that the UN will have no legal authority to mandate penalties against those which fail to meet their self-established targets. There is also language regarding countries’ funding to assist developing nations transition to clean energy, but this commitment of at least $100 Billion per year is not legally binding. Given the lack of legal authority, some experts question whether the agreement is enforceable. But that might not matter.
For those companies that have yet to view sustainability as a mandatory business practice, there are several approaches each should consider. For starters, executives must examine these questions:
As governments, investors and consumers shift to a more
sustainable, clean and carbon-free environment, what impact, if any, will this have on our core business products, services and investments?
Have similar companies in our sector launched corporate
What sustainability practices can we institute to align with
domestic regulations, NDCs and the more global targets of the Sustainable Development Goals and The Paris Agreement?
In what ways can we better integrate corporate sustainability with
profitability?
Business engagement key to achievement of climate change objectives
Engagement with business and the private sector has been acknowledged by many agencies preparing for COP21 as being crucial to the successful design, financing and implementation of measures to address climate change and to achieve the transition to a low carbon economy whilst meeting sustainable development goals and achieving economic growth. In its New Climate Economy Report, the Global Commission on the Economy and Climate concludes that tackling the risks of climate change whilst achieving economic growth is dependent on structural and technological changes, flow of investment for innovation, strong political leadership and credible, consistent policies. The first of the report’s proposed ten point action plan is to accelerate low-carbon transformation by integrating climate into core decision-making processes at all levels of government and business.4 The supply by business of reliable climate change related information is crucial to that process. Corporate climate change-related information. There is no universally agreed definition of “corporate climate change-related information”, but generally it includes details of some or all of the
; Resource consumption that affects climate change, including of fossil fuels;
Manufacture of waste and pollutants that affect the climate including greenhouse gas (GHG) emissions;
The principal risks and opportunities expected by the company as a result of climate change, for example, demand for new products, regulation related to climate and supply chain resilience.
Corporate reporting and alignment of business practice with the climate change schedule
The relationship between business activity and climate change is therefore reflected, inter alia, in the increasing demand for corporate climate change-related information. Corporate climate change reporting has featured in discussions at several high-profile, international events including COP20, the UN Climate Summit 2014 and the World Economic Forum’s January 2015 annual meeting, signifying a growing desire for greater awareness and understanding of the relationship between business activity and climate change. Corporate reporting approaches are therefore being developed as part of the infrastructure necessary to align business practice with climate change mitigation and adaptation plans and with sustainable development goals, one of which, under the UN’s Open Working Group Proposal is to take urgent action to combat climate change and its impacts. In an effort to build that infrastructure and strengthen the drive towards greater corporate transparency and effective management of climate change, growing numbers of governments are developing both mandatory and voluntary schemes involving the corporate disclosure of climate change related information. 5
Corporate climate change-related reporting schemes introduced by G20 governments
Since the 1990s the majority of G20 countries have introduced some kind of active or potential mandatory corporate reporting scheme that requires disclosure of some or all of the climate change related information described above:
corporate social responsibility, governance or company law. For an increasing number of governments, corporate climate change reporting requirements and guidance are part and parcel of wider climate and sustainability policies and an integral element of market based mechanisms including greenhouse gas (GHG) emissions trading schemes. Corporate climate change–related reporting schemes do not therefore follow a uniform pattern. Each scheme’s description depend on the policy route(s) through which it has been introduced.
High-level trends - High-level trends amongst mandatory corporate reporting schemes introduced by G20 member countries can however be observed. In particular, there are trends in the approach to conformance (i.e.: the applicable penalty and enforcement measures), the reporting period for which information is requested, the reference to enabling frameworks, guidance and tools and the requirement for reported information to be verified or assured.
Reference to enabling frameworks, guidance and tools There is evidence that many G20 member country schemes prescribe or prefer to specify the methodology that should be used for the preparation of reported information. In some cases where enabling guidance is referenced, it has been prepared by governments specifically to support reporting practice and conformance with the requirements of reporting schemes. In other cases, schemes state that information should be prepared based on enabling guidance produced by other organisations, including non-governmental organisations. In practice, a wide range of reporting frameworks and calculation methods are referenced.
Use and force of reported climate change-related information
appraisal of performance against policy objectives, investment analysis and risk analysis. Companies themselves also use the information to derive benefits, including those listed above.
Investors Through the work of CDP, who provide the only global environmental disclosure platform for companies to report climate change and GHG emissions information to institutional investors with assets of US$95 trillion, and others, there is significant evidence of investor demand for climate change-related information and evidence of investors using information for a range of purpose including:
Monitoring GHG emissions trends;
Engaging with companies on their approach to management of climate change risks and opportunities;
Reduction of exposure to carbon-intense holdings; Investment research;
Ranking and comparing companies on climate change leadership, operations management, supply chain management, product development and innovation and governance.
Purchasing organisations i.e.: companies that procures from and manages supply chains to secure goods and services use information from their suppliers to identify risk and to work with suppliers to manage climate risks and increase efficiencies. There is evidence that purchasing organisations work with their suppliers to:
Agree GHG emissions reductions targets for suppliers;
Develop climate risk metrics for monitoring and reporting risks;
Develop data collection systems that support carbon management programmes operated by purchasing organisations; and
CHAPTER 3
Elements of Environmental Protection and Sustainability under CSR
Out of ten major areas of CSR activities, the item iv) refers to activities directly relevant to environment and environmental sustainability. The broad areas include ‘ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water’. This is the most positive feature among other scheduled activities under the CSR. These activities are going to contribute in a significant way for the betterment of environment. Different listed areas appear distinct but in fact are interrelated and thus the benefit of good performance in one area may contribute to others. Various elements of environmental protection and sustainability are elaborated in following sections of this article for a better understanding and implementation of CSR provisions.
Environmental Sustainability: Environmental sustainability is a broad term and is a key pillar of sustainable development. It is about meeting human needs without compromising the ability of the environment to support life and render goods and services on a long-term basis. Morelli (2011) defines environmental sustainability as a condition of balance, resilience, and interconnectedness that allows human society to satisfy its needs while neither exceeding the capacity of its supporting ecosystems to continue to regenerate the services necessary to meet those needs nor by our actions diminishing biological diversity.
sustainable consumption and production of resources, environment harmony and unity between organisms and their environment. Ecological balance is essential for proper functioning of various ecosystems and maintenance of healthy environment. It facilitates uninterrupted flow of environmental goods and services for the welfare of human beings, flora and fauna. If ecological balance is somehow disturbed the normal functioning of ecosystems is disrupted leading to different types of environmental problems. Overexploitation and utilization of resources, environmental pollution, and inappropriate management of waste, population growth are some of the major causes of disturbance in ecological balance
Protection of Flora and fauna:
Flora is basically the plant life that is present in a particular region or habitat whereas fauna refers to different forms of animal life. Deforestation, environmental degradation, habitat loss and fragmentation, infrastructure development, logging and poaching, illegal trade and unethical practices of human beings are some of the important factors affecting the existence of flora and fauna. As a result, many species of plants and animals are threatened and at the verge of extinction. Various in-situ and ex-situ conservation measures are required to protect flora and fauna. Identification of site specific activities for protection of flora and fauna in terrestrial and aquatic ecosystems and their implementation can be a priority area of CSR.
treatment, appropriate shelter, proper food and nutrition, humane handling and humane slaughter/killing. Thus, the activities such as constructing shelter houses, providing ambulance services for distressed animals, birth control and immunization of stray animals, relief to animals during natural calamities etc. can be undertaken under this broad activity.
Agroforesty: Agroforestry is a land use system which integrates trees and shrubs on farmlands and rural landscapes to enhance productivity, profitability, diversity and ecosystem sustainability. Agroforestry provides opportunity for employment and income generation and offers food and fodder, timber, fuel wood and various other natural resources to local population. It also has the potential to mitigate the effects of climate change through carbon sequestration and regulating microclimatic conditions. Thus, agroforestry is important in meeting the ever increasing demand of timber, food, fuel, fodder, fertilizer, fibre, and other agroforestry products; increasing the tree cover; conserving the natural resources and forest; protecting the environment and providing environmental security. CSR activities can encourage tree plantation in rural areas by establishing nurseries and developing the capacity of the people in related activities.
construction of reservoirs such as pond, tank, check dam and cleaning and rejuvenation of water bodies.
Environmental aspects of Corporate Social Responsibility (CSR) are the duty to cover environmental cost of a particular company’s operations, products and facilities.
The major ingredients of environmental CSR are elimination of waste and emissions, maximizing energy efficiency and productivity and minimizing practices that may adversely affect use of natural resources by coming generations. Sustainability and carbon footprints occupy an increasingly important position on the corporate agenda around the world. Many companies are realizing the importance of environmental initiatives in business development. As one of the most serious effects of outside economic activity is detrimental impact on the environment, the environmental issues are of great importance in the company. Corporate social responsibility means here ecological management. This includes activities in accordance with the adopted law, supports environmental awareness in the given surrounding, and also creates its own solutions to minimize the harmfulness of core business. All these elements do not function in isolation – they interlace to create a model of economic management which is responsible for the natural resources.
Let us take a close look at some of the major aspects of environmental sustainability.
Role of Packaging
Packaging is an important concern for consumers, particularly those who are interested in converting to eco-friendly buying behaviours. Packaging plays a great role in environmental sustainability by protecting products, preventing waste and enabling efficient business conduct. Reduction in the amount of packaging and use of eco-friendly packaging material provide an attractive opportunity to promote environmental sustainability.
Sustainable packaging is a relatively new addition to the environmental considerations for CSR. Companies using environment-friendly packaging materials are reducing their carbon footprint, using more recycled materials and minimizing waste generation. Companies that highlight their environmental initiatives to consumers can increase sales as well as boost product reputation.
For example, Cisco outsources all of its manufacturing and has over 600 suppliers. To avoid any problems, Cisco’s packaging team undertakes a painstaking process to create more effective and environmentally friendly packaging. In 2012, the company eliminated 757,000 pounds of paper and plastic waste for one product line alone. For its total shipments during 2012, Cisco reduced its use of cardboard, plastic and paper by as much as 466 metric tons.6
Role of Clean Energy
Deployment of renewable energy systems can make a big impact on CSR activities of companies as clean energy is one of the best methods to mitigate climate changes. Decentralized power generation using
renewable resources is rapidly gaining popularity among world’s top companies.
Most of the world’s largest companies, like Microsoft, Apple and Google, are adopting renewable energy as it makes good business sense to lower emissions, diversify energy supply, mitigate fuel cost and above all portray a green image. Major IT companies are rushing to develop renewable energy projects to power their giant data centers.
Google has entered a 10-year deal with utility company Grand River Dam Authority to supply 48 MW of wind power to its Oklahoma data center. Apple’s data center in Maiden (North Carolina), which draws staggering 20MW power, will run entirely on solar energy and biogas.
Role of Environmental Reporting
Environmental reporting, voluntary as well as mandatory, is also getting prominence in the context of corporate social responsibility. Environmental information like greenhouse gas emissions, waste generation, energy consumption, use of transport can improve the transparency of industrial activities, thereby, providing a powerful tool to fight environmental degradation.
Environment protection and corporate social responsibility: Reality or a myth
comply with. The corporate houses claim that they are incorporating the CSR agenda for making their corporations environment and human friendly but the reality is somewhat altogether different. Actually corporations wants there shareholders benefited financially. There are various reports which shows that main source of environment pollution is made by the industries. Industries for maximizing there profits, degrade the environment and pollute it, in the following ways7
a) Use of natural resources by industries, as it destroys nature and affects the natural environment. Cotton, textile, paper, iron, coal, oil, fodder, plywood, food processing, etc all need natural products as raw materials. Thus increasing needs of industries have resulted in over exploitation and stress on natural resources.
b) Residues of industries known as effluents are released in water and land without any treatment which pollutes the water and land, effecting the aquatic life and underground water.
c) Fossil fuel used by industries like coal, kerosene, diesel, and atomic energy also pollutes the air in the form of smoke and radioactive particles.
d) Noise, also a major by-product of industries and industrial products causes noise pollution.
e) Industrial wastes – particularly hazardous waste and radioactive waste- have also become a major environment pollution problem. There are variety of cases has been occurred which shows that due to over exploitation of natural resources and industrial wastes, the human generation was in danger.
The Bhopal Holocaust (1984), where more than 3000 person died and about 2 lakh were affected by the leakage of MIC gas, Love Canal
Gearing up for responsible growth: India’s top companies for Sustainability
and CSR 2016
KEY FINDINGS
1. Only the Top 33% companies believe in taking the long term view on responsible business:
For the longest time Indian companies have focused on market access, customer acquisition and compliance. There is now however a shift towards a more responsible form of growth because taking a long term view of sustainability and social responsibility is creating long term competitive advantages and helping in managing risks. Top companies have a deeper focus on Governance, Disclosure, Sustainability and CSR. However, the lower ranked companies have not seen a significant change.8
http://blogs.economictimes.indiatimes.com/ResponsibleFuture/gearing-up-for-responsible-growth-indias-factors. This year more than 54% companies have scored more than half the marks on governance 47% last year.
3. Disclosures are poor as sustainability reporting is inadequate Disclosures were poor in general because sustainability reporting was weak, especially in manufacturing industries. And the latter being two-thirds of our sample size in this year’s study, it weighed down the averages further. Since the reporting was weak, external certification and disclosures of material risks was poor. Lastly, very few companies participated in industry specific sustainability initiatives on an average – 16% in manufacturing and 14% in services. About 60% of companies had sustainability reports up from 58% last year and only 25% of the companies had GRI based sustainability reports.
4. Sustainability is at the heart of high performing companies
Top performing companies have increased their focus on sustainability and also deepened current efforts around reduction of emissions, climate change, waste management, water and energy. 47% companies had higher sustainability scores (YOY), 34% remained the same and 19% witnessed decline.
5. Companies look at long term projects and not charity 32% companies spent 2% and more in 2014-15 on CSR activities, higher than 18% in the previous year of study. Further 33% companies spent between 1% and 2% of their average PAT. And remaining 35% companies had a CSR spend of less than 1% of their average PAT.
Aggregate CSR spend for 173 companies in 2014-15 was Rs. 5752 cr with an average spend of Rs. 33.25 cr per company. This translated into an average CSR spend as a percentage of average PAT of 1.4%, which is lower than the Government mandate of 2% and more.
CSR amount was given as donations and for support during national calamities.
6. Government push makes corporate India step up
The Companies Act of 2013 and several government initiatives have pushed companies to work in relevant areas. Improved compliance on account of spending requirements, CSR committee requirements, reporting requirements etc. Swachh Bharat – The mission has been taken up by companies across the country with some success. About 39% of the companies surveyed have a focus on Swachh Bharat – primarily focused on construction of toilets. Solar – The push toward renewable has been another focus area for the government.9
Implementation of CSR initiatives
The implementation of CSR initiatives usually differs for each company, or even sector, depending on a number of factors, such as size and culture. Manufacturing-based companies are confronted by a wide range of environmental challenges, while retail or service-sector companies face these to a lesser extent. Although some companies address
http://blogs.economictimes.indiatimes.com/ResponsibleFuture/gearing-up-for-responsible-growth-indias-environmental issues one facility or department at a time, companies are increasingly integrating the environment into all parts of their operations. Whatever the nature of the commitment, most companies follow a similar series of steps when addressing their impact on the environment:
1. Corporate Environmental Policy: Companies committed to reducing their environmental impact usually create a set of environmental principles and standards, often including formal goals. At minimum, most such statements express a company’s intentions to respect the environment in the design, production and distribution of its products and services; to commit the company to be in full compliance with all laws and go beyond compliance whenever possible; and establish an open-book policy whereby employees, community members and others can be informed of any potentially adverse effects the company might have on the environment.
2. Environmental Audit: Before a company attempts to reduce its impact on the environment, it is essential that it first gains a full understanding of it. For most companies, this usually involves some kind of environmental audit. The goal of audits is to understand the type and amount of resources used by a company, product line or facility, and the types of waste and emissions generated. Some companies also try to quantify this data in monetary terms to understand the bottom-line impact. This also helps to set priorities as to how a company can get the greatest return on its efforts. 12
build a true environmental ethic. Besides education, many companies create incentives, rewards and recognition programs for employees who demonstrate their environmental commitment.
4. Green Procurement: To help ensure that their products and processes are environmentally responsible, many companies seek to buy greener products and materials from their suppliers. Some companies participate in buyers’ groups in which they leverage their collective buying clout to push suppliers to consider alternative products or processes.
CHAPTER 4
CSR and sustainable development: Do Indian companies care about the environment?
Though Big Industry, with its high level of emissions, waste generation, and fossil fuel consumption has traditionally been viewed as the chief villain in the fight against climate change, CSR programmes being undertaken by several large companies in India suggest that they have started thinking about their impact on the environment and are striving to become responsible corporations.
Data analysed by the ministry of corporate affairs for CSR expenditure of all Indian companies in 2014-15 showed that 14 percent (Rs 1,213 crore) of total CSR spending in India was made on activities focusing on conserving the environment. It was the third highest expenditure on a social impact issue after education (32 percent) and health (26 percent) and was greater than the amount spent on rural development (12 percent)10
These figures highlight that companies today have an increasingly broad understanding of the risks and opportunities that climate change poses
to their strategies and operations and that larger issues of sustainability triggered by climate change are becoming an integral component of dialogues with the major stakeholders. At the same time, verifiable corporate and partners’ accountability and reporting have proven to be key drivers to CSR getting embedded in the mainstream of strategy and business operations of companies.
A study conducted by NextGen to analyse the CSR expenditure (INR) of the top 100 companies for FY15-16 supports this trend. Among these companies, the top spenders in environment conservation were primarily from the following three sectors:
FMCG - ITC (72 crore), HUL (22 crore)
Energy companies – NTPC (44 crore), IOCL (30 crore)
IT and financial services companies – Wipro (48 crore), Axis Bank
(28 crore)
A deeper dive into the types of CSR projects carried out by these companies throws up some interesting insights about their perspective towards sustainable development as a key component of CSR.
1. Focus on sustainable projects with long-term impact
A decade ago, the most common CSR activity with a focus on the environment was planting trees. Indian companies today are instead focusing on projects that have a sustainable long-term impact, such as installing solar powered lighting systems and water conservation projects.
One of the reasons why companies may prefer such projects to tree plantation drives is that access to clean water and energy has several cascading effects on the social and economic development – ranging from opportunities for better education, health, and income to increased safety for women and lower deaths due to reduced indoor pollution.
2. A shift from philanthropy to responsible business and strategic CSR
Companies have started moving away from traditional philanthropic projects and have begun institutionalising CSR activities strategically, thereby bringing business responsibility to the forefront.
Thus, for FMCG firms that source raw material from farmers, issues like securing and sustaining the livelihoods of farmers growing inputs for their products as well as local water regeneration has become extremely critical. Similarly, for energy companies, which are often considered to be the worst climate offenders, investing in environment-friendly projects serves to mitigate their risks from a reputation point of view.
3. Mainstreaming sustainability into business operations and the rise of shared value projects
For several of the largest spenders on environment-related projects, sustainability has become a way of doing business. ITC’s CSR Committee is aptly called the "CSR and Sustainability Committee." Similarly, HUL’s projects focus on water stewardship tie-in with Unilever’s global focus on addressing water scarcity. Axis Bank spent nearly 28 crore on reducing GHG emissions through the use of renewable energy and optimising energy efficiency, choosing to concentrate on reducing the company's footprint on the environment.
sustainably by 2020. And their sustainable tea procurement project carried out as a part of the CSR activities serves a dual purpose- meeting the 2 percent criteria as well as the company's own responsible business targets.
4. Environment protection is still not mainstream among a majority of companies
Despite the emergence of individual thought leaders, sustainability is still not at the forefront of CSR activities among a majority of Indian companies. This trend is apparent even among the top 100 companies. Only about a third of the top 100 companies spent a significant portion of their CSR budget on environment-related activities, with such projects accounting for a mere 10 percent of the total number of CSR projects carried out in FY15-16, as per the study conducted by to analyse the CSR expenditure of companies.The trends visible in the CSR projects about the environment highlights a dichotomy in the way companies approach environment protection interventions in India. While some are thought leaders in the space and see sustainable development and environment protection as an opportunity, for many others, the pressing need for acting on conserving natural resources hasn’t arrived yet.
CHAPTER 5
Conclusions and suggestions
The healthy environment is central to economic activity and growth. It provides the resources economy needs to produce goods and services, and it absorbs and assimilates unwanted by-products in the form of pollutants and wastes. Normally it is believed that economy and environment are contrasting to each other. In fact, it is not true and both can flourish simultaneously if corporate, people and governments act in a responsible manner. Incorporating environmental elements in CSR activities in the Companies Act 2013 and making it obligatory for the companies are significant positive steps in saving environment. If implemented properly the CSR can be of great help in protecting environment and achieving environmental sustainability
First the priority areas and issues of environmental degradation shall get more attention.
Second the activities/initiatives can be continued for long time wherever required to achieve saturation thereby getting maximum advantage to stakeholders and recognition to Corporation.
Third the pooling of funds (State and Corporation) will allow scaling up of efforts and fourth the approach will allow participation, which in turn bring more transparency for all the participating stakeholders. Other reason for advocating this partnership is the fact that in spite of vast number of (around 20 Lakhs) NGOs operating in the country, the availability of eligible NGOs to become partner for CSR activities is really very low mainly due to ‘trust deficit’ factor and also to some extent due to lack of professionalism as witnessed by many corporations.
Keeping the expected flow of fund in the years to come under CSR spending’s after Company 2013 act, there is need to involve more and more stakeholders right form in-house trusts/foundations, NGOs and government departments through a well designed and participative model to address various environmental challenges which will sure to provide a win-win situation for the shareholders and governments and fulfill the ultimate objective of equitable and sustainable development.
BIBLOGRAPHY
