Organizations and corporate houses around the globe are increasingly recognizing
the importance of demonstrating transparency and accountability beyond the traditional
domain of financial performance. A primary reason for this is an even greater increase
in public expectations from organizations and industries to take responsibility
for their non - financial impacts, including impacts on the environment and on the
community. Consequently, environment has taken the center stage and the western
â€˜greenâ€™ wave of the sixties is more powerful now than ever before.
The industrial sector is largely governed by the market which works using sound
economic principles. However, the â€˜greenâ€™ wave of sustainable development led to
the formation of a new subject called Environmental Economics! The underlying principle
of Environmental Economics is the concept of externality - that some effects (say
the pollution it causes) of an activity are not taken into account in its price
which may destablize the market. Environmental Economics coupled with Environmental
Policy & Law led to some interesting and unique measures of ensuring that corporate
houses carry out their activities in an environment friendly manner. A few such
measures are briefly discussed below.
Environmental Impact Assessment (EIA) is a corporate
planning tool that is now generally accepted as an integral component of sound decision-making.
The objective of EIA is to foresee and address potential environmental problems/concerns
at an early stage of project planning and design. EIA systematically examines both
beneficial and adverse consequences of the project and ensures that these effects
are taken into account during project design. But what is most important is the
fact that EIA is a â€˜legalâ€™ and mandatory requirement and has to be carried out by
every corporate house before it can initiate a new project which may have a considerable
impact on the Environment. In fact EIA is probably the only tool in the hands of
environmentalists that has teeth. It is legally binding and anyone not abiding by
it can be taken stratighaway to the Supreme Court.
ISO 14001 is an internationally accepted standard
that sets out how a corporate house can go about putting in place an effective Environmental
Management System (EMS). The existence of the standard allows organizations to focus
environmental efforts against an internationally accepted criterion. The standard
is designed to address the delicate balance between maintaining profitability and
reducing environmental impact. ISO 9000 quality registration has already become
necessary to do business in many parts of the world. Thus, the fact that companies
may soon need environmental management certification to compete in the global marketplace
easily overshadows all ethical reasons for adopting ISO 14001.
An Environmental Audit (EA) is a means by which businesses
can assess the environmental impacts of their operations. It aims at the measurement
and evaluation of all inputs and outputs from the production process. It is only
after these impacts have been identified and measured, that a company can determine
where it should implement cleaner production and carry out eco-efficiency improvements.
The financial benefits from adopting cleaner production are not the only incentives
that may encourage firms to undertake audits. It can also be an effective risk management
tool for assessing compliance with environmental legislation, and avoiding the risk
of prosecution and fines arising from potential environmental breaches.
Corporate Social Responsibility (CSR) has been defined
as a concept whereby companies voluntarily integrate social and environmental concerns
in both their business operations and their interaction with their stakeholders.
So far, CSR is being considered voluntary and an aspect of good corporate governance
for both large multinationals and small, locally based businesses. However, there
is pressure from NGOs and Civil Societies to make it mandatory.
The present generation has grown up in the fear and uncertainity of climate change
and global warming, the ozone hole, acid rains and pollution. It is not only well
informed but also concerned about its environment and about the environment we will
leave for the coming generations. It is a generation that is ready to purchase organic
food at higher costs even when chemically grown food is available at relatively
dirt cheap rates.
The present generation also has several tools at its possession which it is using
time and again to highlight issues and corporates that are harming the environment.After
an year long world wide (web)
campaign by Greenpeace, Apple Inc. was forced to place
â€˜A Greener Appleâ€™ on its website.
The pressure was not so much from the activist
than from the fear of losing customers. More and more such campaings are coming
up and the green voices are only getting louder. Thus, mainstreaming environment
in corporate planning not only saves the environment, it is also an excellent business
( This introduction was written by Govind Singh )