Corporate Houses and Environment

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 green 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 green 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 legal 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 straightaway 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 uncertainty 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 a Greener Apple on its website.

The pressure was not so much from the activist than from the fear of losing customers. More and more such campaigns 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 strategy.

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Govind Singh

Dr. Govind Singh holds a Ph.D. in environmental studies and is currently associate professor of environmental studies at O.P. Jindal Global University, Delhi NCR. He can be reached at

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