Tuesday, 20 August 2013

CSR and the Environment

The Parliament recently passed the Companies Bill, which will now replace the Companies Act of 1956. This new law makes it mandatory for companies to spend 2 percent of their profit on Corporate Social Responsibility (CSR). Of course, this refers only to companies with a net profit of more than Rs 5 crore. It is heartening that even before this law was enacted, companies have been voluntarily spending on CSR projects. While projects related to education, health and women’s empowerment have been hot favourites in the CSR sector, environmental projects have recently been gaining popularity. With CSR now becoming mandatory for corporate biggies, I guess, or at least I hope, there will be even greater commitment towards addressing the social and environmental issues we are facing.

In terms of the environment, I would believe that the first step in exercising responsibility would be for companies to engage in a sincere and serious green audit of themselves. They would need to examine the environmental impact of the goods and services they produce, a review of their production and marketing processes, a thorough assessment of their own ecological footprint. Obviously, the objective of this exercise is not just to know the amount of environmental damage the company is causing (no company is going to put money on the table to dig out its faults), but rather to determine how this damage can be reduced or minimized.

Further, it would definitely be worthwhile for companies to invest part of their CSR funds into eco-friendly technologies. Solar power, for example, would be an area to be explored. Given the fact that all companies consume huge amounts of energy, be it in their production plants or corporate offices, moving over to solar energy would definitely be a step in the right direction. Similarly, in terms of water, creating rainwater harvesting structures or constructing grey-water recycling plants, would be highly beneficial. Investing in good waste management systems is yet another avenue to considered.

And yes, donating CSR funds to meaningful environmental projects is crucial. Often companies approach environmental organizations, asking them to hold some ‘symbolic event’ such as a tree plantation or clean-up drive. Sizable funds are poured into these events that produce no results – except good photographs that can be published in the company’s annual report. It is time to move from the ‘symbolic’ to the ‘significant’, funding projects that significantly impact the environment. These ‘significant projects’ are not ‘events’ that can he conducted in a single afternoon, they need time, but in the end, they make a difference. 

Let's hope we see some 'responsibility' exercised as the companies go about acting on the demands of this new 'Responsibility Act'!  

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