Of corporate responsibility and climate change

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Of corporate responsibility and climate change

Sunday, 17 March 2019 | Gautam Mukherjee

Of corporate responsibility and climate change

Balance

Author :  Namrata Rana and  Utkarsh Majmudar

Publisher : Westland, Rs 799

This book uses a combination of theory and real-life case studies of marketers to analyse the state of businesses in the midst of climate change and technological disruption. It shows how some have managed to find the balance, says Gautam Mukherjee

This book, Balance, seeks to tell the story via a tour of the main markers. There are “externalities and their implications” meaning the impact of a given commercial or industrial activity on others. The “Social return on investment (SROI)” is a formula  for measuring the social profits against the investments made, controversial as it may be in terms of accounting principles adopted. But it does set up an index for comparing scores. One of the most interesting explorations in this book are on the “frictionless” uses of Blockchain technology. It could, say the authors, “support green supply chains, measuring water use, emissions management,” and can support the “sharing economy”. Cryptocurrencies are already legal tender in Japan.

There is an urgent need to understand climate change better. The World Economic Forum projects that by 2020, which is almost upon us, “about $5.7 trillion will need to be invested annually in green infrastructure”. This is definitely a tall order, given that most of the investment has to come from a concept called “climate financing,” a kind of World Bank for climate change mitigation by adopting projects and programmes. Again, there are controversies of what kind of project qualifies. There is a need for instruments like “Green bonds” and “Catastrophe bonds” and qualification on the basis of “impact testing”. The whole caboodle is commonsensically very difficult to get started and flourishing, as the tangible short term returns are negligible. However, the importance of doing something, almost anything, cannot be denied.

There are UN developed Sustainable Development goals (SDGs), some 17 in number, and extremely macroeconomic in scale. They list, for example, “Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all” and “End poverty in all its forms everywhere”. And then there is corporate social responsibility to do things in an ecologically friendly way that makes for sustainability. Broad Corporate Social Responsibility (CSR) norms are increasingly mandatory, but is this enforced around the country and the globe? India only mandates 2 per cent of turnover spend on CSR, but a survey of its top 166 companies in 2016-17 clocked just 1.88 per cent. And about 45 per cent of this was used on health and education, while the list includes poverty alleviation, water, energy, capacity building and many other heads. Still, the CSR spend has risen from about 1 per cent before it was made mandatory.

Of course, this CSR approach is going to stay largely cosmetic, given the size of the problem and its overhang that threatens to engulf us all. However, to get the largest economies to take on extra here-and-now costs, which are far from negligible, to fuel a cleaner, more sustainable future, is a difficult task.

Much of the clean-up therefore has to be undertaken at Government expense, as in the sewage processing stations and other effluent management infrastructure being developed in the Namami Gange projects. However, these are showing good results in short order, after years of trying to tell municipalities and industry to do something about it failed. The book lays out case studies taken from a number of companies in different fields such as Kirloskar Motors, Toyota Motor Corporation, Yes Bank, Ambuja  Cement, ITC and Dr Reddy’s.

It reviews the challenges faced by various and diverse sectors such as cement, automobiles, oil and gas, telecom, mining and metals, banking and financial services, information technology, towards not only controlling and sanitising effluents and emissions, but even toxic electronic waste. Laws play their part, as does enforcement or lack of it. India has quite a few laws in this space — Waste Management Laws, Environmental Protection Acts, Bio-Medical Waste Management and Handling Rules, Batteries Management and Handling Rules, Hazardous Wastes Management and Handling and Transboundary Movement Rules, Plastic Waste Management and Handling Rules, E-waste Management and Handling Rules, Solid Waste Management Rules.

Data is another great frontier that has got its European law even as India is starting to enact its own. The General Data Protection Regulation (GDPR) is applied in the EU and the European Economic Area (EEA) towards data protection and privacy for individuals. How privacy of personal data impacts sustainable development, however, is unclear. The authors of this book are Namrata Rana, who works in the area of strategy and brands at Futurescape and is visiting faculty at IIM Udaipur, and Utkarsh Majmudar, who teaches at leading business schools and writes on sustainability and business responsibility. This volume covers a lot of ground, but the authors are probably most comfortable with the growth and improvement matrix for a responsible corporate sector, where both authors display the confidence of domain knowledge.

Many of the global initiatives described, however, have failed to touch many lives, even as they have underscored that efforts are indeed underway. But will the answer to a cleaner world eventually come from inexpensive new technology adoption that renders older, polluting ways obsolete, and too expensive to carry on with? The history of the industrial revolution, now apparently in its 4th wave, as well as the socio-political advancements we have seen over the last century, seem to suggest as much.

The reviewer is an entrepreneur and former corporate executive

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