The Need For Action
Environmental degradation in India is maturing from internecine battles over large dams and endless, mind-numbing debate on subjects like population pressure that extract or denude natural resources faster than they can be replaced. Fortunately, Steering Business Toward Sustainability addresses a problem that has both greater relevance and rather better chances of finding solutions that of industrial activity, which is responsible for most of the adverse impact on ecosystems worldwide.
Recent years have seen increasing activism in the Third World, not least in India, where there has been an articulate and determined opposition to industrial projects which affected people see as livelihood-threatening.
These trends have already had substantial impact on business. Start-ups like the Thapar-Du Pont nylon 6,6 project and the Sterlite copper smelter have had to be shifted from their original locations and in some cases even abandoned altogether. The new activism hasnt spared running industries, either, with several dyestuffs units in Gujarat facing closure orders in 1995, for instance.
But despite the bitter battles that have been fought so far in and out of courts, the convergence between environmentalists and industrialists neednt always be confrontational. For instance, a Delhi-based NGO, the Centre for Science and Environment, has just launched a new project which will identify companies which are making an effort to become environmentally friendly, and those that are not, a venture which has received positive and encouraging response from Industry, according to CSE.
Steering Business Toward Sustainability not only suggests what companies can do to do well in such a green audit, but also indicates what they can do to stay ahead without compromising commercial considerations. The book is a series of readings by conservationists, businessmen, policy makers and academics, and edited by well-known physicist and systems theorist Fritjof Capra and business executive-ecologist Gunter Pauli.
It is aimed primarily at businessmen and corporate executives, who appreciate the environment-friendly strategic vision it suggests. But most will be even more interested in specific tactical responses to environmental issues that could threaten their organisations image or functioning.
The readings start by describing how individuals and corporates can make themselves aware of the environmental issues that could affect their organisations and their jobs. What follows is a logical consequence: assessing corporate environmental performance. A company that is successful at doing this might want to set its goals still higher, and the final piece in the section suggests that develop- ping, and acting upon, the interplay between media, business and the public can be even more rewarding.
The trouble with most environmentally-motivated corporate initiatives is that there is often very little tangible short- to medium-term payoff. A green image doesnt necessarily beef up the bottom line; in fact, serious environmental commitment may only be within the financial reach of the worlds largest corporations.
There is a clear role for the State here, since governments have at their disposal two powerful tools for nudging business in greener directions. Governments can draft policies and laws that mandate ecologically friendly behaviour by companies. They can also set up several types of fiscal incentives to encourage companies to institute and sustain such behaviour. Tax policies across the world may not exactly be ecologically disastrous, but few unequivocally discourage businesses from using energy inefficiently or from using virgin materials instead of recycled ones, for instance.
And as large institutional stake-holders get increasingly ready to flex their financial muscle, the fiduciary responsibility of these stake-holders can also play a role in encouraging green corporate behaviour. Several institutional investors, especially pensions funds, dislike investing in businesses that are environmentally unsound. In markets where such ethical investors are important, polluting companies, for instance. will find that one source of capital has dried up.
If this sounds too good to be true, quite a lot of it is, alas. It will be years before many industries develop local linkages and infrastructure to function in any green manner. Others, like chemicals and paper await technological breakthroughs before they can pay heed to environmental issues without becoming utterly uncompetitive. And managers are unlikely to pretend the compelling consideration of short-term profitability doesnt exist.
Nevertheless, industry has the financial muscle and the long-term vested interest to make critical changes in bettering the environment. Nor can any improvement take place in isolation from industry. The book is worth reading for emphasising this, and because it helps bring reason back into a movement that has been hijacked by illiberal and unreasonable thought too often in the past.
Steering Business Toward Sustainability Edited by Fritjof Capra and Gunther Pauli United Nations University Press Pages: 191; Price: Rs. 195