Current environmental issues and how corporations are taking responsibility

to positively impact the environment

Sustainable businesses can generate positive cash flows over a long period of
time maintaining their competitive advantage. For that to happen, it must be
adaptive to changes in the environment, technology, and regulatory landscape.
Corporations have an important role in meeting the Paris Sumit targets while
achieving various Sustainable Development Goals, which have environmental
underpinnings namely – SDG 7,8,9,11,12,13,14 and 15.
Rapid industrialization and fossil fuel-powered development have created
various negative externalities. As demonstrated by IPCC studies, a direct
relation exists between human activity and greenhouse gas emissions, which
has raised the global mean temperature. GHG emissions have led to a plethora
of health issues due to polluting effects. This has caused various climate-
related business risks–physical, operational, and transition risks. Industries like
textile, iron and steel put lots of pressure on water resources, leading to
contamination of water bodies. Durable goods and packaging for FMCG have
caused tonnes of plastics to end up in landfills, degrading soil quality and
groundwater. To meet the consumption demand of the rising population, lands
are cleared rampantly to set up industries, build new cities, roads, etc – causing
a loss of biodiversity. Loss of forest cover means disruption of water and carbon
cycle. The boom of technological goods in the last decade has given birth to e-
waste which poses peculiar challenges in disposal.
It is generally accepted saying that challenging situations teach us the most.
The same applies to businesses faced by the challenges mentioned above that
have made corporations more responsible and forced them to consider the
environment as their stakeholder, with emphasis on the triple bottom line
rather than the traditional bottom line. To understand this better we can see
how industry leaders are setting an example by addressing various
environmental issues. Retail giant Walmart mobilized its logistic network to
provide essentials to workers and affected communities when Hurricane
Katrina hit the US in 2005. It worked extensively in recycling goods and food
waste, electrification of its fleet, and establishing sustainable practices in its
supply chain. Biotechnology company Novozymes prioritized energy and water
efficiency while using carbon disclosure project based on Life cycle Assessment.
Automobile companies – Honda and Toyota were best positioned to sell cars in
a carbon-constrained economy because they had a competitive advantage on a
warming planet as their fleets were fuel efficient and ahead of their rivals in
commercializing new technology. Agri–heavyweight Cargill became McDonald’s
greenest supplier by installing anaerobic reactors at its meat and pork
processing plant. Ambuja Cement was India’s first water-positive company
through regular water audits, dry process technology, rainwater harvesting,
and arresting wastages. Apple’s circular economy policy is worth mentioning.
Patagonia’s innovative way – of making consumers smarter in their purchasing
decisions to decrease the impact of consumerism, its initiative of dedicating 1%
of sales or 10 % of profits – whichever is greater – to the environment way back
in 1986 is an inspirational success story of a small business punching above its
weight.
Corporate Social Responsibility had its precursors in business engaging in
philanthropy and charitable giving. As the idea of ‘corporate citizenship’ began
to gain traction, the social and ethical responsibility of corporations was the
area of focus to give back to society from profits is earned, also making the
consumers more conscious of the activities of these businesses. In India, this is
codified in Section 135 of the Companies Act, 2013 which mandates a company
of net worth of Rs 500 crore or more, a turnover of Rs 1000 crores or more, or
a net profit of 5 crore or more to spend 2% of its average net profit on activities
like – safeguarding environment, eradicating hunger, promoting health,
education, livelihood enhancement, social and gender equality etc. JSW Steel
at Vijayanagar is a perfect example to understand CSR – where it redefined
capitalism by integrating social and environmental challenges into its business
core and created an integrated value chain. Its journey started on barren land,
lacking key inputs and facing transport and logistic challenges. It incorporated
zero waste practice, designed a zero-water discharge setup, and extensive tree
plantation ( causing the local temperature to drop by 5 degrees). Realizing the
societal and economic benefits of investing in community development – it
promoted education through 40 schools, sports by sponsoring sports events,
vocational training ( reducing hiring costs from outside), women empowerment
through micro-entrepreneurship, providing affordable health care,
infrastructure development through road, drainage, toilets, garbage to
electricity initiative and agriculture and livestock health and productivity
initiatives in PPP model.
Corporations nowadays have moved a step ahead from CSR – by working on
shared value, where societal issues are approached from a value perspective.
Value is economic and societal benefits relative to cost. It positively impacts the
environment due to E, S, and G interlinkages.