Sustainability of Business in the Context of Environmental Management

Kamlesh Pritwani

• Publisher: CRC Press
• Year: 2019
• eBook ISBN: 9780429603181
• Edition: 1
• Topic: Economics
• Subtopic: Business General
• Index: Economics

Sustainability of Business in the Context of Environmental Management studies the newly emerged concept of 'sustainable business' in view of the growing Indian economy. It explores the current corporate social responsibility practices adopted with special reference to environmental management in Indian companies.
The book compares the legal, financial, economic, industrial, and social behavioural aspects. Out of these aspects, industrial aspect in view of 'environmental management' is discussed in detail. It also explores the forces driving the changing relationship between business and society and corporate leadership reacting to environmental challenges. Finally, the book restates the concept of increasing profitability through societal development.

Please note: This volume is Co-published with The Energy and Resources Institute Press, New Delhi. Taylor & Francis does not sell or distribute the Hardback in India, Pakistan, Nepal, Bhutan, Bangladesh and Sri Lanka

1

Introduction

“Meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.”

The World Commission on Environment and Development

Our Common Future (1997)

PROLOGUE

Environmental and social considerations have always deeply influenced the business environment of India. In 1991 India adopted the policy of free market economy, globalization, and liberalization. With greater emphasis on free market economy, more business freedom to the Indian corporate sector, and the entry of foreign corporate, new vistas in ‘global business market’ got opened. The proliferation of ideas and business strategy models at the global level depicts the need for expanding the socio-environmental canvas of the Indian business. The Finance Commission of India mandates examination of the need for improving the quality of public expenditure to obtain better outcomes. It has laid emphasis on the essential need to manage ecology, environment, and climate change.

Despite the ecology getting vulnerable and the environment gradually degrading, India is set to build more industries, power plants, homes, roads, ports, and airports. At this stage of growing industrial development, India urgently needs to monitor the impact on the environment because of this urge to grow. To follow environmental governance, Indian businesses need to understand the emerging environmental issues, new legislations, and latest technological developments in the prevention and control of industrial pollution as part of their CESR programme.

“Rio Earth Summit was a signal to the World that after decades of pitting environmental quality against economic growth, policy makers are finally becoming aware of the crucial and potentially possible link between the two” (Serageldin 1993). Development cannot be sustained without ‘economic growth’ and economic growth cannot be sustained without ‘industrial development’. In this development chain, industrial development causes environmental degradation. Hence, sustainable development, business growth, and environmental management are the major interwoven issues of the 21st century in the globalized business era.

India’s annual per capita income is significantly low and is growing very gradually. As per the Multidimensional Poverty Index (MPI), India is at the seventh position from the bottom. In 2010, one-third of the world’s 1.2 billion extreme poor lived in India alone. China, despite much progress in poverty reduction, ranked second, and was home to about 13% of the global extreme poor (United Nations 2014). Eradicating poverty in India requires every person having access to safe drinking water, sanitation, housing, nutrition, health, and education. According to the MPI, out of its 1.2 billion-plus population, India is home to over 340 million destitute people and is the second poorest country in South Asia after war-torn Afghanistan. As per The Global MPI, 2014, 640 million poor people live in India (40% of the world’s poor), mostly in rural areas, meaning an individual is deprived in one-third or more of the 10 indicators (malnutrition, child deaths, defecating in the open). Hence, this is the contradictory stage of development for developing countries like India; whether the move is towards industrial growth or towards eradication of extreme poverty. On the other side, industrial environmental concerns need to be confronted upfront. Over the past 50 years, India’s forest cover has declined steadily. Transportation, fuel, and water scarcity are now the major constraints for industrial development. To sustain a consensus for open trade, India has to find a way to advance values, fairness, and justification. India also has to trace out avenues to achieve robust growth, while protecting the environment and reversing climate change. India’s energy consumption increased by 7.1% in 2014, reaching an all-time high and accounting for 34.7% of the global consumption increment in 2014. Scientists theorize that an increase in greenhouse gases (GHGs) will translate into increased temperatures around the globe, which would result in many disastrous environmental effects. In fact, the Intergovernmental Panel on Climate Change (IPCC) predicts in its Fourth Assessment Report released in 2007 that during the 21st century, global average temperatures are expected to rise by between 2.0 and 11.5 degrees Fahrenheit. The Fifth Assessment Report, which was finalized in 2014, provides an update of knowledge related to climate change including information on:

● Socio-economic aspects of climate change and its implications for sustainable development

● More detailed regional information

● More precise considerations of risk, economics, and ethics

● Stabilization of GHG concentrations

Therefore, local impacts of industrial production processes and remedial concerns are more sensitive issues in this global competitive industrial era (IPCC’s Fifth Assessment Report 2014).

Figure 1.1 depicts the stages of development during different ages. The concept of Green Business Development is a gradual shift from Stone Age, Golden Age, Space Age, and industrial Garbage Age and finally towards Green Age. Industrial garbage will destroy this beautiful planet, by leaving bad impacts on health of nature and human being. Consequently, future generation will have to move back again towards Stone Age. The only way for survival is to follow the path of sustainable business development and transition from industrial Garbage Age towards Green Age.

Challenges for Businesses

In today’s global competitive business environment, a business has to face numerous challenges to survive. Some of these challenges are as follows:

● Market challenges

■ Lack of purchasing power

■ Technological incompetence

■ Information unevenness and knowledge gaps

■ Insufficient R&D and know-how transfer

● Organizational challenges

■ Cultural, attitudinal, and social factors

■ Organizational structures and incentives

■ Lack of admittance to low-cost finance

● Challenges of economic instruments

■ Lack of understanding

■ Legal system leaning to command and control

■ Recent industrial structures

● Challenges of clean technology adoption

■ Information draught

■ Low threat-bearing capacities

■ Operational difficulties

■ Financial constraints

Figure 1.1 Stages of development

Significance

As a concept, business sustainability has gained momentum at the strategic, managerial and operational levels, which has enabled companies to further widen their business horizons. Besides enhancing sustainability reporting, an in-depth analysis of key stakeholders and material usage issues should be carried out on a priority basis. This will help businesses in aligning business practices with social needs and expectations, which is not only vital for the smooth operation and growth of businesses but also important for the country’s growth.

The Indian corporate sector can act as a catalyst for enhancing environmental management practices. This will definitely accelerate the pace of globalization of trade and commerce. Due to the stiff competition in the global market and to have competitive edge over their rivals, businesses have to excel at each activity level and minimize operational costs. Development pattern has undergone drastic changes in the recent era. Each country does indulge in conspicuous consumption and capricious use of scarce resources. Cost of ecological degradation is more than 6% of the gross domestic product (GDP). Most parts in India are still underdeveloped due to wrong priorities in view of loss of forest cover, rising arms and ammunition expenditure, depletion of natural resources, pollution, and worsening unemployment rate. These all disturbances also are due to negligence of Indian values and cultural heritage.

This book is a humble effort towards social justice, as remarkable economic growth is impossible without social justice. It aims to guide researchers in understanding the dimensions of different corporate environmental concerns. It also will throw light on the path of government initiatives regarding industrial concerns, as strong implementation is more important than formulation of policies. The attitude to environment management in India is lackadaisical, seen in a narrow context of ‘pollution control’ and is largely left to the relevant administrative departments to manage it only through legislative enforcement. The ownership of environmental concerns is, therefore, not widely held by several important stakeholders such as the community, public and private institutions. As the role of bureaucracy is also not satisfactory; therefore, sustainable development becomes an uphill task and social justice remains neglected. Market economies focus on earning more money and also stress on making unjustified profits. The desire to earn profits through social justice remains neglected.

GROWING INDIAN ECONOMY

Indian economy is likely to grow in the range of 5.4%–5.9% in 2014–15 overcoming the 5% GDP growth of the past two years. This recovery is remarkable despite the global recession. Although agricultural output declined by 0.2%, the manufacturing sector grew more than double, from 3.2% in 2008/09 to 8.9% in 2009/10 and recovery was marked in the growth rate of gross fixed capital formation. It is mainly due to the effectiveness of the Indian Government’s policy responses. Table 1.1 depicts the realistic scenario of the ‘key indicators’ of the Indian economy during the last 10 years. As per Table 1.1, the growth rate declined to 12.89% and 15.06% in 2008/09 and 2009/10, respectively, as compared to 2007/08. Rise in national income is a good indicator of growing Indian economy. After improvement in 2010/11 and 2011/12, growth rate again declined in 2012/13 and 2013/14, respectively by 12.25% and 12.28%. The industrial production data revealed shortfall in 2007/08 and a major decline ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Preface
• Acknowledgements
• Table of Contents
• 1. Introduction
• 2. Literature Review
• 3. Research Methodology
• 4. Sustainable Business
• 5. Environmental Management
• 6. Indian Contexts: A Case of Indian Companies
• 7. Results and Discussion
• 8. Recommendations
• 9. Inferences
• References
• Index
• About the Author