Corporate Social Responsibility and Climate Change

By: By Raimi L, Akosile O K and Adebanwa A
CSR can be an effective tool for mitigating climate change. It is the duty of corporations to redress climate change through environment-friendly manufacturing techniques, adoption of a green, transparent policy and environmental disclosure.
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Climate change is an environmental challenge confronting all countries across the globe in varying degrees of intensity. Across Africa, Asia, North and South America and Europe, the adverse effects of climate change have manifested over the years as ozone layer depletion, continental global warming, shower of acid rain, extended fires, melting ice, rise in sea level and other extreme events which calls for urgent actions at national and international levels.

The developed countries with large industrial plants and manufacturing companies have experienced the threats of climate change, and their policy-makers are working tirelessly at mitigating the adverse effects of solid waste contamination and carbon/gas emission from industrial plants on people, plants and planet. However, unfortunately it is the developing countries that are most vulnerable to climate change and associated environmental disasters as they cannot do much to mitigate these threats because of the domestic challenges of poverty, bad governance, terrorism, hunger, diseases and institutional corruption.

A number of affirmative actions and recommendations that had been formulated at national and international level to combat climate change include eco-vigilance, conservation of the flora and fauna, zero-tolerance for gas flaring, adoption of environment friendly manufacturing techniques, socially responsible investment (SRI) and carbon emission reporting and disclosures. Despite all these laudable policies, environmental abuses engendered by industrial plants and manufacturing companies continue unabated.

A self-regulating approach that makes manufacturing organisations socially responsible and responsive to environmental issues in their operating countries/communities can be expedient in climate change mitigation, and strengthen existing governmental policies on climate change. Measures taken as part of corporate social responsibility (CSR) as a voluntary obligation for enhancing the social, economic and environmental wellness of society could actually reflect the CSR in its true spirit.

India and CSR legislation

In India, the Ministry of Corporate Affairs notified Section 135 and Schedule VII of the Companies Act 2013 as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014 with effect from April 1, 2014, under which every company, whether private or public, with a net worth of INR 500 crore or a turnover of INR 1,000 crore or net profit of INR 5 crore, needs to spend at least 2 per cent of its average net profit for the immediately preceding three financial years on CSR activities. The CSR activities should not be undertaken in the normal course of business and must be with respect to any of the activities mentioned in Schedule VII of the 2013 Act which enumerates activities related to poverty alleviation, education, healthcare, environmental sustainability, among others. Contribution to any political party is not considered to be a CSR activity.

This has seen many huge corporate entities plunge overnight into CSR activities, a lot of them dubious. Where projects related to environmental sustainability go, it is all the more so. There are paper manufacturing companies which plant trees in acres of land. But these plantations are monoculture projects, and although increasing the green cover, can hardly qualify as environmentally sustainable. Similarly, we have many companies financing the planting of trees like eucalyptus or jatropha in monoculture plantations. Neither of these plants are environmentally sound investments, with eucalyptus particularly prone to cause groundwater levels to plunge to dangerously low levels while interfering with the food cycle and food security in forest environments.

This is not to say that there are no environmental initiatives to date. Bharat Petroleum’s Project Boond, which involves the setting of rainwater harvesters in rural India, Tata Power’s energy conservation and ‘Act for Mahseer’ conservation initiative for Mahseer fish, Larsen and Toubro’s initiative to set up check dams in Palghar, Maharashtra, and Mahindra and Mahindra’s Project Hariyali to provide a green cover in Araku Valley have won them laurels. However, each CSR initiative ought to be matched with sustainable business practices.

CSR in India tends to focus on what is done with profits after they are made. On the other hand, sustainability is about factoring the social and environmental impacts of conducting business (Price Water House Coopers, 2013).

For instance, Vedanta thought nothing about publicising its efforts at promoting education in the Niyamgiri belt, even as it sought to uproot the Dongria Kondhs from their homes, and lay waste the forests of Niyamgiri to mine bauxite for aluminium. Coca Cola’s soft drinks plant shamelessly exploited the groundwater in Plachimada, Kerala, to manufacture its colas, while advertising its CSR initiatives for the surrounding community. Coca Cola’s rainwater harvesting initiatives to recharge overexploited groundwater aquifers at Kaladehra in Rajasthan too, were found to be contentious by an independent audit by TERI (Karnani, 2012). Similarly, for all its CSR commitments, Unilever India did not think twice, when dumping toxic mercury at its scrap yard from where it found its way into the waters in Kodaikanal in the Nilgiris where it was manufacturing thermometers (Greenpeace, 2001).

From a policy angle, it is not enough to formulate a CSR policy or development programme. The implementation process must address three dimensions of sustainability—economic, social and environmental, often called the sustainable development triangle.

When we talk of the climate change mitigation agenda, it must be realised that it is in the interest of manufacturing companies to support efforts at curbing environmental risks and threats posed to humans, animals, plants and the ecosystem. Unfriendly manufacturing practices have triggered atmospheric poisoning and water contamination causing avoidable death. Environmentalists are hence pressurising industry to comply with enabling laws and regulatory requirements in their host countries, and reduce emissions of greenhouse gases (GHGs) (Ortar, 2014). But more than activists, it is the consumers and host communities that can play a pivotal role in ensuring compliance of laws by errant industrial groups. It will also ensure that there are genuine CSR initiatives, rather than mere green washing.

Climate change mitigation: need for a green policy

An attempt to refocus CSR as a mitigation tool for climate change has led to the postulation of the green theory. Green thinking raises an alarm on the side effects of economic growth on climate change. According to Eckersley (2010), green theory is a novel thinking which articulates the concern for people’s rights, justice, citizenship, good governance and environment. In a sequel to the emergence of green theory, nuances such as green marketing, green products, green policies, green consumerism emerged to convey green lifestyles as well as warning corporations against remaining unresponsive to climate change and environmental degradation which have precipitated crises across the globe (Wagner 2003). Similarly, environmentalists and ecologists have advocated green thinking for industrialists and manufacturing companies to be accommodated in the processes of production, so as to have a sustainable positive impact on the ‘consumer and the environment in the long run’ (Szuster, 2008).

Green theory is very relevant to oil producing regions in Nigeria, where multinational oil companies continuously flare gases with little regard for the environment, humans, animals, flora and fauna (Amaeshi et al; 2006; George,
et. al., 2012).

In support of the view above, Grant (2007) states that the threat of climate change as well as the need for ecosystem sustainability has necessitated a green policy to avert the spill over effects of industrial gases. It is reported that corporations are voluntarily adopting a green policy in the production and designing of environment friendly and green compliant products (Szuster, 2008).

In pursuance of global green policy to manage climate change, the 7th, 8th and 9th principles in the UN Global Compact need to be enforced. The 7th principle made it mandatory for all corporations across the globe to adopt a precautionary approach to environmental management; the 8th principle requires corporations to promote greater environmental responsibility; and the 9th principle expects corporations to deploy environment-friendly technologies in their operations (UN Global Compact, 2014:6). A green policy directed at climate change is a self-regulating action designed by political actors to mitigate the threat that climate change poses to the world (Grant, 2007).

There are several examples of green policies across the globe. In Canada, mining corporations have adopted green policies, to make the environment better for all (Hart, 2012). Green policies are enforced in the mining industry through codes of conduct—the C-300 Bill; operation, maintenance and surveillance (OMS) manual; and. the effluent regulations (ibid). In Nigeria, the MTN telecommunications company has adopted a green policy on wastes, by producing biodegradable recharge cards as well as encouraging MTN e-charge, which is an electronic technique of loading airtime directly to phones and is designed to replace paper recharge cards.

Furthermore, the developed economies have developed an environmental reporting standard called ‘the Green Reporting Index’; as social and environmental indicators for measuring corporations’ green-compliance and responsiveness to environmental issues (Hart, 2012). Even in the United States, the public thinking about CSR has changed, with investors now insisting on knowing the extent of a firm’s carbon emissions to the atmosphere as per the Carbon Disclosure Project (Stanny, 2008).

In the developing world, it is difficult to monitor CSR through legislation. When legislation related to CSR was sought to be introduced in Nigeria, the Parliament did not approve of the same. However, voluntary action related to declaring the carbon footprint of corporate entities is slowly becoming the norm. Under the Indo-German Biodiversity Programme, which is an initiative of the Indian government and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), several major Indian companies owing allegiance to the Confederation of Indian Industry (CII) have signed the India Business & Biodiversity Initiative (IBBI) Declaration, committing themselves to valuation of biodiversity and ecosystem services, as also the impact of business decisions on biodiversity. Each of the 16 companies who have signed the declaration so far have pledged themselves to make a public disclosure of the progress made on the areas mentioned in the Declaration (businessbiodiversity.in; indo-germanbiodiversity.com).

Endnote

Pressure groups and environmentalists can easily leverage CSR as a tool for mitigating the threats posed by climate change through a self-regulating green policy followed by the corporate sector. While, instrumental CSR is desirable, policy makers should be wary of superficial CSR programmes/projects branded as green because they may often be designed for commercial benefits, with little concern for the public or the environment, amounting to what is termed greenwashing (Greer and Bruno, 1996; Hart, 2012; Sweeney, 2009). Secondly, it is best to be wary of over-publicised green postures by manufacturing outfits that use the media to impress the public on being environmentally responsible (Szuster, 2008) to enhance patronage for their products
(Grant, 2007).

In truth, CSR needs to be refocused as a tool for climate change mitigation through adoption of green policies involving responsible production techniques, and disclosures of carbon footprint. Green theory can be a relevant perspective for embedding the climate change discourse in contemporary times.

References

Amaeshi K. M., B. C. Adi, C. Ogbechie and O. O. Amao. 2006. Corporate Social Responsibility in Nigeria: Western mimicry or indigenous influences? Journal of Corporate Citizenship, 24: 83-99.

Eckersley R. 2010. Green Theory. In Dunne, T., Kurki, M. and S.Smith, International Relations Theories Disciplines and Diversity. New York: Oxford University Press.

George O. J., O. L. Kuye and U. C. Onokala. 2012. Corporate Social responsibility (CSI) a catalyst to the Niger Delta Crisis: The case of Nigerian oil Multinational Companies Versus the militants of Niger Delta Region of Nigeria.  Journal of management Research, 4 (2):1-11.

Grant J. 2007. The Green Marketing Manifesto. England: Wiley & Son.

Greer J. and K. Bruno. 1996. Greenwash: The Reality Behind Corporate Environmentalism. Penang, Malaysia: Third World Network. pp28-30.

http://www.greenpeace.org.uk/media/press-releases/unilever-admits-to-dumping-of-mercury-in-indian-tourist-town.

Hart R. 2012. Green Mining or Green Washing? Corporate Social Responsibility and the Mining Sector in Canada. Mining Watch Canada.

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Ortar L. 2014. Climate Change and CSR: Can Voluntarism Pay? The College of law and Business,Israel,Konrad-Adenauer-stiftung,Isreal,pp.1-28.

Pricewaterhouse Coopers Handbook on Corporate Social Responsibility in India, Pwc/CII, 2013, https://www.pwc.in/assets/pdfs/publications/2013/handbook-on-corporate-social-responsibility-in-india.pdf.

Karnani A. 2012. Corporate Social Responsibility does not avert the tragedy of the Commons, -Case Study: Coca Cola India, Working Paper, Ross School of Business, University of Michigan. Available at: https://deepblue.lib.umich.edu/bitstream/handle/2027.42/90509/1173?sequence=1.

Stanny E. and K. Ely. 2008. Corporate environmental disclosures about the effects of climate change. Corporate Social Responsibility and Environmental Management, 15(6): 338-348.

Sweeney L. 2009. A Study of Current Practice of Corporate Social Responsibility (CSR) and an Examination of the Relationship between CSR and Financial Performance Using Structural Equation Modeling (SEM).Doctoral Thesis. Dublin Institute of Technology, Dublin.

Szuster D. 2008. Green Marketing -A Case Study Of British Airways. Dissertation On Culture, Communication And Globalisation, Aalborg University.

UN Global Compact. 2014. Corporate Sustainability in The World Economy. UN Global Compact Office, United Nations, New York. Available at: http://www.unglobalcompact.org/docs/news_events/8.1/GC_brochure_FINAL.pdf.

Wagner A. S. 2003. Understanding Green Consumer Behaviour: A Qualitative Cognitive Approach, Routledge.

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