Corporate social responsibility and environment

ABSTRACT

Corporate social responsibility is the buzzing words in every sphere of the corporate sector. Corporate social responsibility has its ethos in the   business self regulation, which is considered as integrated and inseparable part of the business models. The Bhopal gas tragedy case has left the unending issue of the compensation to the victims, which is still an unanswerable question before the judiciary and the corporate sector regarding the social responsibility. Further the episode of Vedanta, Singoor and the measure mega projects again has to answer the damage to the environment, protection of the indigenous people and other similar social responsibilities are also annexed with the environment and the corporate social responsibility.  The basic aim or object of the corporate social responsibility is to give the responsibility on the companies to give positive impact on environment, consumers, employees, communities ,etc through their business. Corporate social responsibility gives the responsibility to the corporate world to focus on the public interest by not harm the community through its product and increase or help in the development of community or the society.    

This paper will focus on the corporate responsibility on environment, how the corporate world helps in the environment protection and reducing the environment pollution and legal application for the protection of environment from the corporate world, which is the inherent part of the Brundtland Report of 1987, which has emphasized on the ‘sustainable development’ principle.

Further this paper will explore the various mediums of harmonious remedial measure to solve the entangled puzzle of the safe and healthy environment and the corporate social responsibility. It is the high time for the business hubs to think above than the profits in fact to take care of the environment. This paper will provide the legal and ethical measures to curb the emerging environmental hassles by the panacea of the corporate social responsibility.

Key words: Corporate social responsibility, environment, environment protection, India and legal application.

INTRODUCTION

The term corporate prima facie resembles or synonymous to the earning economic gains and to concentrate on the on the profits of the corporate giants. But with the advent of corporate social responsibility, the corporate chambers are more inclined towards the social and charitable causes towards the human need, human values and human rights. When these terms have been attached to it the right to healthy environment has automatically comes into picture, which has been enshrined in the fundamental rights guaranteed by the Constitution of India under Article -21.

The concept of the corporate social responsibility is not new one but the great philosophers like Kautilya and other Pre- Christian scholars have laid down the environment friendly ethical doctrines of business.

DEFINITION OF CORPORATE SOCIAL RESPONSIBILITY:

Corporate social responsibility (CSR) is about understanding your business impact on the wider world and considering how you can use this impact in a positive way. CSR can also be good for your bottom line. Almost everyone has different opinion or different thinking about the corporate social responsibility and every one give their definitions on corporate social responsibility and some of them are as follow:

1. The European Commission's[1] definition of CSR as:

"A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a   voluntary basis."

2. Anonymous [2]respondent to an Accountancy Ireland survey defined csr as:

Doing the right thing even no one is looking.

3.IndianNGOs.com,[3] 2003 defined CSR  as:

 “Corporate social responsibility is a business 4 Stakeholder process wherein the institution and the Social individuals within are sensitive and careful Environmental about the direct and indirect effect of their Economic work on internal and external communities nature and the outside world.”

4.Andersen,[4] 2003 define corporate social responsibility as:

CSR  is extending the immediate Social interest from oneself to include one’s fellow Environmental citizens and the society one is living in and is a part of today, acting with respect for the future generation and nature

5.Lea,[5] 2002 define  CSR as ;

“ CSE is about businesses and other organizations going beyond the legal Stakeholder obligations to manage the impact they have Social on the environment and society. In Environmental particular, this could include how organizations interact with their employees ,suppliers, customers and the communities in which they operate, as well as the extent in which they protect the environment.”

6.Pinney,[6] 2001 Corporate social responsibility (CSR) as:

“CSR  can most simply be defined as a set of management practices that ensure the company minimizes the negative impacts of its operations on society while maximizing its positive impacts they attempt to protect the environment”

Despite of these writers many more  writers give their definition on corporate social responsibility and after studied all the definitions according to me corporate social responsibility means: 

Social Responsibility and  Accountability of Corporate world towards the society and  community for the protection of environment in public interest.

Lets take an example for to understand the concept of corporate social responsibility:

Suppose there is a company called “XYZ” which makes leather bags and it was situated in AGRA.

Towards the Corporate Social Responsibility XYZ Company gives the proper wages to their employees, make preventions before throwing out the raw material outside , for the development of the area gives free education to the children, for the fight against HIV-AIDS educate the people about this and done the work in the public interest.

By citing the example of XYZ Company I am trying to give the example of Corporate Social Responsibility upon the corporate world which they have to fulfill.

CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL IMPACTS:

Now days when corporate world grow and almost cover all of the world economy and help in the progress of all the nations than in this situation corporate world has the highly responsible for the protection of environment and to reduce the environment pollution .To protect the environment and to reduce the environmental pollution companies can do many things and it helps them in increasing their profits also and by the small things also the companies can increase their profits like:

(a)Switch off the light and equipments when not working.

(b)Reduce the waste.

(c)Use recycle waste.

(d)Reduce use of water.

(e)Reduce the amount of paper.

If the corporate world makes the Corporate Social Responsibility as the bottom line in their work or in their projects than it will help the corporate world in the following ways:

Please your customers! Customers are becoming increasingly demanding. As awareness of the global scale of environmental problems grows, they are looking for companies to present them with purchasing decisions which can be taken without compromising the future.

Reduce your costs! Wasted energy, wasted water, raw materials that are paid for and then thrown away, potential environmental accidents leading to fines - all these are costing your business money. You want to optimise your efficiency - and it can be a lot more creative and about improving quality than you would ever think.

Manage Risk! If companies are not initially thought about the environment and their product harm the environment than it will engage the company into the environment legislation , to save themselves if company initially take the Corporate Social Responsibility as bootom line of their bussiness than by this they can manage the risk.

The  International Chamber of Commerce (ICC)[7], Word Business Council for sustainable development (wbcsd) and Business Charter for sustainable Development identified sixteen key principles for Environmental management.

1. Corporate priority.

2. Integrated management.

3. Process improvement.

4. Employee education.

5. Prior assessment.

6. Produces and services.

7. Customer advice.

8. Facilities and operations.

9. Research.

10. Precautionary approach.

11. Contractors and suppliers.

12. Emergency preparedness.

13. Transfer of technology.

14. Contribution to the common effort.

15. Openness to concerns.

16. Compliance and reporting.

CORPORATE SOCIAL RESPONSIBILITY AND LAW:

Corporate history provides many examples of company’s pursing profit without regard to relevant CSR matters, including:

1. Nike factories in Asia were criticized for extremely poor working conditions and for employing young children[8]

2. Nestle received criticism in relation to its’ practices including unethical marketing and utilising a supply chain that uses child bonded labour;

3. James Hardie has been criticised regarding its failure to provide adequate compensation to people affected by asbestos related diseases resulting from the company’s building products;

4. Ford Pinto scandal whereby Ford, although aware of a fatal design flaw, decided it would be cheaper to pay off possible law suits with regard to resulting deaths instead of recalling and fixing the affected cars;[9]

5. Shell’s joint venture with the Nigerian government where, in 1995, Ken Saro Wiwa and eight others were executed largely due to leading a non violent campaign against environmental damage associated with the operations of multinational oil companies, including Shell and British Petroleum. Shell was criticised for not using its power to intercede with regard to the executions. and;[10]

6. Enron manipulated electricity in order to maximize  profits at the expense of Californian citizens.

Historically, a narrow view of corporate responsibility has been enforced whereby a corporation’s responsibility extends only to maximizing profits. In Dodge v Ford Motor Co [11]the Michigan Supreme Court upheld the shareholders’ claim that a corporation is carried on primarily for the profit of the shareholders and therefore the powers of the directors are to be exercised on this basis. The decision of the directors not to declare a dividend to facilitate the expansion of the business and increase the number of employees was considered to be inappropriate. However, subsequent cases have taken a more flexible approach. Decisions made to benefit consumers, the community, employees and the environment have been considered as not breaching directors’ duties where shareholders’ interests have not been completely disregarded and emphasis placed on the corporation’s future.[12]

In Australia, the traditional view is that case law and corporations legislation does not extend a directors’ obligation to consider stakeholders other than shareholders (other than in respect of creditors when a company is or is likely to become insolvent)[13].Acting in the best interest of the company has generally been interpreted by the courts as acting in the best interest of shareholders. However, laws relating to labour conditions, consumer protection and community matters such as environmental protection apply to corporations and therefore any decision by directors in breach of these requirements may potentially lead to a breach of directors’ duties.[14],[15]

Recently the Parliamentary Joint Committee (PJC) on Corporations and Financial Services Inquiry into Corporate Responsibility and Triple Bottom Line Reporting (Committee) considered whether the legal framework, viz. the Corporations Act, should be amended to legally oblige directors to consider broader interests. On 22 June 2006, the PJC released their findings, pre-eminent amongst their findings is the recommendation that there be no amendment to the Corporations Act to require directors to consider the public interest, instead the PJC recommends a voluntary self regulatory approach. During the review, the PJC noted, inter alia:

(A) the Corporations Act permits directors to have regard to the interests of broader stakeholders;[16]

(B) many companies are voluntarily integrating the consideration of broader community interests into their core business strategies;

(C) the importance of balancing the long term view of a company’s viability and profitability with the focus on short term returns;

(D) by international standards, Australia lags in implementing and reporting on CSR;

(E) CSR initiatives assist (i) maintain and build reputation and (ii) recruit and retain high quality staff;

(F) institutional investors have a strong influence on corporate behaviour and are more likely to take alonger view;

(G) support for the adoption of the UN Principles for Responsible Investment;

(H) overall reporting should remain voluntary as mandatory reporting would lead to a ‘tick the box’mentality;and

(I) a voluntary standardised reporting framework should be developed and advocated support of theGlobal Reporting Initiative.

In INDIA also the companies follow the Corporate Social Responsibility and if they are not follw it than liable under environment act . In other words, if any company harm or pollute the environment than liable under indian law and have to pay damages.

Indian law has adopted the principle of precautionary principle, inter generation equity,use and conserve natural resourse,polluter pays principle,etc.

TEN MOST SOCIALLY RESPONSIBLE COUNTRIES IN THE WORLD:

According to Fortune Magazine[17] the follwing are the top ten socially responsible country in the whole world :

1. Statoil - Fortune's pick for the most socially responsible company in the world is this Oslo-based oil and gas giant which is 67% owned by the Norwegian government. While the company is beginning to expand into alternative energy, the bulk of their profits come from oil exploration, refining and distribution (Statoil owns and operates over 2000 gas stations worldwide). While the company certainly places a high premium on corporate social responsibility (not surprising for a company based in forward-thinking Scandinavia), they have had their share of blemishes. Most recently, in February 2011, Statoil faced environmental charges levied by Alberta, Canada for improperly diverting water from their oil sands operations.

2. Grupo Ferrovial - A Spanish conglomerate involved in transportation and urban infrastructure services, Ferrovial is a member of both the Dow Jones Sustainability and FTSE4good investment indices (each comprised of global companies that meet high CSR standards). They've also created an Environmental Performance Index, the first of its kind, to track the company's global environmental performance in real time.

3. Walt Disney Company - The house that Mickey built is the only US-based company in the top 5. Some of their more interesting initiatives include: running Disneyland trains on biodiesel made with cooking oil from the resort's hotels, establishing a worldwide conservation fund and instituting a "green standard" for all employees and cast members.

4. Edison - Founded in 1884, this Milan-based firm is Europe's oldest energy company. Despite its age, Edison is one of the leading renewable energy providers in Europe with 68 hydroelectric facilities, 29 wind farms, and one solar facility currently online (17% of the company's installed capacity is in renewable and is their fastest growing segment).

5. ENI - Another Milan-based energy company, specializing in oil, gas and petrochemicals. In 2010, ENI was namedthe best company in the world for the online communication of its corporate social responsibility initiatives in the annual survey conducted by Lundquist which analyzed the 91 companies listed in the Dow Jones Sustainability Index.

6. Whole Foods Market - The supermarket chain that brought organic products to the mainstream American consumer. Given Whole Foods' longstanding commitment to CSR issues, it's not a surprise to see it make this list.

7. Total - French oil and gas conglomerate. This one is a head scratcher. Despite efforts to appear socially responsible on their website, Total is a habitual offender of CSR issues including: the environment, human rights and corruption. Hard to agree with this choice.

8. (tie) Hochtief - Germany's largest construction company and a leader in the green real estate space, Hochtief is also a member of the Dow Jones Sustainability index.

8. (tie) Nestle - One of the largest food manufacturers in the world, in 2009 Nestle instituted "The Cocoa Plan" in an effort to encourage sustainability, labor rights and fair trade in the cocoa industry. But, like some of the other larger companies on this list, Nestle has been frequently criticized for their questionable business practices and alleged greenwashing.

10. (tie) Next Era Energy - Formerly known as Florida Power & Light, Nextera rebranded themselves in 2009 in an effort to disassociate themselves from a regional sounding name (they operate is 28 US states and Canada) and to highlight their aggressive move into renewable energy. NEE is the largest owner and operator of wind power farms in the US and second only to Iberdrola in the world (44% of NEE's total energy output comes from wind power).

Despite of these top ten countries another conmpanies like Tata, Kelloges, etc are socially responsible companies in the world and adopted corporate social responsibility in their work.

SUGGESTIONS FOR THE DEVELOPMENT OF THE CORPORATE SOCIAL RESPONSIBILITY:

Every company in the world have to adopt the corporate social responsibility as their bottom line to protect the environment because the environment protection issue are on the peak and if every company adopted the policy than it will help the countries to protect the environment for this the companies and government can adopt the following steps:

(1) Make the csr as bottom line in their project.

(2) Take compensation from the company which pollutes the environment.

(3) Government makes policies for the protection of environment.

(4) Adopt Csr is compulsory for the companies.

(5) Companies voluntarily take the steps toprotect the environment.

(6) Ngo”s helps the company to adopt CSR.

CONCLUSION:

Corporate Social Responsibility means the responsibilities on the companies for the development of the environment and for the community welfare and for the betterment of the society. CSR is highly responsible for the protection of the environment and to reduce the environment pollutant.

If companies engages the csr  in their policies than they can protect the environment because by this they initially done the steps to protect the environment and to take the prevention steps to control the environment pollution and the companies can start the steps to develop the area and educate the people.

In short, every company have to employ Corporate Social Responsibility in their business project.