How green are Indian companies?

How green are Indian companies?

Recently Newsweek released its fourth 2012 Green Ranking of the 500 largest publicly-traded companies in the world in collaboration with environmental research providers Trucost and Sustainalytics, They assessed each company’s environmental impact, environmental management, and transparency.  One key aspect of this rating is inclusion of Environmental Disclosure where each company’s transparency with regard to its environmental performance is assessed.

Table: Newsweek Green Ranking 2012: Indian Companies

Rank	Company	Industry Sector	Industry Rank	Impact	Management	Disclosure	Green Score	2011 Green Score	Rank Change
2	Wipro	Information Technology & Services	1	70.2	100	88.3	85.4	73.4	33
11	Tata Consultancy Services	Information Technology & Services	4	74.9	81.8	98.9	80.4	79.1	-4
19	Infosys	Information Technology & Services	5	64.6	88.5	99.9	78.9	77.3	-11
96	Larsen & Toubro	Industrial Goods	4	70.2	59.8	95.1	68	N/A	N/A
282	Tata Motors	Vehicles & Components	18	54.7	68.5	25	57.9	53.3	44
342	Reliance Industries	Energy	11	46.7	57.4	73.3	54.2	47.9	70
344	State Bank of India	Financials	86	88.5	31.4	0	54	55.9	-66
346	HDFC Bank	Financials	87	71.2	37.8	48.1	53.9	N/A	N/A
386	ONGC	Energy	15	47.6	55	55.9	51.8	50.8	-16
419	Tata Steel	Materials	20	30.4	69.1	43.8	49.1	53	-88
476	ICICI Bank	Financials	95	54.2	37.8	0	41.4	N/A	N/A
497	NTPC	Utilities	18	0	48.7	46.7	26.5	22.1	1
499	Coal India	Energy	34	0	35.6	45.6	20.6	17.9	0

Of the 500 worlds top companies in the list 13 were from India. Out of which 7 are from manufacturing operations (who have intensive environmental impact) and 6 are from services area like IT and finance. Wipro comes second in the overall ranking among the world’s top 500 companies and other two IT giants TCS and Infosys are within top 20. But surprisingly world’s first company to be carbon positive, water positive and zero solid waste discharge ITC, does not feature in the list. 

It is easier for service companies to get a good score simply because they do not have any visible air, water or solid discharge and hence almost no environmental compliance to adhere to. At best their impacts can be secondary as in consumption of electricity that comes from a power plant or consumption of paper and other such resources whose manufacturing affects environment not the use. Although they can play a big role in dictating terms on suppliers for stringent environmental compliance and that element is taken care in most other reporting under sustainability criteria. While for manufacturing industries one of the major components of environmental impact and management is very visible in the form of contaminated air, water and solid waste discharge whose control is not only non productive but also very expansive.

One also has to bear in mind that these rankings are based on secondary reports that are generated by the companies with their choice of environmental consulting firms. As anyone working in environmental field knows too well, the weak monitoring and reporting system – a mere submission of monthly report- and myriads of small consulting firms who will do anything to retain their clients, makes it all too obvious how much of the reporting can be taken on the face values. 

But that’s not all. This ranking and all other such reporting do not take in account the inherent and irreversible environmental damage caused by the lobbying!  

The recent exposes like Coalgate, Arvind Kejriwal’s allegation on how Reliance twists the policies (It’s been insinuated since the time Dhirubhai Ambani was heading the group) in its favour and the Nira Radia tapes that shattered the myth around Tata being the considerably honest company, this ranking becomes questionable. 

Take example of the Coalgate scam and the irreversible and long lasting environmental damage the indiscriminate mining operation have caused. Since no matter how much a corporation scores on environmental compliance or environmental management it will be reporting on an alternate scenario -where there should have been no mining in the first place- if it lobbied for favorable environmental policies or evaded some policy restriction by contributing funds to the ruling political parties. Take also for example the case of Posco. No matter how much environmental compliance they do in the future, just by overriding provisions of National Environmental Protection Act 1984 and Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 they will do irreversible harm.  

Before Nira Radia tapes became public there wasn't much evidence of corporate lobbying being done in India by professionals the way it is done in USA. The companies did the liaison by themselves mostly the owner of the business directly contacting someone in the party to have favourable policies in lieu of fat party fund. Donations to political parties for various favour is done without impunity in both developed and developing countries. While in some cases corporations in developed countries influence policies in their home country as well as in other developing countries where they either have outsourced the manufacturing or have independent operations. Association for Democratic Reforms an NGO has compiled a report Analysis of Donations of Political Parties on the donation received by political parties in India. It shows that predominantly all mining and associated services industries are the one who have paid huge sum of money as donation to all major political parties. 

While in USA there exist political and business ethics research organization like the Center forPolitical Accountability and University of Pennsylvania’s Zicklin Center forBusiness Ethics Research who study and report political transparency or private companies there is no such report available on the Indian companies.

Even if it is merely 2 % Its good news that there are companies in India who care for their image and participate in such reporting. It would be unfair to brush all companies in one stroke as practicing crony capitalism but Indian companies have long way to go to emulate ethical practices of their counterparts in Europe and elsewhere.