UNDP to fund Green Rating of industry

UNDP to fund Green Rating of industry

The Government of India (GOI) and UNDP have signed the first sub-programme under the UNDP Environment Programme Support document which was signed in September 1997. Green Rating of Indian industry, the project to be implemented by the Centre for Science and Environment (CSE), will focus on analysis of industry’s environmental performance.

A sum of US $ 250,000 has been sanctioned to CSE for the initial phase of the five year project. The new UNDP Resident Representative in India, Dr. Brenda Gael McSweeney, and the Joint Secretary in the Department if Economic Affairs, Mr. Gajendra Halea, signed the documents in the presence of the visiting UN Under secretary-general and UNDP Associate Administrator, Mr. Rafeeuddin Ahmed, and the Finance Secretary, Mr. Montek Singh Ahluwalia.

The Green Rating of Indian Industry is a programme that analyses the relative performance of Indian industries in incorporating good environmental management principles in their management practices. It will not only document, analyse and rate the relative performance of Indian industries, but more importantly, influence industries to voluntarily espouse good environmental management by providing reputational incentives through a wide dissemination of the rating exercise. Concurrently, the programme will also take up capacity building and awareness creation activities to address interest groups such as environment managers, media, the investing public, financial institutions, etc. by conducting exhibitions, seminars, training programmes, publishing informational newsletters, articles and reports, etc.

The project will address the issue of industrial pollution and urban pollution, waste management and management of environmental standards. The problems of air and water pollution and those arising from unplanned urbanisation are all consequences of rapid economic change. Yet public disclosure of industry's environmental information is not practiced and as a result there is no public participation and debate. Consumers, both in the local and international markets, are also beginning to demand information about the environmental effects of products. Therefore, pollution control efforts must be matched with the promotion of state-of-the-art technologies and management practices for pollution reduction, and recognition of those cases where superior performance standards have been reached.

In India, the primary thrust of pollution control efforts thus far has been on technology induction and improvement in certain target groups of industries through demonstration projects. But little has been achieved to bring about a broad-based incorporation of environmental principles in industries from cradle to grave of a product’s life-cycle. Moreover, information on environmental performance of industries is not available to the public to enable informed decision-making. Although industrial units are currently required to submit exhaustive regular reports to the State Pollution Control Boards, this information has never been made fully public. Such lack of data in the public domain has done little to encourage public participation in environmental affairs.

Certain progressive segments of the industry have already adopted state-of-the-art technologies for pollution reduction, but have never made their performance standards public. As there is currently no method for establishing relative industrial performance, industry leaders are not receiving any recognition for their efforts. On the other hand, industry segments which are lagging in environmental performance do not feel any public pressure to improve. There is currently no system to assess industry performance on environmental management and to empower the civil society by making available this information.

There is, therefore, a widespread feeling that alternative forms of governance should be built which are based on public participation, transparency and market-oriented policies. The Green rating of Indian Industry aims to address these issues.

The project aims to bring about a change in the mindset of the industry, consumers and investors so that the environmental considerations become an integral part of the industrial activity and encourage the Indian corporate sector to make voluntary environmental improvements and disclosure. For such a kind of an initiative to succeed it would take considerable effort, time and financial resources. The impacts of such a programme would be visible after about 4 - 5 years of operation.

The ratings will provide potential investors with information to judge the possible environmental impacts of the production unit they are planning to invest in and the environmental profile of the companies involved. Apart from educating investors, these measures will also be useful to the industrial managers to assess their own environmental performance. It will also enable the regulatory agencies to take note of companies’ performance. The results of the project will also help the government in the formulation of the country’s future industrial plans. In addition, it would encourage the industry to conform to the commitments made by the government as part of the various international agreements.

The primary beneficiaries of this project would be the community ( consumers and investors). Other beneficiaries are industry, government, regulatory agencies, policy makers and the financial institutions. The company specific comparative environmental performance data would be available to the various stakeholders to make informed decisions with regard to their investment and purchase. In addition, the industry would be able to benchmark its performance and become more cost and quality competitive.

India’s rapid economic and industrial growth is causing increasingly severe environmental degradation and pollution problems which have local, regional, and global implications. Although industrial pollution is only one cause of declining water, air and land quality in India, it is an specially potent one because of the toxic nature of many industrial pollutants and their high concentrations in the many industrialised regions of India. A World Bank study by Carter Brandon and Kirsten Hommann puts the health costs of environmental degradation in India at US $ 7 billion a year. Another study shows that as cities start getting wealthy, they concurrently have serious pollution problems.

According to the World Bank study on the Thailand and Indonesian economies, among others, the pollution load of industrialising nations can increase 10-fold if its gross domestic product merely doubles. Therefore there is urgent need to help steer the Indian industry towards sustainable growth and the Green Rating Project aims to fullfill this task.

Maintaining environmental balance with economic growth is a subject of state policy in India. Since 1974, several environmental laws have been enacted and numerous institutions have been set up to implement the objectives of these laws. The Government’s Environmental Action Programme recognises the constraints for the implementation of policy by way of lack of resources, limited public awareness, limited applicability of fiscal instruments, and the absence of a fully developed process for accounting for the intrinsic value of natural resources. Present legislation empowers the Central Pollution Control Board (CPCB) to lay down and maintain ambient air and water standards, to demand information regarding effluent emissions, to shut down polluting activities, and to prevent new discharges of effluent and sewage. However, legislation has had limited success in checking water and air pollution. Environmental pollution in India continues to grow despite all efforts of government agencies.

The rise of public opinion against polluting industries as expressed through Public Interest Litigation (PIL) is a clear indication of the community becoming increasingly aware of the problems due to pollution. Due to the intervention of the courts, a large number of industries have been directed to close their operations. As a result of growing public interest litigation, major battles are going on in courts in Gujarat, Calcutta and New Delhi. It is obvious that if an industry closes down, investors will lose money. Therefore, if investors can be made environmentally conscious, they would be able to exert a powerful pressure on companies. Industries have a reason to fear that public investments in industries could get affected if there is an adverse public opinion against the stocks they have invested in. Green Rating of Indian industry is a step towards increasing industrial responsibility towards the environment.