Environment

Biodiversity and pandemics: Does conserving nature matter to corporates?

While the government’s environmental conservation endeavours are followed closely, the role of industry goes largely unnoticed 

 
By Gurudas Nulkar, Madhura Bedarkar
Published: Wednesday 16 September 2020
Expenditure in biodiversity and nature conservation is likely to show results over many years, with benefits not quite obvious to society. Photo: iStock

Some might opine that conservation of biodiversity — saving the Great Indian Bustard or the carnivorous Drosera plants — is best left to scientists and environmentalists. In the ongoing battle with the novel coronavirus disease (COVID-19), however, experts warned the reduction in biodiversity and degradation of ecosystems was likely to increase risks of new viruses entering human life.

Last year, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) said the human society was in peril because of a rapid decline in natural life-support systems. Peter Daszak of IPBES called the destruction of nature as the ‘perfect storm’ for the spill-over of animal diseases.

The Executive Secretary of the UN Convention on Biological Diversity flagged that unsustainable practices in agriculture, forestry, mining and urban expansion destroyed species habitats, resulting in a loss of biodiversity.

Nevertheless, rising production, emission and waste generation continue to disturb natural systems. Without greater efforts from governments and society, this existential threat to humanity will continue unabated.

While the government’s endeavours towards environmental conservation are closely followed by the media and experts, the role of industry — significant contributors to environmental impacts — goes largely unnoticed.

Therefore, we wanted to understand if the conservation of nature was a major agenda for corporate India. For this, we reviewed the corporate social responsibility (CSR) spending of 100 large organisations.

India’s CSR rules prescribe ten areas for CSR expenditure. Among these ten areas, we examined expenses on Point iv of Schedule VII of the Companies Act, 2013 that states “ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining the quality of soil, air, and water.”

These were the factors that influenced the diversity of life forms and the health of ecosystems on the planet. Our selection of 100 CSR spenders was based on two criteria: They must be listed on the National Stock Exchange and must have spent at least Rs 1 crore on CSR in the financial year of 2017–18.

The sampled companies represented diversified sectors. Their CSR spending was obtained from their annual reports for 2017-18. Furthermore, we spoke to CSR managers and non-profits who participated in CSR programme implementations. 

In 2017-18, the 100 sample companies spent Rs 7,971.22 crore on CSR activities. This represented 79.71 per cent of the total CSR expenditure of that year.

CSR spend on the environment

Source: Authors

Only 31 companies spent Rs 717.62 crore — nine per cent of Rs 7,971.22 crore — on activities related to the natural environment. Sixty-nine companies — including Reliance Industries Ltd, the top CSR spender for that year — spent nothing on these activities.

Furthermore, we split the Rs 717.62 crore into seven sub-themes within ‘environment’. These were biodiversity and nature conservation, water, waste management, energy, Swachh Bharat Abhiyan, industrial sustainability and unspecified.

Of the Rs 717.62 crore, over half (53.59 per cent) was spent on ‘energy’ related activities. These included clean-energy programmes involving solar photovoltaic cells, solar microgrids and windmills, energy-efficient devices, light-emitting diode streetlights, compressed natural gas and liquefied petroleum gas sources.

Break-up of CSR spending on environment

Themes within
‘environment’ category of
Schedule VII CSR spending

CSR spending on each theme

 

Rs (in crores)

Per cent of the total

Energy

384.59

53.59

Biodiversity and nature conservation

186.69

26.02

Swacch Bharat Abhiyan

60.05

8.37

Water

49.86

6.95

Waste management

15.42

2.15

Not specified

12.36

1.72

Industrial sustainability

8.65

1.21

Grand total

717.62

100

Source: Authors

Here, CSR managers can quantify the impacts into savings in carbon emissions. ‘Biodiversity and nature conservation’ came next, receiving 26.02 per cent of funds. From this expenditure, however, over 50 per cent was spent on plantations and garden improvements.

Swachh Bharat Abhiyan received 8.37 per cent of the funds. CSR managers had little hesitation in allotting funds to a government programme.

Water-related activities attracted 6.95 per cent of the funds. Water holds an emotional appeal and conservation programs have a positive effect on the company’s image. Expenditure on ‘waste management’ was 2.15 per cent. This theme has evident and quantifiable outcomes and supports incomes of the informal workforce engaged in it.

From the interviews, we identified five major questions that influence CSR programmes:

  • Can the programme improve the company image?
  • Is the programme topic sensitive in society?
  • Can the impacts of the programme be measured within a year?
  • Is the technology proven?
  • Are the beneficiaries of the programme our potential or existing customers?

These questions — which emerged from discussions — clearly suggest why nature conservation is not a preferred CSR expenditure.

Within the ‘environment’ category — other than ‘biodiversity and nature conservation’ — all other themes had a short-term, measurable social impact. Clean energy, water conservation, waste management and Swachh Bharat Abhiyan have visible benefits and contribute to improving the natural environment.

On the other hand, expenditure in biodiversity and nature conservation was likely to show results over many years, with benefits not quite obvious to society. Thus, even within this theme, tree plantation, park and garden improvement were favoured, attracting over half of the Rs 186.69 crore.

CSR managers were concerned that impacts of the expenses made on biodiversity, species conservation, ecosystem improvement or river rejuvenation may take decades to show up and quantification will pose challenges.

Moreover, conservation techniques were often debated by experts. These factors contributed to making biodiversity and nature conservation less attractive for CSR managers.

CSR is a strategic tool for companies to improve their images, hence they, understandably, favour quantifiable programs with visible impacts. Unfortunately, biodiversity and nature conservation are weak in both these areas.

To make matters worse, we noticed a poor understanding of biodiversity and its role in the economy among CSR managers. Degraded natural capital, resource price volatility, risks of water scarcity or environmental impacts do not connect clearly with business goals.

Based on our findings, we identified three immediate measures to encourage higher participation from companies in nature conservation. The elephant in the room is the lack of awareness of what biodiversity and nature conservation means to businesses.

Furthermore, most companies lacked capabilities to assess conservation programs. The first step, then, is to build a strong awareness among CSR managers.

Industry federations, including Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, National Association of Software and Service Companies and others, can drive these efforts.

They successfully promoted quality and productivity programs in the Indian industry in the past. Collaborating with academic and research institutions, they can undertake promotion of ecological awareness.

The second measure is that of policy enablers and legal support. A challenge for industry today is the confounding way in which different departments operate.

The Union Ministry of Corporate Affairs frames CSR rules while the Union Ministry of Environment, Forest and Climate Change (MoEF&CC) is responsible for nature conservation. A special cell within the MoEF&CC, with powers to negotiate with relevant ministries and departments, will help direct CSR expenditure towards nature conservation.

The third measure is prioritising nature conservation programmes and certifying agencies that operate within this domain. Nature conservation needs a strong scientific foundation and is important for implementing agencies to have access to landscape-specific expertise.

There is a history of incorrectly handled conservation and restoration programmes in India. Plantations of non-native trees or constructing permanent structures in watersheds often resulted in more harm than good.

An example is the plantation of non-native Gliricidia trees, carried out for increasing tree cover on hillslopes. These trees profusely regenerated, leading to monocultures of Glyricidia.

This competed with the regeneration of native trees. Conservation programs certified by partner institutions of MoEF&CC can make this expenditure more favourable to industries. As businesses benefit directly from natural resources, it is critical for them to support national efforts in nature conservation.

Considering the state of the Indian environment, it is imperative that efforts must be stepped up by all stakeholders. Left to the government alone, it would be nothing less than a herculean task. Any further delay will adversely affect the planet’s life-sustaining capacity and increase the risks of life-threatening organisms that are better adapted to the changing planet than us.

Views expressed are the authors’ own and don’t necessarily reflect those of  Down To Earth.

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