Setting Out

since the release of the environmental rating of the automobile sector by the Centre for Science and Environment several people have told us that it must have taken some courage to rate the auto sector, which is headed by some of the most powerful industrial stalwarts like Rahul Bajaj and Ratan Tata.

We had never thought on these lines. On the contrary, we found the industry extremely docile and cooperative.

Consider this. First, the automobile industry shared data with us that they don't even share with the various agencies of the government. We asked companies to send us the specific emissions of their vehicles and produce emission certificates from the Automotive Research Association of India (arai) for each vehicle that we were rating. This data, we know, is never shared. Certainly, the arai refuses to part with this information even to the Central Pollution Control Board (cpcb) considering it private and confidential. We have always remarked that this is private information collected in public interest. But the public is kept in the dark.

Secondly, Tata Engineering (telco), with which our Right to Clean Air Campaign has had a running battle for the past four years, participated willingly and with interest in our environmental performance rating exercise. Our relationship with telco has not been very genteel. Not only has telco taken potshots at us, we have also not hesitated to give it back. The problem has been telco's interest in diesel based vehicular technology and our efforts to reduce the use of diesel to clean up the air of Delhi.

It is clear to us that though the civil society is still very weak on pollution related issues, this situation will inevitably change as noxious fumes grow around us. In many cases, the interaction between the civil society and industry will be confrontational as they have often been across the world. But, as this exercise shows, there can also be spaces where the interaction can be more cooperative.

In fact, we believe our effort will provide critical help to the industry to develop an environmental vision and strategy. The detail with which we have studied the automobile industry will help industry owners make much better decisions in the future. This is the first comprehensive green audit of the sector. Our experience with the green rating of the pulp and paper sector was that our rating helped the company management to get a perspective, perhaps for the first time, of just what is needed. And because we place high standards -- measuring the current status with the global best practice -- it makes ceos map the road ahead.

Our key finding was that while with economic liberalisation the world's leading companies have invested in India, these global giants -- the best in the world -- are not bringing in their most emission efficient products. In other words, the country is not getting the advantage of receiving environmentally friendly technologies. We found that multinational companies, scored higher marks, but were only marginally better than their Indian counterparts.

But is industry to blame? Or is the government, which is extremely callous and indeed oppositional to the environmental problem, more responsible? At the meeting to release the rating, Aditya Vij, managing director, General Motors India Limited, said his company was prepared to manufacture Euro iii emission compliant vehicles and even better. "But we need cleaner and compatible fuel," he said. Indeed, we found that many Indian auto manufacturers have vehicles capable of meeting much better emission norms, even today. But clean fuel and stricter emission norms remain a real handicap. Given the shenanigans of this near monopolistic, government owned oil industry, which is controlled by ministers who care two hoots about the environment, getting clean fuel is a near impossible task. They will move only when there is a hammer from the courts.

In fact, we have often wondered if we should also rate the oil industry. But then we gave up the idea, simply because they would have no reputational incentive or disincentive. And we are sure there will be a total lack of cooperation from them. In fact, what is amazing is that the private sector, for all its ills, remains more accountable to public pressure in a democracy. On the other hand, the public sector, supported by politicians and bureaucrats with all their vested interest, has no public accountability. Our experience is that markets and democracy can function, but not monopolistic industry, even if controlled by democratically elected netas .

Our rating is based on a complete life cycle analysis -- from sourcing of raw materials, to production plants, product and finally its disposal. We found that designing a life cycle study had to be dynamic -- different for different industrial sectors. In the pulp and paper sector, the maximum weightage was on the production facility, simply because it had the greatest environmental impact. However, in the auto sector we reworked the criteria to give emphasis on the product, the vehicle, as over 80 per cent of the primary energy consumption and most emissions are at this stage. But we failed on one count: to give adequate importance to the issue of disposal of the product. As Saifuddin Soz, former Union minister for environment and forests and a member of our Project Advisory Panel, pointed out, it is becoming more and more necessary to force industry to take responsibility for the disposal of the product, not just its manufacture. In Europe, for instance, auto manufacturers will soon have to take back the vehicle for disposal. This pushes them to use more and more recyclable components.

Time seems to have stopped for Indian manufacturers as far as the design of the vehicle engine, the basic driver, was concerned. We found engine technology is at least a decade old. Even the catalytic converters used to control emissions are not built to fit the engine, but are add-on features, which we found were mostly unsuitable. Interestingly, the environmental imperative has pushed industry. It is the infamous polluting two-stroke two-wheeler, which has seen the maximum development to make it emission efficient.

It is clear from our analysis that, on the whole, individual companies will be reluctant to invest in advanced technologies, without any incentive. Today, the situation is that companies have a vested interest in maintaining technological status quo , simply because they have already spent money on incrementally upgrading their product. In other words, they have gone from producing Euro I to Euro II vehicles for instance. But the need in India, which is choking with pollution and has a large number of dirty vehicles already on the roads, is to bring in the world's best technology, today. Not even tomorrow. When a company moves from Euro ii diesel to compressed natural gas (cng) vehicles, it can leapfrog emissions to reach Euro iv norms, in the case of particulate emissions. But investment in cng makes sense only for technological laggards and so there is enormous resistance to this change.

The option would be to give financial incentives to those companies which go beyond existing norms. Essentially, reward the emission efficient. Tax the emission inefficient. This is absolutely vital for India if it wants to deal with its growing pollution. And we are definitely one of the most polluted countries in the world today. But for mandarins of the finance ministry and the finance minister in particular, environment is of little concern. And they do not hesitate to say so publicly.

We can rate the various sectors of the Indian industry and maybe even make some change. But will there be any reputational advantage of rating our netas . Ultimately, and sadly, it is our brown netas and sahibs who are the biggest culprits when it comes to the slow murder of the Indian people.

-- Anil Agarwal and Sunita Narain

Hide and see
In this two-year exercise, the project achieved 90 per cent participation from the 29 automobile companies in the country. Still three companies chose to be non-transparent and refused to participate in the exercise. The three companies, which chose to continue being outcasts from transparency are Bajaj Tempo Ltd, Yamaha Escorts Motor Ltd. and Swaraj Mazda Ltd. Naturally these companies hit at the bottom of the pile with zero marks.

Despite repeated efforts from the grp unit to contact these companies for information, they never responded. Towards the end of the rating exercise they informed cse that they would not be participating. Maybe they had something to hide. But now they will have to explain to the civil society their absence.

It remains to be seen whether these companies choose to sit out and pay with their company's image when the next ratings take place. Time will also tell whether these ratings will be a wake-up call for the auto industry to pull up its socks. grp's previous experience with rating the paper and pulp industry has shown that the ratings have worked (see box: turning over a new leaf on p24).

grp will always remain a platform for various interest groups to come together . It is finally the civil society, which has to give its mandate and sensitise all sections of the society about environmental issues confronting the country. "I believe the best is yet to come," said Manmohan Singh, former Union finance minister and chairperson of the Project Advisory Panel (pap), Green Rating Project (grp). "The process needs to be taken forward," he added.

Key elements
• Assessment is based on life-cycle analysis

• Sector-specific approach to environmental performance rating

• Forces the image-conscious and stock market-sensitive companies to become trendsetters because they have the wherewithal to improve

• Focuses on a company's future environmental commitments rather than dwell on its past

• Develops data after its voluntary disclosure by companies

• Involves the public in this exercise as green inspectors who survey the plants on grp's behalf

• Ensures transparency through an institutional mechanism consisting of independent expert panels

• Evaluates primary data given by companies and secondary data provided by green inspectors and other independent agencies

• Assesses non-participating companies on the basis of secondary data

• Takes into account the companies' feedback before making the findings public

• Recognises outstanding performers and exposes errant companies

• Involves public dissemination of rating results

The scoring scale
Weightages are assigned to various stages in the product's life cycle depending upon their impact on the environment. Consequently, even as the broader criteria remain constant for all sectors, weightages may vary substantially. While maximum importance was given to the raw material procurement and production phase in the pulp and paper industry, product-use stage got top priority when the automobile sector was rated.

The scoring scale is based on grp's principle of pushing companies to perform much better than what the prevalent regulations stipulate. Whenever a regulatory standard exists, it is, therefore, fixed as the lowest benchmark. In the absence of this, the Indian average performance is the yardstick to measure minimum eligibility.

To arrive at a comparative scale, the average of all companies is calculated and given 2 marks. The best performer gets 8 and those below average are given 0. A linear scale is used between 2 and 8. The most eco-friendly companies are awarded 8 marks out of 10 because even in their case there is room for improvement.

Mileage for all
grp has laid down the path for coherent corporate environmental governance. Even as investors associate a company's poor green record with financial risks and liabilities, a high rating increases its goodwill brightening business prospects. Public interest litigation (pil) has also helped heighten public consciousness in this regard.

The age-old concept of there being an inverse relationship between environment and economy has become obsolete. In the previous rating, it was seen that a mill with a sound environmental management programme had a 60 per cent chance of earning profits and vice-versa.

The project includes an environmental awareness programme with special emphasis on management graduates, environmental managers and government officials. Training workshops covering media, regulatory authorities, industry and financial institutions are a part of this programme.

It also plans to push for the introduction of fiscal and environmental policies to support sustainable development.

Nuts and bolts
In a change from the run of the mill ratings, grp decided to take a look at, what many would call the meat of the issue -- the engine inside the vehicle. It broadly segmented the issues concerning the engine into three, vehicle and engine design, pollution control technology and actual emissions. Vehicle and engine design was given the highest weightages out of the three. The pollution control technology being used in the vehicles was given the second weightage while the actual emissions from the vehicle got the least weightage. The weights were assigned keeping in mind that engine design has a direct correlation with emissions and is most crucial, whereas the pollution control technology is functional, in India, only for the initial life of the vehicle and becomes irrelevant in the later period of the vehicles running life. The emission values in the test reports too are of comparatively little significance as they are more a mirage than reality for the consumer under real driving conditions.

Driving to the grave
The last stage in the life cycle of a vehicle, that of final disposal and recycling of parts of the vehicle, was also brought under the ambit of the rating process. While driving the car causes considerable impact on the environment, disposing or recycling of the aged vehicles poses its own threat. Therefore grp looked at what, metaphorically may be called, the graveyard of the vehicle. The following initiatives taken by companies for environmentally sound disposal or recycling of the product were considered: whether vehicle design incorporated ideas of recycling, the extent to which the vehicle could be recycled and the development of product recycling manual.

Besides what happens at the factory floor, on road and at disposal sites, the grp also took a close look at the going-on inside the boardrooms and how integral environmental initiatives are to company operations. grp was looking for leaders in the industry, who, besides driving their companies to profits also believe in riding the stagecoach of environmental consciousness.

Another way of assessing corporate endeavours towards environmental management was to see how the companies has tried to create an informed consumer. grp decided to assess and incorporate in its parameters a measure of how seriously the companies took consumer sensitisation.

This complete life cycle analysis ensured that the rating became a robust model.

The inside story
The number of polluting processes inside the automobile assembly plant is limited. Painting, machining, finishing, incineration and the effluent treatment plant itself are the major sources of pollution. Energy is a major input, which causes pollution in the upstream processes involving generator, boiler, power plant and the like. Consumption of oil, lubricants, coolants and solvents contributes to the toxic and non-biodegradable pollutants from the plant.

In absolute terms the production facility of the automobile sector creates far less pollution than those of other manufacturing industries (pulp and paper, iron and steel and textiles). But grp found that its overall environmental performance leaves much to be desired.

Consumption efficiency
• Automakers draw 91. 3 per cent of their energy requirements from polluting fossil fuels such as coal, diesel and furnace oil. Only 8.7 per cent of the total energy consumed comes from liquefied petroleum gas (lpg), compressed natural gas (cng), propane and other such green fuels (see chart: Pollution at the plant ). Of the 26 concerns rated, 14 were seen using 100 per cent polluting fossil fuels. But encouraging trends have emerged over the past three years, pointing to a concerted effort by 75 per cent of the companies to cut their specific energy consumption.

• The industry is not a major consumer of water and, therefore, does not seem to be addressing this problem seriously enough. Despite this, 62.5 per cent companies have decreased their specific water consumption. The concept of sourcing water through harvesting has not yet arrived in the sector across the globe. India is no exception. As much as 75 per cent of the total requirement is met from ground water.

Process efficiency
• Auto companies use a substantial portion of new metals in their casting operations (see chart: Pollution at the plant). Currently, only about 25 per cent of the metals used in foundry and aluminium dye-casting are recycled. Most manufacturers use 20-30 per cent scrap. This trend has been constant for the past three years.

• Non-biodegradable metal working fluids and solvents are very commonly used in the assembly plant. Currently, few companies are recycling their lubricants. Tri-chloro-ethane, a solvent used for finishing operations and facility clean-up, is a known carcinogen and has been banned in the West. It is, however, commonly used in India. Another environmental problem is the disposal of grinding sludge. Most of the companies claim to be either storing this waste or selling it without any further follow-up.• Though almost all the companies use components with heavy metal plating, monitoring of heavy metals in wastewater is not practiced in India. Heavy metals such as lead, tin and chromium are indispensable parts of a vehicle but extremely toxic. Prolonged exposure of workers to these can seriously affect their health.

• The global paint industry is in the midst of a green revolution, but this makeover seems to have been overlooked by the Indian auto sector. Vehicle manufacturers continue to use solvent and heavy metal-based paints instead of water-based ones. The paint transfer efficiency of the Indian companies is less than 50 per cent, which means more than half the paints consumed go waste.

That the majority of them do not monitor volatile organic compound (voc) emissions is a cause for concern. voc is a major pollutant which can, however, be recycled for energy generation. This, too, is not being done. Manual painting, perceived to enhance the look of the vehicle, is still in vogue in the industry. Close to 50 per cent of the companies have recorded a surge in the use of paints and primers during the past three years.

All at sea
A square peg in a round hole would succinctly sum up the state of wastewater management at the automobile production plants. Even as most of the wastewater discharged is chemical in nature, nearly all companies have installed biological treatment systems wherein sewage waste is mixed with process waste and then treated. The result: chemical dosing in the biological plant, causing acidification of wastewater. Regulatory standards in this context have been found to be lax and irrational. Segregation of wastewater in terms of level of pollution is also not undertaken.

The average efficiency of effluent treatment plants (etps) is 48 per cent. This indicates that the difference between pre-treatment and post-treatment wastewater quality is 48 per cent. The automobile sector has achieved a score of 39.7 per cent in water pollution.

Air travails
If not monitored, incinerators can pose a problem themselves. No company has kept tabs on incinerator emissions as they seem content merely with its installation.

Several plants also have high capacity diesel generator sets. Here, too, no emission control devices are in place. The automobile industry has managed 30 per cent -- a dismal score -- in this category.

Solid mismanagement
The absence of coherent norms to handle solid and hazardous wastes has resulted in the sector getting 25.5 per cent. Of the total solid waste generated, 48.30 per cent is land-filled, 2.3 per cent reused or recycled, 13.9 per cent is sold, 27 per cent is sold but end-use not kept track of and 8.5 per cent is incinerated.

Forty-six per cent of hazardous waste is land-filled, 10 per cent sold to contractors without any follow-up, while approximately 45 per cent is incinerated and emissions not monitored.

Greening the plant
Despite delegating most of the polluting processes to vendors, the overall environmental performance of the automobile companies at the production plant has been far from satisfactory. Remedial action -- both short-term and long-term -- is the need of the hour.

• Vehicle manufacturers should switch over to clean gaseous fuels such as lpg and cng to meet their energy needs at the plant.

• With vast tracts of land at their disposal, rainwater harvesting can be a viable alternative to cater to their process water requirements.

• Recycling can help reduce the use of new metals in their casting operations.

• Automakers should opt for water-based paints instead of solvent and metal-based ones.

• It is not enough for companies to instal pollution control devices such as incinerators. A close watch must also be kept on the emission caused by them.

• Authorities should lay down proper norms for solid and hazardous waste disposal, clearly stressing the importance of reuse and recycling.

On the whole, the automobile sector needs to look afresh at the issue. Prevention rather than cure can help nip production-stage pollution in the bud.

Room at the top
Given that mncs had a head start in terms of capital, technology, reach and number of years in the industry, they were expected to emerge runaway winners. But the best they could manage was 3 leaves -- a category in which Indian companies also figured and which was well below the highest honour of 5 leaves. The global players use India as a dumping destination for obsolete technology. This may well be the reason for their average performance.

"Our company is different. We are selling the same car in India as well as Europe," contends I K Lee, director, production, Daewoo Motors India. But figures speak otherwise (see graph: Double standards ).

Some automakers feel hamstrung by local constraints. The latest Euro iii and Euro iv models of internal combustion engines cannot be launched in India because of the low-grade fuel sold in the country, they aver. Another green option -- hybrid vehicles -- known to be successful in developed markets like Japan, is unlikely to attract the Indian consumer owing to the product's exorbitant prices.

When queried on the outdated technology issue, Aditya Vij, managing director, General Motors India Limited, says, "We manufacture cars strictly in conformity with Indian norms." In his answer lies the crux of the problem: India's less stringent environmental regulations that give mnc auto giants a licence to pollute.

Green direction
Across the boardrooms of the world, environmental discipline is increasingly dictating the business practices for companies. Companies scrutinise the environmental track record of their suppliers, vendors and partner associations during negotiations. This is because the image of a company is its greatest asset and a good standing among the stakeholders. Financial institutions, investors and shareholders have all become environment conscious. For example, multinational companies doing well financially are also those that are investing in environmentally sound practices. Unfortunately, this trend is yet to take roots in India.

Last word
grp is an exercise to sensitise the environmental aspects of the automobile industry. Change must begin at the top. Sadly, the Union government's ways have been such that it is seen to protect the interests of the industry, not the people. Being a seller's market, consumers in India have accepted their fate. With a friendly government and an indifferent consumer, the industry is making a killing.

In many ways the issue is also about a complacent mindset. At the release function, csir director-general R A Mashelkar had an interesting anecdote to narrate. Relaxing on a lazy afternoon beside a swimming pool in Indonesia, he saw a few children playing. When a dried leaf fell into the water, a child went out of his way to catch it. Instead of throwing the leaf outside the pool, the child went to the dustbin a few yards away. Just to make sure that the pool and its environment was kept clean. Now can we say that about Indians?