Submission date postponed for green audits

India was the first country in the world to make environmental audits mandatory, hoping it would encourage industry to shift from pollution control to process efficiency

By Nitya Jacob
Published: Saturday 04 July 2015

MandatoryINDIA is the first country to make environmental auditing compulsory. Countries such as the UK and the Netherlands have encouraged their industries to conduct audits since the mid-1980s, but it's not mandatory.

The ministry for environment and forests (MEF) has decided to postpone from May 15 to September 30 the date for industries to submit their first environmental audit. This corresponds to the date by which companies are expected to file annual reports.

The MEF environmental audit report requires companies to provide details of water, raw materials and energy sources used by them, and the products and the waste they generated. MEF hopes that such meticulous stock-taking will encourage industry to shift the emphasis of environmental management from pollution control to process efficiency.
Hardening stand Indian industry still voices misgivings on several counts regarding environmental auditing. The Union cabinet cleared on March 18 an amendment to the Companies Act, making it mandatory for companies to include environmental audit funding in their annual reports. However, industry is opposed to such public disclosure and is trying its best to block the amendment. Says Kumar, "We do not believe that the Indian public is mature enough to understand the implications of such data. It could lead to unnecessary litigation and harassment for companies in the guise of public interest litigation." But this is contrary to the situation in Europe where some companies publish environmental audits on their own to placate an increasingly environment-conscious public.Countries such as the UK and the Netherlands have encouraged their industries to conduct audits since the mid-1980s, but it's not mandatory.

Expressing an industry worry about the confidentiality of corporate secrets, Uma Garud, joint secretary in the Federation of Indian Chambers of Commerce and Industry, says, "The Indian industry is unwilling to publish details of raw materials used because it could reveal corporate secrets concerning raw materials and processes."

Surinder Kapur, managing director of Sona Steering Systems Pvt Ltd in New Delhi, has a solution to this impasse. He suggests, "The government, for the time being, should restrict access to environment audit data to the State Pollution Control Board (SPCB) concerned and to an expert agency that could analyse the data -- say, for example the National Productivity Council in Delhi or the National Environmental Engineering Research Institute in Pune."

Industry is also apprehensive that the environmental audit data it supplies could be used by pollution control boards for prosecution at some future date. But a senior MEF official assures prosecution is not on the agenda, and adds, "Information about a company's effluents is already being submitted to the SPCB concerned. If the prescribed limits are exceeded, the board can prosecute the company. So the submission of audit results will not provide the board with additional opportunity to prosecute the company."

Another hitch that will be encountered is the lack of technically qualified environmental auditors. There are no more than three or four agencies in India that have the expertise to conduct environmental audits. MEF envisage solving this problem by setting up a committee of experts along the lines of the Institute of Chartered Accountants of India. Furthermore, companies below a size that is yet to be decided may be allowed to conduct in-house audits. But larger companies will have to hire approved environmental auditors through the technical qualifications of such environmental auditors is still to be decided.

One year has passed since the government made environmental auditing compulsory, but the industry has done precious little and most industrialists still do not have a clue about the requirements of environmental auditing and the qualifications of approved auditors. Given the industry's reluctance to act on its own, it is up to MEF to ensure that the "valuable management tool" of environmental audits is used to its fullest advantage.

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