Responsible business behaviour is no more an option, but the need of the hour. With the rising threat of global warming and the effects of it on the global climate, it has become extremely important for the countries of the world to keep a check on their carbon emissions.
Accountability of Businesses to behave Responsibly in India
Businesses are among the major contributors of carbon in the atmosphere. In order to encourage them to act more responsibly, the government of India has various mechanisms and laws in place. These mechanisms are effectively enforced by various agencies of the government. This phenomenon was observed in the recent order of the National Green Tribunal (NGT) dated 10 September, 2020 while hearing a matter pertaining to use of ‘excessive plastic’ by e-commerce companies in packaging, which directed the Central Pollution Control Board (CPCB) to undertake an environmental audit of the respondent companies to assess and recover compensation for violation of environmental norms by such companies. The NGT has also called for the implementation of the Extended Producer Responsibility (EPR) for businesses in the past.
Promoting Environmental Disclosures in India
Environmental, social and governance (ESG) credentials of companies are playing a major role in determining their success and growth. These credentials are not just an ethical consideration but they are crucial to determine the revenue and its capacity to raise funding or capital for the companies.
In 2011 the Ministry of Corporate Affairs, Government of India had released the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs). In order to align these guidelines to the global sustainability standards, the Sustainable Development Goals (SDGs), and the United Nations Guiding Principles on Business & Human Rights (UNGPs) the NVGs were revised and released in 2019 as the National Guidelines on Responsible Business Conduct (NGRBC).
The NGBRC was developed with an aim to guide and encourage the businesses to adopt responsible business behaviour in their day to day operations and not treat them as mere regulatory compliance requirements. The NVGs had provided for a disclosure mechanism in the form of Business Responsibility Report (BRR). The BRR has also been amended to reflect the principles of NGRBC and provide encouragement to the corporations in India to take a leadership role in making these disclosures.
It has become inevitable for businesses to take the changing environmental and socio-economic conditions into consideration while conducting the business. The current sustainability-conscious market is very critical about the companies’ response to the changing circumstances while associating with them. Therefore, it is important for companies to know that with weak governance structures, they will not be able to sustain, especially with the increasing role and influence of social and environmental activists in forming the public opinion in the country.