How India Inc can harness CSR for effective environmental conservation

June 5 marked half-a-century of celebrating World Environment Day. Despite our collective efforts, these 50 years have been marked by rising temperatures and greenhouse gas (GHG) emissions, and their detrimental impact on our planet. Continuing GHG emissions portend a grim 50 years ahead, too, with temperatures soaring further, oceans turning more acidic, sea levels rising, and precipitation patterns seeing significant shifts. And corporates have a huge role to play here.

The missed opportunity in CSR spending

Few will dispute that harnessing the power of corporate social responsibility (CSR) can help India meet its sustainability goals.
Yet, a closer look at India Inc’s CSR spending on environmental initiatives presents a compelling narrative of growth and impact that is ‘so close yet so far away’.
To wit, between fiscal 2015 — the first full year after the CSR legislation took effect, mandating listed corporates to spend 2% of their average profits in the previous three fiscals on specified causes — and fiscal 2021, India Inc’s CSR spend grew a whopping 111% to Rs 14,459 crore from Rs 6,839 crore. However, spending on environmental causes grew a mere 15% to Rs 716 crore from Rs 623 crore.
Cumulatively, too, spending on the environment was just 8% of the total CSR spend over this period, as the following table shows.

CSR trends

To be sure, the decline, particularly in fiscal 2020 and 2021, can be attributed to the urgent imperatives of the pandemic. However, even before the pandemic, environmental spending never surpassed 10% of the total CSR budget.
Health, sanitation, and education have typically hogged the bulk of the CSR kitty, with numerous on-ground implementing NGOs involved.
However, environmental spending has been marred by the limited availability of specialised partners, absence of transparent benchmarks around unit economics, and dearth of robust monitoring processes and impact measurement frameworks.
While the pandemic rightly prioritised healthcare, the environment needs to swiftly regain focus if India aims to achieve its Net-Zero goals and carbon-neutrality plans.

The time is now

Unlocking the potential of CSR for environment conservation will need a multifaceted approach, encompassing policy, strategy, and operations.
From a policy standpoint, while Schedule VII of Section 135, Companies Act, 2013, includes environment as a key CSR focus area, there is a need for larger implementation partners, transparent practices, and benchmarks for greater accountability. Strengthening the policy framework and ensuring effective implementation can encourage more substantial CSR investment in environment.
Corporates must adopt a more strategic and comprehensive approach by embracing long-term, programmatic interventions that align with the UN Sustainable Development Goals and embed the rationale and suitability of each initiative. A holistic approach, involving communities and stakeholders, can foster sustainability and shared ownership of projects.
It is crucial to connect environment conservation initiatives with a company’s broader GHG reduction strategy. Planting trees is not enough; actual reduction of the carbon footprint should be the primary goal. By making environmental initiatives an integral part of the GHG strategy, we can nudge more corporates to actively support these efforts.
Projects can be made more impactful by integrating different aspects of sustainability, such as combining plantations with water conservation efforts.
By showcasing the impact achieved through these integrated initiatives, we can effectively highlight their potential and encourage greater adherence.
Fostering knowledge management and dissemination by bringing together key stakeholders to share insights gleaned and lessons learned will contribute to collective action and better decision-making. It will also provide a platform to encourage and reward corporate environmental investments.
Furthermore, integrating data-driven impact measurement practices like geo-tagging of trees and measurement of carbon sequestering potential will provide a deeper understanding of outcomes and enable refinement of strategies.
To sum up, on this momentous occasion, we need to adopt a holistic strategy to unlock the true potential of corporate CSR contribution to the environmental cause.

The author is the Chief Operating Officer of CRISIL Foundation (the CSR arm of CRISIL Limited). Views are personal

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