Sustainability or sustainable development, as a concept, demands “every generation leave water, air and soil resources as pure and unpolluted as when it came on earth.” It recommends that each generation should leave undiminished all the species of animals it found existing on earth. Essentially, as globally understood, it is the “ability to have something or an activity maintained at a certain stable rate or level.”
As trustees of natural resources, citizens and governments are ethically bound to conserve world’s resources as part of inter-generational and distributional equity. Sustainability enables restorative environmental justice to those adversely impacted by exploitation of natural resources that undermines the guarantee of food, water and energy security and clean breathable air.
The need to showcase economic development has instilled a sense of unfair competition among developing nations leading to unsustainable business practices. As a matter of environmental and economic policy, governments have called upon corporations to disclose the nature of inputs that go into each of the business processes and details of production cycles through ‘Environmental, Social, and Governance’ (ESG) reporting that ensures transparency and accountability.
India has formalized ESG reporting under the Companies Act, 2013, the Securities and Exchange Board of India (SEBI). Introduced in the year 2021, SEBI calls it as a framework for Business Reporting and Sustainability Reporting (BRSR), making it mandatory for the top 1000 listed companies. This form of ESG reporting forms an integral part of financial investments. ESG linked finance results in ‘greenwashing’ attempts by businesses to make false claims about their products, labelling them as environmentally harmless, while precluding end-users or consumers to counter such claims.
Reporting for sustainability is based on environmental metrics that mandate disclosures on the carbon footprint of a commercial activity, energy generation and consumption, water sources, consumption and wastewater management, emission of air pollutants and greenhouse gases such as carbon di-oxide, methane, etc., aspects of biodiversity conservation to assess the impact of businesses on ecological systems and mitigation projects.
For the limited purpose of identifying the gaps in reporting on sustainability, it would suffice to state that the environmental metrics mandated under ESG reporting is restricted to a broad spectrum of environmental standards. There is a need to harmonize environmental metrics as per norms of international environmental law and create an overarching independent third-party regulatory forum. In its present form, the data collected is incomplete, unverifiable and inconsistent.
It is germane to the present discussion that ESG reporting excludes land-use changes from agricultural to non-agricultural purposes, bereft of specifics on alteration of the natural characteristics of land and soil for assessing their degradation, desertification, ground water depletion, impacts on rights of indigenous peoples, tribals or Adivasis under the Forest Rights Act, information on mining of critical minerals including sand from riverbeds, metals, nature of sediments and disposal of wastes.
The recent controversies surrounding land-use conversion in the Pallikaranai Wetland in Chennai and the cancellation of the construction of an airport near Parandur in Kancheepuram district of Tamil Nadu by acquiring agricultural lands for public infrastructure has highlighted the adverse impacts of unsustainable land-use changes. Similarly, there have been several protests from environmental activists and conservationists with petitions challenging the approvals granted to the controversial Nicobar Project, which would result in long-term damage to coral reefs, flora and fauna which are to be protected under several international environmental laws.
Currently, BRSR framework does not envisage mandatory disclosure of land-use changes effected by an entity in establishing its manufacturing activity. This is a major flaw in the present reporting standards that affect the crucial agricultural economy of India. There is a clear distinction between disclosing activities in and around ecologically sensitive areas that protect habitats, aquifers, forests, shrublands, pasturelands, wetlands, mangroves, natural vegetation for livestock and conversion of fertile agricultural lands for commercial purposes that impede wind flow, irrigation passageways, deplete ground and fresh water sources, deterioration of physical, biological properties through leaching and economic value of land.
The report should demand specifics on siting of industrial complexes established close to eco-sensitive zones, biosphere reserves, wetlands, seismic zones, forests and coastal areas. A major gap in the reporting norms under the BRSR framework is the lack of information on noise pollution in and around a manufacturing entity, large-scale felling of trees or deforestation.
Companies need to provide details of the value chain or supply chain that includes procurement of raw materials, whether they are sustainably grown, produced or manufactured, energy-efficient transportation and the manufacturing process of the end-products. It is imperative that the entity provides a lifecycle assessment of products starting from procurement to reaching the end-user, which includes recycle and reuse capability of the end-products without generating any non-degradable wastes. Life-cycle assessments of products contribute to creating a low-carbon and circular economy where generation of non-degradable wastes is bare minimum, ensuring Zero-liquid discharge, which means no pollutants reach clean water sources through treatment processes.
Sustainability is about enchancing technological capacities by ensuring big businesses invest in research and development of environmentally sound technologies (ESTs) and innovation that improves the resource efficiency of business processes across sectors.
Finally, sustainable reporting should be expected of small businesses in determining energy usage with a mandate to install stand-alone renewable energy sources, waste generation and treatment. This data can help incentivize and promote Small and Medium Enterprises (SMEs), that are equally important to development of India as a low-carbon economy.