Chapter 4. Environmental Ethics – Business Ethics and Corporate Governance


Environmental Ethics


The importance of environmental preservation through better State and corporate governance practices cannot be overstressed, given the increasing awareness among people worldwide on this issue in the context of global warming and its attendant problems. The State is enjoined to play a significant role to protect, preserve and nurture all creatures—human, the flora and fauna—and to maintain ecological balances for the good of all mankind, and corporations have to assist the State in this endeavour. Governments worldwide are assisted by the environment-conscious public, media, consumer and environmental groups apart from corporations. Corporations have a special responsibility to bear, since they have played a major role in environmental degradation. While producing goods, they have destroyed forests, depleted water sources, overused irreplenishable resources, polluted atmosphere and poisoned water. They have a stake in preserving the environment and the ecology for posterity. Companies have a moral, ethical and social responsibility to maintain the purity of the ecosystem and safeguard the environment.


It is well-known that contemporary environmental problems are serious, but the specific issues, consequences and priorities are vaguely defined and much less explained for people to understand the implications of these problems. However, there is a clear appreciation today than ever before that environmental quality is an important desideratum in the social and economic development of nations, and the well-being of their people.

The growth of consumerism, leading to the high rate of consumption of natural resources, is at the heart of many environmental problems. Traditionally, industry has been driven by consumer demand to produce goods efficiently, regardless of the consequences. Regulation and innovation are changing this system, but yet have not solved the problems. The need to have clean air and water, fertile soil, biodiversity and an overall cleaner world for the people to live on, are all stressed to ensure the health of the global environment. Environmental problems thus continue to pose challenges and opportunities to business as they have for several decades.


Over the last century, many activists, writers and policy makers have debated about the environment. Since the advent of the Industrial Revolution, human activity has taken an increasingly heavy toll on natural resources. The natural balance has been distorted owing to the over-dependence of mankind on the environment for the sake of small gains, and a lack of foresight. In the United States, as early as the turn of the 20th century, the importance of natural resource conservation led to the establishment of National Parks by President Theodore Roosevelt’s administration. Later, the human health risks posed by pollution raised much concern during the 1960s. Slowly the concept of environmentalism evolved as attitudes about human impacts on air, water, forests and other aspects of the environment.

Increasing awareness and consequent concern on these issues were fuelled by informed public sentiment, media coverage, corporate attitudes and government policy. Public protest on air and water pollution led to the passage of many environmental laws by the US Congress and to the creation of the Environmental Protection Agency’s (EPA) community-led recycling programmes. Added to this, the protest against polluting businesses in ‘Not in My Backyard’ (NIMBY) campaigns is another example of how environmentalism has impacted industrial activity. Activists have encouraged industry to change practices and innovate in order to improve environmental quality.

Widespread support for environmental protection is a relatively new phenomenon. An enhanced perception of an impending crisis has caused in recent times a spate of law-making, technological innovation, improvisation and even bureaucratic evolution. During the last three decades, businesses have had to respond to many new regulations which have posed challenges and at the same time opened new opportunities. However, the interaction of different stakeholders has brought out both strengths and weaknesses of democratic decision making in a capitalistic economy.

The economic implications of environmental problems have been key issues throughout the history of environmentalism. Michael Silverstein argues that environment and economic goals are not irreconcilable.1 He cites historical evidence dating back to the Industrial Revolution demonstrating that business and environmentalists are not inherently in conflict as they are often perceived to be. The principles of industrial resource use and environmental conservation, he argues, are compatible in that each one focuses on sustainability.

While activists have done much to publicize environmental problems, disasters such as Bhopal, Three Mile Island and Exxon Valdez, and books such as Rachael Carson’s Silent Spring have also raised public awareness on the health hazards of pollution and environmental degradation. This realization has resulted in an increased demand for industry disclosure and accountability. In many cases, increased awareness, regulation and changed practices have resulted in improved environmental quality. However, many challenges remain unresolved. Moreover, there is also a perceptible shift over time from confrontational activism to cooperative problem solving among stakeholders.


Environmental philosophy takes a variety of forms and stances, each with some merit, and all adding to our understanding of the relationship between human beings and the environment. A fundamental aspect of environmentalism is that the players who are involved in it are often motivated by different philosophical approaches to the natural world. By gaining an insight into the ideologies underlying the environmental movement, we can understand the arguments and stances of the players involved. Environmental philosophy is also important since it is useful in changing attitudes towards the environment.

John Bellamy Foster in Global Ecology and the Common Good2 argues that only a change in common morality will help alter the present means of production and mass consumption, which will otherwise lead to ecological collapse sooner than later. He further argues that the self constructive levels of consumption in developed societies can be curbed by shifting to a more holistic perception of the natural environment. ‘Nature’ according to him, should be included as a member of the moral community.

Marisa J. Mazzotta and Jeffrey Kline3 in Environmental Philosophy and the Concept of Non-use Value argue that ideas from various environmental philosophies should be incorporated into economic policy formulation. This is because resource economics, traditionally fails to effectively measure non-use values. This leads to a dilemma in that some natural resources lack an easily measurable monetary value, but are important to ecosystems. According to them the ideologies of anthropocentrism, conservationism, preservationism, biocentrism, ecocentrism, deep ecology, social ecology and eco-feminism are all frameworks applicable to the relation between environment and economics.

Another issue in environmental debates address the legal rights of nature. Joel Schwartz in his article “The Rights of Nature and the Death of God” poses the question as to who should represent nature in a democracy, self-appointed environmentalists or elected officials. The practical implementation of environmental philosophy in the debates of public policy and regulation may be the key to natural resource conservation.

Perhaps the most famous work in environmental philosophy is that of Aldo Leopold who in his book A Sand Country Almanac, 1948, related his ideas that radically alter the framework in which humans relate to the environment. His concern about environmental degradation led him to argue that nature must be protected both legally and morally. Leopold was an expert in natural resource management who realized the consequences when humans are alienated from their natural surroundings. His call for the inclusion of ‘nature’ in the moral community was an argument for preserving the environment for its own sake, not simply for human use.


Preservation of a healthy environment and ecological balances is everybody’s concern. To promote environmental awareness among the people, we need the help of different stakeholders. These stakeholders are the public, the media, environmental groups, corporations, and the government.

Public Opinion

Public opinion is crucial to the resolution of environmental issues in a democratic society. The public has the power to support interest groups, elect and lobby officials, pay taxes, work for companies, buy products, and support or reject policies.

In the United States, many polls were conducted to determine what the public thought about various issues, and the results were carefully monitored by incumbent politicians. These results indicated that after decades of being on the fringe, environmentalists had succeeded in making many of their points. There is acceptance among the populace that something must be done about environmental problems.

The effects of pro-environment public sentiment are evident in many business and government sectors. Bhushan Bahree and Kyle Pope4 in their article ‘Giant Outsmarted’ identified the direct correlation between public opinion and environmental policy. They describe how Greenpeace stopped Royal Dutch Shell from scuttling an oil rig in the Atlantic Ocean by organizing public protest throughout Europe. The pressure was such that it forced Shell to alter its policy and dismantle the rig on land at a substantial cost to the corporation. This is a classic example where public pressure prompted a giant corporation to change its policy. Here, the perceived risk of environmental damage took precedence over economic considerations thanks to the strong public opinion.

The public perception of environmental risk continues to be a driving force in US politics. According to Thomas A. W. Miller and Edward B. Keller,5 health concerns are the primary motivation for public alarm. In their article, ‘What the Public Wants’, the authors describe how specific language that is used to inform the public has a direct effect on their response. One example involves the use of ‘non-hazardous’ or ‘hazardous’ in the description of a waste site. The ambiguous use of these terms can convey an inaccurate sense of the danger to a surrounding community. Besides, the correlation between human and ecological health is often poorly understood. More public education on environmental issues is required. Communication of problems to the public must improve to build consensus and understanding on vital environmental issues.


It is an irrefutable fact that the media wields considerable influence over public perception of environmental groups, corporations and the government. The role of the media in the dissemination of information to the public on issues of grave importance cannot be overstressed. News publications and journals, television and radio are the source of information to the public on environmental issues.

Trends in environmentalism are important to journalism. Studies have shown that positive news about the environment has received considerably less attention than negative news in recent years. This situation is changing and headlines may soon announce the environment-friendly deeds of corporations which may provide valuable publicity to improve their competitiveness in a society that is increasingly conscious of environmental issues. To ensure that the media provides balanced information, it is important for business to play a proactive role in information dissemination. It is a fact that as with many issues, a lack of objectivity often pervades environmental journalism.

Environmental Groups

Many environmental advocacy groups have evolved considerably from the liberal, anti-business, anti-government periphery of past decades. While some radical groups do remain, many moderate or conservative groups are cooperating with business and government. The role of some groups is shifting from simply bringing attention to environmental issues towards working to solve problems. These organizations are often a reliable source of information and support and represent public sentiment.

Since environmental groups vary greatly in scale, scope and philosophy, it is difficult to discuss them as a distinct entity. Some of the familiar major groups are Conservation International, Greenpeace and Environmental Defence Fund. The environmental groups play a significant role in environmental issues and must be taken seriously by decision makers in business and government. Cooperation with these groups is essential in the next phase of the movement: industry innovation. Environmentalists are important both as a source of information and as representatives of public interest, though there are substantial obstacles to cooperation, including conflict of interest, compliance, and the size of companies.

In addition to environmental groups, there are also organizations that are opposed to environmental regulation, the so-called ‘wise-use’ movement. The Competitive Enterprise Institute (CEI) supports free markets and limited government by opposing most environmental statutes and policy. The group frequently criticizes the EPA for using inexact science and inefficient protection measures. It is important to recognize that government environmental policy is not perfect. All stakeholders are responsible for working towards a consensus for effective decision making on these issues.


Corporations had been known in the past to be traditionally unsympathetic to environmental problems. The pollution and degradation caused by industrial activities in the 19th and 20th centuries created many of these problems in the first place. As a result of pressure from environmentalists and regulatory legislations, many companies have altered their stance and modified their policies. In fact, many firms now work proactively to improve environmental quality. This relatively recent phenomenon continues to develop as environmental issues gain the attention of more business professionals.

The key shift occurring in the environmental regulation of industry is from an emphasis on pollution control to an emphasis on pollution prevention. With forethought and ingenuity, the goal of the latter idea is to eliminate pollution before it is produced, by innovating processes. Environmentalists encourage corporate investment in technologies to reduce the use of contaminants in industrial production. Therefore, there are now many voluntary business initiatives that promote pollution prevention by improving efficiency in production. This approach is popular because corporations can cut costs while improving environmental quality.

The development of corporate environmental policy has ranged from incremental changes to comply with regulations, to substantially innovating processes. It is the latter formulation that was extolled by Stephan Schmidheiny at the UN Earth Summit in 1992. In many cases it has been found that sound environmental policy can parallel the interests of corporations.

The shift of corporate attitudes is key to environmentalism. Dow Chemical, a corporation that dominates an often criticized industry, is a notable participant in corporate stewardship. Consumer and legal pressures have been important incentives for Dow to develop its environmental policy. It is now a top priority for this corporation to improve its environmental record. The example of Dow serves as evidence that environmental concerns are urgent and that they are appropriately being included near the top of the corporate agenda.

In the near future, companies that refuse to ‘go green’ will be unable to survive in an environmentally conscious marketplace. Therefore, it is vital that corporate leaders learn to promote resource preservation through reducing waste and maximizing resources while improving profits.

The stance of corporations is shifting towards being proactive stakeholders seeking sustainable solutions. Industry has traditionally been at odds with environmentalists, but the paradigm is changing. Holistic management of natural resources and the necessity of response to public concern are playing a greater role in corporate strategy.


The implementation of effective environmental policy has been obstructed by many factors: inadequate scientific knowledge, budgetary deficiency and conflict of disparate interests. The electoral cycle and public emphasis on a sound economy force environmental issues into a political arena which does not always lend itself to timely decision making. The EPA, for example, often has difficulty improving environmental quality when its activities are perceived to hurt the economy. While environmental protection is a broadly supported idea, the reality of its costs is unpopular.

The economic costs of environmental regulation have been criticized by the private sector, and usually the EPA is the target of reproach. While the EPA has come under attack for costly litigation and inefficient regulatory policy, it has been instrumental in monitoring the polluting emissions of industry. The agency is still developing its role in public policy and improving environmental quality.

Many stakeholders who advocate or oppose environmental protection seek to influence the government. Even with firm leadership, effective environmental policy will take time to develop in a government. The inexactness of environmental science and costs to the economy are key obstacles to developing a sound environmental policy.

The stakeholders in environmental issues play important roles in policy formulation. Government directives can prevent some of the most egregious environmental damage from occurring, but lasting solutions are only possible with concerted cooperation from all actors. Partnerships at a local, regional or global level may be the best way for stakeholders to participate in efforts to resolve environmental issues.


Environmentalism in the 21st century can be characterized by three principles that will serve as bases for continued activism and policy formulation. The first of these is partnerships, an integrated strategy that brings disparate interests together in a cooperative forum to resolve environmental issues. This ‘common sense’ approach is proving to be a practical and effective way to address natural resource concerns. Corporations taking this approach benefit from the knowledge and experience of their partners.

The second development fundamental to future environmentalism is international cooperation which is growing in response to the crisis of global environment. Environmental issues have reached the world agenda in United Nations programmes, world conferences and international agreements.

The third principle that has evolved as a new foundation for environmentalism is sustainable development, a model for conservation which focuses on natural resources consumption. For economic development to be sustainable, the needs of the present must be met without compromising the ability of future generations to meet their own needs. This task will require a fundamental shift in the world economy to limit natural resource consumption and environmental degradation.


Recent cooperation among stakeholders on environmental issues is promising evidence that pressing environmental problems can be resolved. Partnerships are voluntary collaborations between two or more organizations with a jointly defined agenda focused on a discrete, attainable, and potentially measurable goal. The ‘life-cycle’ of partnerships involves an integrated relationship among stakeholders throughout the decision and implementation process.

It is evident that both corporate and environmental stakeholders gain benefits from cooperation. Dominance of business interests cannot be undermined, but non-governmental organizations (NGOs) can maintain substantial influence in the decision making process by understanding the goals of corporations.

Further evidence of the importance of partnerships is the growing practice of corporations to seek the assistance of NGOs to preserve endangered species in their areas of operation, pooling the assets of stakeholders and cooperatively reaching for a solution.

Partnership may also be an effective way for the government to tap the resources of expertise that exists in environmental groups.


Many environmental issues are international by their very nature. These include cross-boundary pollution, common area resources, and economic development. Traditionally, state sovereignty and self interest took precedence over the resolution of global problems. In recent decades, an integrated world economy has emerged and is dominated by multinational corporations. The resulting economic interdependence of nations fosters cooperation in resolving international issues. The worldwide recognition of an ecological crisis has moved the global environment higher on the international agenda. The absence of an international government, competition between nations and the complexity of international relations all remain as obstacles to global environmental policy.

The United Nations Conference on Environment and Sustainable Development in 1992 though not the first of its kind, was a major breakthrough for environmentalists. The meetings held in Rio de Janeiro were divided into three levels; government leaders, corporations, and NGOs. Each group debated issues of social justice, property rights, North-South relations, forest principles, development, biodiversity, responsibility and technology transfer. While it is significant that world leaders address global problems such as ozone depletion and common area resources, lack of funding remains as an obstacle to permanent solutions. The key success of the Conference was that the environment became a priority on the global agenda.


A very significant concept underlying international and domestic environmental policy is sustainable development. The implication is that there are limitations to the earth’s carrying capacity in the light of present levels of technology, social organization and population.

The evolution of ideas about sustainable development has been substantial, but the next step is to generate effective policy initiatives. While it is clear that current economic practices are unsustainable, it is an undeniable fact that developed countries have the knowledge to operate sustainably. The key will be for government and corporations to change practices in shifting to a more efficient model of resource use.

A contradiction of popular opinions about sustainable development is offered by William Nitze in The Economic Case for Sustainable Development. The author argues that sustainable practices are no more costly than current industrial processes and that the actual barriers to change are inadequate information, training and incentive. He claims that cleaner technologies are very competitive and that public development institutions should attempt to stimulate innovation, rather than dole out funds for incremental costs. He further argues that organizations like the Global Environment Council (GEC), should change the manner in which they help developing countries to focus on sustainability.

Environmentalism in the 21st century is likely to be characterized by various efforts to implement the sustainable development agenda. International organizations, such as the United Nations and World Bank, will be integral to the development of effective global environmental policy. The questions of financing sustainable development, technology transfer and corporate interests need resolution if lasting change is to take place.

Corporations maintain a dominant role in these issues; those that adopt a proactive stance in environmental stewardship are likely to compete well in the world economy in the years to come.


Environmental regulations are often criticized as being too costly for business. Certainly, protecting environmental quality is an expensive task for many regulated industries. Beyond higher costs for individual firms, however, many people argue that the high level of environmental regulation hurts a country’s competitiveness in the world market. Some economists have countered that strict environmental regulation may actually serve to enhance a country’s competitiveness. It is evident that forward-thinking firms can turn environmental regulations to their advantage. They argue that clean business practices are more efficient, and therefore, profitable. It is also important to realize that not all firms are affected equally by environmental regulations.

The effect of environmental regulation upon our economy as a whole remains unclear. Many economists feel that environmental regulations raise the price of inputs, putting businesses at a competitive disadvantage in the world economy and hindering growth. Others argue that forward-thinking regulations in the United States encourage firms to innovate, which keeps the country at the forefront in technology enhancing US competitiveness. Michael Porter is the leading proponent of the pro-regulation view. He outlines his major arguments in Green and Competitive. Regardless of the validity of either argument, business people should view regulations as an opportunity to gain an advantage for their individual firms.


Historically, nations have had widely varying environmental protection standards. With the increasing recognition that natural resource degradation is a global concern, countries have now begun to negotiate agreements on environmental issues. The first such agreements such as the 1987 agreements, however, have reflected the growing recognition that international trade and environmental protection are intrinsically linked. In the future, any firm with international dealings will have to take environmental issues into consideration.

Because countries have different environmental standards, firms looking to market their services abroad may find it hard to convincingly demonstrate their environmental responsibility to green consumers. The lack of standardization of environmental regulations between countries has complicated trade issues. For this reason, the International Standards Organization is taking its success in quality standards with the ISO 9000 series to environmental issues. The new standards, called ISO 14000 will have a major impact upon businesses who wish to appear ‘green’.

To help standardize environmental regulations around the world and facilitate collective action on pressing environmental issues, nations have begun to negotiate treaties for the protection of natural resources. The Montreal Protocol is a good example of an international environmental agreement. From an environmental perspective, these international agreements can be very effective. Treaties focusing solely on the environment however may not necessarily take economic concerns into due consideration. The resulting costs according to economists may be too high.

In the pursuit of free trade, the world has generally moved towards lowering national trade barriers. National environmental standards, however, can be used as informal trade restrictions requiring that products meet certain criteria. However, since environmental standard vary widely from country to country, those countries with the highest environmental standards are seen as protectionist. Both environmentalists and free-traders are concerned about the effects of pure trade agreements, such as the General Agreement on Trade and Tariff (GATT) treaty.

The North American Free Trade Agreement (NAFTA) is one of first major trade agreements to seriously integrate environmental concerns into trade considerations. Their treaty requires the United States, Mexico and Canada to implement pollution prevention strategies and to pursue sustainable development. Future trade agreements will follow NAFTA’s lead and promote prudent use of natural resources.


India’s Toxic Corridor

Most of the developing countries suffer from numerous environmental problems and India is no exception. The country’s forest cover has been vastly depleted, water bodies poisoned in and around industrial towns, tanneries and textile units, and air is badly polluted in towns and cities. In our zest to quicken the pace of industrial development, we have ignored the need to put in place measures that would safeguard the ecology and environment.

The road from Ahmedabad to Mumbai runs through what the rulers of Gujarat proudly refer to as the ‘Golden Corridor’ of chemical industries. Others know it as the armpit of industrial civilization in India as the cancer corridor or the toxic corridor.

At least 2,000 industries compete for resources in this narrow belt of land hemmed in by gently sloping hills on the one side and the Gulf of Khambat on the other. Virtually every river—Sabarmati, Mini, Tapi Narmada, Par, Kolak. Damanganga—that enters the corridor leaves carrying lethal loads of industrial poisons. A July 2000 World Bank sponsored State Environmental Action plan report lists sections of all these rivers as ‘critically polluted’. That means the rivers are close to losing all capacity to sustain life. The same report also indicates that the groundwater in at least 74 out of 184 talukas in Gujarat is poisonous because of industrial pollution. Another estimate cited by a high-powered committee of the Supreme Court says that an alarming 70 per cent of Gujarat’s water resource is now contaminated by industrial pollution.

Evidence of Pollutants

The carrying capacity of the land in this part of the country is visibly strained, and that is telling on the lives of the people living in these areas.

  • Villagers in Haria, Umarsadi, Sarigam, Kolak, Ankleshwar and Sarangpur complain that groundwater containing industrial poisons is affecting their health and causing failure of agricultural yields.
  • Environmental surveys conducted by Greenpeace confirm the widespread presence of industrial poisons in the environment, including dangerous levels of heavy metal and persistent organic pollutants.
  • Emerging evidence indicates that the pollutants have entered the human food chain through vegetable and fish from the region.
  • Reports from villages surrounding Vapi, Atul and Ankleshwar claim that infertility is on the rise, that young women suffer from frequent miscarriages; and that respiratory and skin diseases are commonplace.
  • In Kolak village, which is sandwiched between the Damanganga and Kolak, both of which are polluted by the Vapi industries, villagers report more than 70 cancer fatalities in 10 years.
  • The Mitna Machhi, an adivasi community that sustained itself by gathering fish and mud-skippers from muddy river banks, is now support-less because mudskippers are locally extinct owing to pollution.6

Industry is the world’s foremost creator of wealth, employment, trade, technology, and controls, deploys tremendous amount of human and financial resources for economic value addition. Industrial and business processes add value to natural resources as these transform the latter from raw gifts of nature into useful products. Industry today, carried on by giant corporations, is synonymous with the ‘big corporation’. Big corporation is powerful enough to influence any situation, be it developmental or environmental. But the mantle of the big producer—creator of wealth and promoter of industry and commerce, and worn by the big corporation since the 18th century—has been discarded in following the so-called ‘green philosophy’. Often blamed for producing massive amounts of waste in an endeavour to produce wealth, they are now expected to become protectors of the environment. The world, according to the Brundtland Commission, was producing seven times more goods as compared to the 1950s. The Brundtland Commission was established by the UN General Assembly in 1983 and was formally known as the World Commission on Environment and Development (WCED). The commission, under the chairmanship of Harlem Brundtland, was convened to address the growing global concern about the fast deterioration of the human environment and quick depletion of natural resources, both of which adversely impacted sustainable development ( Today, about 20 years after the Brundtland Report, we are producing several times more goods, but more importantly, we are producing several times more waste: solid, aqueous and aerial. In recent years, as awareness about environmental degradation occurring in air, water, soil and the biosphere has grown, most of the blame has been laid at the doorstep of industry, with the big corporations roped in as the main culprits and enemies of the environment. Most types of environmental problems have been attributed to industry, either local or global. Problems such as global warming, depletion of the ozone layer, increase of instances of health problems, etc. are claimed to be the result of rapid industrialization without a thought for environmental degradation. They are no longer defensive and reactive. They are becoming innovative and proactive.

In the modern world, the role of corporate business has extended from beyond just producing goods and services, or creating jobs, or even promoting industrial growth. Industry’s role is fast changing from one that is negative to one that is positive in all areas of socio-economic endeavour. They are now expected to act positively towards the improvement of the quality of the environment. It has been realized by industrialists that it is imperative to perform their conventional tasks of production of material goods in such a way so as not to impair the quality of life.

The distinction made by Adam Smith7 between justice and benevolence is more relevant today to corporate business than it ever was. Justice, according to him, is a negative principle that prohibits harm; benevolence, however, requires positive action for the realization of an intrinsically desirable goal—the well-being of others. Corporate business today has the responsibility towards the society, not only to render social justice, but also to promote the greatest good to the largest number of people. To the established duties of the corporate sector of diverting a portion of their profits to community purpose, production of goods and services, creation and protection of jobs, etc., has been added another one—by far the most onerous, up-do-date zealous protection of the environment.

However, while growth in technology promoted by big business has created problems of environmental destruction and degradation, it is this growth and technology that also hold the hope for improvement—the solution also lies there. A better choice of technology—both preventive and curative—can reduce the damage already done to the environment and prevent further damage. The big business has already moved into a new chain of thinking, in which technological dimensions are decreased, and importance of social, economic, political, cultural and especially environmental dimensions are growing in importance. This change was first seen in the 1980s, especially in the attitude of chemical and oil companies. By the time world leaders gathered for the Rio Summit in 1992, a Business Council for Sustainable Development (BCSD) formed under the chairmanship of Stephen Schmidhering, a Swiss businessman, with its 50 members, had put together guidelines for environmental friendly behaviour for companies.


There are several reasons why those managing business are becoming increasingly conscious of environmental issues and go a step further to convert them to their own advantages:

  • For management morale—to have a good environment record (especially after the Stockholm Convention) and the desire to earn good reputation as protectors of the environment.

    In an era of ‘lean management’, many companies are finding ways and means to cut waste wherever possible. Pollution prevention extends this concept to resources, and firms are finding that they can significantly lower their ‘end-of-pipe’ abatement costs by not creating wastes in the first place. After all, some argue, what is pollution, if not wasted resources? ‘Waste Not, Pollute Not’ is the pollution prevention mantra in American industries. ‘Doing it for Mother Earth’ examines the gains that can be realized in both compliance and profits from pollution prevention programmes.

  • The Environmental Protection Act (EPA) has acknowledged the potential gains from pollution prevention as opposed to mere ‘end-of-pipe’ compliance, and has recently begun to encourage such practices through the use of voluntary programmes.
  • Businesspeople have realized the advantages of taking a proactive stance towards environmental regulation. Instead of fighting against regulations, some firms are looking beyond mere compliance and improving their environmental performance. There are a variety of innovative business strategies which involve strengthening the firm’s bottom-line as well as the environment.
  • Industry leaders have also realized the potential for additional benefits from pollution prevention. By incorporating principles of waste reduction into industry-led voluntary programmes they hope to foster positive public opinion and perhaps forestall inefficient regulations, while enhancing industry wide environment performance.
  • Products may meet regulatory standards when they leave the factory, but may yet cause environmental damage through future use. Changing regulations may create costly burdens for firms that do not examine the lifetime effects of their products. For example, many firms in the United States are incurring huge remediation cost at Superfund sites, where polluting was not always illegal at the time. Recent trends in regulation suggest that forward looking firms will protect themselves through ‘green design’ of their products and enhance their public image by examining the entire life-cycle of their products.
  • To keep their consumers, who are increasingly environmentally conscious happy, companies have to ensure that their products, packages and even processes are environment friendly. There have been several instances where the consumer movement has made companies change their activities and processes, which contributed to environmental degradation, to become environment friendly. For example, McDonald’s fast food chain8 used to sell hamburgers in polystyrene ‘clamshells’. Environmentalists followed by school children and other consumers demonstrated outside McDonald’s shops and heaps of letters poured into their headquarters at Chicago. The Environmental Defense Fund also approached the company. The company ultimately agreed to replace the clamshells with ‘quilted paper wrap’, which, though still not biodegradable, made much smaller waste heaps, about a tenth of the earlier size. The company did not start using washable crockery on the plea that the detergent and hot water used to clean them would themselves not be much more environment friendly than throw-away packaging carefully destroyed. This resulted in the company to look for ways to cut down waste by using recycled materials in packaging and restaurant furnishing, and transporting products such as ketchup in reusable crates.
  • Eco-labelling is another example of companies trying to pacify consumers with proof of environment friendliness of their products. The first eco-labelling was done in Germany in 1978. The products carried the ‘Blue-Angel’ label. A study9 of 22 countries done by the Organization of Economic Cooperation and Development (OECD) showed that these countries had or were planning eco-labelling. Consumers all over the world today look for the label showing that the product is ‘green’.
  • Potential savings through pollution prevention measures have been increasing. Companies have found that reduction in their use of raw materials and energy, and in the amount of toxic wastes they produce could yield savings.
  • The fear of incurring the cost of environmental damage has risen as regulations have been tightened by governments and courts of law.
  • In the past, environmental advocacy groups and government regulators were seen as opponents of business. Now, however, some firms are finding that they can save a lot of effort and trouble, if they work with these groups to find solutions acceptable to all stakeholders.

Environmental damage through industrial activity can be of two types:

  1. Depletion of natural resources: Excessive use leads to the reduction in natural resources that are extracted and/or used up in the production of other goods, such as minerals, fossil fuels, etc. These resources are non-renewable. Once extracted, they cannot be replaced. Technology must find substitutes for such raw materials if further depletion of non-renewable resources is to be prevented. Depletion is thus a quantitative concept.
  2. Degradation of the natural resources: Degradation refers to the deterioration of the quality of the environment. All production creates waste and pollution right through the process of manufacturing to the disposal of the final product. Wastes—aerial, aqueous or solid—degrade the air, soil and water quality and pose health hazards.

Disposing waste into the environment was cheap, if not free, until recently because the costs from pollution were not borne by the producer of that waste. As a result, waste emission has almost surpassed nature’s capacity to absorb wastes. Waste management has become essential—in many cases it has been made mandatory through government regulations, but with industry and business becoming environment conscious, waste management is finding an increasingly important place in the agenda of big corporations.

Pollution Prevention

As seen earlier, sustainable development has universally been accepted as the common environmental goal in business circles now. Corporate management has a great deal to offer to achieve sustainable development. To implement sustainable development, it requires promotion and application of pollution prevention, whether through source reduction or clean technologies. An effective pollution prevention programme can yield cost savings that will more than offset programme, development and implementation costs. Cost reduction may involve immediate savings that appear directly on the balance sheet or may involve anticipated savings in terms of avoiding potential costs. Cost savings are particularly notable when the costs result from the treatment, storage or services that produce waste e.g. material costs can be reduced by adopting processes.

Wastes may be aerial, aqueous or solid emissions, and waste management comprises containment, dispersal and remedial measures. Pollution prevention management means both management of wastes and production before they create pollution problems. In the past, environment management strategy focussed on pollution control—waste removal, treatment and disposal techniques, etc. mostly in the manufacturing process. However, the problem of environmental degradation is not limited to manufacturing processes only. That is only the first generation problem, that is release of waste within the plant. The problem is much more extensive, as besides manufacture, storage, transportation and use of products also contribute to pollution, waste accumulation and environmental degradation. Thus we need to differentiate between waste management strategies and pollution management strategies. While the former emphasizes reduction in waste generation and controlling pollutants in waste, the latter seeks not only to improve manufacturing processes, but also to consume environment friendly products.

Box 4.1 discusses some real life examples of how producers, motivated as they are purely by profit motive, cause environmental degradation with harmful impact on the society.


A good example is the Bhopal gas tragedy in 1984, in which thousands of people lost their lives after methyl isocyanate leaked from the Union Carbide plant in Bhopal. Many well-informed people vividly remember the tragic and poignant Chernobyl nuclear disaster in Kiev, Ukraine that occurred in 1986.

The explosion of the nuclear reactor killed, as on mid-2006, ‘fewer than 50’ people and released large quantities of radioactive substances into the atmosphere.1

Bhopal and Chernobyl did not mark the end of environmental disasters. The Valdez oil spill (USA) of 1989 and the Tokaimura nuclear accident (Japan) of 1999 are other prominent examples. In developing countries such as India, environmental issues often take a backseat and accidents are quite common. In another environmentally damaging incident caused by criminally careless corporate attitude, Hindustan Lever dumped mercury waste from its thermometer factory in Kodaikanal in the surrounding forests.

This negligent attitude of the multinational company adversely affected not only the forests but also the local community. When environmentalists, headed by Greenpeace, unearthed the incident, the company initially denied the charges that it was responsible for the damage.2

Later on, the Indian authorities coerced them to admit the truth about their deep involvement in the fiasco. Since then, Unilever has retrieved and sent back to USA some of the waste for disposal, but is shying away from compensating the affected workers and further environmental remediation measures.

The German transnational, Bayer has continued to sell certain phased-out pesticides in Asia in spite of giving an assurance that it would stop the manufacture of these highly poisonous pesticides.3

Ship-owning companies such as Bergesen of Norway and Chandris of Greece follow the unlawful practice of dumping their toxic waste in ship-breaking yards located in developing countries such as India, Pakistan, China, Turkey and Bangladesh. Though the International Marine Organization has chalked out a guideline to be followed by shipping companies for disposing off their harmful wastes before the ships are sent for being scrapped, these are hardly followed. Therefore, it is necessary that these guidelines are made mandatory to make the ship owners responsible in case of violations.4

In today’s globalized world, transnational business and trade organizations tend to move around assets, products and wastes across countries with a view to increasing their profits by reducing the costs. These companies take undue advantage of the lack of well-defined local environmental and health laws in poor countries and their governments’ laxity in implementing them. Further, they often export pesticides and wasteful and destructive technologies to under-developed countries, which decisively harm the inhabitants of these countries.



1. K. S. Parthasarathy, “Chernobyl: 20 Years Later,” The Hindu, 20 April 2006.

2. Greenpeace, “Unilever Admits to Toxic Dumping; Will Clean Up, But Not Come Clean,” 19 June 2001, available at

3. A. C. Fernando, Corporate Governance: Principles, Policies and Practices, New Delhi: Pearson Education, 2006.

4. Ibid.

Key Strategies for Industrial Pollution Prevention

  1. Systematic waste reduction audit: This will enable manufacturers to take inventory and trace input chemicals and to identify how much waste is generated through specific processes. It is an extremely useful tool in diagnosing how a firm can reduce or even eliminate waste.
  2. Material balance: Identifying processes, inputs, outputs, recycle and reuse rates, deriving a preliminary material balance and evaluating and re-fixing material balance.
  3. Economic balance: Identifying costs and reviews to achieve an economic balance. According to benefit-cost ratio, experience in the industrialized countries has proved that anti-pollution technology has been cost effective in terms of health, property, and avoiding environmental damage and that it has made many industries more profitable by making them more efficient in the usage of resources. While economic growth has continued, the consumption of raw materials was held or even declined. For the benefit-cost analysis, industries look for savings and cost effectiveness in any step or operation they undertake. Pollution prevention has been found to be cost effective and results in saving, especially in the long run. Several slogans on pollution prevention programmes clearly indicate this view. For example, Chevron gave the slogan ‘SMART’ (Save Money and Reduce Toxics), Dow Chemicals ‘WRAP’ (Waste Reduction Always Pays). Of course, firms also found that their measures to tackle pollution made big improvements in their environmental performance. Between 1989 and 1991, Chevron Texaco reduced its output of dirty air, water and solid wastes by 40 per cent and toxic emissions by 58 per cent.10 It would mean saving on waste disposal and clean up operations. Savings from pollution prevention programmes result from several sources. It reduces the need for pollution control equipment and disposal of hazardous and/or non-hazardous wastes. Further, companies found that their pollution prevention, resource conservation and designs and strategies can reduce the use of raw materials and energy costs. Another very important cost saving that results from pollution prevention strategies is that of invisible costs such as health problems of workers that cause decrease in productivity.
  4. Waste reduction: Identifying opportunities and implementing them through simple process modifications such as pollution prevention measures such as good house-keeping, waste reduction and recycling, designing a waste-reduction strategy, implementing internal recycling for one’s own or others’ use, to reduce emission from the process and also to reduce the need for continued supply of raw material inputs.
  5. Use of newer, cleaner technologies: Development of preventive technologies to benefit current and future scenarios, without transferring the problem from one media to another such as air, water and land, as is often the case. For example, waste treatment processes produce large amounts of sludge and residue, which again would need a disposal programme to prevent secondary pollution.

    The key, therefore, lies in technological change. In the past, technological inventions were mostly made to save resources—both human and natural. The need of the day is to use technological progress for environmental protection and damage abatement wherever possible. Experience shows that the technological management has reduced the adverse impact of many activities on the environment. However, the progress in environmental protection technology has failed to keep pace with the fast depletion and degradation of natural resources. Stress has to be laid on both preventive and curative technological progress.

  6. Life-cycle assessment: This is a process of evaluating the environmental burdens associated with a product or activity. It addresses the entire production system, not just isolated components. It starts by identifying and quantifying energy, the material used and the waste released into the environment, assessing the impact of the energy and material uses and releases to the environment and identifying and evaluating opportunities of effecting environmental improvement. It is a complex process beginning with goal definition, going on to inventory of resources and requirements, and assessing the possible threat to planet survival. The corporate sector needs to further become proactive, that is, use technological innovations for environmental progress, which can be measured, communicated and also used effectively as a marketing tool to educate all stakeholders.

Business managers must recognize new business ethics and opportunities—clean products and clean technologies to create a competitive advantage. Old established companies also need to enter the stream of environmental, technological innovations before the new entrants using the latest, cleaner technologies provide a stiff competition and drive them out of the market. Crime of the future will no longer be failure to comply with regulations. It will be not to act preventively, and failure to measure performance. Judgement pronounced by public opinion in the market, will make or mar the future of a business enterprise. To remain a vital, thriving competitor, a corporate management must gear up to meet the needs of the next generation of consumers.

Companies, as also the world, are realizing that they have neither the resources, the rapid technological changes, nor the time to damage their environment now and clean up later.

Emerging technologies offer the promise of higher productivity, increased efficiency and decreased pollution. Though they may bring problems of new toxic chemicals and wastes and of major accidents of a type and scale beyond the present coping mechanism, implemented with caution, there is no reason why they should not lead to a more prosperous and bright future for the corporate world and respectability for management.

Thus company managers’ roles and responsibilities are undergoing fast transformation not only in the area of maximizing return on investment, but also in the real-life proposition of social responsibility and social accountability. With unprecedented growth in information technology, speedy process of globalization and 24-hour trading in commodities, foreign exchange, and bullion, managers and other functionaries of the corporate world have urgent need to re-orient their perception and working style.


Environmental performance has become a critical issue in recent times. Environmental disasters can create serious problems for organizations. A good example is the Bhopal gas tragedy in 1984, in which thousands of people lost their lives after methyl isocyanate leaked from the Union Carbide plant in Bhopal.

Many well-informed people remember vividly the tragic and poingnant Chernobyl nuclear disaster in Kiev, Ukraine that occurred in 1986. The explosion of the nuclear reactor killed as in mid-2006 ‘fewer than 50’ people and released large quantities of radioactive substances into the atmosphere.11

Bhopal and Chernobyl did not mark the end of environmental disasters. The Valdez (United States) oil spill of 1989 and the Tokaimura (Japan) nuclear accident of 1999 are other prominent examples. In developing countries like India, environmental issues often take a back seat and accidents are quite common.

In another environmentally damaging incident caused by criminally careless corporate attitude, Hindustan Lever dumped mercury waste from its thermometer factory in Kodikanal in the surrounding forests. This negligent attitude of the multinational company not only affected the forests but also the local community adversely. When environmentalists headed by Greenpeace unearthed the incident, the company initially denied the charges that it was responsible for the damage.12 Later on, the Indian authorities coerced them to admit the truth about their deep involvement in the fiasco.

Since then Unilever has retrieved and sent back to the United States some of the waste for disposal but is shying away from compensating affected workers and further environmental remediation measures.

The German transnational Bayer has continued to sell certain phased-out pesticides in Asia in spite of giving an assurance that they would stop the manufacture of these highly poisonous pesticides.13

Ship-owning companies such as Bergesen of Norway and Chandris of Greece follow the unlawful practice of dumping their toxic waste in ship-breaking yards located in developing countries such as India, Pakistan, China, Turkey and Bangladesh. Though the International Marine Organization has chalked out a guideline to be followed by shipping companies for disposing off their harmful wastes before the ships are sent for being scrapped, these are hardly followed. Therefore, it is necessary that these guidelines are made mandatory to make the ship owners responsible in case of violations.14

In today’s globalized world, transnational business and trade organizations tend to move around assets, products and wastes across countries with a view to increasing their profits by reducing costs. These companies take undue advantage of the lack of well-defined local environmental and health laws in poor countries and their governments’ laxity in implementing them. Further, they often export pesticides and wasteful and destructive technologies to under developed countries, which decisively harm the inhabitants of these countries.

Most types of environmental problems have been attributed to industry, whether local or global. Problems like global warming, depletion of ozone layer, and increase of instances of health problem are considered to be the result of rapid industrialization without a thought for environmental degradation. By tackling environmental problems, there may not be any immediate improvement in the bottom line. At the same time, it is wrong to assume that investments made to improve environmental performance will never pay off. A strategic approach to environmental risk management can generate sustainable, competitive advantages in the long run. For this, environmental issues must be integrated with the companies’ corporate strategies. One of the more prominent and significant ways of integrating environmental issues with the company’s corporate strategies is by adopting environmental audit as a means of taking initiative to evaluate environmental performance.


The time has come for companies to take a fresh look at environmental issues. Attempts to improve environmental performance should be viewed as an opportunity to innovate rather than as a burden. As Porter and Vanders Linde have put it, ‘The relationship between environmental goals and industrial competitiveness has normally been thought of as involving a trade-off between social benefits and private costs. The issue of how to balance society’s desire for environmental improvement becomes a kind of arm-wrestling match’. Environmentalists want to establish high standards, while industrialists want them lowered or even eliminated. However, the unavoidable struggle between the economy and ecology arises out of static view in which everything in environmental regulation is fixed—technology, products, process and customer needs. But if environmental standards are designed well and appropriately, they can promote innovation, which may fully, or to a large extent, offset the cost of complying with them.15


Environmental audits provide an in-depth review of the company processes and progress in realizing long-term strategic goals. The concept has come into force in recent years and differs from a financial audit in that it is intended to measure the impact of an organization’s operations on the environment against a predetermined set of criteria, and as far as possible to assess them in terms of costs. This audit is part of a continuing and cyclic process rather than an exercise in standard accounting practice at a given point of time. The audit may also be used to assist in determining the environmental expenses incurred by companies.

The environmental audit examines the company’s performance as against its policy with reference to performance of personnel, technology, systems and documentation and how these are related to relevant standards of practice. Therefore, environmental audit is in the nature of a corporate policy audit. The objectives of an environmental audit are evaluation of the efficiency and efficacy of resource utilization, that is, man, machine and materials, identification of areas of risk, environmental liabilities, weakness in management systems and problems in complying with regulatory requirement, and insuring the control on waste pollutant generation.

In general, there can be two types of environmental audit: an environmental compliance audit checks the degree of conformance to laws and rules prescribed by the relevant regulatory authorities, while an environmental management audit is an appraisal of the company’s internal capabilities to discharge its environment-related responsibilities. A compliance audit may cover issues such as housekeeping, practices followed while storing dangerous chemicals, how hazardous waste is being stored and disposed, the method followed for releasing waste water, etc. A management audit is more concerned with capabilities, focuses on issues such as organizational structure, accountability, training of employees to respond to crisis situations and relationships between plant personnel and local regulatory authorities. The audit can examine the environmental policy statement of the company, the documented procedures for preventing any damaging crisis situations and the type and frequency of review of the programmes.

If used well, the audit can generate various benefits for organizations:

  • problems can be corrected before they are too large to fix;
  • opportunities can be identified for cutting costs through measures such as waste minimization and recycling;
  • insurance costs can be reduced;
  • employees can be persuaded and motivated to take environment issues seriously; and
  • the corporate image can be improved.

More and more companies now understand that they have to respond with alacrity to issues concerning environment and just not to comply with the law passively. Most companies display a high degree of knee-jerk responses to environmental issues. They also believe that command and control mechanisms and formal procedures and rules will automatically take care of environmental issues.16

Environmentalists are of the opinion that the best way to manage environmental problems is to align it with the company’s business strategy. They should collect and store information on environmental issues in the same way as they do for other business issues. They should also deal with environmental risks in the same manner as they deal with business risks.


In general, corporate environmental policies may serve one or more of the following objectives:

  • Reducing costs through measures such as recycling or energy conservation.
  • Reducing the possibility of accidents.
  • Establishing a good corporate reputation.
  • Mitigating employees’ discomfort by providing a better work environment.
  • Maintaining a good relationship with the local community and regulatory authorities.
  • Conforming to a code of ethics.

Reinhardt, an authority and prolific writer on environmental and corporate strategy, suggests five different approaches to managing environmental issues.17

  1. Investing in environment friendly processes or products: The additional costs are recovered from customers through clear differentiation and product positioning that allows the firm to charge a premium.
  2. Managing environmental regulations: This includes investing in environment protection and forcing other firms to make similar investments.
  3. Investing in environmental performance improvement, without increasing costs: Such an approach will be possible if, for example, effective recycling can bring down input consumption, which will result in the company charging lower prices to recover the investments made.
  4. Combining methods: Combining all the three methods mentioned above to change the basis for competition and redefine the market so that both the firm and the environment can benefit.
  5. Looking at environmental issues from a risk management perspective: This approach is to put systems and processes in place to prevent or minimize the possibility of accidents and dealing with them effectively whenever they occur.

The specific approach to environmental issues would depend on the industry structure, the firm’s competitive positioning, its organizational capabilities and its perceptions about the response of regulatory authorities and environmental activities. The five approaches are discussed in detail below.


There is considerable scope to innovate through better environmental performance. A company can design better performing, higher quality or safer products. There may also be scope to modify the product so that there is higher resale value. If one or more of such conditions are met, the company may be in a position to charge a premium that more than recovers the costs incurred in improving environmental performance.

Industrial customers are often prepared to pay a premium for products with improved environmental performance if their (customers) own costs can be reduced. Some customers may also be prepared to pay a premium, if they consider the superior product to be a hedge against stringent environment regulations in the future. Ciba Speciality Chemicals is a good example inasmuch as its environment friendly dyes have helped consumers to cut expenditure on salt and water treatment and improve quality.18 This has enabled Ciba to charge a higher price for its dyes.

In the case of consumer goods, retail customers may be prepared to pay more if the environmental benefits can be projected suitably. For environment-friendly products to command a premium in the market, the company’s concern about the environment must be consistent with the other signals it sends to customers. If improved environmental performance is not well integrated with the overall product positioning or corporate strategy, it may fail to capture the value created.


This can be done in two ways: self-regulation and government regulation.

Self Regulation

Firms in an industry can come together and agree to incur additional costs for improving environmental performance. Self-regulation can preempt more stringent government regulations. It also gives companies greater latitude in dealing with environmental problems. Self-regulation may also enable companies to develop better environmental standards than the government.

The main problem with self-regulation is that the pay-offs from the improved environmental standards may vary across companies in the industry. Quite often, smaller firms are at a disadvantage while larger firms can leverage the benefits of a good reputation that results from better environmental performance. Thus, self-regulation can change the basis for competition by favouring some firms at the expense of others.

Reinhardt mentions various conditions for the success of a self-regulatory system.19 Companies in the industry must be able to set measurable performance standards. They should also be in a position to enforce the rules. The programme must be broad-based, involving a sufficiently large number of companies, especially all the important players in the industry, so that opponents cannot come together and block it. The programme must have credible mechanisms for standard setting, monitoring and enforcement.

Government Regulation

A firm may try to put pressure on its competitors by influencing government regulators. But straight and simple lobbying as adopted by Indian companies may not have the desirable impact in the long run. To use this approach successfully, the firm must have a unique competitive advantage when the new laws come into effect. As Reinhardtputs it, ‘There is no long-term benefit in a strategy of pure rent seeking. Without some complementary investment in the market place or some pre-existing source of competitive advantage, the pay-off to an investment in regulatory change will be zero’;20 Both the firm and its competitors will drive out the very economic surplus they want to pocket themselves. It is up to the firm to convince all the concerned parties— customers, competitors and regulators—that the proposed new rule is both feasible and desirable.

Porter and Van Jer Linde argue that any antagonism between the regulators and the industry locks companies into static thinking. It also leads to gross overestimates of the costs involved. In many cases, because of the learning curve effect, the cost of compliance with regulations tends to decrease progressively over time. Hence, aggressive lobbying by an industry to dilute environmental standards may not only be opportunistic but also counter productive. They suggest that companies must keep the following in mind while trying to influence environmental standards being set by the regulatory authorities. The standards must create sufficient opportunities for the industry to innovate. The regulations should leave the door open for further improvements instead of locking companies into a particular technology.21

The regulatory process should create minimum uncertainty about the outcome expected. It should be emphasized that environmental regulations must focus on outcomes and not technologies.

Generating Cost Savings

Conformance to improved environmental standards may be accompanied by process innovations. These include higher process yield leading to higher resource productivity, less downtime through careful monitoring and maintenance, lower output and energy consumption and reduced material storage and handling costs.

In the hotel industry, for instance, many have reduced solid waste generation and slashed water and energy consumption. The Dutch flower industry due to its heavy use of fertilizers and pesticides in cultivating flowers was faced with stringent regulations as these substances were contaminating the soil. The industry came up with innovative solutions such as a closed loop system to reuse water and growing flowers in water and rock. These changes produced uniform growing conditions and improved the product quality.22

As a result, environmental performance improved, even as costs came down. Dow Chemical is another good example of how a company can cut costs and improve environmental performance at the same time. In its California complex, hydrochloric acid gas is scrubbed with caustic soda to produce various chemicals. The earlier practice was to store the waste water in an evaporation pond. Regulators insisted that these ponds be closed by 1988.23

In 1991, US regulators asked distillers of coal tar to drastically cut their benzene emissions. The regulation motivated Aristech Chemical Corporation of Pittsburgh, Pennsylvania to develop a method for removing benzene from tar in the first processing step itself. This did away with the need for expensive gas blankets. The new pollution control measures enabled Aristech to save US$ 3.3 million.24


Companies can also try a combination of the various approaches discussed so far. They can use research to develop new ways of offering services to customers and attempt to shape the future of the industry’s environment practices. They can reduce the cost of disposal for customers, through buy-back schemes. They can offer value to customers in ways which competitors cannot match, and charge a premium.


For many organizations managing environmental issues means avoiding the costs associated with accidents, catastrophes and other environmental mishaps. Reinhardt has identified four different elements of environment risk:

  • probability of occurrence of an adverse event such as an accident;
  • probability distribution of the total costs if the event occurs;
  • allocation of responsibility if an accident occurs;
  • certainty of the assessment.25

In other words, four different tasks have to be performed by managements while dealing with environmental risks. They must minimize the probability of occurrence of the adverse event. They must cut losses when an accident occurs. They should be able to pinpoint responsibility on the concerned parties when the event occurs. They must obtain more information to make the risk assessment methodology as robust as possible. Managers have to use the right mix of risk reduction, risk shifting and collection of information to manage environmental risk efficiently.

The simplest way to manage environmental risk is to buy an insurance policy. This shifts the risk to the insurance company. Such an approach makes sense if the company feels that the premium being paid is small compared to the huge risks involved. Another approach is to set up disaster management cells which can respond quickly when an accident occurs. A third approach involves setting clear guidelines for the operating units in the form of various documents and manuals. Another approach is to link promotion of managers with their contribution to risk management.

Behavioural issues need to be carefully examined so that environmental risks are managed systematically. Reward systems normally favour managers who reduce costs or increase profits. Environment-related expenditures show up immediately in the books of accounts but it may take some time for the benefits to be realized. Consequently, there may be a tendency to reduce investment on environmental performance improvement measures. Inbuilt mechanisms are necessary to check this.

Though Reinhardt considers environmental risk management as a separate approach, there is a strong case for arguing that the various risk-mitigation measures can be incorporated in each of the four approaches covered earlier. Improving the process, cutting costs, differentiating the product and managing regulation can all be viewed as methods to reduce the risk of incurring heavy losses owing to environmental mishaps.26

Thus, environmental issues should be analysed as business problems. A rigorous analysis is necessary to understand which investments generate value for shareholders. While doing the bare minimum to stay on the right side of the law is not acceptable, pouring a large amount of money into environmental projects in the name of discharging social responsibility is unwise. As Reinhardt puts it ‘Campaigners aren’t in business to solve the world’s problems nor should they be’. Are there not stockholders who want a return on their investments? Keeping this in mind, managers have to work out a business strategy and know the time when it really pays to be green. Besides, it is not always that environmental issues translate themselves as money-spinning opportunities. It is also equally false to hold the opposite view, namely, if a company invests in improving the environment, it stands to lose.27

Managers should look at better environmental performance as an opportunity rather than as a threat. As Porter and Van der Linde say that companies should ponder over questions such as ‘What are we wasting?’ and ‘How could we enhance customer value?’ instead of focussing on regulatory compliance.28

Many companies allow environmental issues to be handled by lawyers and consultants who tend to focus on compliance rather than innovation to correct this situation. Environmental strategies must become the direct concern of the top management. Environmental impact should be incorporated in the overall process of improving productivity and competitiveness. Managers should be proactive and go beyond currently regulated areas. They should look for opportunities to improve design, manufacturing and delivery processes on an ongoing basis.

According to Frank P. Popoff, former CEO of Dow Chemicals, ‘Competitive advantage must not be gained through non-compliance or minimum compliance. Some companies try to reduce cost this way. But this is deadly. Sooner or later, mandates will come into place to prevent such an approach and put the company at an enormous competitive disadvantage. Success truly belongs, I believe, to those companies that not only comply with environmental standards, whether mandated or self imposed, but do it more efficiently and effectively than others. If they conserve energy more efficiently through internal cycling or on-site disposal they will ultimately reduce cost’.29


Environmental practices in India have improved significantly in recent times. Used to a fairly lax regulatory environment for a long period of time, many Indian companies had not taken environmental management seriously in the past. Now, regulations have become more stringent. Moreover, many companies are looking at environmental management as a means to improve their image and to cut costs. A recent survey of 47 companies conducted by Business Today and Tata Energy Research Institute (TERI) has revealed that 75 of them have an environmental policy.30 Many companies have quantifiable targets in areas such as emissions. Some companies stand out in their effort to upgrade environmental performance. Not surprisingly, quite a few of these companies are subsidiaries of global companies.

Bayer India believes that the benefits of successful environmental management programmes far outweigh the costs. The company has made substantial investments in incinerators and leased out 30 of its incineration capacity to other chemical firms. The fee charged by the company has enabled it to recover most of the costs. Better environmental practices have also reduced water consumption. At Philips India’s Pimpri unit, tubelights were earlier flushed with 70 mg of mercury each to ensure that 15 mg stayed in the tube. This increased both environmental hazards and costs. Philips switched over to argon flushing, reducing both pollution and costs in the process. At Tata Steel, improved environmental practices have increased profits through lower consumption of raw materials and better utilization of wastes.31

Yet environmental management in India still has a long way to go. Consider the Uranium Corporation of India Ltd (UCIL) mines in Jadugoda. Children in 15 adjoining villages have been affected by radiation, while many workers are suffering from serious ailments. A study conducted by the Jharkand Organization Against Radiation (JOAR) in 1998 revealed that many women in the region suffered from miscarriages and still-births—16 of the children born to them died at infancy. Lack of safeguards at the mines has exposed 30,000 people in 30 villages to radiation risks. Nuclear waste has been dumped into waste dumps called ‘tailing ponds’. Wind blows the harmful dust around in summer, while in rainy seasons the river water gets contaminated. In 1994, there were 17 deaths. By 2001, it had gone up to 31. Many people have been affected by cancer.32

According to the UCIL Chairman and Managing Director, Ramendra Gupta, ‘Pan Parag’ causes bigger health hazards than uranium mining. He felt the journalists must run after the former instead of the latter. He even cited a report stating that the radiation levels within 5 km of Jadugoda were normal. He also contended that malnutrition and alcoholism rather than radioactivity are causes of illness in Jadugoda.33

Many Indian companies look at ISO 14001 certification as an end in itself. Most have not integrated environmental management into the corporate strategy. In many instances, ‘green initiatives’ have been launched without a clear understanding of the potential benefits. In the worst cases, companies flout pollution laws and pay bribes to government inspectors when they visit their premises. Quite clearly, Indian companies still have a long way to go in the area of environmental management. The cost they may have to incur in the event of mishap may turn out to be heavy!

However, in recent times there has been public opinion and an active role of the environmentally aware NGOs, who have gone to the courts through public interest litigations to protect the environment for people to have clean air, water and atmosphere. The courts in turn have ordered Central and State governments to enforce environmental laws strictly and in extreme cases have come down heavily on polluting industries as in the cases of the hosiery industry in Tirupur and leather tanning activities in some districts in Tamil Nadu. Likewise in Delhi, polluting industries were ordered to be shifted while the metropolitan buses were asked to use non-polluting gas instead of highly polluting diesel.

Box 4.2 provides the result of the second worldwide annual survey conducted by the National Geographic Society. It discusses how people of developing countries such as India make virtue of their practices which are due to their poverty-stricken lives, rather than because of their deliberate choice.


That cold water bath many Indians have because there is no electricity … that matka they use because they cannot afford a fridge … and the long walk they take to work and back because private transport is expensive and public transport shoddy. There is an upside to the hard life.

Indians may be green with envy at the consumption-driven lifestyle in the West, but their own frugal ways and modest means have catapulted them to the top spot in the world’s Green index, making them the most environmental-friendly denizens of Planet Earth.

The second annual survey conducted by the National Geographic Society and international polling firm Globe Scan on environmentally sustainable behaviour, the results of which were released on 13 May 2009, showed that Indian consumers have overtaken Brazilians to take the top spot with a Greendex score of 59.5. The Chinese retained the third spot with 55.2. At the bottom of the ladder in the 17-country survey are the over-consumptive Americans (43.7), Canadians (43.5) and Japanese (49.3).

So, what has put Indians at the top of the Green ladder? It was driven by above-average performance on all four sub-indices, including first-place rankings for food and goods. Indians are the most frequent consumers of self-grown food, with 35 per cent eating what they grow several times a week or daily. Desis are also the least frequent consumers of beef, which requires greater energy to grow—only 22 per cent consume beef weekly compared to an average of 63 per cent for the 17 countries surveyed.

Indian consumers also topped the goods sub-index score. Their top status is due in part to having lower-than-average rates of ownership of large appliances and electronics. Also, the rate of those buying used goods, avoiding environmentally unfriendly products and excessive packaging, and buying environmentally friendly products is the highest.

Indian consumers continue to rank third on the transportation sub index, based on the fact that they are second-most likely to live close to their usual destinations and second-least likely to own a car or truck (54 per cent). Among those who drive, Indians tend to have lower-than-average annual mileage rates. Besides, they are the most likely to own and use motorcycles or scooters and second most likely to drive a compact car, after the Mexicans. In addition, walking or riding a bike is up seven points from the past year (to 57 per cent).

As regards housing, Indians rank second only to Brazilians. Factors contributing to their high ranking include a low incidence of having home heating (41 per cent) and hot running water (38 per cent) and a high incidence of using on-demand electric water heating (45 per cent among those with hot running water), and using solar energy to heat water (15 per cent).

However, there are plenty of signs of India’s Greenness, which seems driven more out of compulsion than conviction, may not last long. According to the study, Indians are the most likely to say that they intend to acquire a motorized vehicle in the next year (58 per cent). There is also declining frequency of consumption of local foods, fruits and vegetables and an increase in the consumption of imported foods and bottled water. India is also the only country surveyed experiencing increased bottled water consumption.

Indian consumers’ attitudes showed their divergent and conflicting views on the environment. As a group, they express above-average concern about the environment. As for their personal contribution to environmental problems, they say they are trying hard to reduce their own negative impact and are paying more attention to environmental issues. At the same time, many agree that environmental problems are exaggerated and that the Green movement is a fad. Indians have faith in the government, industry and new technology to help solve environmental problems, but express below-average faith in the ability of individuals to make a positive impact.


Source: “Indians are World’s ‘Greenest’: Survey,” Times of India, 14 May 2009. Reproduced with permission.


The Ministry of Environment and Forests and the country’s industrial sector have partnered for voluntary pollution control. They have jointly worked out a charter on corporate responsibility for environmental protection. This charter was released on 13 March 2003 in New Delhi.

The charter marks a shift from regulatory enforcement of pollution control norms to voluntary compliance by the industry, to significantly enhance the quality of the environment. The preparatory work in this regard has been completed with the government holding discussions with the representatives of 17 major polluting categories of industries.

At a conference of representatives of the government and the polluting industries, some basic issues were identified with a view to evolving an agreement on a national action programme. In the perception of the government, the regulatory measures have served useful purpose over the years. However, its utility is limited in terms of overall environmental management.

While several industrial units have established pollution control systems, their operation and maintenance are quite unsatisfactory. In the government’s view, though outwardly, industries were complying with the effluent and emission standards, there were several instances where water and air quality did not improve.

The voluntary charter makes it a point that all possible attempts are made to reduce air and water pollution. The industry has accepted on its own volition to take up modernization of production processes and installation of required systems so that the polluting effluents and solid wastes can be considerably reduced. It is envisaged further that measures such as energy conservation, reduced use of raw materials, effective monitoring of air and water quality, adoption of waste minimization measures and better work practices be used to help realize the goal. The charter also enables the industry to be aware of government programmes, priorities and concerns in respect of 17 categories of major polluting industries. These are thermal power, cement, aluminium plants, oil refineries, pesticides, iron and steel, sugar, pulp and paper, copper and zinc, distilleries, petrochemicals, dye and dye intermediates, caustic soda, pharmaceuticals, tanneries and the fertilizer industry. It also allows the required time for implementation of action points relating to the sectors concerned, so that the industry need not bear any sudden burden and pressure of enforcement. The government is also in favour of a pollution control programme so that it can work with industries to bring about self regulation and voluntary compliance rather than imposing penalties.

The government is of the view that the charter would bring about the desired shift in the status of environment and enforcement. Earlier the government had identified the 17 major polluting industries.

The government-industry initiative with regard to environmental protection may also lead to an agreement amongst them for adoption of a charter to set up coal washeries, recycling of ash-pond effluents and to accord environmental clearance for setting up new thermal plants and expansion proposals that would follow the required emission standards.34


From planting trees, to using solar energy, to constructing smart buildings and even collecting litter, corporate India is going all green.35

Private Sector Initiatives

An increasingly large number of companies these days want to be eco-friendly in one way or the other. To quote a few examples, in Johnson & Johnson’s plant in Mulund near Mumbai, biodegradable waste is being recycled. The Leela Kempinski hotel in Mumbai has been maintaining large gardens in its vast premises with a view to encouraging greenery and improving the ambience. The hotel has also been using natural gas as boiler fuel as it is believed that this process would substantially reduce air pollution vis-à-vis oil-fired ones.

There are many other such initiatives in the hospitality sector in Indian industry. To illustrate, the Orchid, an Ecotel hotel is an excellent example of this. The hotel building’s architecture, its measures of water conservation, its usage of rubber wood instead of real wood, employment of energy saving devices are all steps that it employs to qualify itself as an eco friendly hotel. Likewise, the Park in New Delhi, the Ambassodor Pallava in Chennai and the Lake Palace in Udaipur use energy-saving devices to conserve electricity apart from using bio-degradable waste generated in their hotels and also employ various techniques to conserve water.

Companies like LG electronics have put forth environment-friendly initiatives that include rain water harvesting and solar water heaters for use in canteens and for converting sludge into bricks.

Public Sector Efforts

Bharath Petroleum Corporation Limited (BPCL) has introduced a number of initiatives to prevent air pollution in petrol pumps by using vapour recovery systems. In this particular instance, BPCL’s petrol pump in the Indian capital prevents unburned petroleum vapour from entering the atmosphere by splitting it into less harmful compounds.

Bharat Heavy Electricals Limited (BHEL) is another public sector organization that contributes its mite to address issues concerning environment and occupational health and safety. BHEL has launched a slew of products that include wind electric generators, solar heating systems, solar photo voltaic systems, solar lanterns and battery-powered road vehicles with a view to conserving the environment.

The list of such environmentally conscious organizations both in the public and private sectors is exhaustive and is growing by the day.36

Power Grid Corporation of India Ltd (Powergrid), the public sector unit engaged in power transmission, constructs, owns and operates extra high voltage transmission network in India and carries out real-time supervision and monitoring of power flow on a round-the-clock basis over the entire extra-high voltage (EHV) network of the country.

With an asset base of 48,000 circuit kilometres of transmission lines, and 82 substations having 46,500 MVA of transmission capacity, Powergrid is committed to the concept of eco-efficiency through conservation of natural resources, reduced impact on nature and increased service value by use of efficient and safe technology practices.

It is an ISO-9001 company and as a part of its sustainability strategy it is adopting a comprehensive integrated management system comprising ISO-9001 for quality management system, ISO-14001 for environmental management system and OHSAS-18000 for occupational health and safety management system. Some of the initiatives taken up by it to minimize environmental and social impact are installation of tall towers to minimize impact on flora and fauna in ecologically sensitive areas; compensatory afforestation and massive plantation in all of its installations; rain water collection and harvesting; and preference to use barren or waste land for its installations. After demonstrating its commitment, Powergrid is aspiring and striving to attain global leadership in the transmission sector through continually improving its environmental standards as per international best practices.

It has constituted a committee of eminent persons and experts in this field, which shall not only review the Employee Stock Purchase Plan (ESPP) document keeping in view the international best practices but shall also oversee its compliance by Powergrid.

Multilateral funding agencies such as the World Bank and Asian Development Bank (ADB) have been actively associated in operationalizing its sustainability strategy.

Another public sector unit, the National Hydro Power Corporation (NHPC), is also committed to the goals of sustainable development and is promoting hydropower development in India. As most of its projects are situated in the remote corners of India, which have not seen the face of development earlier, meeting environmental challenges has become a crucial issue.

It aims for minimum destruction and exploitation and takes various conservation measures to restore the resiliency of Nature. That Nature must not fall apart due to developmental pressure of dams, is its objective. NHPC’s compensatory afforestation and biodiversity conservation measures have helped in restoring ecological balance in its vicinity. Catchment area and reservoir rim treatments are aimed at increasing the life of the reservoir. Green belts created by the company around the facilities act as carbon sinks, purifying the ambient air for people to breathe. Restoration of quarry sites and landscaping have added aesthetics to the project surrounding.

NHPC has also undertaken massive afforestation, which is an effective tool in arresting soil erosion and enrichment of environment. At the Chamera project it has planted approximately 100 times more trees than that were felled. At the Dulhasti project it was 1000 times and at Rangit it was 60 times. NHPC gives special attention to the choice of species with greater emphasis on indigenous species while monoculture plantation is avoided.


The Directive Principles of State Policy of the Indian Constitution commands the State to ensure protection and improvement of environment and to safeguard forest and wild life. The Directive Principle of State Policy on Environment has been eloquently articulated in Article 48A of the Constitution, introduced by the 42nd Amendment in 1977. It reads thus: ‘The State shall endeavour to protect and improve the environment and to safeguard the forests and wildlife of the country’.37 Likewise, Article 51 (A)(g) lays down protection and improvement of environment as one of the fundamental duties of every citizen. This duty of citizens would mean that every citizen is duty-bound to protect and improve the natural environment of the country including forests, lakes, and wild life and to have compassion for all living creatures.

Laws Governing Environment

The Environment (Protection) Act, 1986 provides for the protection and improvement of environment and for matters connected therein. The act was the result of the participation by India in the United Nations’ Conference on Human Environment held at Stockholm in 1972. There were also other Acts enacted in India relating to environmental issues such as (i) Water (Prevention and Control of Pollution) Act, 1974; (ii) Air (Prevention and Control of Pollution) Act, 1981; and (iii) the Factories’ Amendment Act, 1987.

Environmental pollution created by individuals or corporations amounts to public nuisance and therefore, this can be controlled through criminal law. Offensive smells, noise and air pollution are included under ‘nuisance’. Action against such nuisance can be taken if it is repeated and committed continuously. The nuisance may be public or private in nature. The public nuisance interferes with the quality of life of the society. Therefore, pollution originating from water, air and noise can be prevented by civil or criminal laws.

The criminal prosecution for offence (IPC Z68 OF 1860, Cr Pc 133–144 of 1873) and a civil action by any member of the public with the direction of the court for a declaration of injunction (Section 91 of the CrPe, 1908) are the remedies for public nuisance. These laws had been enacted with a view to protect the environment through better planning and regulation.38 However, these are not enforced effectively to maintain the ecological balance and environmental stability.

The environmental laws are generally enforced by administrative agencies. But due to inadequate staff, insufficient funds and lack of political will, they are not effectively enforced.

The National Environmental Policy, 2004

The National Environmental Policy, 2004, was released in August by the Ministry of Environment and Forests (MoEF) for public discussion. Environmentalists have welcomed it, because though it is more of a strategy paper than a policy pronouncement—it is still a welcome initiative, given the fact that a policy statement on environment and its effective implementation is long overdue, and that it is the dire need of the hour.

Environment and Economy—Two Sides of the Same Coin

The National Environment Policy (NEP) emphasizes the often-overlooked truth that what is good for the environment is also good for the economy and that environmental protection ‘cannot be considered in isolation’ from the development process. A fair trade-off between environmental costs, as far as they can be ascertained and monetized, and economic development imperatives is possible and desirable. The NEP is, however, quick to qualify that where money cannot compensate for loss of an environmental good, cost-benefit analyses and trade-offs are better avoided.39

Conservation of Life Supporting Systems

The draft policy accords priority to conservation of life-supporting systems such as land, forests and water.

The causes of land degradation in India are many, ranging from the direct (water and wind erosion, loss of forest cover, and water logging) to the indirect (fragmentation of land holdings, inadequate tenure rights, wasteful subsidies on agricultural inputs such as water and power).

The NEP’s prescription of adoption of ‘science-based and traditional land-use practices’ developed ‘through research and development’ for combating land degradation is too vague and general. Further, land degradation is often the result of unsustainable and incompatible land-use engineered by the market.

Forest and Wildlife Conservation

Forest and wildlife conservation has been the forte of the MoEF. The NEP breaks new ground in pleading for ‘legal recognition of the traditional rights of forest dwelling tribes’ to ‘remedy a serious historical injustice’. This, however, calls for a major overhaul of the Indian foresters’ prevailing mindset that looks upon forests as garrisons to be protected against marauders and of the legal dispensation that extinguishes all traditional rights in protected areas.

Forest Cover

The MoEF is trying to find out ways and means to achieve the target of increasing the forest cover to 33 per cent by 2012. This task has been set by the Planning Commission under the Tenth Plan and approved by the National Development Council. But, given the recent performance of tree plantation, which stood at 1.1 million hectares in 2002–03, achieving an annual plantation rate of 4.2 million hectares appears to be a ‘gigantic’ task for the ministry. But what is perturbing is the fact that of a total of 33.60 million hectares required for the purpose, the government could make available only 4.2 million hectares. For the remaining, it will have to depend on private institutions and individuals for forestation projects.

The present forest and tree cover in the country is 23.03 per cent. Thus, an additional 6.4 million hectares of forest and tree cover is required for achieving the 25 per cent forest cover target, and an additional 33.60 million hectares for 33 per cent cover by 2012. In the annual terms, the increase has to be at least 4.2 million hectares in the next 8 years. Much of this has to take place on private, non-government and non-forest wastelands over which the government has no direct management control. The involvement of people—particularly at the grassroots level—and agencies outside the government will be crucial in this.40

Biodiversity Conservation

Biodiversity conservation has received adequate attention in the NEP. An important object of the Biological Diversity Act, 2002 is to check piracy of biomaterial and traditional knowledge and to enforce intellectual property rights (IPRs) over them. The Draft Policy reiterates the letter and spirit of the act.

Concerns on Fresh Water Resources

While dealing with freshwater resources, the NEP expresses alarm over the wasteful and inefficient use of surface as well as ground water and points to a slew of actions that need to be taken for conservation. The policy also refers to levy of proper user charges to reflect water scarcity and calls for a review of the subsidies now being extended to the agricultural sector. Agriculture consumes nearly 80 per cent of the country’s utilisable water. Surprisingly, the NEP makes no reference to the National Water Policy document already available.

Expectedly enough, NEP dwells on subjects such as air quality, mountain ecosystems, wetland conservation, creation of environmental awareness among the masses, and spreading environmental education.

Deficiencies in the Draft Policy

The draft Environment Policy naturally attracted a great deal of attention, controversy and criticism. According to Mr N. R. Krishnan, former Secretary, MoEF, there are, inter alia, three notable omissions in the Draft Policy.41 These are as follows: (i) The NEP is silent on the energy front. Energy has much relevance to environment, particularly in the context of global warming. Viewed in the context of the country’s growing needs and the fact that we are already the sixth largest emitter of greenhouse gases that cause global warming, India would be compelled, sooner or later, to accept some limits on its emissions; (ii) Urbanization has a strong adverse impact on environmental quality. The NEP rightly starts with the premise that the environmental problems of India arise mainly out of its large and growing population. However, the NEP has given a short shrift to urbanization and human settlements. One expects this lapse to be corrected in the final document. The NEP is also silent on the role of urban local bodies in environmental improvement. These institutions are poorly endowed with finances and lack expertise in managing the local environmental problems; (iii) The NEP has not recognized adequately the potential of state governments in improving environmental quality. After all most of the subjects that would fall under the definition of the term ‘environment’ are within the law-making powers of state legislatures. However effective the New Environmental Policy looks on paper, the net result will be poor, unless and until the state governments, which are expected to implement them, are motivated to put them into practice, both in letter and spirit.

Though the draft NEP needs to the improved in the context of certain glaring omissions and its failure to interlink the past and present developments to project a futuristic environment policy, if properly implemented faithfully, it would achieve its objectives. The 2004 draft policy on environment forms a good discussion paper and is likely to generate much interest among industry, academia and civil society.

The importance of environmental preservation through better state and corporate governance practices cannot be overstressed, in the context of global warming and its attendant problems. The growth of consumerism, leading to a high rate of consumption of natural resources, is at the heart of many environmental problems. Increasing awareness and consequent concern on these issues were fuelled by informed public sentiment, media coverage, corporate attitudes and government policy. Public opinion is crucial to the resolution of environmental issues in a democratic society. Media wields considerable influence over public perception of environmental groups, corporations and the government. Many environmental advocacy groups have evolved considerably from the liberal, anti-business, anti-government periphery of past decades. The shift of corporate attitudes is the key to environmentalism. The stance of corporations is shifting towards being proactive stakeholders seeking sustainable solutions. Many stakeholders who advocate or oppose environmental protection seek to influence the government.

Government directives can prevent some of the most egregious environmental damage from occurring. A very significant concept underlying international and domestic environmental policy is sustainable development. Its goal is to ensure that the natural resource needs of the present are met without compromising the ability of future generations to meet their own needs. Environmental regulations are often criticized as being too costly for business. Industry is the world’s foremost creator of wealth, employment, trade and technology, controlling and deploying tremendous amount of human and financial resources for economic value addition.

There are several reasons why those managing business are becoming increasingly conscious of environmental issues:

  • For management morale;
  • In an era of ‘lean management’, many companies are finding ways and means to cut waste wherever possible;
  • The Environmental Protection Act (EPA) has acknowledged the potential gains from pollution prevention;
  • Business people have realized the advantages of taking a proactive stance towards environmental regulation.

Industry leaders have also realized the potential for additional benefits from pollution prevention. Changing regulations may create costly burdens for firms that do not examine the life time effects of their products. To keep their consumers, companies have to ensure that their products, are environment friendly. Eco-labelling is another example of companies trying to pacify consumers with proof of environment friendliness of their products. Potential savings through pollution prevention measures have been increasing. The fear of incurring the cost of environmental damage has risen, as regulations have been tightened by governments and courts of law. In the past, environmental advocacy groups and government regulators were seen as opponents of business.

The time has come for companies to take a fresh look at environmental issues. Environmental audits provide an in-depth review of the company processes and progress in realizing long-term strategic goals. Reinhardt suggests five different approaches to managing environmental issues:

  1. Investing in environment friendly processes or products.
  2. Managing environmental regulations.
  3. Investing in environmental performance improvement, without increasing costs.
  4. Combining all the three methods mentioned above to change the basis for competition.
  5. Looking at environmental issues from a risk management perspective.

For many organizations managing environmental issues means avoiding the costs associated with accidents, catastrophes and other environmental mishaps. Environmental management and practices in India have improved significantly in recent times though it still has a long way to go. From planting trees, to using solar energy, to constructing smart buildings and even collecting litter, corporate India is going all green. Every corporate wants to be eco-friendly in some way or the other. The Environment (Protection) Act, 1986 provides for the protection and improvement of environment and for matters connected therein. The National Environmental Policy 2004 was released in August by the Ministry of Environment and Forests for public discussion. Though the draft policy needs to be improved in the context of certain glaring omissions and the failure to interlink the past and present developments to project a futuristic environment policy, if properly implemented faithfully, it would achieve its objectives.

  • Environmentalism
  • Consumerism
  • Economic implications
  • Public protests
  • Environmental philosophy
  • Environmental preservation
  • Public opinion
  • Public sentiment
  • Role of the media
  • Dissemination of information
  • Environmental advocacy groups
  • Regulatory legislations corporate stewardship
  • Consumer and legal pressures
  • Resource preservation
  • Environmental policy
  • Sustainable development
  • Biodiversity
  • Ozone depletion
  • Environmental protection standards
  • Trade considerations
  • Toxic corridor
  • Pollutants
  • Eco-labelling
  • Cleaner technologies
  • Life cycle assessment
  • Environmental audit
  • Product differentiation
  • Cost savings
  • Redefining markets
  • Risk management
  • Environmental management
  • Voluntary charter
  • Eco-efficiency
  • Life supporting systems
  • Wildlife conservation
  • Bio-diversity conservation
  1. Trace the history and growth of environmentalism. What is the philosophy behind environmentalism?
  2. What are the roles stakeholders are expected to play in ensuring environmental preservation?
  3. Discuss the future outlook on environment, with particular reference to sustainable development.
  4. Environmental regulations and processes of preservation are said to be costly. If you were to take a stance opposed to this line of thinking what arguments you will put forward to rebut it?
  5. What is the role of corporations in environmental preservation?
  6. Discuss any two of the following:
    1. Environmental audit.
    2. Public sector initiatives in environmental preservation in India.
    3. Private sector efforts in India to preserve environment.
  7. Discuss critically ‘The National Environmental Policy 2004’.

Krishnamoorthy, B., Environmental Management, (New Delhi: Prentice Hall of India, 2005).

Kurian, J. and Nagendran, R., Essentials of Environmental Studies (New Delhi: Pearson Education, 2004).

Porter. M. and Linde, V., “Green and Competitive: Ending the Stalemate,” Harvard Business Review (Vol. 73, No. 5, September-October 1995): 120–134.

Reinhardt, F. “Environmental Product Differentiation: Implications for Corporate Strategy,” California Management Review (1998).

Rugman, A. and Venbeke, A., “Six Cases of Corporate Strategic Responses to Environmental Regulation,” European Management Review (August 2000).

Tietenberg, T., Environmental and Natural Resource Economics, 6th ed., 1st Indian reprint (New Delhi: Pearson Education, 2002).


(The case is based on reports in the print and electronic media. The case is meant for academic purpose only. The writer has no intention to sully the reputation of the corporations or the executives involved.)


The scorching pace of the growth of modern material civilization brings in several wastes, some biodegradable and some non-biodegradable, adding to the problems mankind faces in trying to preserve nature in a most habitable form to posterity. More and more forms of wastes are added to household and industrial wastes with an unfailing regularity—commercial wastes, hospital wastes, and in recent times, e-waste. With massive industrialization and urbanization, the quantity of wastes generated therefrom has increased manifold causing problems to mankind.

The enormous growth of technology in the field of electronics has made home appliances, office equipment and hardware devices very affordable and widely used. Due to the fact that these devices become obsolete within a few months or years, depending on the type of appliance, consumers are forced to switch over to newer models and improved versions of these devices frequently. Trends change at a very rapid pace today, as for instance, in the mobile phone industry, where mobile users are tempted to exchange old handsets for new ones. This is the case with several household appliances as well, such as computer systems, radio or video gadgets and the like. Due to this factor, the quantities of electronic components being added to the waste stream are increasing at alarming levels. Added to the e-wastes generated out of products used domestically, developing countries like India have become virtual dumping grounds for e-wastes generated in advanced countries. Since hardened public opinion is against letting toxic wastes being allowed within those countries, they are exported to ever-willing poor countries for recycling purposes. The electronic components that are disposed off in an inappropriate manner are collectively termed as ‘e-waste’.


Electronic waste or e-waste is a collective term for electronic goods such as mobile phones, laptops, computers, televisions, video cassette recorders, copiers, fax machines, audiovisual equipment, printers, and other hardware devices accessories, which are disposed off in an illegal manner after use. It could either be the entire equipment itself or an unused or dysfunctional part that has eventually become waste after consumer use. E-waste has been classified as hazardous since it has the potential to pollute natural resources in the environment. These electronic equipments could probably be reused or recycled, but are usually dumped through inappropriate channels, which add to the existing polluted state of the earth. E-waste is one of the fastest growing waste problems in the world creating a crisis not only of quantity but also of a catastrophic situation arising out of the inherent toxic ingredients such as beryllium, mercury, cadmium, and brominated flame retardants that pose an occupational and environmental health hazard.

Though there are a number of definitions given to this term, technically speaking, e-waste is a category or a subset of what is called WEEE (waste electrical and electronic equipment). Any equipment that provides data processing, telecommunications or entertainment either in private households or businesses that has reached the end of its life could qualify for this category of waste.

E-waste has become a problem of crisis proportions due to the fact that it is both hazardous and being generated at a rapid pace.


The large quantities of e-waste being generated have given rise to a new industry: e-waste recycling. E-waste recycling is viewed as a lucrative business because electronic components consist of valuable materials such as gold and copper, though of course, they have also plastic, glass, etc. Loopholes in law and enforcement are utilized, however, by importers, traders and recyclers of such electronic material. Industrialized countries are accused of dumping such electronic material in developing countries. Due to lower environmental standards and working conditions in countries like China, India and Kenya, e-waste is being sent to these countries for processing—in most cases illegally. India, for instance, is in the danger of becoming the dumping yard of used mobile phones and this is indeed a concern to environmentalists as they keep in mind the already sad state of affairs, as far as pollution and environmental degradation is concerned in the country.

However, many of the OECD countries have resolved to implement norms and guidelines to collect and recycle e-waste in their countries. Trade in e-waste is controlled by the Basel Convention, which seeks to control the trans-boundary movement of hazardous substances and their disposal, apart from laying down standards for e-waste management and trade. As a result, the member countries have gone far ahead in developing state-of-the-art technologies and processes that considerably reduce the risks involved in the treatment and recycling of e-waste. To some extent, their own experiences over the past 10 years in handling these huge heaps of waste material have led them to devise efficient and economically feasible systems to manage e-waste. Among the earliest countries to device methods and implement processes to arrest the dangers of e-waste, Switzerland comes first. With the country’s system to deal with e-waste in 1991 (recycling of refrigerator components), came the hope that the e-waste situation in developing and transition countries can be improved. The experiences gained through the Swiss-based projects were adapted for this purpose. In India too, Delhi and Bangalore have electronic waste processing centres.


As has been mentioned earlier, the uncontrolled burning (incineration) and disposal of electronic waste could cause severe environmental and health problems due to the methods of processing the waste. In order to gain an insight into the nature of the problems, we first need to identify the various types of appliances and equipment that could become e-waste once the consumer has used them (Fig. 4.1).

  • large household appliances such as ovens, refrigerators, air-conditioners, etc.
  • small household appliances such as toasters, vacuum cleaners, etc.
  • IT and telecommunications equipment such as computer systems, printers, phones, facsimile devices, etc.
  • entertainment electronics such as TVs, Hi-Fi, portable CD players, etc.
  • Lighting equipment such as fluorescent tubes.
  • e-tools such as drilling machines, electric lawnmowers, etc.
  • electronic toys, leisure and sports equipment such as training machines.
  • medical devices and instruments.
  • monitoring and control instruments/surveillance equipment.
  • automatic dispensers including automated ticket-vending machines.

Either the entire appliance or the individual components that do not function anymore could become an e-waste. Though technical solutions are available, in most cases a legal framework, a collection system, appropriate logistics and other services need to be implemented before a solution can be found to dispose of these items. Of all categories of e-waste, computer waste shows most exponential growth. The International Association of Electronics Recyclers estimates that about 40 million computer components are being scrapped each year, which is expected to climb to 100 million by 2010. Driven by planned obsolescence policies practised by the hardware sector such as the poor design of computers, they cannot be easily upgraded. Besides, computers being storehouses of toxic substances such as mercury, lead, cadmium and hundreds of other deadly chemicals are very difficult to recycle and dispose off safely.


The first comprehensive study to estimate the annual generation of e-waste in India was being undertaken up by the National WEEE Taskforce. The preliminary estimates suggest that total WEEE generation in India is approximately 146,000 tonnes per year. The states that top the list in terms of highest contribution to WEEE include Maharashtra, Andhra Pradesh, Tamil Nadu, Uttar Pradesh, West Bengal, Delhi, Karnataka, Gujarat, Madhya Pradesh and Punjab.

Likewise cities ranking highest in WEEE generation are Mumbai, Delhi, Bangalore, Chennai, Kolkata, Ahmedabad, Hyderabad, Pune, Surat and Nagpur.

An estimated 30,000 computers become obsolete every year from the IT industry in Bangalore alone. The reason for this is an extremely high obsolescence rate of 30 per cent per year. Almost 50 per cent of the PCs sold in India are products from the secondary market and are re-assembled using old components. The remaining market share is covered by multinational manufacturers (30 per cent) and Indian brands (22 per cent).1

Three categories of WEEE account for almost 90 per cent of the e-waste generation:


Fig. 4.1 Categories of waste Electrical and Electronic Equipment (WEEE).

Courtesy: Maurice S. Devaraj

  • large household appliances, 42.1 per cent
  • information and communications technology equipment, 33.9 per cent
  • consumer electronics, 13.7 per cent.

The growing dependence on IT and electronic products has given rise to this new environmental challenge of e-waste.

A recent study by the US EPA revealed that e-waste already forms approximately one percent of the municipal solid waste stream. Research also shows that the generation of e-waste in Europe is increasing three times faster than other municipal waste.2

Electronic and electrical equipment are made up of numerous components and different types of materials, some of which contain toxic substances that could have a negative impact on our health and the environment. If disposed off properly or reused, the harm that is caused due to these materials can be minimized, if not they could be very risky in the long run. The presence of various chemicals in these wastes makes them toxic and poisonous in nature. Heavy metals are mostly toxic and exposure to them can cause diseases like silica respiratory irritation, pulmonary oedema and eve death in some cases. For instance, one of the important components of these equipments, called the cathode ray tube (CRT), has a high content of carcinogens such as lead, barium, phosphor and other heavy metals. If these carcinogens are disposed off carefully in a controlled environment, they may not be serious health hazards or environmental risks. However, if the recycling or breaking/disposing off CRTs is done in an uncontrolled environment without regard to the standards of waste disposal, it could result in harmful repercussions for the workers, apart from releasing poisonous substances into nature’s bosom—soil, air and groundwater.

Recycling of compounds containing halogenated chlorides and bromides used as flame-retardants in plastics, is another dangerous aspect of e-waste management. Copper is used in printed circuit boards and cables. The PVC sheathing of wires is highly corrosive when burnt and also induces the formation of dioxins. A study on burning printed wiring boards in India showed alarming concentrations of dioxins in the surroundings of open burning places, reaching 30 times the Swiss guidance level.

Land filling e-waste, which is one of the most extensively used methods of waste disposal, causes the production of leachates (the liquid produced in a landfill from the decomposition of waste within it). Leachate is the term given to liquids which could contain soluble material removed from the solid mixture through which the liquid has passed. Mercury, for example, will leach when certain electronic devices such as circuit breakers are destroyed. Lead has been found to leach from broken lead-containing glass, such as the cone glass of CRTs from TVs and monitors. When brominated flame-retarded plastics or plastics containing cadmium are land-filled, cadmium may leach into soil and groundwater. Toxic leachates such as mercury, cadmium and lead are the reasons why many water bodies today have been poisoned and the water in them is deemed unfit for consumption. Landfills are also prone to uncontrolled outbreaks of fire which can release toxic gases as fumes.

E-waste toxins increase exponentially as they keep polluting the environment and at some point enter the food chain as well. End users today are becoming aware of the long-term effect of such pollutants but the rate at which e-waste is being generated every year is still alarming. What makes the situation terribly worrying is that compared to the other forms of waste that pollute the environment and make it less safe to live in, e-waste is relatively difficult to control, more so since it is related in some fashion to the technical advancement that the country or the state has made.


What makes e-waste management in India difficult—among several other reasons—is the vast geographical and cultural diversity and economic disparities that exist in the country. Some of the other reasons that make the process of controlling harmful e-waste disposal in India difficult can be summarized as follows:

  • India is said to be facing the danger of importing too much of second-hand devices which have rapidly increased the volumes of e-waste generated apart from domestic sources.
  • Many ports like Chennai port are found to be deluged with e-waste import. Toxics Link, a Delhi-based NGO, points out: ‘The import of e-waste needs clear clearance under the Hazardous Waste Rules 2003 and a prior informed consent under the procedures of the Basel Convention. In no case has this been found to take place in India’.3
  • There are no sources of accurate estimates of the quantity of e-waste generated and recycled.
  • Though the users are exposed to a lot of facts and information about e-waste generation, the level of awareness among manufacturers and consumers is still low and the awareness about the health-ruining dimension of e-waste is even lower.
  • Widespread e-waste recycling in the informal sector is very common. Rudimentary techniques such as acid leaching and open air burning are used, which results in severe environmental damage. Inefficient recycling processes that result in substantial loss of material value could be cited as another reason.
  • ‘Cherry-picking’ by recyclers who recover precious metals and improperly dispose of the rest is yet another problem in India.

Though India has ratified the Basel Convention that seeks to monitor movement of toxic wastes across borders, it is yet to ratify the 1994 amendment that seeks to ban import and export of e-waste for recycling purposes. Two-thirds of the initial members of the Basel Convention, including China, have already ratified the amendment. India has been hesitant to ratify the amendment as the recycling activity generates considerable employment. It is also believed that if such activity is undertaken within the framework of regulations, the safety of the people in it could be ensured.4 Environmentalists are sceptical about this stance of the government because they say that there is no regulation forthcoming as yet.

If India wants to create a niche for herself in the global electronics industry, a good e-waste policy is an utmost necessity. There is no point in the government investing heavily in the IT and electronics sector by creating Special Economic Zones (SEZs) and putting in place an industry-friendly taxation policy without finding solutions to the problems caused by the recycling of e-waste. The problem may not be serious now, but it is increasingly assuming crisis proportions. Toxics Link estimates that India generates annually US$ 1.5 billion worth of e-waste to which over 30 per cent is contributed by the IT sector alone.5 It is, therefore, necessary that India should replace the current informal system with a strictly formal regulated system. The government should also realize that such a policy would not only ensure that the Indian society and environment are safeguarded, but it would also provide ample opportunity to generate income and employment.

A well-laid-out policy for tackling e-waste should be India-specific and should not be a replication of policies pursued elsewhere. The Indian context requires a different, adapted approach that takes into account the working of the unorganized sector, the poor capacity of the government to implement policies, the price-sensitive Indian consumer and, above all, the enormous opportunity that lies ahead in recycling e-waste. Besides, the policy should also envisage systems and policies to ban illegal imports of e-waste from Western countries. More importantly, building consumer awareness that could contribute to a new and responsible kind of consumerism is of paramount importance.


A draft law under the consideration of the Government of India makes e-waste recycling an organized business in India. This would imply that instead of making the IT industry responsible for recycling/disposal as in the United States, Taiwan and Japan, the new Indian policy would shift the responsibility to a third party. Moreover, as far as handling of e-waste is concerned, it will be treated as hazardous waste under the Hazardous Waste Management Guidelines, 1989 by the MoEF. However, as pointed by Toxics Link which has prepared an alternative draft for the consideration of the government, the present draft does not have any specific regulation for collection or ensuring that the e-waste goes only to an authorized unit.


There are some private initiatives to find ways and means of disposing off e-waste scientifically. In what is probably the first-of-its kind service in India, Wipro Infotech, a division of the US$ 2.39 billion Wipro Ltd has launched an e-waste disposal service to end customers from 1 September 2006. Wipro, which has been actively pursuing this line of research since August 2005, has now identified suitable mechanisms, created service points across the country, identified technically competent disposal agencies and has set up a complete process for the disposal of e-waste.6 This identification of suitable e-waste disposal partners is now available to Wipro’s customers in respect of Wipro range of PCs, laptops and servers for processing and recycling of related e-waste. Customers can avail this facility from 15 locations across the country by paying a nominal charge towards freight and logistics.7 Environmentalists fondly hope that this worthy example will soon be emulated by other IT hardware and software companies.


Economic growth of a country should not be conceived only in terms of generation of income and employment. It should be achieved without sacrificing the quality of life of the people. To ensure this, the country should be committed to demonstrate a high standard of environmental protection and provision for a safe and healthy life for the people. Efficient e-waste management is an important constituent of such commitment to environmental protection. India, as a developing country that wants to quicken its pace of development, should put in place proper policies and guidelines to ensure environmental protection so that her people enjoy a better quality of life.

  • E-waste recycling
  • Global dimension
  • Loopholes in law
  • Dumping yard
  • Sad state of affairs
  • Environmental degradation
  • OECD countries
  • Trans-boundary movement
  • Hazardous substances
  • Waste-processing centres
  • Household appliances
  • Entertainmen electronics
  • Sur-veilance equipment
  • Ticket-vending machines
  • National WEEE task force
  • Halogenated chlorides
  • Land-filling e-waste
  1. Why is accumulation of e-waste assuming alarming proportions in India? What are the remedies available to tackle them?
  2. Discuss the Indian draft law on e-waste recycling and management. Do you think it would prevent the country being used as a dumping ground for e-waste?

(The case is based on reports in the print and electronic media. The case is meant for academic purpose only. The writer has no intention to sully the reputations of the corporate or executives discussed.)


India has been a pioneer in the textile industry for centuries. The industry went through a chequered history. But after the introduction of the new economic policy and removal of the quota system there has been an immense growth of exports. With the exports doing well, there has been a huge investment and the yearly sales turnover is becoming increasingly high. Many parts of the country are involved in the manufacturing of textile products and one among them is Tirupur. Tirupur is a town located in the northern part of Coimbatore district in the state of Tamil Nadu.

Tirupur has been known for its manufacture and export of textile goods. It is an important town in the textile belt of India comprising Coimbatore, Erode and Salem in Tamil Nadu. Located 55 km from Coimbatore, Tirupur is a small, dusty and water-starved town. The town manufactures more than half of the T-shirts produced in India, earning the sobriquet, ‘The Banian City’. The town’s production of T-shirts is mainly for exports to countries like Sweden, Switzerland, The Netherlands, Italy, Germany, Canada and the United States among others. In the town and its neighbourhood, there are more than 4000 knitting units, both big and small, which directly or indirectly cater to the export market. The importance of Tirupur can be gauged by the fact that it is one of the top foreign exchange earners for the country. However, though Tirupur has become India’s knitwear capital, catering to the global market, it is woefully short on infrastructure and water. Most of the dyeing and bleaching units in the area are very primitive and pump out effluents, rendering the ground water and soil unhygienic and water bodies highly contaminated. More than 700 dyeing and bleaching units discharge 100 million litres of untreated effluents a day, contaminating the Noyyal, a tributary of river Cauvery, leaving behind tonnes of hazardous sludge as residue. Around 20,000 acres of land downstream of Oraththupalayam dam have been seriously affected, making them unfit for cultivation. The manufacture of textile products involves a lot of processes, of which one of the main process is the dyeing of the fabric. The factories which do the process are called ‘dyeing industries’.


Dyeing is the process of giving the required colour to the fabric and involves many steps, 12 to be exact, which need to be done to give the required finish to the cloth.

The dyeing units in and around Tirupur are, of late, facing many problems due to environmental pollution. Moreover, there is a constant pressure from the Green Bench of the Madras High Court, which was approached by environmental activists to find a lasting solution to the increasing pollution and the ongoing environmental degradation. There is some progress now in the treatment of effluents because of this pressure. The court has ordered all units, which have so long been discharging untreated or partially treated effluents into the river Noyyal, thereby contaminating water bodies, to shut down unless they implement reverse osmosis process in their industries.


The dyeing industries had a similar problem of water pollution a few years ago when they were releasing effluents directly into the river. This was taken seriously by the government, which ordered the units to implement a treatment process that would remove the colour of the water used for dyeing of the cloth. The industries then installed plants which were capable of decolourizing the water.


Fig. 4.2 The Dyeing Process (Traditional Method Using Winches)


Fig. 4.3 Dyeing Using Shopfloor (Latest Method)


Effluent from the textile industry is basically water released from the winches or shop floors (Figs 4.2 and 4.3), which is mixed with the dyes to give the required colour to the cloth. The effluent is released from the 12 processes which constitute the dyeing. The first two processes have the maximum salts and the water used for these two processes is called the salt bath (Fig. 4.4).

Solar Pond

Since this salt bath has very high salt content and cannot be treated, it is left in a solar pond (Fig. 4.5), which is a huge tank covering around 1000 m2 of land. This pond holds the water until it evaporates and then the sludge, which is the leftover from the salt bath, is removed and put into plastic or cement bags. This sludge has to be dumped in the areas owned by the respective industry owners.

Primary Treatment plant

The effluent of the next 10 processes has lesser density of salts and they are treated by a primary effluent treatment plant, which has a collection tank. This tank collects effluents of the various processes and mixes them to form a uniform compound. The compound is then mixed with the following chemicals to remove the salts.

  • Lime: It makes the effluent basic in nature.
  • Ferrous sulphate: It reacts with the formed base. The iron flocculates with the salts and removes the colour of the effluent.
  • Coagulant: This is added finally to collect the formed flakes of iron salts and helps in settling of the sludge.


Fig. 4.4 The Collection Tank (Effluents)


Fig. 4.5 The Solar Pond (Contains the Salt Bath)


The water is finally aerated in a ventilator (Figs 4.6 and 4.7) before being let out. The water thus formed is free of chemical salts but contains biological wastes. These have to be treated, but is not being done. As a result, the ground water in Tirupur is contaminated. The primary treatment was also not done being properly, and so the water still had chemicals which deplete the environment.


As the problem became serious, the Government of Tamil Nadu made it compulsory for the dyeing units to put up reverse osmosis plants. By this process, the primary treated effluent passes through a secondary treatment in which the effluent is treated with bacteria. These bacteria remove the biological matter present in the primarily treated effluent. After the secondary treatment is done the effluent undergoes a tertiary treatment where the reverse osmosis is done. Reverse osmosis is a process of cleaning the secondary treated effluent to such an extent that it can be reused by the dyeing industries.


Fig. 4.6 The Ventilator


Fig. 4.7 Sludge Dumped in Their Respective Premises


The Noyyal river (Figs 4.8 and 4.9) has been the source of water for many places along Tirupur. Tirupur was once an agrarian village. The farmers depended on the water from the river for irrigation. Even now the villages along the river depend on this water. Due to the gradual industrialization of Tirupur into a textile town over the past three decades, environmental pollution started to increase with the degradation of the soil, water and air. People who started doing the textile business were ignorant of the ill effects of effluents, and others who were dependent on the river did not realize the consequences of the pollution. The government did not take measures of controlling the pollution during the initial period. If measures had been taken at the earlier stages, there would not have been such severe consequences that now confront this textile town and its neighbourhood. The river is now totally contaminated and the fishes and other water-borne creatures are dying due to the discharge of effluents.

The Noyyal has thus become the dumping ground for the discharge of effluents and all villages lying in this belt are complaining about its pollution. The effluents have depleted the agricultural land and contaminated the groundwater.


Fig. 4.8 Polluted River Noyyal


Fig. 4.9 Polluted River Noyyal


The Orathupalayam dam (Fig. 4.10) built on the Noyyal river stores water from the river and is helpful in irrigating around 9,875 acres of agricultural land in Karur district. It also helps in the direct irrigation of 500 acres of land in Erode district, where it is located. The dam has a length of 2,290 metres, width of 248 metres, and is spread around 423 hectares. The dam has one river sluice and has six radial gates to control the flow of water. The maximum outflow of water from the dam is 90,900 cubic feet.

The contaminated water from the effluents was stored in this dam, and it started overflowing as the dam had not been emptied for the past few years. The adjoining areas of the dam became inundated and the pollution issue became acute, creating panic among the people of the neighbouring villages. This incident put the textile industries in peril, with the government expressing concern and tightening the requirements on effluent treatment.

Figures 4.11 to 4.13 illustrate the effects of the pollution on the dam.


Fig. 4.10 Orathupalayam Dam


Fig. 4.11 Remains of the Contaminated Water


There were many groups who were severely affected by the polluted and contaminated water.

  1. Well water (both open and closed) which was used for irrigation was affected. The water colour started changing, and many people who used this contaminated water for drinking purposes were afflicted with serious water-borne diseases.
  2. Land was heavily contaminated resulting in low yield. Poor farmers who owned a few plots of land were the worst affected.
  3. The effluent water killed fishes, adversely affecting fishermen who were dependent on them for their livelihood.
  4. Animals which consumed the contaminated water were affected, especially cattle living around the riverbed.
  5. Residents in and around the river and dam complain of the pungent smell and health problems.
  6. The dam was getting eroded slowly because of the acrid nature of the contaminated water. If the water had not been released, the dam would have started developing cracks.

Fig. 4.12 Effluent Mixed Water


Fig. 4.13 Remains of the Sludge


Thus, nearly all stakeholders who were living by the river and those dependent on it had to move to other places. Unemployment issues were also a cause for concern


Due to the various complaints and issues from agriculturalists and other people living around the river, the Government has taken action against these dyeing industries. Now the industries have to set up proper measures to control pollution.

The dyeing units face problems due to the sudden imposition of anti-pollution rules of the government. Investments for setting up plants for reverse osmosis are very high, with a single plant costing around INR 10 to 20 million. This is a huge investment for the industries because their capital cost increases by another 0.25 to 0.5 per cent. The investment will increase with respect to the capacity of the unit. There are units that have spent around INR 40 to 50 million for the effluent treatment plant.

The main problem is that dyeing is one of the most essential processes in the manufacture of the garments and dyeing units cannot closed down without adversely affecting the knitting and hosiery units. There are millions of people dependent directly and indirectly on these units, and there are around 600 and odd dyeing units in Tirupur alone. When these units were shut down as per the High Court orders, the whole industry started getting affected. The demand-supply disequilibrium started widening rapidly. The power to these units was cut and the dyers were unable to run the industries. However, the court relented based on the promises made by the industry owners to set up the required effluent treatment plants, and allowed them to run the industries for five days a week. They were given a few months’ time to put in place the treatment plants.

As of now only a few industries have set up the treatment plants. These industries have a good potential and ability to invest their capital. Government officials make surprise visits to check whether the treatment plant work is working or not. Some of the industries have joined together to form groups such as the common effluent treatment plants (CETP). By December 2006, work had been completed at a cost of INR 7,500 million at 20 CETPs covering 437 dyeing units and 92 bleaching factories. Further, 152 individual treatment plants were carrying out the task at a cost of INR 2000 million. The industry had so far spent INR 3000 million. Industry sources said that all these works would be completed by March 2007. Industries that did not take any measures were recently found and the court has ordered cancellation of their licenses. The CETPs have become operational. The Tirupur Dyers’ Association, established in 1985 with 750 members assist these units through advice on policy issues, and has been acting as a principal body in setting up CETPs. It has also helped members to set up various skills upgradation programmes for the capacity building of its members.


The dyeing units are not the only ones affected by the government norms; the whole industry is being affected. As the demand for dyed cloth has gone up, as increasing demand for hosiery products from Tirupur has caused exporters to look at options from abroad. Presently, they have started to import dyed cloth from countries like China. This will have an adverse impact on the whole market because China is also known for its textiles and will become a tough competitor. Market competition can be met only if the dyeing units set up the reverse osmosis plants as soon as possible and other stakeholders help them to do so.


On 29 January 2011, the Madras High Court, hearing a contempt petition on the pollution of Noyyal River, ordered the closure of all dyeing and bleaching units in Tirupur. This order would adversely impact about 5,000 units that would render 4,00,000 workers directly and about 50,000 workers indirectly, causing a loss of INR 500 million a day. The court strictly instructed the closure of these units and also directed the state pollution control board to initiate criminal prosecution of units which fail to rectify defects leading to pollution. It is now upto the state and central governments to consider the seriousness of the issue and come forward to bail out the units as there is ‘no Tirupur without dyeing factories’.


Till date, the government has helped the Tirupur town and its industries grow exponentially. The town as of now contributes to a huge turnover of above INR 30,000 million and this is bound to improve with the passage of time. Markets also have opened up and competition is bound to increase. A new textile township named Nethaji Apparel Park has also come up, and it is estimated that exports from the town will touch INR 100,000 million in 2006–2007. Also, recent news is that the American retail giant, Wal-Mart is entering India through a joint venture with Bharti and is expected to drive Tirupur knitwear industry to modernize. Wal-Mart sources home furnishings, T-shirts and night suits from units located around Tirupur and Karur and is expected to source textile goods worth US$ 5 billion from India by the year 2010. A major chunk of this may be sourced from the ‘Banian City’. Apart from Wal-Mart, other foreign retailers like Tesco and GAP also source hosiery products from Tirupur and this is expected to increase considerably. All these factors offer assured growth to the knitwear industry and provide a salubrious climate leading to long-term investment, particularly in anti-pollution measures.

It is an irrefutable fact that the dyeing units did degrade the environment. However, that should not let us encourage import of dyed cloth from industries in neighbouring countries and let them gain the upper hand. Subsidies to set up the required plants have to be sanctioned as soon as possible. The industry should flourish and people should expand their business. India needs entrepreneurs like the ones in Tirupur and we should encourage them for promoting the country’s economic development. The government must act fast in cases like this. It is because of the delayed action, farmers and other low-income earning people are suffering. The industry too is made to suffer. This is not the first case where the government has been seen to be slow. Already places like Sirumugai in Coimbatore district and Ambur and Vaaniampaadi in the Arcot district have experienced issues of severe environmental degradation. They should have learnt from such past mistakes and the issues arising from places like Tirupur should have been avoided, but the process is repeating itself and we are now losing both in the agricultural and industrial sectors. It is high time that the government and industry associations such as the Tirupur Dyers Association initiate early measures to arrest this unviable trend.

  • Banian city
  • Dyeing and bleaching units
  • Effluent treatment process
  • The solar pond
  • Coagulant
  • Ventilator
  • Contaminated water
  • Reverse osmosis
  • River Noyyal
  • Orathupalayam dam
  • Affected groups
  • The Green Bench of the High Court
  1. Explain in your own words, ‘The Tirupur Story’.
  2. What is the environmental impact that the dyeing units have caused on the environment surrounding Tirupur?
  3. If you were elected the Mayor of Tirupur Township, what measures would you initiate and execute to ensure that all the environmental problems are solved there?