By Oxfam India
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PracticeDalits & Tribal

Unethical Businesses, Crony Capitalism And The Environmental Impacts

It is only a vigilant and robust civil society that can ensure that businesses are held accountable and the state performs its functions of protecting human rights.

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Unethical Businesses, Crony Capitalism And The Environmental Impacts
Unethical Businesses, Crony Capitalism And The Environmental Impacts

-Lara Jesani

Corporate Social Responsibility (CSR) has largely dominated the business and human rights discourse in India. It is not surprising though, since the right based approach to businesses is far more onerous and people-centric, and shunned for those very reasons. While CSR is traditionally understood as the contribution of businesses towards social welfare, the larger definition under corporate accountability requires companies to act ethically in its business affairs and demands accountability based on a statutory and legal framework. The CSR approach has in practice and policy remained contained to voluntary initiatives, and at best compulsory philanthropy and self-regulation.

Corporate Accountability Requires Businesses To Respect Human Rights

Corporate accountability requires businesses to respect human rights, follow the rule of law and adopt ethical practices, even if it comes at the cost of greater profit. It requires the state to protect the rights of the people and to follow democratic processes to ensure people’s participation in decisions governing land, resources and natural environment. It demands that companies be held accountable for their violations and also for the losses incurred by the people by way of penal, reparatory and compensatory measures.

Big corporates and rich multi-national corporations play an important role in shaping public policy in the country, and exercise great influence over the government to weaken the existing environmental framework. Increasing crony capitalism means that it is businesses and not people’s rights and interests that enjoy protection of the state. Businesses are founded on commercialization and exploitation of natural resources such as land, water, forests, minerals etc. It is accordingly not surprising that they are deeply interested in bypassing public consultation process and fair assessment of environmental and social impact of their businesses, and in weakening the environmental and social regulations and their implementation process, which are perceived as obstacles in their way.

The right to a healthy environment is an integral part of the right to life under Article 21 of the Indian Constitution, and the state is duty bound to protect it under Article 48A. The state is required to put in place an environmental and social governance system comprised of strong and robust laws, transparent decision making process in consultation with the project affected communities, independent institutions to ensure its proper implementation, monitor compliance and take strict action in case of violations. The environmental and social legal framework in India was developed over time with an increasing understanding of human rights as also the wrongs inflicted by corporates. This served to protect the rights of the general public, poor, fisher-folk, indigenous, tribal, farming and project affected communities, who were at risk of displacement, loss of livelihood, health hazards, economic deprivation, loss of their natural habitat, culture and dignity at the hands of unscrupulous businesses.

Frontal Attack On Environmental And Social Governance

However what we have witnessed in the last few years is a frontal attack on the environmental and social governance of our country, while remedial measures have been almost absent in this entire period. There has been a systematic corrosion of and failure to implement protective legislations in the last few years, with a view to boost businesses. India’s jump by 30 positions in 2017 and a further 23 positions in 2018 in the Ease of Doing Business rankings, puts the country now at 77 out of 190 in terms of business friendliness as perceived by the World Bank. This assessment is largely based on the country’s regulatory laws, approval process and difficulty in starting business. India’s sudden rise in the rankings has been attributed to the spate of business friendly reforms introduced by the government. India gained a startling 129 points with regards to construction permits, by easing up the process of obtaining environmental clearances and diluting environmental laws governing building and construction projects in a favour to the real estate industry and corporates. It is not just the construction industry, the dilutions to environment laws and social impact legislations are seen across the board, with a singular objective to increase profits of business houses and big corporates.

Alongwith this, there has been a systematic weakening of environmental institutions, and in particular, the National Green Tribunals, which since their inception in 2010 played a major role in enforcing environmental laws and taking account of violations by companies. By compromising their independence and failing to appoint members, the government has slowly but effectively rendered all zonal benches inoperational and hence, more difficult for the public to hold businesses accountable.

Meanwhile all indicators show that there is nothing short of an environmental and social crisis in the country. The pollution indicators in the country have been startling, and environmental compliance and sustainability programs find almost no place in our environmental governance. India ranks 178 out of 180 countries for its poor air quality according to a biennial report by Yale and Columbia Universities along with the World Economic Forum. Its overall ranking in 2018 is 177 out of 180 on the Environmental Performance Index, plummeting 36 points from 141 in 2016. The poor ranking was linked to poor performance in the environmental health policy and air pollution linked deaths. Out of 280 cities air quality of which were monitored by Greenpeace India, none met the World Health Organisation (WHO)’s safe levels of particulate matter. As per data released by WHO, 14 out of 15 most polluted cities with particulate matter 2.5 pollution, are in India. Meanwhile as per the State of Global Air Report 2018, air pollution kills 1.1 million people in India annually.

But beyond the state apathy and crony capitalism is the state repression faced by project affected communities who dare to voice their grievances against oppressive policies of the state and exploitation by the corporates. On May 22, 2018, at least 13 civilians were killed in police firing on the 100th day of the mass protest against the corporate giant Vedanta’s Sterlite copper smelter in Tuticorin. The project-affected community in Tuticorin had for decades been consistently voicing the health hazards and environmental impact of the plant on their lives, even while new violations were being reported and the litigation against the company was pending. The company successfully evaded the public consultation process on account of which the people in Tuticorin were unable to participate in the decision-making process. It cannot be a matter of coincidence that Sterlite’s Tuticorin operations managed to avoid fresh evaluation of its environmental impact on expiry of the environmental clearance by availing benefit of extensions of the original period of 5 years by double, through environmental policy changes introduced by the central government. Meanwhile on December 15, 2018 the only functioning bench of the National Green Tribunal at Delhi, directed the government to permit reopening of the company’s copper plant at Tuticorin, which was followed by a 6% rise in stock prices of Vedanta.

Need To Shift Focus From CSR Activities To Corporate Accountability Issues

What is the urgent need of the hour is a shift of focus of the business and human rights community in India from CSR activities to corporate accountability issues. It is only a vigilant and robust civil society that can ensure that businesses are held accountable and the state performs its functions of protecting human rights. India cannot wait much longer in addressing its environmental concerns and introducing and implementing a legal framework that mandates sustainability and compliance for every sector of business and industry. With the systems to manage environmental disasters and remedy mishaps rapidly failing, it is not just the project affected communities but soon enough even those who put a premium on such iniquitous and non-inclusive economic growth over human and sustainable development, who shall have to face the disastrous consequences.

(Author is a lawyer practicing in Indian courts on constitutional, environmental and development matters)