Opinions Column: Green and Social Corporates

By Annavajhula J.C. Bose, PhD; Department of Economics, SRCC (University of Delhi)

Padma Shri Naina Lal Kidwai could stimulate the motivational enzyme in you—as a school-leaving student—for two reasons: first, her meteoric rise in the banking and finance sector in India after graduating, as the first Indian woman, from the Harvard Business School, which was preceded by economics honours education at the LSR College for Women in the University of Delhi; secondly, her recent book with the wake-up call “Survive or Sink”, which she wants every Indian student to read. In fact, she had sent thousands of copies of this book for free circulation among students in SRCC.

Kidwai’s wake-up call is the concern of this posting as it is integral to the currently fashionable subject of ‘green capitalism’, and leads me to explore its pros and cons.

At the outset, green capitalism is an oxymoron. For, the history of capitalist economic development is nothing but the overdeveloped history of the corporates driving us off the cliff to ecological collapse. The capitalist logic of expansion and consumption has made the corporates thrive since long at the cost of climate change, rampant deforestation, loss of biodiversity and ocean acidification. In this notorious backdrop, the corporates are now reimaging themselves all over the world by branding themselves as sustainable via green growth, corporate social responsibility and sustainable management. To put it differently, they are now making attempts to cash in by showcasing eco-efforts, as Prof. Stefano Ponte, Professor of International Political Economy at the Copenhagen Business School, put it so well.

As he points out, the eco-efforts of the corporates do not really address environmental challenges. They do not tackle the fundamental problem of ever-increasing production and consumption as a priority. Their focus is on how technology and new business models can improve the efficiency of resource use instead of decreasing the aggregate impact on the Earth and its biosphere. They are just a part and parcel of their relentless cost-cutting drive. “Eco-efficiency processes such as decreasing energy and water use, optimizing packaging and improving recycling often lead to net cost reductions in operations and thus allow a focus on the bottom line—something that became even more urgent following the economic downturn of the late 2000s. Furthermore, lead firms in global value chains are placing new environmental demands on their suppliers, including requests for more information on supplier cost structures and operations. This allows them (buyers), when possible, to squeeze purchasing prices even further, especially in the Global South. When profit margins decrease for suppliers, they negatively affect their economic sustainability and can also have negative rebounding effects on social sustainability—e.g. driving suppliers to cut labour costs or worsen work conditions to recoup the extra environmental costs.” The more efficient extraction and use of natural resources often leads to lower prices. And this can prolong and even increase fossil fuel consumption and the extraction rate of natural resources. 

To conclude, as long as the corporates use sustainability as a marketing and strategic tool, a means of capital and wealth accumulation, and make it subservient to economic growth, efficiency gains will continue to be reinvested in further expanding production and consumption and to be transformed in wealth for the global plutocracy, ultimately exacerbating the global sustainability crisis. This is not all. If we become ethical (green) consumers and demand, for example,  organic groceries, energy-efficient lightbulbs and appliances, recycling and the like, that will not fundamentally alter the “eco-suicidal tendencies of capitalist development because infinite growth, even green growth, is just not possible on a finite planet”. This point is well made by Richard Smith.

Naina Kidwai does not talk about the source of ecological collapse and limitations of green capitalism as etched above. Instead, she is very much hopeful of addressing the pressing sustainability issues of sanitation, water, pollution and wildlife conservation in the Indian context through the collaborative and partnership efforts of the corporates, the government, the development donors and partners, the NGOs, the communities, the civil society and also “our swamis, gurus, pirs, sants and priests”. 

Sanitation and water are interlinked. You cannot have clean rivers without treating sewage. You cannot have pure water bodies without dealing with sanitation. And you cannot have sanitation without water, as technologies today need water to clean toilets.  Kidwai discusses the learnings from the strategies and business models for delivering effective, affordable and sustainable water, sanitation and hygiene solutions suitable for the Indian context. The initiatives of Swachh Bharat Mission, India Sanitation Coalition, and corporate voluntary programmes like Swachhata Doots and Swachh Bharat Fellows are reviewed. On air pollution, several causes and possible solutions are discussed, touching on the way we generate power, transportation and emission standards, industrial pollution, brick kilns, dust, waste treatment and agricultural practices; and the need to measure and track pollution against standards, so as not to lose momentum.  There is also a very interesting discussion on creating a sustainable finance architecture via bank funding and microfinance for building toilets or water harvesting; and on creating millions of entrepreneurs and skilled workers under business models to provide a product or service for a profit in the areas of water management and waste management. The idea of ‘wildlife coalition’ is mooted to deal with wildlife and habitat conservation even as tourism is promoted to benefit the local communities. Finally, microfinance for toilets to women via self help groups should be supplemented with training for these women in livelihoods, business and financial management, so that they can run microenterprises, earn money to repay loans and also save for the welfare of their families. Women need to be empowered to play central role in all the programmes on sanitation, water, agriculture and forests. Lack of sanitation facilities leads to severe health problems and safety issues for women. Water scarcity also impacts women as the primary caregivers. Provision of water at the home liberates women from the chore of collecting and carrying water from a distance, freeing up their time to earn livelihoods and enabling girls to stay in school rather than be detained at home to collect water. Kidwai discusses the projects where women have transformed their lands with the help of NGOs leading to social forestry, horticulture, and orchards and implemented significant water harvesting and water storage facilities. She also talks about harnessing automation and use of latest technologies for irrigation to use water wisely which may help women increase productivity and achieve even better results.

What is interesting about Kidwai’s book is the way she elucidates how the collaborative efforts at sustainable management also bring about better social development via better health, education and community welfare.

I thus invite you to read first Naina Kidwai, then Stefano Ponte and then Richard Smith in order to make up your mind on the topical concern of this posting, namely the role of corporates in solving environmental problems and social backwardness globally and in India as well. 

The general purpose of this posting is to inspire you to critically examine the sexy proposition that corporations can improve societies and the environment without neglecting their bottom line. On the one hand companies are acquiring a new corporate identity called Benefit Corporations or B Corporations, or B Corps. And on the other, the millenials—the 1980-2000 generation that makes up the largest percentage of the US and global workforce and drives trillions of dollars in consumer spending—actively invest in, work for, and purchase from companies that prioritize social purpose along with financial growth, thereby providing “trickle up economics, whereby a company invests in healthy people, healthy land, and healthy communities”!

This general inquiry will become all the more interesting when you posit the question of the role of corporations in contemporary society in historical perspective as Colin Mayer does. “All of the history and evolution of firms, their philosophical foundations, the psychology of human motivation, the biological development of organisms, accounting, and law from around the world since the start of commerce …point away from the separation between public and private, finance and investment, internalities and externalities, and commercial and social towards integration and partnership to achieve private and public purposes. It is to partnerships between all of them that we need to look for both our human and commercial flourishing.” In the spirit of this sense, Naina Lal Kidwai’s contribution is welcome.

Sources:

Colin Mayer. 2018. Prosperity: Better Business Makes the Greater Good. Oxford University Press.

Naina Lal Kidwai. 2018. Survive or Sink: An Action Agenda for Sanitation, Water, Pollution and Green Finance. Special Student Edition, Rupa, New Delhi.

Nishant Bagadia. 2018. Can Corporations Inspire Social Good?. Stanford Social Innovation Review: Informing and Inspiring Leaders of Social Change. March 16.

Richard Smith. 2015. Green Capitalism: The God that Failed. World Economics Association.

Stefano Ponte. 2019. We Must Move Beyond ‘Green Capitalism’. https://ScienceNordic.com, December 11.

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