Corporate India needs to decarbonize operations: Green projects with CSR funds won’t suffice

Every year, some of India’s largest industrial companies publish sustainability reports that are full of details on the number of trees planted, villages electrified and water bodies restored. And every year, the factories that made those reports possible continue to burn coal, run furnaces and emit carbon at rates that have barely changed in a decade. Both things are true.

Neither cancels the other out. That is the uncomfortable part. India’s corporate sector has spent the decade since the enactment of the Companies Act of 2013 perfecting a particular kind of environmental sincerity.

The law required large companies to spend 2% of their profits on initiatives for social good. The intention was sound. But for heavy industry like steel, cement, coal and chemicals, it created an unintended side-effect.

It opened up a way to be seen as environmentally responsible without any change in how the business actually ran. Plant trees, fund solar panels in a village, restore a watershed, file the report and then move on. The factory that was a source of emissions stayed exactly as it was.

This was a compliance exit from the harder question of what to do about carbon coming out of the chimney. Only a small fraction of large listed companies have set any targets to reduce emissions from their core operations, while environmental corporate social responsibility (CSR) budgets have grown steadily. More troublingly, studies of corporate disclosure over the past decade suggest that heavier spending on environmental philanthropy has not translated to greater investment in an actual clean-up of industrial processes.

In some analyses, the relationship ironically runs the other way. Therefore, philanthropy is not a complement to change. It is