The growing interest in companies towards implementing CSR projects to protect the environment and climate is steadily increasing. We have also seen a growing trend in companies’ interest to invest in environment flagship projects and RBI playing the role of catalyst in guiding CSR towards saving the environment.
Indian corporations need to climate action into business operations. Green financing is a new, promising, and effective form of climate investment. Corporate Social Responsibility (CSR) financing and philanthropy in this aspect play a critical role.
However, recent data by the Ministry of Corporate Affairs reflects that funds directed towards climate change and the environment have formed the lowest share, averaging about 9% between 2014 to 2020.
SDGs and the Indian CSR regulation were implemented/formulated around the same time and seemingly had a tremendous potential to develop a cohesive, sustainable growth model.
Moreover, the SDGs and CSR thematic development areas overlap in the activities needed to achieve either. The CSR regulation sets a broad framework and gives direction for a better sustainable future and the SDGs set tangible, well-defined targets to measure the outcome of activities. As an evolution from the MDGs (Millennium Development Goals), SDGs explicitly call for business to apply their creativity and innovation to solve development challenges. SDGs have more opportunities for private sector participation.
The goals bring together players from all sectors to pursue the common vision of sustainable development and address the socioeconomic and environmental challenges, states a KPMG report: Sustainable Development Goals (SDGs): Leveraging CSR to achieve SDGs.
Reserve Bank of India, in guidance to Banks, has already stated the importance of increasing awareness about Corporate Social Responsibility (CSR)in integrating social and environmental concerns by companies in their business operations and interactions with their stakeholders. Sustainable Development (SD) essentially refers to the maintenance of the quality of environmental and social systems in the pursuit of economic development. Non-Financial Reporting (NFR) is an organization’s reporting system in this context, especially regarding the triple bottom line, that is, the environmental, social, and economic accounting.
The contribution of financial institutions, including banks, to sustainable development, is paramount, considering the crucial role they play in financing the economic and developmental activities of the world. In this context, the urgency for banks to act as responsible corporate citizens in society, especially in a developing country like ours, need be hardly overemphasized. Their activities should reflect their concern for human rights and the environment.
Reserve Bank of India has recently released a Discussion Paper on Climate Risk and Sustainable Finance, which recognizes that climate change is increasingly becoming a source of financial risk for banks globally. RBI has warned that global warming and climate change are particularly important in sustainable development, especially for developing countries that are ill-equipped for such changes.
According to recent climate change studies, most Asian companies are “largely oblivious” to the risks posed by climate change issues to their business models and the environment. Nearly two-thirds of the respondent companies were given a zero score for their approach to climate change.
The findings suggest that, generally, Asian businesses are far behind their US and European rivals on this issue.
According to a report, Corporate Social Responsibility: An Implementation Guide for Business, authored by Paul Hohnen, and edited by Jason Potts, for the International Institute for Sustainable Development: Sustainable development and CSR are moving targets that cannot be fully “achieved” by one-time activities and decisions. Businesses—and other organizations—should approach CSR as a process of continual improvement, being constantly alert to new issues and considerations. The challenges of sustainable development and market developments imply that a firm could adopt the approaches described in this guide today and face new challenges and opportunities tomorrow.
Environmental responsibility refers to the belief that organizations should behave as environmentally friendly as possible. It’s one of the most common forms of corporate social responsibility. According to Harvard Business School Online’s Business Insights Blog, some companies use “environmental stewardship” to refer to such initiatives.
The business community needs to strategize itself for achieving SDGs via CSR as a catalyst of shared growth. The innovation in the CSR initiatives and foresight of the impacts created are key founding blocks that a company can dwell upon while working towards SDGs. An effective positive social impact can be made through an active and holistically planned CSR program. National and multi-national companies can contribute towards these goals by utilizing their capital and their reach, resources, technology, research, knowledge, and innovation.
The future CSR activities in the environment domain will be about green competitive advantage, and firms will undertake environmentally sustainable activities to build a sustainable image among consumers. Studies have indicated that such an approach is critical for businesses to increase competitiveness, capture market share, and establish a green corporate image.
