Why the “Environmental” Pillar of the ESG should be your business interest?

September 09-2024

Compliance Executive (Environment)

Why the “Environmental” Pillar of the ESG should be your business interest?

The increasing understanding of the role of environment in influencing the business operations and practices has led to various development activities that are inclined towards developing more resilient operations. The industry is in the zone of environment-business nexus where on one hand there is decrease of ecosystem value due to human activities and climate change and on the other hand is the rise of uncertainness on current necessary business practices. According to the Economic Survey 2023-2024 in past two years there has been a rise in food prices due to extreme weather, lower reservoir levels, and crop damage. These events have affected farm output particularly the production prospects of various vegetables and pulses. Further some noteworthy experts such as Grant Thornton’s Rishi Shah anticipated in one of its interviews that the rise on overall inflation trend including the food prices in due course would be due to seasonal factors including heat. Rystad Energy analyst Jorge Leon has also listed Climate Change as one of the major factors to cause inflation by impacting the oil markets. These climate change impacts visibility and extremity are being propelled by human activities. For example, Shark Scientists tested 13 specimens of Brazilian sharpnose shark and found cocaine in their muscle and liver. Some studies have reported heavy metal contamination such as cadmium in the muscle tissues of fish and shellfish of Kochi backwaters. These presences pose health risk by increasing the disease risk for the consumers who depend on it for their basic healthy diet. Further bad practices are impacting the natural ecosystem and therefore decreasing the natural-capital of the ecosystem services. For example, A report was submitted to the Southern Bench of National Green Tribunal which said that due to oil spill 20 hectares of mangrove in Tamil Nadu were severely damaged and 40 hectares were found to be moderately damaged.

“There is a shift from voluntary to mandatory disclosures on the business operations and practices.”(In quotes )

For example, globally the planning models are now being redesigned from a perspective of unique geography and environmental conditions. The legislation and policy are gradually being designed from a general aim of risk reduction to set of practices that would address specific risks. For example, Denmark the first country in the world to target methane emissions in the flatulence produced by livestock. Under the policy legislation, Denmark will tax livestock farmers for greenhouse gas emitted by their cows, sheep and pigs from 2030. How efficient and effective will this legislation be? The question is yet to be answered.

In case of India, the legislation implication is gradually taking shape in form of penalties for non-compliances. For example, in Kerela the maraud municipality imposed 1200 US dollar fine on Grand Medows, an apartment complex for disposing of toilet waste into the backwaters. There is also a gradual shift in new trade licensing system for parking lots in malls, resorts and entertainment facilities that are more sustainable and environmentally friendly. Keeping in line some major industries have already started shifting their business operations as per evolving mandatory sustainable standards. To quote and example, Tata Steel is planning to go for early closure of its blast furnaces to find an environmentally friendly alternative in one of its plants. However, in this article we shall focus on key environmental “spokes” in form of case studies that are emerging as major factor that have direct influence on environment-business nexus.

The rise of infectious disease is one of the critical “spoke” as seen during the COVID-19 pandemic. The occurrence of new disease poses a risk at the workers efficiency and therefore their productivity. The latest is the declaration of monkey pox (mpox) in the Democratic Republic of Congo (DRC) and neighbouring countries to be a Public Health Emergency of International Concern (PHEIC) under the 2005 International Health Regulations (IHR) — the World Health Organisation highest-level alert by the director general of the World Health Organisation. The declaration occurred after the conclusion of a closed virtual meeting due to mpox outbreak sweeping through several African countries. Mpox was first discovered in humans in 1970 in the DRC, then called Zaire. It has since been mainly limited to certain West and Central African nations. Humans mainly catch it from infected animals, such as when eating bushmeat. Apart from mpox, the neighbouring African countries such as Sudan is facing a Cholera epidemic after several weeks of heavy rain and subsequent contamination of drinking waters. Some 20 people have died from the disease as told by Health Minister of Sudan Haitham Mohamed Ibrahim. The world health organisation in line with such events have updated its list of over 30 pathogens that could potentially start the next pandemic. The updated list of 2024 includes influenza A, dengue, mpox, along with new bacterial strains responsible for diseases such as cholera and plague in the list.

“Will mpox outbreak first neglected in Africa could now turn into a global mess?”

Thailand and Sweden were the first countries of outside Africa to detect mpox cases of Clade 1B variant. In this regard, the Government of India through Prime Minister Office have directed to enhance surveillance on mpox, emphasizing early detection and prevention measures to combat the mpox disease effectively. The government of India is planning swiftly and recently signed a $170 million policy-based loan with the Asian Development Bank (ADB) to consolidate and strengthen India’s health system preparedness and response capacity to future pandemics. The step is in positive direction when we look at the views of some epidemiology expert like Gagandeep Kang who told in one of her interviews that “What we know we don’t know is when and where our next disease outbreak will be”.

Government of India needs to develop its preparedness for diagnosing emerging infectious disease. For example, there is a rise of endemic viral disease as seen in many states such as Maharashtra (Zika virus) and Kerela (West Nile virus). Some coastal states especially Kerela shows distinct pattern of incidence of communicable diseases. For instance, malaria, chikungunya, and dengue cases surge during the monsoon season due to increased mosquito activity. As per preliminary research these outbreaks are linked to the local source of drinking water, including wells and regional water supply.

The recent heatwaves events were one of the driving forces that stressed the available power supply infrastructure. Indias power consumption broke records in May 2024 when the heatwaves were at its peak. The heatwaves caused various incidents of fire in various institutions, industries, factories and even hospitals, causing a loss of lives and impact on business-as-usual scenario. This brings to a much-acknowledged Fire code available for key industrial settings. The fire code which mentions in details about types of exit access, exits, escape lighting and exit signage are a well-established code among the industries. However sometimes these codes are ignored and are found as a non-conformity during the auditing process. The occurrence of fire can be due to any reason of ignorance and can lead to disruption in business operations. The ignorance creates the site of accidents as “Death Traps” causing loss of lives of the people present there. For example, 17 workers including 15 women were hospitalised after ammonia gas leaked in a food processing unit in Maharashtra.

The European Union Copernicus Climate Change Service reported that the June 2024 was last of the 13 hot streak months records. These heatwaves were part of the extreme weather events which has become quite frequent. One of the major extreme weather events is flooding which is being seen around the globe. For example, in Nepal nearly 200 people have died in June & July 2024 due to landslides and floods caused by incessant rains. Nearly 300,000 Bangladeshis took refuge in emergency shelters from floods that inundated vast areas of the low-lying areas. In Vietnam flash floods and landslides damaged homes, destroyed crops and cut-off several communities in the region.

01. Karnataka: Landslides disrupted train services leaving passengers and transporting material to be stranded. In same areas due to heavy rain related incidents there were loss of lives and domestic animals.
02. Telangana : Heavy rains lead to waterlogging in capital city Hyderabad causing slow traffic movement. The Indian Metrological Department issued yellow alert for Heavy rain in the region. The heavy rains caused severe traffic disruptions and water logging. Commuters spend hours in traffic as they struggled to navigate their way due to traffic congestion caused due to severe inundation.
03. Andhra Pradesh : The Indian Metrological Department reported heavy rainfall with thunderstorm and strong surface winds with the speed of 30-40 kmph in certain region of the State. The substantial rainfall caused streams and canals to overflow in several areas particularly in the Western region. Approximately 24 thousand US dollar worth of crops were waterlogged due to the breach of a tank, leading to significant damage.
04. Himachal Pradesh : As per satellite data there is a rise of glacial lakes in Sutlej catchment area from 562 in 2019 to 1048 in 2023 due to climate change. These lakes pose threat to lives and infra downstream in case of any extreme weather events. The state is vulnerable to frequent landslides and flash floods leading to closure of roads. The state witnessed highest of 168.3 mm of rainfall in a day. Heavy rain therefore has been a significant factor for triggering landslides in the states causing damage to houses and property. Further the erratic rainfall pattern is also seen as a reason behind depleting natural water sources, especially water springs that have been going dry over the years in the State.
05. Delhi : Heavy rains when lashed in the city caused widespread waterlogging and trigger traffic snarls in multiple stretches.
06. Tamil Nadu : Coimbatore received 847.7 mm of rainfall in 24 hours. There were reports of breaching in some check dams during the heavy rains.
07. Kerela : The Indian Metrological Department issued orange alert in certain districts and prohibited people to venture in the sea. Torrential downpour and squally winds across the state causes widespread damage including falling of trees causing traffic disruption. The state also witnessed rain water as well as sea flooding. Subsequent frequent flooding of homes and residential area has severely impacted the lives of the people.
08. Haryana : The state witnessed some rain related death incidents caused by landslides, traffic chaos and house collapses as well as dam breaches which inundated several villages.

Further some noteworthy persons have also highlighted the significance of Climate Change as a potential risk. For example, the Chennai Corporation Mayor, R Priya on heavy rainfall said in her interview that “Climate Change is drastic, we have to be prepared for high rainfall”, while for heatwaves the UN WHO head Guterres said that “Countries of the world to adopt several proposals aimed at reducing heat deaths, starting with help to cool and care for the most vulnerable people — the poor, elderly, young and sick”.

Further some noteworthy persons have also highlighted the significance of Climate Change as a potential risk. For example, the Chennai Corporation Mayor, R Priya on heavy rainfall said in her interview that “Climate Change is drastic, we have to be prepared for high rainfall”, while for heatwaves the UN WHO head Guterres said that “Countries of the world to adopt several proposals aimed at reducing heat deaths, starting with help to cool and care for the most vulnerable people — the poor, elderly, young and sick”.

Does my organisation have a “Climate Action” plan in form of business reporting?
Do my workers have knowledge about the environmental challenges on the business process?
Do I have a disclosure when my supplier and buyers ask me about the organisation environmental compliances?

Why the “Environmental” Pillar of the ESG should be your business interest?