Business and Environment

Dr. Shruti Gupta

Businesses do not operate in a vaccum. The social environment, the political environment, legal environment, economic environment all play a crucial role in which a business system operates. Unfortunately, the ecological environment in which everything exists is not fully appreciated by businesses. Rather, the environmental costs are ignored and are externalized totally to be borne by the society at large. Over a period of time such a neglect has led our country to a situation where the industrial growth model has become a non-sustainable model. The evidence of this is seen in the form of mass protests, agitations and court litigations in several parts of the country against setting up of industries and ongoing industrial units. Major industrial investments are getting blocked due to neglect of environmental concerns and livelihood issues of the local people. In the case of extractive industries like coal and minerals, the problem assumes gigantic proportions.

It is true that industries have taken environment for granted. The industrial technology and modes of production have led to widespread pollution of air, water and soil in India. It’s true that the ecosystem provides various goods and services to the society but they have not got the due recognition. This paper provides a theoretical framework of the immense contribution of ecosystem goods and services to businesses and society at large. Unless businesses and planners take into account this aspect, decisions will be taken that will lead to more severe degradation of the natural resource base.       

Our national income also does not factor into the contribution of ecosystem goods and services. A national income statement is presented but not along with a national balance sheet. When forests are cut for timber, the value of the timber gets added to the national output. But the consequent loss of forest ecosystem goods and services is not reflected anywhere. In fact, loss of national assets is shown as an accretion to our national income! Similarly, when a decision to construct a dam is taken, it is easy to quantify the water that will be available for irrigation, water supply, electricity to be generated and so on. But the ecological loss of biodiversity, soil, wildlife, forests in the form of groundwater recharge, sediment control, rainfall and weather pattern, are never considered because they are hard to quantify. There are social costs in the form of loss of habitat for the locals, displacement costs, loss of livelihood, loss of cultural values and many more.

Neglect of ecosystem goods and services has meant that industrial projects are given clearances without adequate caution. This has systematically led to a situation that most Indian rivers stand highly polluted, the ambient air quality is toxic to humans and others, the loss of top soil nutrients is more than the total fertilizer production in the country. It is high time that we switch over to a more sustainable industrial growth model. Climate change uncertainty and loss of biodiversity are going to affect industries in a manner that would call for a new approach to industrial management.

The results of the review of literature that has explored the economic and other values of ecosystem goods and services are presented in this paper. Valuation/ quantification of such goods and services is now possible but this paper does not go into the details of putting a price tag on each of these goods and services.