Ethical panorama of business

Environment Under The Ethical Panorama Of Business

The Discourse on Ethics As A Propellant To Csr

The need of the hour has become the application of business ethics by corporations in their processes and functions, fulfilling their liabilities as a ?corporate citizen' to challenge the menace of depleting environment. This paper tries to enumerate the ways in which this pious goal can be achieved and bridge the gap between concepts unexplored. The term business ethics represents a combination of two very familiar words, namely "business" and "ethics" The organization has to find and obtain needed resources, interpret and act on environmental changes, dispose of outputs, and control and coordinate internal activities in the face of environmental disturbances and uncertainty. Although economic and legal responsibility embody ethical norms about fairness and justice, ethical responsibilities embrace those activities and practices that are expected or prohibited by societal members even though they are not codified into law. Organized societies around the world did indeed establish principles and developed rules or standards of conduct - both legal and implicit - in order to guide businesses in their efforts to earn profits in ways that do not harm society as a whole.

Based on these conceptualizations, the definition of business ethics adopted here comprises "the moral principles and standards that guide behaviour in the world of business" whereas "an organization's obligation to maximize its positive impact, and minimize its negative impact, on society" is being termed corporate social responsibility which is a multidimensional construct comprising four subsets of (1) economic; (2) legal; (3) ethical; and (4) voluntary philanthropic responsibilities and classification of codes and scenario on developments in Corporate Responsibility globally, includes: The Millennium Development Goals, The UN Global Compact, The UN Norms: Business and Human Rights, The Global Reporting Initiative, ISO 26000 etc.

A further insight into the concept of CSR takes us to the two broad approaches to CSR. The first approach is the Traditional Approach. The basic theme of this approach is ?doing good to look good?. Basically, this approach was followed for a long time, till recently, and the companies following this approach undertook to perform their CSR only for the sake of it, only because it would fetch them recognition in the market. It did not practice these activities because it was genuinely interested in the well being of the society. The mere reason behind it was to build its corporate image. Commitments were short term, allowing the organization to spread the wealth over a variety of organizations and issues through the years.The new approach or the Modern Approach has its underlying objective, ?doing all that we can to do the most good, not just some good?. It supports corporate objectives as well. This is a win-win situation for all because when a particular company does well to the society genuinely and for a cause, it has to be good, and along with this process, it succeeds in building a name for itself.

An increasing number of companies are reporting publicly on their all round performance, both as a communication to stakeholders and as a management tool. Companies recognise that verification by a third party can add value to the overall reporting (social and environmental) process by enhancing relationships with stakeholders, improving business performance. The Corporate Social Responsibility Survey 2002-India, jointly conducted by the United Nations Development Programme, British Council, Confederation of Indian Industry and PricewaterhouseCoopers, covering 19 industry sectors reveals that this interest is growing as more and more companies in India are keen to project themselves as good corporate citizens.

The globalization of production and services provision by MNE's has created a heightened sense of awareness concerning the potential of environmental harm that the activities of such firms might create on the other hand MNE's may also be seen as the main repositories of modern, environmentally friendly technology and most advanced experts on environmentally sound management practices. A number of initiatives have addressed different aspects of the relationship between good governance, CSR and accountability. They include the OECD Guidelines for Multinational Enterprises, the UNDP High Level Commission on the Private Sector and Development, and the UN Global Compact/UNDP initiative of ?growing sustainable business in least developed countries'. A non exhaustive list of such initiatives been discussed further in the paper But there is still no comprehensive institutional setting or process within which to build understanding on the relationship between good governance, market-based CSR, and corporate accountability. The need is to implement social, ethical and environmental policy (commonly known as codes of conduct) through the development of objectives, programmes and mechanisms for monitoring social compliance performance.

Some believe that the only companies that are likely to survive in a competitive marketplace are those that place profit maximization above everything else. The noted economist Milton Friedman was a leading proponent of this view. Some take the position that organizations are not capable of moral agency. Under this, ethical behaviour is required of individual human beings, but not of the business or corporation. Other theorists contend that a business has moral duties that extend well beyond serving the interests of its owners or stockholders, and that these duties consist of more than simply obeying the law. It is sometimes claimed that a Gresham's law of ethics applies in which bad ethical practices drive out good ethical practices.

Globalization And Environment Degradation The Paradox

If we look at society from a historical perspective, we realize that protection and preservation of the environment has been integral to the cultural and religious ethos of most human communities. Ancient Hindus, Greeks, Native Americans and other religions around the world have venerated nature. Corporations having an ethical inclination towards environment to attain sustainability, the driving force has been Globalization. The term globalization is perhaps one of the most widely used and least precisely defined concepts in contemporary business. According to Schwartz and Gibb (1999) the term 'globalization' does not refer to a single process but "serves as shorthand for several related processes" one being ?trend away from nation states' where public in general requires more accountability from other powerful actors, such as business, and expects them to respond directly to the demands of public opinion. It acts as a force internationalization, liberalization, universalization and deterritorization .environmental effect on globalization being largely felt in the Economic and Governance domains. Cultures around the world thus converged towards adopting some core values, comprising: truthfulness; fairness; freedom. These universally shared values led to establishing international principles regarding the ethical responsibilities of contemporary business to society -the Caux Round Table (CRT) -- grounded on the United Nations Universal Declaration of Human Rights (1948); the European Convention on Human Rights (1950); the Helsinki Final Act (1975); the OECD Guidelines for Multinational Enterprises (1976); the International Labour Office Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (1977); and the United Nations Code of Conduct on Transnational Corporations (1972) -- covering five major business areas: employee practices and policies; basic human rights and fundamental freedoms; consumer protection; environmental protection; and political involvements.

Due to globalization there can be environment degradation. Rachel Carson's ?Silent Spring' warned the potential long-term harms to humans from pesticides. A wide range of such environmental concerns are relevant for business and thus play a role in business ethics. Though those who are dedicated to market mechanisms fear that environment regulation will act as a barrier to trade while environmentalist are concerned that market access can override national standards. Over the years, the international community has increased its awareness on the relationship between environmental degradation and human rights abuses such as 1) exhaustion of natural resources leads to unemployment and emigration to cities.2) this affects the enjoyment and exercise of basic human rights. Environmental conditions contribute to a large extent, to the spread of infectious Diseases and 3) new problems such as environmental refugees.

For the first time the General Assembly of the United Nations initially recognized the link between human rights and environment protection in a 1968 resolution. Now the surge is towards attainment of Environment justice which deals with equitable utilization of resources, procedural fairness and a safe and healthy environment. In the era of globalization and a shift towards non-state actors international human rights has acquired crucial role for countries where the poverty makes economic development a priority. One of the limitations of the human rights approach is that the obligation runs only to states and not the private entities that they are usually responsible for environmental harm.

Herein comes the coinage of the term ?Environmental Ethics' which is expected to be practiced by the corporations not only in letter but also in spirit. Anthropocentric (human centred) environmental ethics hold that only human beings have a moral value. It involves the application of standards of ethical principles to environmental principles. The academic field of environmental ethics grew up in response to the work of scientists such as Rachel Carson and events such as the first Earth Day in 1970, when environmentalists started urging philosophers to consider the philosophical aspects of environmental problems. Two papers published in Science had a crucial impact: Lynn White's "The Historical Roots of our Ecologic Crisis" (March 1967) and Garrett Hardin's "The Tragedy of the Commons" Marshall uses the following terms to describe ethical approaches namely: Libertarian Extension (extension echoes a civil liberty approach (i.e. a commitment to extend equal rights to all members of a community), the Ecologic Extension (places emphasis not on human rights but on the recognition of the fundamental interdependence of all biological and a biological entities and their essential diversity ) and Conservation Ethics.( looks only at the worth of the environment in terms of its utility or usefulness to humans)

The crux issue is of Environmentalism which has a major impact of how business conducts itself in the form of governmental regulations dealing with environmental protection. The two approaches appended to it are a) Preservationists- who are obliged to keep nature in its pristine beauty and b) Conservationists- who keep nature in its current state without depleting its resources much. On the other hand, there are three general principles of environmental protection, that are of especial importance in the development of MNE responsibilities namely- a) ?precautionary' principle which stresses incumbence upon the regulator to ant and to prevent damage from arising even where there is lack of full scientific certainty. b) ?preventive' principle which applies not only to states but also non-state actors and enacted in Principle 11 of the 1992 Rio Declaration which requires states to enact ?effective environmental legislation' and c) ?polluter pays principle' which echoes as ?the costs of pollution should be borne by persons responsible for causing the pollution' It will include full environmental cost and not just those, which are immediately tangible.

In the Indian context, Pollution laws are both complex and dynamic, and the present decade, in particular, has ushered in important changes in laws relating to environment. Section 49 of the Water (Prevention and Control of Pollution) Amendment Act 1988 and Section 43 of the Air (Prevention and Control of Pollution) Amendment Act 1987 give power to the people to file cases of complaint before the judicial forum. Section 18 of the Environment (Protection) Act 1986 also gives power to the people to sue delinquent industries or any other person responsible for the pollution. 'The Polluter Pays' principle has been held to be a sound principle by this Court in Indian Council for Enviro- Legal Action vs. Union of India ( JT 1996 (2) 196). The Court observed, "We are of the opinion that any principle evolved in this behalf should be simple, practical and suited to the conditions obtaining in this country". The Court ruled that "Once the activity carried on is hazardous or inherently dangerous, the person carrying on such activity is liable to make good the loss caused to any other person by his activity irrespective of the fact whether he took reasonable care while carrying on his activity. The rule is premised upon the "very nature of the activity carried on".

Emanated Concepts

The integration of business ethics with the cause of environment is a herculean task but still many concepts and principles have been developed establishing a relation between the two. This paper mentions some of those as below-

Corporate Citizenship-

The idea of responsible business behavior is far from new. But since the 1990s, increasing concern over the impacts of economic globalization has led to new demands for corporations to play a central role in efforts to eliminate poverty, achieve equitable and accountable systems of governance and ensure environmental security. The agenda that has resulted from these concerns has variously been called 'corporate citizenship', ?corporate social responsibility' (CSR), ?corporate accountability' or simply ?corporate responsibility' An increasing number of companies are reporting publicly on their social, environmental and ethical performance, both as a communication to stakeholders and as a management tool. Companies recognise that verification by a third party can add value to the overall social and environmental reporting process by enhancing relationships with stakeholders, improving business performance.

Emission Trading

Emissions trading (or emission trading) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It is sometimes called cap and trade. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emission allowance must buy credits from those who pollute less. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. The nature of the pollutant plays a very important role when policy-makers decide which framework should be used to control pollution. CO2 acts globally. The same amount of a regional pollutant can exert a very high impact in some locations and a low impact in other locations, so it does actually matter where the pollutant is released. This is known as the 'Hot Spot' problem'. The European Union Emission Trading Scheme (or EU ETS) is the largest multi-national, greenhouse gas emissions trading scheme in the world and was created in conjunction with the Kyoto Protocol. An early example of an emission trading system has been the SO2 trading system under the framework of the Acid Rain Program of the 1990 Clean Air Act in the U.S.As a reaction to the same 23 multinational corporations came together in the G8 Climate Change Roundtable, a business group formed at the January 2005 World Economic Forum. The group included Ford, Toyota, British Airways, BP and Unilever. The International Air Transport Association, whose 230 member airlines comprise 93% of all international traffic, position is that trading should be based on ?benchmarking,? setting emissions levels based on industry averages, rather than ?grandfathering.? But the point of concern that needs to be checked is that regulatory agencies run the risk of issuing too many emission credits, diluting the effectiveness of regulation, and practically removing the cap. In this case, instead of any net reduction in carbon dioxide emissions, beneficiaries of emissions trading simply do more of the polluting activity.

Triple Bottom Line

At its narrowest, the term ?triple bottom line' is used as a framework for measuring and reporting corporate performance against economic, social, and environmental parameters. At its broadest, it captures the whole set of values, issues, and processes that companies must address to minimize any harm resulting from their activities and to create economic, social, and environmental value. It is signified as three lines representing society, economy and environment

Carbon Trading

Carbon trading is an umbrella term that includes the trading of GHG reduction credits that were defined in the 1997 Kyoto Protocol of the Climate Change Convention, first drawn up in 1992. There are two main ways to exchange carbon. The first is the cap-and-trade scheme whereby emissions are limited and can then be traded. Under Kyoto Protocol Annex I countries can trade between each other. The European Trading Scheme is a cap-and-trade scheme and the largest companies-based scheme around. It is mandatory and includes 12,000 sites across the 25 European Union member states. The compliance is critical and under Kyoto obligations, industrialised countries have 100 days after final annual assessments to pay for any shortfall- by buying credits or more allowances via emissions trading. Failure to do so leads to further penalties. There are also some voluntary cap and- trade schemes. The Chicago Climate Exchange is such a scheme. The Kyoto Protocol laid down the excellent idea of Carbon Trading at the Global level with various countries having specified amount of Carbon Emissions Limit.18 Presently, various Indian Companies are practicing carbon trading, but the same is being done at the international level. Although India has no commitments to fulfil as it is a part of the Non annex - I countries in the Kyoto Protocol but a system which can actually replicate the international system of carbon trading at the domestic level

Recycling and Packaging

Several countries have taken steps to introduce mandatory recycling of products and packaging to reduce the generation of waste and the resulting pollution. Countries have even come up with the legislations of their own the torchbearer being Germany by enacting Verpackungsverordnurg (Packaging ordinance) followed by EU which introduced Packaging Directives in Dec 1994. These laws are part of an international trend to consider environmental impact of products throughout their lifecycles to the point of their ultimate disposal.

Eco Labels

If consumers are informed, the market and consumer choice can be relied upon to stimulate the production and consumption of environment friendly products the two forms are- a) Mandatory, comprising of ?Negative' and ?Neutral' content and b) Voluntary marking ?Multi criteria'

Pollution Havens

As per this hypothesis MNE's operating in ?dirty' industries are likely to invest in countries that have low regulatory standards, thereby allowing them to take advantage of a location-specific advantage for absorbing imported environmentally harmful practices.

Eco-modernism

The power of business to improve the environment is stressed to be apart of what has been termed as ?eco-modernism'. The faith and the technology could be used to ameliorate the environmental harm caused by earlier generations of productive technologies. This approach amounted to a departure from the earlier business perspectives on environmental issues, which saw environmental regulation as a barrier to the market.For example, in response to concerns over effects of climate change, in 1997 BP left Global Climate Coalition (GCC), the major industry association opposing emission controls and reduces its internal emissions by 10 % in 2003, this trend soon followed by Shell.

The Realm Of Regulations

Sustainability is the ultimate goal of business ethics that is practiced by companies in the markets they have their presence in and it also builds a brand image in the markets it wishes to foray into. The need is of the regulations that drive the desired objective to reality. These are in the nature of governmental, international and self regulations on the companies. The corporate need to comply with these else earn a bad name and lose their market share. Owing to the fact, that unregulated industrialization and growth and will create environmentally unacceptable consequences, particularly in rapidly industrializing countries. Thus a degree of control over environmental effects of domestic and foreign investment alike will be required.MNE's are key to effective transnational environmental protection in that they represent the interface between the environmental and global economic integration. This is due not only to their capacity to produce high levels of pollution, but also their ability to develop new environmentally friendly technologies and management practices on their own regardless of actual levels of governmental regulations, creating a firm specific environmental regulatory order.Equally economic instruments that require legislative sanction, such as ?green' taxes and incentives designed to encourage firms to operate in a more environment friendly way. Mandatory environmental accounting and auditing requirements or legally binding eco-labelling schemes, can only be instituted by states.

Similar to the recent experiences of many global corporations such as Nike and Shell, companies operating in India run the risk of damaging their brands and reputations if they fail to embrace corporate responsibility policies and practices. Hindustan Lever, for example, is rated high in terms of brand quality but has recently come in for considerable public criticism for its handling of hazardous waste at a thermometer factory in southern India. The companies have taken their own initiatives in revamping their image by innovative methods. The IEI has launched an ?enviro farm' scheme where organic farming on a commercial scale is undertaken with the involvement of local communities. Enviro farms are cultivated to the standards of the International Federation of Organic Agriculture Movement, Germany.

The OECD MNE Guidelines are subscribed to by all thirty members of the Organization for Economic Co-operation and Development (OECD). A further ten non-member countries (Argentina, Brazil, Chile, Egypt, Estonia, Israel, Latvia, Lithuania, Romania, and Slovenia) have also adhered to the Guidelines. The purpose of the OECD MNE Guidelines is to offer a balanced, multilaterally-endorsed, and comprehensive Code that expresses the shared values of adhering governments. They are ?recommendations jointly addressed by governments to multinational enterprises? that provide ?principles and standards of good practice consistent with applicable laws?. By providing a clear set of expectations, the Guidelines seek to encourage the positive contributions multinational companies can make to economic, environmental and social progress. The Guidelines comprise a set of voluntary recommendations in all the major areas of corporate citizenship, including employment and industrial relations, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition, and taxation. The instrument's distinctive implementation mechanisms include the operations of National Contact Points (NCP), which are government offices charged with advancing the Guidelines and handling enquiries in the national context. NCPs also support a unique mediation and conciliation procedure - called ?specific instances? - involving claims that the Guidelines have not been respected. This process may be engaged whether or not a company has recognized the Guidelines. While the Guidelines are primarily addressed to MNEs, they are not aimed at introducing differences of treatment between multinational and domestic enterprises. Accordingly, multinational and domestic enterprises are subject to the same expectations in respect of their conduct wherever the Guidelines are relevant to both. The Guidelines were expressly designed to strengthen the existing international normative framework. Among other norms, they reference the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development and Agenda 21, and the Copenhagen Declaration for Social Development. The Guidelines can readily be used in conjunction with other instruments

Next in fray is the UN Global Impact. The UN Global Compact has two broad goals. These are to mainstream ten core principles relating to human rights, labour standards, the environment, and anti-corruption in business activities around the world; and to catalyse actions in support of broader UN goals, such as the Millennium Development Goals (MDGs). A voluntary initiative, it is not a code of conduct. The principles relevant for the paper are related to - Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Global Reporting Initiative was formed by the US based non-profits Coalition for Environmentally Responsible Economies (CERES) and Tellus Institute, with the support of the United Nations Environment Programme (UNEP) in 1997. The guidelines are widely recognized for bringing sustainability reporting into the business mainstream.

Senior business leaders say the time has now come for all business to report their sustainability and use. The ISO 4000 series covers six main areas including environmental management systems, environmental auditing, labelling, performance, evaluation life cycle assessments, and terms and definitions. Of the already adopted ISO 14000 series it is ISO 14001 Environmental Management Systems- Specifications with Guidance for Use which allows for corporate certification, but not as a whole.

The United Nations Framework Convention on Climate Change (UNFCCC) was adopted in June 1992 by over 180 countries at the .Earth Summit in Rio de Janeiro and came into force on 21 March 1994.1 The UNFCCC provides a legal framework that enables Parties to the Convention to start the process of stabilising Greenhouse Gases (GHG) in the atmosphere. The Kyoto Protocol adopted under the UNFCCC in December 1997, came into force on 16 February 2005.2 The Kyoto Protocol commits industrialised signatory countries (.Annex I. countries) to reduce their GHG emissions by an average of 5.2%. Under the Kyoto Protocol, Annex I countries may achieve these emission reductions either domestically or by supplementing their domestic efforts through three international market-based or flexible mechanism. The Kyoto Protocol sets targets for industrialised countries to cut their GHG emissions like carbon dioxide, methane, hydroflurocarbons, perflurocarbons and sulphur hexafluoride, nitrous oxide. These gases are mainly responsible for global warming, the rise in global temperature, which may have catastrophic consequences for life on earth. The targets for reducing emissions then become binding on all the Annex 1 countries, which have ratified the Protocol. The two main industrialized countries, which have not ratified the protocol, are Australia and United States.The agreement acknowledges that developing countries contribute least to climate change but will quite likely suffer most from its ill-effects. These countries do not have to commit to specific targets, but have to report their CSR & Environmental Ethics. China and India, potential major polluters with huge populations and growing economies, have both ratified the Protocol. As of now, 165 countries have ratified the Protocol.

Multilateral Environmental Agreements (MEA's) have also taken a crucial role in this regard after Montreal protocol on substances that deplete the ozone layer, which adopts trade controls which are more restrictive as to non-parties than parties. Formal regulations refer to mandatory requirements imposed by governments and regional organizations with law-making powers, as well as standard setting environmental agreements aimed at environmental protection and furtherance of, sustainable development by way of MEA's. At present there are no international rules, or procedures for the environmental regulation of MNE's. Therefore these cannot be held liable under international law as such, only under applicable national laws. Though there are certain non-binding and mandatory international instruments creating commitment of MNE's. Emphasis also has to be supplied to Basel Convention on Control of Trans-boundary movements of hazardous wastes, which the business houses have to comply to project a human face to their operations. Enterprises should maintain contingency plans by the instrument of EIA's (Environment Improvement Assessments) for preventing mitigation and controlling serious environmental and health damage by its operations.

The Corporate Compliance

The objective of the imposed regulations is not achieved until they are complied with not only in letter but also in spirit. In May 2002, the United Nations Environment Program (UNEP) released an extensive report saying that, ?there was a growing gap between the efforts to reduce the impact of business and industry on nature and the worsening state of the planet? and that ?this gap is due to the fact that only a small number of companies in each industry are actively integrating social and environmental factors into business decisions.? It is hard for an individual corporation or even group of corporations to effectively break out of this cycle due to fear of competitors being able to take the advantage. Hence this becomes a political as well as economic and environmental issues. Corporations therefore can also be positive engines for the environment as well.

• That is, if the environment and related factors were central concerns in politics, media, and so forth, then public pressure and other factors would of course require corporations to be more accountable.

• Furthermore corporations typically have a lot of capital, knowledge, and resources to research, pursue, develop, and market environmentally friendly/sustainable products, but only if that is the political driver.

Social compliance is the end product of social accountability. Throughout Europe and the US, the pressure groups have demanded that production and services sourced out to the developing or under developed countries due to cheap labour should not lead to environmental deterioration, exploitation and bad working conditions. Compliance with the applicability of ethics marks the observance of CSR. CSR in India has yet to realize its full potential. Individual and collaborative initiatives continue to be dominated by self-assertion rather than accountability. What is absent, however, are clear metrics for evaluating their actual impact in improving social conditions. Established industrial dynasties, such as the Birlas and the Tatas, concepts of nation- building and trusteeship have been alive. Alongside these are the leading Indian companies with strong international shareholdings, such as Hero Honda, HLL (Hindustan Lever Ltd), ITC, and Maruti Udyog, where local dynamics fuse with the business standards of the parent or partner. Another tradition emerges from the public sector enterprises, such as BHEL (Bharat Heavy Electricals Ltd), HDFC (Housing Development Finance Corporation), NTPC (National Thermal Power Corporation), and ONGC (Oil and Natural Gas Corporation), where social obligations remain an integral part of their business despite the march of privatization.

Though many multinational retailers can now boast of a Code of Conduct, only a few have been able to roll out a full scale and independent monitoring programme. The issues involve from finding resources to conflicts with short-term business objectives. External challenges include cultural diversity. Voluntary initiatives are important?if companies agree that this is the correct way of proceeding they are more likely to comply. But self-regulation has its limits. Take the UN Global Compact to which 700 companies have signed up. But a number of NGOs have strongly criticized the Global Compact because they say the companies just use it to promote themselves as ?good corporate citizens? without actually having to live up to their commitments, because the Compact entails no verification. They command authority but lack responsibility; they control vast resources but do not have sovereignty. They operate in a grey zone at the international level where rules are unclear and control is difficult. According to Pricewaterhouse Coopers, within the next 10 years the evaluation methods used by Wall Street analysts will include new matrices- social performance and intellectual capital?to more accurately assess the net worth of a company. Companies will increasingly adopt a comprehensive view of corporate citizenship that includes the environment and community engagement.

As part of more comprehensive compliance and ethics programs, many companies have formulated internal policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly-generalized language (typically called a corporate ethics statement), or they can be more detailed policies, containing specific behavioural requirements (typically called corporate ethics codes). Not everyone supports corporate policies that govern ethical conduct. Some claim that ethical problems are better dealt with by depending upon employees to use their own judgment.

Companies have realised their responsibilities and as an initiative have taken positive steps one of them being dedicated positions in the company to look after its CSR accountability. An example can be the appointment of Ethics Officers. Ethics officers (sometimes called "compliance" or "business conduct officers") have been appointed formally by organizations since the mid-1980s. Originally the Ethics Officer Association (EOA)-- was founded at the Centre for Business Ethics(at Bentley College, Waltham, MA) as a professional association for those responsible for managing organizations' efforts to achieve ethical best practices. They often report to the Chief Executive Officer and are responsible for assessing the ethical implications of the company's activities, making recommendations regarding the company's ethical policies, and disseminating information to employees. They are particularly interested in uncovering or preventing unethical and illegal actions.

We have several bodies now emerging on the Indian scene that focus on issues of CSR. Core-BCSD India is a unique grouping of corporate organizations that, for instance, are trying collectively and individually to build in sustainable development concepts in their operations. Core-BCSD India includes some of the most innovative, some of the largest and also the most forward looking organizations in the country. The objectives of sustainable development rest within the principles of corporate social responsibility (CSR), because unless the needs of society, both present and future, are served, sustainable development would remain only a myth. And the most significant step in pursuing CSR is to proactively protect the environment. Recent statements and writings of Lord John Browne, CEO of BP, where a company that has built its entire business around provision and use of hydrocarbons has actually issued a call for reducing emissions of carbon dioxide and greenhouse gases for stabilizing the world's climate system. Many would see this as totally opposed to the business interests of BP. But in actual fact BP has read the writing on the wall and has identified its future as an era beyond petroleum as the company's advertisements proclaimed loudly a few years ago. This, therefore, is an example of a company altering its long-term business plans to suit what it anticipates society would want in the future. This example, therefore, highlights the fact that corporate social behaviour (self -regulation) could also be good business.

Evoking Sustainable Development

Learned scholar Joseph R. Des Jardins observed-------

-? Many not think that a mere pragmatic approach is called for an approach that recognizes the plurality of environmental values and principles and emphasizes the greater consensus on practical policy considerations, the end product being attainment of sustainability?

His observations, holds ground as the aim of CSR coupled with ethics is undoubtedly sustainability. The most widely quoted definition of Sustainable Development is that of the Bruntland Commission which calls for definition that, ?meets the needs of the present without compromising the ability of future generations to meet their own needs.' The emphasis is on human needs rather than wants, and on inter and intra generational equity. This approach is based on an accommodation between economic growth, environmental concerns, and the wider social effects of economic activity.

Future economic activity must be economically vigorous enough and ethically focussed to meet the real needs of the world population and it must do so in ways that are environmentally sustainable. To this is it expedient to focus of the three pillars of sustainability which are-

1. Economic

2. Environmental Viability

3. Ethical

The major breakthroughs through which marks of sustainable developments can be traced are mentioned below:-

1. The Limits to Growth (1972): Published by the Club of Rome, the report challenged the idea of progress, on the grounds that it failed to acknowledge the obvious truth that resources are finite, and hence growth dependent on resources can not be endless.

2. UN Stockholm Conference on the Human Environment (1972)

3. World Conservation Strategy (1980): prepared by the IUCN with UNEP and WWF, promoted the idea of environmental protection in the self-interest of the human species.

4. Environmental disasters in mid of eighties: The interest in sustainability that flourished during that period was spurred by a series of incidents, including Bhopal (1984), Chernobyl (1986), the hole in the Antarctic ozone layer, leaking toxic chemical dumps, such as Love Canal, general fears about chemical contamination and conflicts over decreasing natural resources such as forests and fisheries.

5. Our Common Future (1987): the UN-sponsored Brundtland Commission released a report that captured widespread concerns about the environment and poverty in many parts of the world.

6. UN Conference on Environment and Development/ Earth Summit (1992), Rio de Janeiro: World attention on sustainability peaked at the event.

7. United Nations Millennium Summit (2000), New York: Goals were declared by UN to speed up growth of developing part of the world so that it can pace up with the rest developed world.

8. United Nations Climate Change Conference (2007), Bali: Representatives from over 187 countries struggled to find a roadmap to save the earth, especially developing countries, from the disastrous effects of climate change due to global warming caused by various industrial and developmental activities

In order to fix accountability of the corporation involved in emitting pollutants and thus responsible for degradation of environment, and to check this for attaining sustainable development legislatures round the world have been enacting strict liability laws. The most exacting national law in developed countries is the United States Comprehensive Environmental Response Compensation and Liability Act, 1980 (CERCLA) commonly referred to as ?Superfund Act'. In 1991, India passed the Public Liability Insurance Act, which introduced ?no fault' liability for industrial accidents involving hazardous activities though the compensation limit was set at Rs. 25,000. Indian courts also developed a concept of ?absolute liability' for escape of a hazardous industrial substance. And more recently, certifying the ?polluter pays' principle (as earlier discussed) applicable principles of EU Member States have laid down the Directive on Environmental Liability of 2004. Thus it can well be ascertained that through these strict legislations the ?States' are eyeing the observance of ethics by corporations in business practices.

Observance Voluntary Or Obligatory? The Mle

The question that arises after the above discussion, is since ethics are borne from within in business practices by the corporate thereby exhibiting them as a good ?corporate citizen' observing CSR, whether it is a voluntary step or obligatory in nature? The million-dollar question as of now is whether CSR has been or should be mandated or not. As of now, there is no law that recognizes or enforces the concept of CSR, but still companies do comply with their responsibilities, which may be for their personal gains to their reputation, name or even profits. The principle of sustainable development has been held to be a principle of International Law. Though judge Duval noted that environmental torts based on these principles had not acquired the status of a customary law. On the other hand it is well established that a country is liable under International law for harm caused by the trans-boundary escape of air-borne pollutants originating in privately owned facilities within its boundaries. This may offer a cause of action where it is not possible to sue the corporation that caused the harm directly. The ?host' country acts as the ?insurer of last resort' in such cases. The risk of responsibility may encourage the host country to undertake preventive measures which includes passing of strict legislations, international cooperation with other governments and international organizations

In Supreme Court of India, precedents have been set which go in favour of CSR acquiring the statutory backing and are in specific reference to the environment. Further cases need mention.-

1. National Textile Worker's Union Vs. P.R. Ramakrishnan

It was held by the Apex Court in this case that the traditional view that a company is the property of the shareholders is an exploded myth. According to the new socio-economic thinking, a company is a social institution having duties and responsibilities towards the community in which it functions.

2. Birla Zauri Agro Chemical Ltd., Goa Case (April 1975)

In this case, the Goa High Court ordered the closure of the company's operations because the effluents of the company were polluting the sea causing large-scale deaths of fish and also polluting the wells of villagers and damaging the crops. Here the company was obviously violating the environment laws. The company has a statutory duty in such cases to take care of the pollutants and maintain the environmental balance. It follows the principle that the polluter pays.

Conclusion

Ethics and Corporate Social Responsibility are indispensible. CSR is not only about fair auditing, maintaining consumer relations but also about caring for the society as a whole by giving equal weightage to Environment as a whole. The processes carried out by corporate should be eco-friendly and also complying with all the regulations set for the purpose by regulatory bodies and institutions. This will ultimately reach to Sustainable Development by amalgamation of ethics into responsibility towards Environment by these ?corporate citizens'.

In the Indian context, in order to arise the ethical development, in the corporates, the state should itself make a paradigm shift from where it currently places itself in the global circuit. It has to come out of the traditional view ?doing for the sake of it' to Milton's idea that ?the business of business is business'. The way India has responded to Kyoto Protocol has been commendable and it has created a lion's share for itself in the global carbon emission trading market. This is a perfect example of India's resilience and its capability to modulate its policies in a changing world arena. India should try to frontload its preparations to meet its commitment under the Kyoto Protocol and concentrate on harnessing renewable sources of energy. The right approach is to understand that the environmental problems should not be read in isolation, they have a direct impact on the economic condition and human development in a country. India should frame its environmental policies and legislations keeping this aspect in mind. The United Nations Millennium Development Goals should be the leading light in any such exercise, which are strived for by all the member-nations of the United Nations.

The authors would propose certain suggestions in the regard of the regulations and corporate social performance towards the cause of Environment-.

First, regulatory controls are seen as going hand in hand with market controls over environmental actions involving full environmental costing through the ?polluter pays' and ?natural resource user pays' principle. MNC's are to be consulted in this regard. Secondly, a program to develop systems for integrated environmental and economic accounting should be set up. Thirdly, trade in environmentally damaging products, chemicals , toxic substances, and hazardous wastes can be lawfully banned. Furthermore, corporate wherever they operate, are specifically urged to introduce policies, commitments and standard of operations in relation to hazardous waste generation and disposal that are equivalent to or no less stringent than those in country of origin. They are also expected to adopt the best available environmental technologies, develop products and services that are safe. Finally, they are urged to impart environmental education and use their expertise and knowledge in the development of public policy.

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