It is happening today not because the economics has changed, but because environmental protection has been redefined as pollution prevention, from its earlier definition of pollution control.

Pollution control through end-of-pipe treatment is a dead investment and has inverse relationship with the bottom line.

However, pollution prevention is an investment, which leads to better utilisation of resources and hence, will strengthen the bottom-line.

This was also proved during the pulp and paper sector rating. CSE analysed the financial performance of the 28 pulp and paper companies that had been rated. The conclusion; there is a 60 per cent likelihood of a pulp and paper mill with fairly good environmental performance churning out profits and vice-a-versa.

Public interest litigation, encouraged by an activist judiciary, has led to the closure of a number of industrial plants by the Supreme Court and the High Court. If a company closes down, it is obvious that its stock value will go down. Investors can lose substantial money, which for many could be their life savings. Therefore, with increasing environmental consciousness of investors, investments in companies with poor environmental track record is likely to go down.

Green Rating Project’s ultimate aim is to get the industry develop and implement its own eco-friendly practicesss

To prepare environment inventory of companies by systematically collecting information about their environmental performance. This information will be further analysed, comparatively evaluated and disseminated.

To develop a market-based incentive through the rating to encourage industries to voluntarily improve their environmental performance;

To empower communities and markets to proactively participate in accelerating sustainable economic growth;

To aid in better regulation of industrial pollution by regulatory authorities and,

To aid in better formulation of policies by the government leading to sustainable development of Indian industries.

In totality, GRP aims to get Indian industries to develop and implement on their own sustained eco-friendly practices to preserve the environment.

KEY ELEMENTS

Green Rating Network is an important part of the whole exercise. A green inspector interacting with local community during survey for paper industry

CSE has taken the cue from the methods practiced in the West, but at the same time has suitably modified them to suit its own strengths and the peculiarities of the Indian industrial context. Following are the key elements of this modification:

Focus on a company’s future environmental commitments and rather than dwell on its past track record: We begin by assuming that most Indian companies have not come up to the mark on the environmental front, partly because of inadequate enforcement of Indian laws and partly because political and industrial leaders have not given enough attention to environmental management.

Therefore, CSE wants to recognise companies that are making a serious effort to improve their current and future environmental record, even if their past performance has been poor. But it would verify actual commitments and targets of the company for its environmentalfriendly initiatives by rating the sectors once in two years.

Voluntary disclosure: A company that does not disclose any information will qualify for the lowest possible rating.

Primary and secondary data: Since the project relies heavily on voluntary disclosure by companies, data collection from both primary as well as secondary source becomes very important to maintain the overall credibility of the rating. The primary data collection consists of a corporate policy questionnaire, a sector specific questionnaire and visits to the corporate headquarters as well as factory site.

Secondary data collection consists of feedback from different sources like local communities, local media, NGOs, respective state pollution control boards, etc.

Involve public: For both primary as well as secondary data collection, the project has developed a country-wide Green Rating Network. The network consists of qualified and spirited citizens willing to collect data of companies situated in their area on behalf of the project. The criteria used for screening and selection of the Green Rating Inspectors is educational background, experience and proximity to the selected companies.

Sector-specific approach: Since it is not practical to rate a company of one type with a company of another type in technical terms. Therefore the environmental performance rating of companies will be done within a specific industrial sector by GRP.

Initial focus: Multinational companies and major Indian companies on the stock market are conscious about their public image, especially those that are trying to raise funds abroad. They are also the ones that have the means available to obtain world class technology.

Therefore, CSE’s initial focus will be on this segment. Large industries are generally trend-setters and as industry leaders, they can set the standards for other companies to follow.

Rating of non-participating companies: In addition to companies that are voluntarily disclosing information, the project will also obtain data on companies, which are not disclosing their information. These companies will be rated on the basis of secondary information.

Transparency: The project has set up an institutional mechanism, which has a project advisory panel (PAP) and sector-specific technical advisory panels (TAP), to involve the society in general and experts in particular in this rating exercise.

First opportunity to companies to view their report: To bring in transparency at each and every step of this project, CSE will provide the rating report of a company to its managers for their comment and feedback before publicly disclosing any information about it.