Carbon Credit – For Environmental Management
Environmental management is not merely managing the environment but it’s the management of human interaction with; and impact upon the environment in order to conserve the environment for mankind’s sake. Managing environment is the biggest issue these days which is being faced by everyone everywhere across the globe. Initially, the Environmental Law was perceived as one of the most important tools of environmental management. However, Protection of environment from degradation has now not just remained a legal issue but a management issue as well.
It is observed that mere compliance of environmental law on paper does not result in effective control of pollution. An alternate paradigm for pollution abatement for more effective methods of environmental control beyond traditional “command-and-control (CAC)” style regulation is to use economic instruments (EIs) or market-based instruments (MBIs). Introduction of market based instruments will help to reduce emission of pollutants, pollution and will surely increase social responsibility of industries. Eco-taxes, tradable emission limits and negotiated agreements are some of the types of instruments which can be used effectively and efficiently.
In India, environmental management is largely carried out at the state level. This is true for natural resources such as forests and land as well as for air, water quality and solid waste pollution.
Green and Grey Products:
Almost every product has multiple environmental impacts. The products and their manufacturing processes, consume energy, use renewable and non-renewable material and generate emissions. A product is ‘green’ when its environmental and societal performance, in production, use and disposal, is significantly improved and improving in comparison to conventional or competitive product offerings, i.e. they are sustainable from the environmental point of view. A Green Product is environmentally preferable and leaves minimum environment footprints.
When a product is unsustainable from the environmental point of view, it is termed as ‘grey’.
Market Based Instruments (MBI) for Environmental Benefits: “Market Based Instruments refer to the environmental policies which encourage change in technology, behaviour or products through financial incentives like subsidies, taxes, price differentiation or market creation.”
Carbon Credit – As one of the most effective MBI:
A Carbon CreditA permit that allows the holder to emit one ton of carbon dioxide; Credits are awarded to countries or groups that have reduced their green house gases (GHG) below their emission quota. Its goal is to stop the increase of carbon dioxide emissions. The Kyoto Protocol presents nations with the challenge of reducing greenhouse gases and storing more carbon. A nation that finds it hard to meet its target of reducing GHG could pay another nation to reduce emissions by an appropriate quantity. The carbon credit system was ratified in conjunction with the Kyoto Protocol.
For example, if an environmentalist group plants enough trees to reduce emissions by one ton, the group will be awarded a credit. If a steel producer has an emissions quota of 10 tons, but is expecting to produce 11 tons, it could purchase this carbon credit from the environmental group. The carbon credit system looks to reduce emissions by having countries honor their emission quotas and offer incentives for being below them.
Indian Initiatives for environmental management:
Comparing the globally placed carbon trade, India seems nowhere near. However, Policy Statement for Abatement of Pollution, 1992 by the Government favours the use of MBIs for pollution control, wherever feasible. In the recent years, compulsion to comply with Euro II emission norms is a very confident step towards controlling air pollution. It has now become essential for companies to make environmental considerations as a part of their business decision making.
The enactment of the Information Technology Act, 2000 has enabled the industry to kick-start the use of electronic mode as a valid legal medium for carrying out its business operations which were until now done compulsorily on paper. This includes initiatives like MCA e-filing, Income Tax e-filing, SEBI Reporting and other electronic communications via, emails and video conferencing.
What we professionals can do?
India is still not a signatory to the Kyoto Protocol, which in a way, is a road-block for effectively carrying out environmental management by the industries. Currently companies like Jindal Stainless, Essar Steel, Hyderabad Chemicals, Paschim Hydro Energy P. Ltd, The Andhra Pradesh Paper Mills Ltd, have been making use of market based instruments like Carbon Credits in their businesses. It is a need of the hour for Company Secretaries, Chartered Accountants, Lawyers, Cost Accountants and other Management professionals to put up their say in the management of their respective organisations (financial, manufacturing or services) and be a part of the decision making more proactively & aggressively.
At the organisation level:
- The various industry Chambers like FICCI, ASSOCHAM, CII should take-up the issue of introducing market based instruments like Carbon Credits through a legal framework with the Government. These trade organizations can also come up with some award program to the Companies which religiously follow the norms. Such award program will work as a motivating factor in the industry to adopt the norms suo-moto.
- Introduction of corporate-run carbon funds
- Introduction of Government-run carbon programmes
- We, professionals, should stress upon and make the company management aware of the benefits of such market based instruments
- Awards like ‘Best Green Idea’ for employees coming up with suggestions; ideas, ways, etc. should be introduced.
- Ask the management of our respective organisations to take help of the MBIs wherever feasible.
- Computer-based entrance tests for educational courses.
- Organizations can also come up with policies for reducing wastes like for encouragement of use of metal water bottle in the organization in place of plastic water bottles which is sanitary, easy to clean and is capable of being used over and over.
- Organizations can also encourage use of reusable lunch bags / cups etc. in their cafeteria / lunch rooms which helps in avoiding use of plastic / paper, use of hand towels in toilets and lunch rooms instead of paper towels and electric dryers.
On individual level, we professionals can contribute in the following way:
- We, professionals, can help our respective organizations in implementing effective waste management systems. We can also assist in registering our manufacturing units under Indian Green Building Council and products under Bureau of Energy Efficiency voluntarily; though for some the registration is mandatory.
- Internal policies may also help in encouraging paperless communications, use of common transport etc. as far as possible. Such policies may atleast ensure minimum use of paper (double side printing), avoidance of wastage and re-cycling of waste paper and therefore, saving trees – a natural resource.
- We can also assist in encouraging our fellows in full utilization of software applications, for example execution of daily work in soft copies rather than printing (Eg. Excel Macros for data processing, analysis, etc.). This way, we will solve two problems i.e. space for storage of physical records and availability/ accessibility of all records at a centralized server hence, reducing dependence on human factor. We all are aware that most of the official communications can be done through email/video conferences. We professionals can advise our managements / fellow employees to adopt such practices.
- We, professionals, need to refer to many laws for which we purchase bulky books every year. Here, we can purchase CDs instead of those books, which will reduce substantial use of paper and storage and will be easy to use.
- We can also adopt and advise good practices of reducing carbon footprint for example using CNG gas in our cars, maximum use of public transport system.
- We can advise our managements to come up with policies to reduce wastages, be it paper, electricity or any other. Policies on travels can also be modified to discourage air travel at all levels of management. A small change can add a big thing to the concept of “Go Green”.
It’s the need of the hour to think very seriously on reducing environment loss by religiously following & implementing and innovating techniques & ways to contain the same. This is a high time to call a revolution for reducing carbon footprint in order to preserve what’s left of the ozone layer, which is a protective layer between sun’s harsh ultra violet rays and the living beings. Otherwise, the day is not far when the world will be full of hunger; sun burnt, blind people, scary sounds and many more incurable diseases.
About the Author
Monika Bhardwaj, B.Com, ACS, Gurgaon Anand Wadadekar, M.Com, M.A (Eco), MBA, AMFI, Pune