EHS compliance is becoming increasingly intertwined with the success and progress of companies all over the world and India is no exception. We are only in the first few months of 2018, and the EHS regulatory and policy trends in India for the current year seem to be crystalizing already. Although India has traditionally had a poor reputation when it comes to supervising and enforcing compliance with its environmental, health and safety laws, there is evidence that this is changing – both in terms of enforcement actions by the authorities and also developments in regulation and policy. A new trend focusing on stringent surveillance and enforcement by Indian authorities is on the rise and an increased number of enforcement cases can be expected to be seen in the coming months and years. Although, instances of implementation of EHS regulations in the country are still not highly publicized, both within India and outside, we feel it is only a matter of time before this will change as well.
Within the broad scope of EHS regulation in India, there are some specific areas that are in the limelight and will see further developments in the near future:
Facilitation of female workers in the workplace and protection from workplace stress particularly sexual harassment
Facilities employing women workers are required to provide amenities and facilities like crèches in order to help retain and facilitate women in the workplace. In another woman-focused change, the Government of India, through its Ministry of Women and Child Development, launched the SHe-Box (sexual harassment electronic box) Online complaint Management System to report and view the status of sexual harassment complaints arising from the workplace, which include the following:
- physical contact and advances;
- a demand or request for sexual favors;
- sexually-oriented remarks;
- showing pornography; and
- any other unwelcome physical, verbal or non-verbal conduct of a sexual nature.
In addition, based on a recent landmark judgementt by The Central Administrative Tribunal of India, companies employing temporary or ad-hoc female employees will be required to allow them to take maternity leave.
Safety with regard to lifting machinery
The scope and regulation of lifting machinery has been expanded to include elevators in addition to lifts since facilities are increasingly using them on their premises. In addition to this widening, more stringent requirements like increased testing of machinery and more detailed undertakings by manufacturers of machinery, have been adopted.
Companies registered in India, from 2018 onwards, will be subject to the two percent corporate social responsibility (CSR) spending requirement if they meet annual financial thresholds "in the preceding year" as opposed to during "any financial year", as per the previous requirement under the company laws which lay down mandatory CSR requirements. As a result, companies that meet the threshold in the preceding year will be required to spend at least two percent of the average net profits made during the three immediately preceding financial years on CSR initiatives. This is an example of the increasing focus on CSR within India.
Consolidation of Labor Laws
The Labour Secretary of India, Mr. M Sathiyavathy, recently stated that the Ministry of Labour and Employment is moving towards consolidating more than 44 labor laws at the central level into four broad codes covering wages, industrial relations, social security, and occupational safety, health and working conditions. This will remove the multiplicity of definitions and authorities that currently exist and aid in the ease of compliance without compromising on wages and social security of workers.
In addition to these codes, a Bill to further amend the Contract Labour Act is also expected to be pushed for passage in the parliament, this year and the Payment of Gratuity (Amendment) Bill, 2017, which will enable the central government to enhance paid maternity leave by executive order is also expected to come through this year. These changes will likely alter the current labor requirements that companies working in India have to fulfill, but what the exact alterations will be, is yet to be known since no drafts of the codes or bills are currently available.
A common thread among these EHS areas are the changes that have been put forth with regards to them, all of which point to the following:
Promotion of a culture of safety:
There is an acceptance that 80 percent of workplace incidents are stress-related, which is the reason why an employee culture focused on happiness and safety is being emphasized on in India. The SHe-Box (sexual harassment electronic box) Online Complaint Management System is an example of this. From another perspective, widening the scope of lifting machinery is another example of the focus on safety and a move towards a zero-harm culture with a focus on preventing accidents.
Tight enforcement, higher fines and absolute liability of companies:
Facilities in India are permitted to operate only after procuring licenses and non-compliance of this leads adverse results seen under the Sterlites Industries case, where one of the largest copper smelter plants in India was found to be operating without a valid renewal of its environmental consent to operate. When assessing the company's liability to pay damages (that is, for damage caused to the environment during the 15 years it operated without a valid environmental permit), it was determined that 10 percent of the profit before depreciation, interest and taxes (PBDIT) had to be paid as compensation, which amounted to INR 1 billion. Further, in the case of M.C. Mehta v. Union of India, the absolute liability rule and the concept of deep pockets was established, after an oleum gas leak took place in the Shriram Food and Fertilizers Ltd. complex at New Delhi and resulted in the death of a few persons and hospitalization of many workers. This case is the benchmark for dealing with instances of damage caused by dangerous chemicals when usage and/or manufacturing is undertaken by a company.
Increased public activism:
NGOs in the state of Gujrat alleged that a manufacturer of potassium and sodium bichromate in Gujarat dumped more than 45,000 tons of toxic waste in and around its facility. In 2004, because of the growing public outcry and PIL’s, the Supreme Court’s Monitoring Committee (SCMC) directed an inspection of the site where the dumping had taken place after which it directed the company to have the waste removed by an expert body and ordered the company to deposit USD $3.7 million towards the initial remediation work.
Growing number of closure of facilities in cases of non-compliance:
The Tamil Nadu Pollution Control Board (TNPCB) recently ordered closure of 10 dyeing units in the Tirupur knitwear cluster that failed to comply with the Supreme Court order pertaining to pollution caused by the dyeing units on the Noyyal River which was located close to their facilities. The power and water supply to these units was also disconnected and the Supreme Court of India directed the company to deposit USD $11.6 million to clean up the river.
It is a forgone conclusion that compliance is a necessity to run a safe and effective business. Non-compliance results not only in costly fines, temporary stoppage of production, damage to the company’s reputation, but also protentional criminal charges, all of which are being seen, more and more under the Indian jurisdiction and are reflected in recent policy changes. The natural next step will be increased publicity of instances of non-compliance, the resulting loss of reputation for the companies involved and the use of increased awareness of the same as a deterrent, by Indian authorities.