CSR Inseparable from Environmental Responsibility: Supreme Court

The Supreme Court held that Corporate Social Responsibility (CSR) cannot be separated from Corporate Environmental Responsibility.

• Companies cannot claim social responsibility while ignoring environmental obligations and the rights of other beings in the ecosystem.

Great Indian Bustard Protection

• A Supreme Court bench issued a series of directions to protect the Great Indian Bustard, a species on the verge of extinction.
• The bird faces major threats from non-renewable power generation projects in Rajasthan and Gujarat.
• The Court linked corporate environmental harm directly to corporate accountability for conservation.

Constitutional Basis

• The Court referred to Article 51A(g) of the Constitution, which imposes a fundamental duty on every citizen:
  • To protect and improve the natural environment, including forests, rivers, lakes and wildlife.
  • To show compassion for living creatures.
• It ruled that a corporation, as a legal person, also shares this constitutional duty.

CSR as a Constitutional Obligation

• The bench observed that CSR funds are the tangible expression of this fundamental duty.
• Allocating CSR funds for environmental protection is not charity, but a constitutional obligation.
• Parliament institutionalised this duty through Section 135 of the Companies Act, 2013.

Polluter Pays Principle

• The Court emphasised the “polluter pays” principle:
  • Where corporate activities such as mining, power generation or infrastructure projects threaten endangered species, companies must bear the cost of species recovery.
• CSR funds should be directed towards:
  • In-situ conservation (protecting species in their natural habitat).
  • Ex-situ conservation (breeding and conservation outside natural habitats).

Legal Framework for CSR

• CSR in India is governed by:
  • Section 135 of the Companies Act, 2013
  • Schedule VII of the Act
  • Companies (CSR Policy) Rules, 2014
• Schedule VII lists eligible CSR activities, including environmental sustainability and conservation.

Mandatory CSR Criteria

• CSR provisions apply to companies with:
  • Net worth of ₹500 crore or more, or
  • Turnover of ₹1,000 crore or more, or
  • Net profit of ₹5 crore or more in any financial year.
• Such companies must spend at least 2% of the average net profits of the preceding three financial years on CSR activities.

Sources: ET & PIB