Supreme Court Expands CSR to Include Environmental Duty

Why in the News?

The Supreme Court ruled that Corporate Social Responsibility (CSR) inherently includes environmental clearance obligations, holding corporations constitutionally bound to safeguard ecosystems, while hearing petitions related to conservation of the critically endangered Great Indian Bustard.

Supreme Court on Corporate Environmental Responsibility:

• The Supreme Court bench of Justices P.S. Narasimha and Atul S. Chandurkar held that corporations, as legal persons, have a fundamental duty to protect the environment and obtain necessary environmental clearances.
• The Court interpreted CSR as extending beyond shareholder interests to include ecosystem protection and environmental impact assessment.
• It ruled that companies cannot claim to be socially responsible while ignoring environmental degradation caused by their activities or failing to secure proper environmental clearances.
• Allocation of CSR funds for environmental protection and clearance processes was held to be not charity, but a constitutional obligation.
• The judgment arose from petitions highlighting threats to the Great Indian Bustard, a flagship species of India’s arid and semi-arid grasslands, emphasizing the need for environmental democracy in conservation efforts.

Great Indian Bustard Case and Polluter Pays Principle

• The Court emphasised that protection of endangered species is a paramount obligation in environmental governance, aligning with the Forest Conservation Act.
• It invoked the polluter pays principle and precautionary principle, mandating that corporations whose activities harm habitats must bear the cost of ecological restoration and conduct thorough environmental impact assessments.
• Sectors such as mining, power generation and infrastructure were specifically cautioned due to their ecological footprint and urged to adhere to EIA notifications.
• The Court stated that CSR funds must be channelled towards in-situ and ex-situ conservation to prevent species extinction and promote a pollution-free environment.
• Non-renewable power companies operating near bustard habitats in Rajasthan and Gujarat were urged to act as “guests in a shared environment”, recognizing coexistence with wildlife and respecting coastal regulation zones.