The Supreme Court on Friday said that corporate social responsibility (CSR) also encompasses Corporate Environmental Responsibility (CER), emphasising that the goal of corporates is not merely to maximise profits for shareholders but also to protect and improve the natural environment—including forests, lakes, rivers and wildlife—as mandated by the Constitution.
Stating that the “corporate definition of ‘social responsibility’ must inherently include ‘environmental responsibility’. Companies cannot claim to be socially responsible while ignoring equal claims of the environment and other beings of the ecosystem,” a bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar held that corporates are constitutionally mandated to protect and sustain the environment impacted by their operations.
Referring to Article 51A(g), which imposes a fundamental duty on every citizen “to protect and improve the natural environment including forests, lakes, rivers and wildlife, and to have compassion for living creatures,” the judgment said: “A corporation, as a legal person and a key organ of society, shares this fundamental duty. CSR funds are the tangible expression of this duty. Consequently, allocating funds for the protection of the environment is not a voluntary act of charity but a fulfilment of a constitutional obligation.”
The top court made these observations in its judgment on a PIL filed by Delhi-based wildlife enthusiast M.K. Ranjitsinh and others, who had sought directions to the Rajasthan and Gujarat governments to ensure predator-proof fencing and controlled grazing in enclosures developed for the Great Indian Bustard (GIB).
The petitioners had also urged the two state governments not to permit installation of overhead high-tension power lines, further construction of windmills, or installation of solar infrastructure in priority and potential habitats identified by the Wildlife Institute of India.
Underscoring that CSR extends to the responsibility of protecting and sustaining the environment, the judgment said: “The definition of ‘community’ within the CSR framework has been expanded to explicitly include the natural world, cementing the link between social welfare and environmental health.” This crucial expansion recognises that “a corporation is an organ of society, and its ‘social’ responsibility extends to the wider community impacted by its operations.”
Referring to Sections 135 and 166(2) of the Companies Act, 2013, the judgment noted that the law effectively dismantles the “narrow view that corporate profit is solely the private property of shareholders” and instead places an obligation on corporates to act in “the best interests of the company, its employees, the shareholders, the community, and for the protection of the environment.”
It further referred to Schedule VII of the Companies Act, 2013, which enumerates permissible CSR activities, specifically listing “ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, and conservation of natural resources.” By categorising these ecological activities as “social” responsibility, the law recognises that human beings cannot “own” or “use” the environment solely for their own purposes.
By its order dated March 21, 2024, the Court revisited and modified its April 2021 directions after considering stakeholder submissions and the need to balance wildlife conservation with climate change mitigation.
Recognising that renewable energy expansion is crucial to addressing climate change, the Court held that there was no justification for a blanket ban on installing solar power transmission lines across an area of about 99,000 sq km. The modification was driven by the imperative to promote renewable energy while safeguarding endangered species.
Accepting the recommendations of the Expert Committee constituted by its March 21, 2024 order, the Court issued several directions, including identifying 14,013 sq. km of priority conservation area in Rajasthan and 740 sq. km in Gujarat.
It further directed that the measures recommended by the Expert Committee for in-situ and ex-situ conservation of the GIB within the priority areas of Rajasthan and Gujarat be implemented forthwith. The Committee’s recommendations for monitoring GIB populations in the revised priority areas were also to be enforced immediately.
Accepting the Committee’s recommendation to provide a power corridor up to 5 km in width, located at least 5 km south of the southernmost enclosure of the Desert National Park, the Court also directed that long-term studies on the effects of climate change on the GIB be conducted.