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UPSC » Daily News Analysis ‘Supreme Court Expands CSR to Include Environmental Responsibility’ : 20 December

Daily News Analysis ‘Supreme Court Expands CSR to Include Environmental Responsibility’ : 20 December

Table of Content

Why in News?

  • The Supreme Court has ruled that Corporate Social Responsibility (CSR) inherently includes environmental responsibility, holding companies constitutionally duty-bound to protect the environment and wildlife.

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Corporate Social Responsibility (CSR)

  • Corporate Social Responsibility (CSR) refers to companies taking responsibility for their social, environmental, and ethical impact.
  • In India, CSR is mandated under the Companies Act, 2013 for eligible companies.
  • Such companies must spend at least 2% of their average net profits on social development activities.

Background of the Case

  • The judgment arose from petitions concerning the protection of the Great Indian Bustard, a critically endangered bird species.
  • The species is mainly found in the arid and semi-arid grasslands of Rajasthan and Gujarat, especially around the Thar Desert.
  • Corporate activities such as mining, power generation, and infrastructure projects were found to threaten its habitat.

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Great Indian Bustard (GIB)

  • Great Indian Bustard (GIB) is a large ground-dwelling bird found mainly in Rajasthan and Gujarat.
  • Major threats include habitat loss, hunting, and collision with power transmission lines.
  • IUCN Status: Critically Endangered.

Supreme Court’s Interpretation of CSR

  • The Court held that CSR cannot be limited to shareholder welfare or philanthropy.
  • It ruled that environmental responsibility is an inseparable part of social responsibility.
  • Corporations, as legal persons, are key organs of society and must protect the ecosystem.
  • CSR spending on the environment is therefore a mandatory constitutional obligation, not voluntary charity.

Constitutional Basis of the Judgment

  • The Court brought corporations within the ambit of Article 51A(g) of the Constitution.
  • Article 51A(g) imposes a fundamental duty to protect and improve the natural environment and wildlife.
  • Though fundamental duties are directed at citizens, the Court held that corporate entities must also comply.
  • This strengthens the link between environmental protection and constitutional morality.

Polluter Pays Principle and CSR

  • The Court reaffirmed the ‘polluter pays’ principle as a cornerstone of environmental jurisprudence.
  • Where corporate activities damage ecosystems, companies must bear the cost of environmental restoration.
  • CSR funds should be used for species recovery and habitat protection, both in-situ and ex-situ.
  • Environmental harm cannot be externalised onto society or the State.

Directions Regarding the Great Indian Bustard

  • Companies operating near the Bustard’s habitat were directed to act as “guests in its abode”.
  • Non-renewable energy and infrastructure projects must be carried out with ecological sensitivity.
  • The Court emphasised that economic development cannot come at the cost of extinction.
  • Protection of endangered species was declared a paramount obligation.

Significance for Polity and Governance

  • The judgment expands the scope of CSR under Indian constitutional law.
  • It reinforces the idea that corporate governance includes environmental stewardship.
  • It strengthens India’s commitment to sustainable development and biodiversity protection.
  • The ruling sets an important precedent for corporate accountability in environmental governance.