Mukt Shabd Journal ISSN NO : 2347-3150

A study on Corporate Environmental Responsibility in India

ArshaHari,
M.Com Student,
Department of Commerce,
University of Kerala,
KaryavattomCampus,
Email: hariarsha3@gmail.com

Abstract
Corporate social responsibility is a company’s sense of responsibility towards the community and
environment (both ecological and social) in which it operates.CSR is a way of conducting business by
which corporate entities contribute visibly to the social good. The Companies Act, 2013 has formulated
section 135, The Companies (Corporate Social Responsibility) Rules, 2014 and Schedule VII which
prescribes mandatory provisions for companies to fulfill their CSR. The term corporate Environmental
Responsibility has derived from Corporate Social Responsibility. CER specifically refers to the corporate
duty to abstain from damaging its environment.The environmental aspect of CSR has been debated over
the past few decades, as stakeholders increasingly require organizations to become more environmentally
aware and socially responsible. In the traditional business model, environmental protection was
considered only in relation to the "public interest". Until now, governments had maintained principal
responsibility for ensuring environmental management and conservation. The public sector has been
focused on the development of regulations and the imposition of sanctions as a means to facilitating
environmental protection. Recently, the private sector has adopted the approach of corporate
responsibility towards the prevention and alleviation of environmental damage. The sectors and their roles
have been changing, with the private sector becoming more active in the protection of the environment.
Many governments, corporations, and big companies are now providing strategies for environmental
protection and economic growth. In recent years, an increasing number of companies have pledged to
protect natural environments. This study makes an attempt understand the underlying concept of
Corporate Environmental Responsibility and their implementation in India.

Key words:Corporate Social Responsibility, Environment, Companies

Introduction
Corporate Social Responsibility is management concepts where by companies integrate social and
environmental concerns in their business operations and interactions with their stakeholders. CSR is
generally understood as the way in which a company achieves a balance of economic, environmental and
social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations
of shareholders and other stakeholders. In this sense it is important to identify the distinction between
CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy.
Even though the latter can also make a valuable contribution to poverty reduction, which will directly
enhance the reputation of a company and strengthen its brand etc. The concept of Corporate Social
Responsibility can have a wider scope. The CSR contains the concept of Corporate Environmental
Responsibility which is having a greater importance in the fast moving world where the quality of our

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environment is degrading.. CER is commonly defined as is the way in which organizations can
incorporate environmental issues into their operations in order to eliminate wastages and emissions,
maximize their efficiency and productivity of its resources. It aims at minimizing practices that badly
affect the country’s natural resources. It takes all its meaning from the current context of global warming,
destruction of biodiversity, etc. and becomes a pillar for the development of some organizations that
voluntarily engage in contributing to CER. Corporate Environmental Responsibility is about managing
the use of natural resources in the most effective and efficient manner in order to reduce environmental
impacts and to reduce the financial costs. Nowadays, environmental risk management is essential for the
development of all the organizations and it allows them to carry out their activities in a sustainable
manner, protecting their environment. In this study a detailed analysis about the concept of Corporate
Environmental Responsibility is studied.

Objectives
 To understand the concepts of Corporate Social Responsibility
 To Study the provisions of CSR and its implications in companies Act
 To study about Corporate Environmental Responsibility
 To study about the Corporate Environmental Responsibility in the Indian situation

Methodology
This study is descriptive in nature. Secondary data has been collected from various Journals, Websites
and Books

Corporate Social Responsibility

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially
accountable to itself, its stakeholders, and to the public. By practicing corporate social responsibility,
companies can be conscious about the kind of impact they are having on all aspects of society, including
economic, social, and environmental. To engage in CSR means that, in the ordinary course of business, a
company is operating in ways that benefits society and enhance its environment, instead of contributing
negatively to them. CSR (Corporate Social Responsibility) has been typically understood as a side
activity of a company which takes place usually in a form of donations to Non Governmental
Organizations or as contribution towards the recovery of certain calamities or disasters. Very often
CSR is confused with philanthropy, which it is certainly not.A properly implemented CSR concept can
bring along a variety of competitive advantages to the company , such as enhanced access to capital and
markets, increased sales and profits, saving of operational cost, improved productivity and quality,
increase the efficiency of human resource base, improved brand image and reputation, enhanced customer
loyalty, better decision making and risk management processes.
Corporate Social Responsibility and Companies Act
The Section 135 of the Companies Act 2013, Schedule VII of the Companies (Corporate Social
Responsibility) Rules, 2014 prescribes mandatory provisions for Companies to fulfill their Corporate
Social Responsibilities. Every Company including its holding or subsidiary having a net worth of Rs. 500
Crore or more or Turnover of Rs. 1000 crore or more orNet Profit of Rs. 5 crore or more during the
immediately preceding financial year must comply with the provisions of Corporate Social
Responsibility. A foreign company having its branch office or project office in India, which fulfills the
above mentioned criteria must also comply with the provisions of CSR as per the Act and

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Rules.However, if a company ceases to comply with the above motionedcriteria’s for 3 consecutive
financial years then it is not required to comply with Provisions of CSR till the time it meets
the specified criteria.
CSR Committee:
Every Company for whom CSR is applicable is required to constitute a CSR Committee Consisting of 3
or more directors, out of which at least one director shall be an independent director. Though, if a
company is not required to appoint an independent director, then it shall have 2 or more directors in the
Committee.
Consisting of 2 directors in case of a private company having only two directors on its Board
Consisting of at least 2 persons in case of a foreign Company of which one person shall be its authorized
person resident in India and another nominated by the foreign company
Functions of CSR Committee:
The CSR Committee shall formulate and recommend to the Board, a CSR Policy which shall indicate the
activities to be undertaken by the Company as part of its CSR activities, They recommend the amount of
expenditure to be incurred on the activities that constitute a part of CSR. The committee is responsible for
monitoring the CSR policy of the company from time to time, for which they institute a transparent
monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by
the company
Responsibility of Board of Directors (Board of Directors):
The Board of Directors of every company on which CSR is applicable shall after considering the
recommendations made by the CSR Committee, approve the CSR Policy for the Company and disclose
contents of such Policy in Board report for approval. They ensure that the activities as are included in
CSR Policy are undertaken by the Company. The board shall disclose the composition of the CSR
Committee in Board Report; they also ensure that the company spends, in every financial year, at
least 2% of the average net profits of the company made during the 3 immediately preceding financial
years, in pursuance of its CSR Policy. The CSR projects, programs or activities undertaken in India only
shall alone constitute the amount to CSR Expenditure.
CSR Policy
The CSR Policy of the company shall, include the list of CSR projects or programs which a company
plans to undertake specifying the models of execution of such project or programs and implementation
schedules for these programs, monitoring process of such projects or programs and contains a clause
specifying that the surplus arising out of the CSR projects or programs or activities shall not form part of
the business profit of the company.
It is to be noted that only the CSR activities undertaken in India shall be considered.
Corporate Environmental Responsibility
Corporate Environmental Responsibility can be considered as a pillar of corporate social
responsibility which is having a greater momentum in today’s world. It serves the environment more
than what CSR is capable of doing. There are many drivers which explain why corporate should
incorporate environmental concerns into their own strategic decision making. The reasons are a mix of
incentives that directed the companies in order to improve standards.One of the most important and
dominant factors of companies environmental concerns is regulation and government policies. States are
often influenced by Civil Society Organizations (CSOs) and Environmental Non-Governmental
Organization (ENGOs) activism. The implementation of policies is facilitated by subsidies, tariffs and
taxes.Besides, in a context of information revolution, business practices are brought to light around the

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world which affects company’s reputation. Thus, companies are more frequently judged on their
environmental stewardship. Consumers, shareholders, employees and partners require organizations to
become more environmentally aware and socially responsible. They also want more transparency from
companies in this regard. This means that companies benefit from corporate social responsibility &
environmental management. All of these drivers have encouraged or forced companies to integrate
environmental concerns into their business strategy.
Corporate Environmental Responsibility in India
The environment ministry has firmed up guidelines that everycorporate seeking green clearance has to set
aside 2% of its capital investment for Corporate Environment Responsibility (CER).
The guidelines make it compulsory for every company to set aside funds for Corporate Environmental
Responsibility over and above what is required for executing the environment management plan in a
project affected area.Brownfield (expansion) projects would be required to earmark 0.125% to 1% of
additional capital investment for CER purposes and the slab for Greenfield projects ranges from 0.25% to
2% of the capital investment.
Environment Impact Assessment (EIA) process in India is non-operational. Hence it is important that the
ministry should improve the EIA process and its implementation in the country. Instead, the ministry is
now specifying how much money every company should spend on CSR (ministry has conveniently
termed it as CER or Corporate Environment Responsibility) activities. But CSR is not a concern for the
ministry. Companies have to implement Corporate Social Responsibility under the Companies Act.At
present, Section 135 of the Companies Act 2013 and schedule VII of the Companies Rule 2014 lays down
the foundation for theCorporate Social Responsibility (CSR) for every company with a net worth of Rs
500 crore or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more in any
financial year financial year.
The environment ministry has observed in guidelines that CSR does not necessarily cover all projects.
Environment clearance given to a project may involve a situation where the concerned company is yet to
make any net profit or if it is not covered under the Companies Act.
Corporate Environmental Responsibility constitutes activities or measures like pollution control, wildlife
and forest conservation, compensatory afforestation and rehabilitation and resettlement of displaced
persons.Funds can also be used for creating supply of drinking water, providing infrastructure, sanitation,
health, education and skill development, among others.
Union Budget and Environment Protection
The Central Government on Saturday in the budget for 2020 increased the budgetary allocation for the
environment from last fiscal by nearly five per cent for 2020-21 with no alteration in the fund allotted to
pollution control and climate change action plan.Union Finance Minister has allocated Rs 3100 crore for
the environment ministry out of which Rs 460 crore were allotted to control pollution, which is the same
as the last budget.Control of Pollution has been conceptualized with the aim to provide financial
assistance to Pollution control Boards/Committees and funding to National Clean Air Programme
(NCAP).
The minister also announced that states where cities with a population above one million which are
formulating and implementing plans for ensuring cleaner air should be encouraged.The Parameters for the
incentives are to be notified by the Ministry of Environment, Forests and Climate change. The allocation
of amount for this purpose is Rs 4,400 crore for 2020-21.
The budgetary allocation for National Mission for Green India programme has been raised from Rs 240
crore to Rs 311 crore this time compared to the previous year with national afforestation programme

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alone is being allotted Rs 246 crore, which is much higher than last year's amount of Rs 179 crore.In
wildlife arena, the government-initiated projects like Project Tiger and Project Elephant which saw some
changes with the former were getting reduced by Rs 50 crore and the latter being raised by Rs 5 crore.
The fiscal's allocation of Rs 350 crore for Project Tiger, an initiative for conserving the wildcat was
reduced to Rs 300 crore and Rs 30 crore for Project Elephant, which was launched to conserve elephants
across the country which is now allotted at Rs 35 crore.
The budget for National Coastal Mission was also raised with the government allotting Rs 103 crore this
year towards the fund, compared to Rs 95 crore in the last fiscal year.Under the National Coastal Mission,
the environment ministry is responsible to ensure the security of livelihood of coastal communities
including fisher folks. The fund is being allotted to conserve, protect the coastal stretches and to promote
sustainable development based on scientific principles.

Conclusion
Corporate Environmental Responsibility is new and emerging dimension of Corporate Social
Responsibility which gives due importance to the environment in which a business is operating. Concern
for environment is gaining momentum because in the fast moving globalised digital world our natural
environment and habitat that are degrading at a rapid rate which can even make life impossible on earth.
The government has put forth many rules and regulations for conserving or earth but the truth is that the
conservation of environment is possible only through the individual efforts put forward by each one of us.
From certain perspective of the CSR activities are just considered as charity which is not done with the
intention for what it is meant for. The corporate practice CSR as just as a strategy for increasing their
good name which in leading to a large customer base and profits. They considered CSR as a means of
achieving greater profits in terms of money and wealth. With the emergence of CER it took a diversion
from the way in which it was travelling and concentrated for the well being of our surrounding natural
environment

References
1. Corporate Social Responsibility (CSR) as Per Companies Act, 2013. (2018). Retrieved from
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2. Pay 2% of capital investment for green clearance: Environment Ministry to Corporates. (2018).
Retrieved from The Economic times:
https://economictimes.indiatimes.com/https:/economictimes.indiatimes.com/news/economy/polic
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corporates/articleshow/64008830.cms?utm_source=contentofinterest&utm_medium=text&utm_c
ampa

3. Forget CSR. It’s time for CER: Corporate Environmental Responsibility. (2019). Retrieved from
Unpacking Design: http://unpacking.design/blog/corporate-environmental-responsibility/

4. What is CSR? (n.d.). Retrieved 12 2019, from UNIDO.org: https://www.unido.org/our-

focus/advancing-economic-competitiveness/competitive-trade-capacities-and-corporate-
responsibility/corporate-social-responsibility-market-integration/what-csr

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