Corporate Social Responsibility and Environmental Protection: A Study of Judicial Role
India has a history of having a compassionate attitude towards environment. But with the passage of time the ethical values towards society have degraded as a result of which judiciary intervened so as to protect the environment. A concept known as corporate social responsibility emerged in the light of right to pollution free environment and the constitutional duty to protect and improve the environment. In order to realise the constitutional objective of protecting environment the concept of Corporate Social Responsibility was recognised in the legislative enactments. The paper introduces the concept of Corporate Social Responsibility and the Constitutional commitment towards environment protection. Judicial decisions bring into light the conception of Corporate Environment Liability by streamlining the defaulting institutions.
India is a welfare state. But with the passage of time Indian government has adopted liberalisation, privatization and globalization. Public sector has slowly shifted to private one. Therefore, the new concept of Corporate Social Responsibility[CSR] means a corporate sector shall perform such welfare function towards society which is necessary for maintaining the social interest of the society. In the words of ‘Carroll’ and ‘Buchholtz’, the corporate social responsibility encompasses the economic, legal, ethical, and philanthropic expectations placed on the organisations by the society at a given point of time. According to Browin H.R., social responsibility is defined as, “the obligation of a businessman to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of objectives and values of the society. Some scholars have defined CSR as a social commitment of a businessman or a social obligation or moral or ethical responsibility or a corporate social philanthropy. In the words of Mahatma Gandhi, business entrepreneurs are trustees and not the owners of the social wealth and they have to spend a part of it for social causes. To describe the principle of trusteeship he quoted, enjoy the wealth, take the minimum which you need, leave the rest to the welfare of community.” It cannot be considered as charity. A robust and thriving development sector is central to India’s quest for equitable, inclusive and sustainable growth. India’s development sector has evolved substantially over the last few decades and is now witnessing unprecedented interest and investments across the value chain.
With the passage of the Companies Act, 2013 the mandate for corporate social responsibility (CSR) has been formally introduced to the dashboard of the Boards of Indian companies. The industry has responded positively to the reform measure undertaken by the government with a wide interest across the public and private sector, Indian and multinational companies. Building a society which provides equal access to opportunities negates disparities and, is a collective responsibility.
Concept of Corporate Social Responsibility
The emerging concept of corporate social responsibility goes beyond charity and requires the company to act ethically in the company’s business affairs. The triple bottom line approach to corporate social responsibility emphasizes the company’s commitment to operating in economically, socially and environmentally sustainable manner. CSR is based on the idea that successful profitable corporations should take the responsibility for social issues and manage their business in such a way that maximises profit and stockholder wealth while also contributing to the resolution of the social problems. The concept involves notions of human welfare and emphasizes a concern with the social dimensions of the business activity that have direct connection with the quality of life in the society. The word responsibility implies that business organisations were believed to have some kind of obligation towards the society in which they functioned to deal with the social problem s and contribute more than just economic goods and services. It is a concept whereby the companies integrate social and environmental concern in their business operations and in their interactions with the stakeholders on a voluntary basis. The main function of an enterprise is to create value through producing goods and services that society demands, thereby generating profit for its owners and shareholders as well as the welfare of the society, particularly through the on going process of job creation. Social responsibility implies the acceptance of a moral imperative to recognise the duties and obligations arising from a company’s relationship with customers, suppliers, employers, shareholders and society at large beyond consideration of profit. It refers to business decision making linked to the ethical values, compliance with the legal requirements and respect for people and communities and environment.
Constitutional Commitment vis-à-vis CSR
Philanthropy and CSR is not a novel concept for Indian companies, however a few organisations are likely to struggle. The role of civil society in fuelling this change is bound to be extremely important. With the new corporate resources in their tool bag much will depend on their ability to innovate and adapt. India has inherited a culture of tolerance, no, violence, equity and compassion for animate objects. In olden times, they were the part of daily life and synthesised with religion.Therefore, the fundamental ethics of behaviour with each other was to live in harmony with each other because it was well realised that each one of them is dependent on one another and destruction and damage to the other is the destruction of self and is complementary to each other.
The idea of environment had never been in the minds of the founding fathers of the Indian constitution. Consequently, the expression environment was initially not found in the constitution. The abovementioned philosophy of peaceful co existence with nature got mentioned, in one way or the other, in the Indian Constitution.
The expansion of right to life under Article 21 of the Indian Constitution inspired the judiciary to open the new vistas in this regard. However, it took a long time for the apex court to pronounce explicitly that the right to life under article 21 of the Indian constitution contains a right to healthy environment, although the high Courts had gone ahead much earlier. Imposition of damages on the defaulting industry for causing disturbance to the water is justified on the touchstone of right to life, and duty to protect and improve environment. The right to healthy environment is the product of judicial interpretations adding new dimensions to the right to life in Article 21 of the constitution of India. On the other hand, 42nd amendment to the constitution has imposed the duty on the state and the citizens to protect and improve environment, by adding article 48 A to the directive principle of state policy and 51 A (g) as a fundamental duty. These insertions have acted as the foundations for building up environmental jurisprudence in the country. Corporate sustainability essentially refers to the role that companies can play in meeting the agenda of sustainable development and entails a balanced approach to economic progress, social progress and environmental stewardship.
The Companies Act, 2013 has introduced the idea of CSR to the forefront and through its disclose-or-explain mandate, is promoting greater transparency and disclosure. Schedule VII of the Act, which lists out the CSR activities, suggests communities to be the focal point. On the other hand, by discussing a company’s relationship to its stakeholders and integrating CSR into its core operations, the draft rules suggest that CSR needs to go beyond communities and beyond the concept of philanthropy. It will be interesting to observe the ways in which this will translate into action at the ground level, and how the understanding of CSR is set to undergo a change.
The judicial role of eighties played an important role in reaching new horizons of jurisprudence in India, more so in the area of environmental protection. The verdict in Municipal Council, Ratlam v Vardhichand is a land mark. The residents of Muncipality were suffering for a long time from the pungent smell emanating from open drains. The apex court identified the responsibilities of the local bodies towards the protection of the environment, and developed the law of public nuisance in the Cr. P.C. as a potent instrument fro the enforcement of their duties. Justice Krishna Iyer had made a thorough examination of two issues:
a. The municipal Legislation which casts the duty on the municipalities to clean the roads and clean drains.
b. The provision in the Indian Penal Code, which prescribes the punishment to a person contravening with the direction of the magistrate.
In Vijay Singh Punia v State of Rajasthan imposing 15 percent of the turnover of the dyeing and printing industries as damages for causing water pollution Rajasthan High Court observed:
The emission of untreated waste water by the industrial units is depriving the citizens the access to unpolluted ground water which is essential for the existence. Not only the ground water has been affected by the way industrial units have been operating, but their working has also affected the quality of vegetables and crops which are grown in that area…. For enforcing he rights under Article 21 of the Constitution and compelling the persons to discharge their fundamental duties under Article 51 A (g) of the Constitution, the courts exercising extraordinary jurisdiction can impose damages on the polluter for the restoration of the ecological balance and also for the victims who have suffered the intrusion upon the environment and ecology of the former.
Environment Protection Measures
Irrespective of whether a company is polluting or non polluting, protection of environment should be the concern of every socially responsible organisation. Each company must take steps to make sustainable use of resources, establish a healthy and safe working environment, maintain ecological balance, take proactive steps to minimise waste generation and preserve environment.
Corporate business ethics:
Ethics is a set of principles or standard of human conduct that govern the behaviour of individuals or organisations. Using these ethical standards, a person or group of persons or organisations regulate their behaviour to distinguish what is right and what is wrong as perceived by others. It is not a natural science but a creation of human mind. All human societies have ethical systems that define what is meant by right and wrong, fairness, justice, truthfulness and similar ideas dealing with morality and rightness. Individuals who live in those societies learn more from childhood what is considered as ethical and unethical. Business is increasingly challenged to consider ethics when it makes decisions. They need to find out the balance between economics and ethics. Society wants the business to produce the needed goods and services but it also expects the business to conduct its economic operations in an ethical way.
Model Environmental Policy
The company’s commitment towards is absolute. The company believes in sustainable development by ensuring that the activities are in harmony with environment. The company in the process of various steps of manufacturing is committed to achieving excellence in environmental performance and towards this objective shall:
· Adopt appropriate operational practices and suitable technologies to monitor, control and minimise the impact of its activities on environment.
· Continually improve its performance by setting the objectives and targets to prevent or reduce pollution and waste and minimise the use of resources
· Comply with all relevant legislative and regulatory environmental requirements.
· Develop and maintain a highly motivated workforce trained for effective management of environment and emergency situation .
· Provide relevant information on environmental policy to the concerned authorities and interested parties and ensure that the policy is understood, implemented and explained by the employees at all levels within the organisation.
· Evaluate and modify environmental management practices keeping in view regulatory requirements, community concerns and technological advancements.
Major areas defining Corporate Social Responsibility
Corporate social responsibility has much broader implication for a nation as a whole. The growing popularity of corporate social responsibility is premised on the belief that the modern corporations have the financial resources, human capital, an global influence to advance the progressive causes. Some of the areas which define CSR are as under:
a. Community development: this includes socially oriented activities which are primarily of the benefit to the general public like corporate philanthropy, housing construction, financial health services activities among employees food programmes and community planning and development.
b. Human resources: this area includes social performance directed towards the well being of the employees such as improvement of employment practices, training programmes working conditions and provision for job enrichment schemes
c. Product of service contribution: this includes consumerism, product quality and product safety.
d. Physical resources and environmental contribution: These activities are directed towards alleviating or preventing environmental pollution and conservation of scarce natural resources and the disposal of solid waste are included in this area.
Corporate social responsibility reduces the dependency on the Government for the social change. It is also about training young minds and also helping the future generations organise themselves for the greater good.
CORPORATE ENVIRONMENTAL LIABILITY
The notions that the individuals, by extension also the corporations, bear the solemn responsibility towards the environment is not new. The Stockholm Conference referred in Principle 1 to man’s ‘solemn responsibility ’to protect and improve environment. Subsequent formulations have preferred to emphasize the individual character of this obligation. Thus the world charter for the nature talks of the duty of ‘each person’ to act in accordance with the terms. The draft principles on Human Rights and environment states that that ‘All persons have the duty to protect and preserve the environment.’ None of these instruments creates legally binding obligations for individuals as such. But they do provide a justification for using criminal responsibility as a means of enforcing international environmental law.
It is only when the accident of magnitude and impact of Bhopal gas leak disaster took place, those environmentalists, social workers, general public and government institutions started thinking about the new ways and means of preventing similar tragedies in the future. This process leads to the legislative and administrative activism. The perception of the global concern about the environment is of recent origin. As Caldwell observed, “at the beginning of the twentieth century, neither the environment as an integrative ecological concept nor the biosphere as a planetary life support system was an object of public international concern.”
The Bhopal gas leak accident, one of the worst industrial disasters in the human history, occurred approximately two years before the Supreme Court evolved the rule of absolute liability. It is not possible for the court to make quick decisions relating to compensation to the victims of the accidents like those of Bhopal gas leak. The interests affected are various; the intensity of damage and suffering varies from one victim to another. Assessment of the compensation for the loss, mental agony, suffering and death has been an arduous task.
In M. C. Mehta v Union of India, the Supreme Court formulated the doctrine of absolute liability for the harm caused by the hazardous and inherently dangerous industry by interpreting the scope of the power under article 32 to issue directions and orders, ‘ whichever may be appropriate’ in ‘appropriate proceedings’. According to the court this power could be utilised for forging new remedies, and fashioning new strategies.
In Deepak Nitrate Limited v State of Gujarat the Supreme Court held that the liability should not be fixed without any nexus to the extent of fault. The compensation should have a relationship with the harm suffered rather than the capacity of the industry.
Indian Council for Enviro- legal Action v Union of India tells the tragic story of village Rajasthan. Its loving environment became highly polluted by the sludge that was left out even after the rouge industries licensed to produce ‘H’ acid. The Supreme Court directed the central Government to determine and recover the cost of remedial measures from the respondents. Section 3 of the Environment Protection Act expressly empowers the central government ( or to delegate , as the case may be) to ‘ take all such measures as it deems necessary or expedient for the purpose of protecting and improving the quality of environment.
Scientific uncertainty may sometimes be a mirage. Polluter’s often try to hide themselves behind the need of scientific certainty. Precautionary principle does not book this hide and seek the policy of the polluters and the potential polluters. The ‘polluter pays’ principle and the precautionary principle were accepted as a part of legal system in the Sludge Case and the Vellore Citizen’s Forums Case
In T. Dhamodar Rao v Special Officer, Municipal Corporation of Hyderabad, the Andhra Pradesh High Court referred also to Article 51 A (g) and 48 A and prevented the conversion of open space to a residential complex. The court noted that the protection of environment is the duty of the citizens as well as the obligation of the state.
In Mohd Hazi Rafeeq v State of Uttaranchal, the Uttaranchal High Court referred to Article 48 A and 51 A (g) in order to stress the duty of the state to preserve and protect forest even at the cost of business interest of the petitioner.
In Rural Litigation Entitlement Kendra v State of UP Supreme court of India accepted the letter written to the court as a writ petition. This case was pronounced by the court as the “first case of its kind in the country involving the issues relating to environment and ecological balance..” the letter was written by RLEK, Dehradun a voluntary organisation. The epistolary jurisdiction has been invoked by the courts in other cases also as the matters involved were of vital importance.
In Municipal Council, Ratlam v Vardichand Shri Vardichand filed a case for removing unhygienic conditions amounting to public nuisance, as Article 47 makes it paramount principle of governance that steps are taken for the improvement of the public health as amongst its primary responsibility. The court observed:
“The officer in charge and even the elected representatives will have to face the penalty of law if what the constitution and follow up legislation direct them to do are defied or denied wrongfully.”
It has been made an obligatory duty of the occupier to disclose the information include health hazards and the measures to overcome such hazards in manufacturing, transportation, storage, and other processes to the workers, chief inspectors, local authority and the general public in the vicinity. Such information shall include characteristics of wastes and the manner of their disposal. It is also the duty of the occupier to draw up an “on site emergency plan” and detailed “disaster controlled measures” and to make them known to the workers and the nearby dwellers.
The need to understand and act upon the concept of corporate social responsibility has gained momentum in the recent past not just in the legal precept but also in the judicial activism. The argument for the individual rights and by extension those of corporations and position of NGO’s stands apart as perhaps the strongest of the environmental claims. The pragmatic point is that the addressing the position of individual and other legally significant entities directly, international law facilitates wider participation in cesses of national governance, and more effective approach to the enforcement and implementation of law, primarily through the use of national legal systems. Besides the constitutional and legislative duty it becomes an ethical duty not only of individuals but of the corporate houses to protect and improve the quality environment. Right to pollution free environment could be achieved by realising common but differentiated responsibility at every strata of the society.
# Meaning of Corporate Social Responsibility is twofold on one hand it exhibits the ethical behavior that an organization exhibits towards its internal and external stakeholders (customers as well as employees) on the other hand it identifies the responsibility of an organization towards the environment and the society in which it operates. Corporate Social Responsibility is not a difficult concept and word to and can be explained as :
· Corporate- means organized business.
· Social- means everything dealing with the people.
· Responsibility means the accountability between the two.
# Vikram jaswal & Shweta Thakur, “Corporate Justice ”,Civil and Military Law Journal, Vol 1 No.3 July 2004, p. 19
# S. C Shastri “Corporate Social Responsibility vis-a –vis Protection of Environment In India: A Legal perspective,” Journal of Faculty of Law Mody University of Science and Technology 2014, p 1
# Section 135 (1). Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.
# http:// www.indiacsr.in/en/?P=113 visited on 1st` July 2015
# Kumar Ayush, “Mandatory Corporate Social Responsibility :An Expansive Vision? ”, Company Law Journal, 1 (3) March 2013,pp 113-114
# Rogene. A. Buchlolz, Business Environment and Public Policy, 1992 p. 21
# Jatana Renu and Crowther David, “Corporate Social Responsibility- Theory and Practice with Case Studies”, 2007 p. 223
# Id at 294
# Corporate Social Responsibility in India has traditionally been seen as a philanthropic activity, and in keeping with the Indian tradition, it was an activity that was performed but not deliberated. As a result, there is limited documentation on specific activities related to this concept.
# S.C. Shastri, Environmental Law, 2012, p.8
# Article 48 A: the State shall endeavour to protect and improve the environment and safeguard forests and wild life of the country. and Article 51 A –(g): it shall be the duty of every citizen of India, (g) … to protect and improve the natural environment including forests, lakes, rivers and wildlife and to have compassion for the living creatures.
# Protection of life an d personal liberty:- no person shall be deprived of his life and personal liberty except according to procedure established by law.
# P. leelakrishnan, Environmental Law in India 2012, p. 237
# The Companies Act, 2013 requires every company to put out its CSR policy in the public domain. The guidance provided in the Act and the draft rules on what constitutes a CSR policy are that it should: exclude normal business activities of the company contain a list of the CSR projects or programmes which the company plans to undertake during the implementation year.
# AIR 1980 SC 1622
# Indian Penal Code 1860, S. 188
# AIR 2004 SC 1
# Id at p. 12
# Corporate Governance Framework , The Institute of Company Secretaries of India, 2009, 109
# Corporate Governance Framework , The Institute of Company Secretaries of India, 2009,. 21
# V. Balu, “Social responsibility and Corporate Business Ethics” Corporate Social Responsibility edited by Renu Jatana & David Crowther 2007 p.343
# Model Statement Policies and practices, The Institute of Company Secretaries of India, vol 5,p. 83
# Mohd. Magdum Mohiuddin, “Empowering the Poor, Role of Corporate Social Responsibility ”, Orient Journal of Law and social sciences, Vol VI issue 8 july 2012 pp. 102-104
# Patricia Birne and A.E. Boyle, International Law and The Environment 2004, p. 282
# P. Leelakrishnan, Environmental Law in India, 2012, p.255
# P. Leedlakrishnan, Environmental Law in India,2012, p 259
# AIR 1987 SC 1086
# (2004) 6 SCC 402
# AIR 1996 SC 1446
# Indian Council for Enviro Legal Action v union of India, AIR 1996 SC 1446, p. 1468
# Vellore Citizens Welfare Forum v Union of India, AIR 1996 SC 2715, p 2721
# AIR 1987 AP 171
# AIR 2006 U’chal 18 pp 21,22
# AIR 1985 SC 652
# (1980) 2 SCC 162
# Article 47: Duty of the state to raise the level of nutrition and the standard of living and to improve public health- The state shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular the state shall endeavour to bring about prohibition of consumption, except for medical purposes of intoxicating drinks and drugs which are injurious to health
# Supra note 10 at pp. 191-192 Also see s. 41- B of The Factories Act 1948.