In a far-reaching ruling linking corporate governance with environmental protection, the Supreme Court of India has held that corporate social responsibility cannot be divorced from corporate environmental responsibility. The court said companies cannot claim to be socially responsible while disregarding the equally vital claims of the environment and other living beings within the ecosystem.
A bench comprising Justices P S Narasimha and A S Chandurkar made the observations while issuing a fresh set of directions aimed at protecting the critically endangered Great Indian Bustard (Godawan), whose habitat has been severely threatened by non-renewable power generation and related infrastructure in Rajasthan and Gujarat.
“The corporate definition of ‘social responsibility’ must inherently include environmental responsibility. Companies cannot assert to be socially responsible while ignoring equal claims of the environment and other beings of the ecosystem,” the bench said.
The court rooted its reasoning in Article 51A(g) of the Constitution, which casts a fundamental duty on every citizen to protect and improve the natural environment and show compassion for living creatures. Extending this obligation to corporate entities, the bench said a corporation, as a legal person and a key organ of society, shares this constitutional responsibility.
“CSR funds are the tangible expression of this duty. Allocating funds for the protection of the environment is not a voluntary act of charity but a fulfilment of a constitutional obligation,” the court held.
Referring to Section 135 of the Companies Act, 2013, the bench noted that Parliament had institutionalised this duty by mandating companies meeting specified financial thresholds to undertake CSR activities. The provision, it said, reflects the principle that corporate profits are not solely the private property of shareholders but are partly owed to the society that enables their generation.
“The magic of legitimacy is in the perspective that private property is a trust,” the court observed, adding that this statutory mandate has fundamentally reshaped traditional notions of corporate governance.
The bench underlined that Section 166(2) of the Companies Act has dismantled the narrow shareholder-centric model of corporate management. Directors are now legally bound to act in good faith not only for members and shareholders, but also for employees, the community, and for the protection of the environment.
“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,” the court said.
Applying the “polluter pays” principle, the court held that where corporate activities such as mining, power generation, or infrastructure development threaten endangered species, companies must bear the cost of species recovery. It said CSR funds must be channelled towards in-situ and ex-situ conservation efforts to prevent extinction.
Emphasising the primacy of protecting endangered species, the bench said corporate duty must evolve from merely safeguarding shareholder interests to protecting the ecosystem itself.
“The non-renewable power generators operating in priority as well as non-priority areas in Rajasthan and Gujarat must always remember that they share the environment with the Godawan and must undertake their activities as if they are guests in its abode,” the court said.
The order was passed in a plea filed in 2019 by environmentalist M K Ranjitsinh, seeking urgent measures for the protection of the Great Indian Bustard. Over the years, the apex court has issued multiple directions to safeguard the species, whose population has dwindled alarmingly.
In April 2021, the court had imposed sweeping restrictions on overhead transmission lines across nearly 99,000 sq km in Rajasthan and Gujarat. That order was modified in March 2024 after the Centre flagged serious concerns about its impact on India’s renewable energy transition, following which a high-level expert committee was constituted.
Accepting the expert committee’s recommendations, the Supreme Court approved revised priority conservation areas of 14,013 sq km in Rajasthan and 740 sq km in Gujarat, narrowing the focus to the last remaining strongholds of the species. It declined a request to further expand the Rajasthan priority area by including 657 sq km in the Rasla-Degrai Oran region, noting that the committee had adopted a holistic, science-based approach after extensive field studies and stakeholder consultations.
Within the revised priority areas, the court imposed strict restrictions. It directed that no new wind turbines and no new solar parks or solar plants exceeding 2 MW capacity shall be permitted, and barred the expansion of existing solar parks. It also prohibited new overhead power lines, except those of 11 kV and below, unless routed through dedicated power corridors identified by the expert committee.
