ENVIRONMENTAL SUSTAINABILITY AND CORPORATE

SOCIAL RESPONSIBILITY LAW IN INDIA: A STUDY

Dissertation Submitted in Partial Fulfillment of the requirements for the

Degree of LL.M. (Master of Laws)

Submitted By Supervised By
D. S. Sarao Dr. Bharat
LL.M. (Two years) University Institute of Legal Studies
Roll No.1554 Panjab University, Chandigarh

UNIVERSITY INSTITUTE OF LEGAL STUDIES

PANJAB UNIVERSITY, CHANDIGARH

2017

i
SUPERVISORS CERTIFICATE

ii
 STUDENTS DECLARATION

I, Deepinder Singh Sarao, a student of LLM, University Institute Of Legal

Studies, Panjab University, Chandigarh with roll number 1554 and university
enrollment number 75-ls-17, do hereby declare that this dissertation paper is an original
work of mine and is result of my own intellectual efforts. I have quoted titles of all
original sources i.e. original documents and name of the authors whose work has helped
me in writing this research paper have been placed at appropriate places. I have not
infringed copy-rights of any author.

Date:

Place: Chandigarh (D.S. Sarao)

iii
 ACKNOWLEDGMENT

Writing this dissertation has been an extremely rewarding and learning

experience. I would like to thank and express my sincere and deepest gratitude to my
guide, Dr. Bharat, University Institute of Legal Studies, Panjab University, Chandigarh,
for his patience, invaluable guidance and insights leading to the writing of this paper
and for assisting me in selecting the final theme for the same.

His expertise, invaluable guidance, positive attitude, patience and healthy

criticism added considerably to my experience. Without his continual inspiration and
gentle prodding, it would have not been possible to complete this study.

I sincerely admire the contribution of all my classmates and the ‘student

humour,’ which helped me and other fellow students see light at the end of the tunnel!

My sincere thanks also goes to the entire teaching staff for their valuable tips,
patience and assistance in helping me to prepare this dissertation

Date:

Place: Chandigarh (D.S. Sarao)

iv
 TABLE OF CONTENTS

Let there be peace in the heavens, the Earth, the atmosphere, the
water, the herbs, the vegetation, among the divine beings and in
Brahman, the absolute reality. Let everything be at peace and in
peace. Only then will we find peace
- Atharva Veda1

Page No.

COVER PAGE i
SUPERVISOR’S CERTIFICATE ii
STUDENT’S DECLARATION iii
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS v-ix
LIST OF SYMBOLS x
LIST OFABBREVIATIONS xi-xvi
LIST OF FIGURES xvii
LIST OF TABLES xviii
TABLE OF CASES xix-xx
EXECUTIVE SUMMARY xxi-xxii
CHAPTER 1 INTRODUCTION 1-11
1.1 Introduction
1.2 Review of Literature
1.3 Identification of Problem
1.4 Research Gap
1.5 Importance of Study
1.6 Hypothesis
1.7 Research Question
1.8 Research Methodology
1.9 Chapterisation
CHAPTER 2 ENVIRONMENT CONSERVATION-NEED OF
THE HOUR 12-39
2.1 General
2.2 Climate Change
2.3 Global Warming and Greenhouse Effect
2.4 Important International Environment Protection Laws and Treaties
2.4.1 Stockholm Declaration
2.4.2 Brundtland Report

1
Available at <http://1stholistic.com/Prayer/Hindu/hol_Hindu-eternal-soul.htm>, accessed on
October 30, 2017 at 1000 hours.
v
 2.4.3 The Earth Summit
2.4.4 The United Nations Framework on Climate Change
2.4.5 Stockholm Declaration
2.4.6 Environment Conservation and UN Industrial Development
Organisation
2.5 Important Environment Protection Laws-India Specific
2.5.1 Acts, Rules and Statutes
2.5.2 The Indian Penal Code, 1860
2.5.3 The Code of Criminal Procedure, 1973
2.5.4 The Motor Vehicle Act, 1988
2.5.5 Constitutional Provisions Related to Environment Protection
2.5.5.1 The Premable
2.5.5.2 Fundamental Rights
2.5.5.3 Fundamental Duties
2.5.5.4 Directive Principles
2.6 Role of Indian Judiciary and Environment issues
2.6.1 The Precautionary Principle
2.6.2 The Polluter Pays Principle

CHAPTER 3 SUSTAINABLE DEVELOPMENT-THE WAY AHEAD 40-68

3.1 General
3.2 Concept of Sustainable Development
3.2.1 Agriculture and Human Practices
3.2.2 Pressure on Limited Resources
3.2.3 Growth and Fragility of Eco-Systems
3.2.4 Over Use of Fuels
3.2.5 Loss of Bio-Diversity
3.2.6 Depletion of Natural Resources
3.3 Environment and Sustainable Development
3.4 Environmental Kuznets Curve
3.5 The Millennium Development Goals for Sustainable
Development
3.6 Sustainable Development Goals (SDG)
3.7 Government of India Policies and Programmes: Sustainable
Development
3.7.1 Green India Mission
3.7.2 National Afforestation Programme
3.7.3 Conservation of Bio-diversity
vi
 3.7.4 Ease of doing Business and Environment Sustainability
3.7.5 National Voluntary Guidelines
3.7.6 Role of Securities and Exchange Board of India (SEBI) in CSR

CHAPTER 4 THE MEANING AND SCOPE OF CORPORATE

SOCIAL RESPONSIBILITY 69-86
4.1 Understanding CSR and its Significance
4.2 Carroll’s Pyramid of Corporate Social Responsibility
4.2.1 Economic Responsibility
4.2.2 Legal Responsibility
4.2.3 Ethical Responsibility
4.2.4 Philanthropic Responsibility
4.3 Scope of Corporate Social Responsibility
4.4 Key issues of CSR
4.4.1 Poverty Elimination
4.4.2 Labour Rights
4.4.3 Human Rights
4.4.4 Environmental Condition
4.5 Overview of Selected Initiatives and Instruments related to CSR
4.5.1 The UDHR and CSR
4.5.2 The ILO Conventions and CSR
4.5.3 The Rio Declaration and CSR
4.5.4 The MDG’s and CSR
4.5.5 The SDG and CSR
4.6 Relevance of ISO 14001 and International Environment Standards
4.7 Relevance of ISO 26000 and International Environment Standards
4.8 The UN Global Compact
4.8.1 Human Rights
4.8.2 Labour
4.8.3 Environment
4.8.4 Anti-Corruption
CHAPTER 5 ENVIRONMENT SUSTAINABILITY AND
CORPORATE SOCIAL RESPONSIBILITY
LAW 87-124
5.1 Defining Environment Sustainability
5.2 Environment Sustainability and CSR
5.3 The American CSR Model

vii
 5.3.1 Xerox Corporation
5.3.2 Bank Of America
5.4 The European CSR Model
5.5 The Indian CSR Model
5.5.1 Historical Background
5.5.2 The Companies Act, 2013-Overview
5.5.3 Section 135 of the Companies Act, 2013 and the Companies
(Corporate Social Responsibility Policy) Rules, 2014
5.5.3.1 What constitutes CSR?
5.5.3.2 Applicability of CSR Provisions
5.5.3.3 Threshold Limit
5.5.3.4 CSR Committee
5.5.3.5 Functions of the CSR Committee
5.5.3.6 Responsibility of Board of Directors
5.5.3.7 Amount to be spent on CSR
5.5.3.8 Profit Calculation/Computation
5.5.3.9 Expenditure Not Exempt From Tax
5.5.4 Schedule VII of the Companies Act, 2013
5.5.5 Invalid CSR Activities and Expenditure
5.5.6 Penalities and Legal Provisions
5.5.6.1 Under Section 166(7), the Companies Act, 2013
5.5.6.2 Under Section 134 (3)(o) and Section 134 (8), the
Companies Act, 2013
5.5.6.3 Under Section 450 and 451, the Companies Act, 2013
5.5.7 Important Court Decisions
5.5.8 A Critical Appraisal
CHAPTER 6 ENVIRONMENT SUSTAINABILITY AND ROLE OF
CORPORATES-CASE STUDIES 125-148

6.1 CSR Trends: Pre And Post Independence

6.2 CSR Trends: Tata Group of Companies
6.2.1 Tata Chemicals
6.2.2 Tata Power

viii
CHAPTER 7 CONCLUSION AND SUGGESTIONS 149-152
7.1 Summary
7.2 Suggestions and Future Work

BIBLIOGRAPHY 153-157
WEBLIOGRAPHY 158-167
APPENDICES

ix
 LIST OF SYMBOLS

CO2 Carbon-dioxide

°C Degree Celsius

$ Dollar

£ Pound

% Percent

3C Combat Climate Change

x
 LIST OF ABBREVIATIONS

AIDs Acquired Immune Deficiency Syndrome

AIR All India Reporter

AP Andhra Pradesh

Bang Bangalore

BIS Bureau of Indian Standards

BR Biennial Report

BRR Buisiness Responsibility Report

BSE Bombay Stock Exchange

BUR Biennial Update Reports

CBD Convention on Biological Diversity

CBFL Computer Based Functional Literacy

CCS Carbon Capture and Storage

CEO Chief Executive Officer

CITES Convention on International Trade in Endangered

Species

COP Conference of Parties

CP Cleaner Production

CSD Commission on Sustainable Development

CSP Corporate Sustainability Protocol

CSR Corporate Social Responsibility

CM Centimetre

dB Decibel

EC European Community

EU European Union

EKC Environmental Kuznets Curve

EMS Environment Management System

xi
EPA Environment Protection Agency

EPI Environment Performance Index

EPP Environment Purchasing Programme

ESG Environmental, Social and Governance

ETI Ethical Trade Initiative

FDA Forest Development Agency

FGD Flu Gas Desulphurisation

FMCG Fast Moving Consumer Goods

FRA The Forest Rights Act, 2006

FY Financial Year

GDP Gross Domestic Product

GNP Gross National Product

GEF Global Environment Facility

GoI Government of India

GHG Green House Emissions

GIM Green India Mission

GMI Green Manufacturing Index

GRI Global Reporting Initiative

GHG Green House Gases

GNH Gross National Happiness

HDI Human Development Index

HIV Human Immuno-deficiency Virus

HFC Hydrofluorocarbons

INR Indian Rupee

IAEG Inter-Agency and Expert Group

IAR International Analysis and Review

ICOR Incremental Capital Output Ratio

xii
ICSI Institute of Company Secretaries of India

IFCS International Forum on Chemical Safety

IPCS International Programme on Chemical Safety

IIRC International Integerated Reporting Council

ILO International Labour Organisation

INET Institute of New Economic Thinking

IOF Indian Oil Foundation

IPC The Indian Penal Code, 1860

ISO International Standards Organisation

ITC Indian Tobacco Company

JFMC Joint Forest Management Committee

Km Kilometre

kW Kilo Watt

kWh Kilo Watt Hour

LED Light Emitting Diode

LLP Limited Liability Partnership

LTSP Long Term Sustainability Planning

LCA Life Cycle Assesment

MCA Ministry of Corporate Affairs

MDG Millenium Development Goals

MW Mega Watt

MT Metric Tonne

MWh Mega Watt Hour

MLF Multilateral Fund

NAEB National Afforestation and Eco-Development Board

NAP National Afforestation Programme

NGO Non Governmental Organisation

xiii
NVGs National Voluntary Guidelines

NASA National Aeronautics and Space Administration

NATCOM India's Initial National Communication to the United Nations

NBAIM National Bureau of Agriculturally Important Insects

NBPGR National Bureau of Plant Genetic Resources

NBAGR National Bureau of Animal Genetic Resources

NBAII National Bureau of Agriculturally Important Insects

NBFGR National Bureau of Fish Genetic Resources

NLT New Living Translation

NPTC National Thermal Power Corporation

NCR National Capital Region

ODA Official Development Agency

ODS Ozone Depleting Substance

OECD Organisation for Economic Cooperation and

Development

OPC Ordinary Portland Cement

ONGC Oil and Natural Gas Commission

PAT Profits After Tax

PPP Purchasing Power Parity

POP Persistent Organic Pollutants

PREMA People's Rural Education Movement

PV Photo-Voltaic

ppm Parts Per Million

PFC Polyfluorinated chemicals

PUC Pollution Under Control

RMI Responsible Manufacturing Index

RPO Renewable Purchase Option

xiv
SC Supreme Court

SCC Supreme Court Case

SEBI Securities and Exchange Board of India

Sq Square

Sq Km Square Kilometre

SMART Sustainable Meaningful Actions for a Responsible Tata Group

SSWA South and South-West Asia

TCL Tata Chemicals Limited

t Tonnes

TGSP Tata Group Sustainability Policy

TGSC Tata Global Sustainability Council

TNS Telecom Network Solutions

TPREL Tata Power Renewable Energy Limited

TSG Tata Sustainability Group

UDHR United Nations Declaration of Human Rights

UN United Nations

UNCED United Nations Conference on Environment and

Development

UNCTAD United Nations Conference on Trade and Development

UNDG United Nations Development Goals

UP Uttar Pradesh

UNECE United Nations Economic Commission for Europe

UNEP United Nations Environment Programme

UNESCAP United Nations Economic and Social Commission for Asia

UNESCAP-SSWA The United Nations Economic and Social Commission for

Asia and the Pacific: Subregional Office for South and
South-West Asia

xv
UNFCCC United Nations Convention on Climate Change

UNIDO United Nations Industrial Development Organisation

UNPRI United Nations Principles for Responsible Investment

v. Versus

WP Writ Petition

WTO World Trade Organisation

WHO World Health Organisation

WWF World Wildlife Fund

w.e.f With Effect From

ZSI Zoological Survey of India

xvi
 LIST OF FIGURES

Page No.

Figure 1 - How are Climate Change and Global Warming Related? 19

Figure 2 - Atmospheric CO2 Emission By Year 20
Figure 3 - Breakway Larsen C Ice Shelf 21
Figure 4 - Towards Sustainable Development (UNIDO) 29
Figure 5 - Three Pillars of Sustainable Development 45
Figure 6 - Three Pillars of Sustainable Development (Dominic McGoldrick) 46
Figure 7 - Environmental Kuznets Curve (EKC) 50
Figure 8 - The Eight MDG 53
Figure 9 - MDG Report Card India 54
Figure 10 - Goal 7: Progress Report ‘India’: Environmental Sustainability 58
Figure 11 - Sustainable Development Goals 59
Figure 12 - Global Sustainable Development Goals 60
Figure 13-World Bank Annual Report ‘Ease of Doing Business 2017: Equal
Opportunity for All’ 64
Figure 14 -Components of CSR 70
Figure 15-Archie B. Caroll ‘The Pyramid of Corporate Social Responsibility’ 72
Figure 16-Valid CSR Activities Under Schedule VII of the Company’s Act, 2013 116
Figure 17-India CSR Outlook Report:
(ICOR a Snapshot of CSR Spend in FY 2015-16) 131

Figure 18-India CSR Outlook Report:

(ICOR a Snapshot of CSR Spend in FY 2015-16) 132
Figure 19-India CSR Outlook Report:
(ICOR a Snapshot of CSR Spend in FY 2015-16) 133

xvii
 LIST OF TABLES

Table 1-ISO 26000: 83 Participating Countries 81

Table 2-The World's Largest Corporate Sustainability Initiative 83-85
Table 3-CSR Evolution: Indian Context 104
Table 4-CSR Report Card, 2012 119

Table 5- Leading Sectors in CSR Initiatives 128

Table 6-Tata Chemicals CSR Spend: 2015-201 141

xviii
 TABLE OF CASES

Page No.
1 Cooverjee B. Bharucha v. The Excise Commissioner
and the Chief Commissioner, Ajmer
1954 AIR 220, 1954 SCR 873 34

2 Indian Council for Enviro-legal Action and others v. Union of India

1996 3 SCC 212 38

3 Infosys Technologies Ltd. v. The Joint Commissioner of Income-tax

2006 103 ITD 399 Bang, (2006) 105 TTJ Bang 802 118

4 Mohd. Ahmed (Minor) v. Union of India

W.P.(C) 7279/2013 118

5 M.C. Mehta v. Union of India

1987 SCR (I) 819 37

6 M.C. Mehta v. Union of India & Others

AIR 1987 SC 1086 50

7 M.C. Mehta v. Kamal Nath

(1997) 1 SCC 388 38

8 Narmada Bachao Andolan v. Union of India

AIR 1999 SC 3345 38

9 NHPC Limited v. Punjab State Power Corporation Limited and Others

Petition No. 230/GT/2014 118

10 Rural Litigation and Entitlement Kendra, Dehra dun v. State of UP

and Others
AIR 1988 SC 218 4

11 Shanti Star Builders v. Narayan Totame

1990(1) SCC 520 37

xix
12 Subhash Kumar v. State of Bihar
(1991) 1 SCC 598 37

13 T. Damodar Rao v. Special Officer Municipal Corporation, Hyderabad

AIR 1987 AP 171 4

14 Vellore Citizens Welfare Forum v. Union of India

AIR 1996 SC 2715 38

xx
 EXECUTIVE SUMMARY
There is one and only one social responsibility of business; to
use its resources and engage in activities designed to increase its
profits

-Milton Friedman2

Population, Environment and Profit: a deadly combination. All three factors are
inexorably linked and are to be blamed for the environmental crisis which is being
faced today. Technological developments, rapidly increasing human population and
dramatic increases in resource and energy consumption are resulting in ‘Growth’ that is
not possible to sustain without causing environmental problems. Consider for a
moment, if increasing population levels combined with this un-sustainable growth
continue to rise at the current rate, our grandchildren will see the planet plunged into an
unprecedented environmental crisis; and for this, people and business, both have to be
blamed.

The time to take drastic corrective actions is now. The present generation,
corporates and business houses have to behave ethically and they have to contribute to
economic development while improving the quality of life of the workforce and their
families, as well as of society. Human beings are currently living in way that is
completely unsustainable with the world we live on. A majority of the population is
unanimous in agreement that climate change and environment degradation is real, and
is happening more rapidly than normal because of human activities.

To begin with, the dissertation covers aspects related to climate change and
environment degradation which are a cause of concern to the comity of nations and
society at large. An attempt has been made to confirm what is generally accepted in
todays contemporary world; that the demands of society coupled with unsustainable
business related practices are responsible for environmental crisis. This raise the next
question; do governments, business houses and corporates owe a social responsibility
towards sustainable growth and in making our planet a better place to live in for the
next generation? The dissertation provides an analysis and evaluation of the concept of
environment sustainability and existing laws related to CSR, at the international and
national level.

2
Scott Paeth and Thomas O'Brien, ‘Religious Perspectives on Business Ethics: An Anthology’,
Rowman & Littlefield, (2007) - Business & Economics, p. 96.

xxi
 One cannot afford to lose sight of the fact that the environment is steadily
eroding and the future of everyone is dependent on the care we take today to preserve
the resources that we know, so we have time to develop better ways of living in the
world. By nature, an orderly society requires laws for governance. The law is important
for a society for it serves as a norm of conduct for citizens. Without law there would be
chaos and it would be survival of the fittest and everyman for himself. Thus law is
important because it acts as a guideline as to what is to be accepted or not accepted in
society.

As the scope of the research was mainly aligned towards environment

sustainability and CSR law pertaining to the Indian context, Section 135 of the
Companies Act, 2013 along with the Companies (Corporate Social Responsibility
Policy) Rules, 2014 and other notifications related thereto have been covered in detail.
Also covered are the efforts and endeavours of corporates to meet the objectives, at the
national and international level as well as various laws, acts, statutes, conventions,
constitutional provisions related to CSR and environment sustainability.

Finally, faith in mankind must endure and this social awakening along with the
laws on ensuring sustainable growth will help in leaving a better world for future
generations. Hopefully, this dissertation will spur others to research further, the laws
related to CSR and environment sustainability at the national and international level.

The business of business should not be about money. It should be

about responsibility. It should be about public good, not private
greed
- Anita Roddick3

3
Anita Roddick, ‘Business As Unusual: The Journey of Anita Roddick and The Body Shop’,
Thorsons (2001), p. 10.

xxii