Companies cannot ignore environment under CSR, rules Supreme Court

However, Section 166(2) of the Companies Act, 2013, dismantled this narrow view by imposing a broader fiduciary duty.”Directors are now legally mandated to act in good faith not just for members, but for the best interests of the company, its employees, the shareholders, 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 bench underscored.It pointed out, “Where corporate activities such as mining, power generation, or infrastructure threaten the habitat of endangered species, the “polluter pays” principle mandates that the company bears the cost of species recovery. CSR funds must, therefore, be directed towards ex-situ and in-situ conservation efforts to prevent extinction.”Holding that the obligation to protect endangered species is paramount, the bench said corporate duty must evolve from merely protecting shareholders to protecting the ecosystem.”The non-renewable power generators operating in the priority as well as non-priority areas in Rajasthan and Gujarat must always remember that they share the environment with the Godawan, the Great Indian Bustard, and must undertake their activities as if they are guests in its abode,” it said.The top court passed the order on a plea filed in 2019 by environmentalist MK Ranjitsinh, seeking measures for the protection of the endangered Great Indian Bustard.The apex court has been passing directions from time to time for protecting the species.In April 2021, the top court had imposed restrictions on overhead transmission lines across nearly 99,000 sq km in Rajasthan and Gujarat.



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