The SC ruled that CSR inherently includes environmental protection, in the MK Ranjitsinh & Others v Union of India case, linking CSR obligations to constitutional duties and biodiversity conservation.
Key Observations by the Court
- Corporations as Constitutional Actors: Corporations, as legal persons and key organs of society, are bound by Fundamental duty under Article 51A (g) to protect the environment and wildlife.
- Article 51A (g) mandates to protect and improve the natural environment including forests, lakes, rivers and wildlife, and to have compassion for living creatures.
- CSR is an Obligation, Not Charity: Allocation of CSR funds for environmental protection is a constitutional duty, not a voluntary philanthropic act.
- Polluter Pays Principle for Species Recovery: Where corporate activities threaten endangered species, companies must bear the cost of in-situ and ex-situ conservation.
About Corporate Social Responsibility
- Legal Provision: CSR is a mandatory requirement for certain companies under Section 135 of the Companies Act, 2013, compelling them to undertake activities that contribute to the social, environmental, and economic development of the country.
- Fund Allocation: Companies are obligated to allocate at least 2% of their average net profit of the preceding three years to CSR activities.
- Activities covered under CSR: Eradicating hunger, poverty and malnutrition, promoting gender equality, ensuring environmental sustainability, etc.