This article was written by Adwitiyo Raha, Amity University, Kolkata, LLM during his internship at Le Droit India.

Abstract.

This article explores Corporate Environmental Responsibility (CER) as a vital element of Corporate Social Responsibility (CSR). It delves into the conceptual framework, importance, and worldwide initiatives related to CER. The article examines various approaches that corporations can take to embrace environmental responsibility, such as curbing harmful practices, regulating energy consumption, and lessening negative environmental impacts. The article also underscores the role of CER in environmental conservation, climate change mitigation, regulatory adherence, market competitiveness, cost efficiency, and risk management. Additionally, it evaluates global initiatives like the Sustainable Development Goals (SDGs) and their relationship with CSR. The study also scrutinizes legal frameworks, including India’s Companies Act, 2013, and environmental protection laws. The article concludes by analysing prominent CER initiatives by companies such as Patagonia in the United States and ITC Limited in India, demonstrating practical applications of environmental responsibility in corporate settings.

Keywords : Corporate Social Responsibility, Corporate Environmental Responsibility, Environmental Conservation, Regulating Energy Consumption,, Regulatory Adherence, Market Competitiveness, Cost Efficiency, Risk Management, Sustainable Development Goals.

Introduction.

Corporate social responsibility (CSR) refers to an idea which holds that businesses have a responsibility to contribute to the economical, social and environmental development of the society around them. It’s a form of self-regulation where companies confer  to act in a socially responsible manner primarily with an objective to create a positive impact on the world.

Companies that either readily opt for CSR or are required by concerned statutes of their respective jurisdiction, are guided by a concept which some experts refer to as “the triple bottom line”. The concept mandates that businesses should be committed to measuring its social and environmental impact, sustainability efforts, and profits. The adage “profit, people, planet,” known as the “three P’s,” is often used to summarize the driving force behind thE aforementioned concept. (What Is Corporate Social Responsibility? 4 Types, 2021)

CSR is broadly classified into three categories ; environmental, ethical, social and philanthropic responsibility. The following article will primarily be dealing with corporate environmental responsibility.

Corporate Environmental Responsibility.

Corporate environmental responsibility is the commitment of businesses to operate in an economically, socially, and environmentally sustainable manner. It ensures that companies take into account their impact on the environment at large while making decisions about production processes, product design, and marketing strategies. (Io, 2023)

Corporate Environmental Responsibility (CER) involves a company’s commitment to minimising the negative environmental impact that it may cause and to promote sustainable practices. CER of a company is not limited to its requisite compliance with the environmental laws of its respective jurisdictions but extends to minimise the negative impact that their own operations may have on their immediate environment. (Kain, 2024)

Companies that seek to embrace environmental responsibility can do so in several ways:

• Reducing harmful practice such as limiting the discharge of pollutants into the environment such as by embracing industrially applicable methods to limit greenhouse gas emissions,
• Regulating energy consumption by adapting an increasing reliance on sustainable resources and recycled or partially recycled materials.
• Offsetting negative environmental impact by engaging in the practice of afforestation or funding studies that primarily aims to study techniques on how to minimise the negative impact a company’s operation may have on the ecology. (What Is Corporate Social Responsibility? 4 Types, 2021)

Importance of Corporate Environmental Responsibility.

1. Environmental Conservation: Corporate Environmental Responsibility (CER) is crucial for preserving the natural environment. Corporations often have significant ecological impacts, and by adopting sustainable practices, they can protect biodiversity, ecosystems, and natural resources. Many enterprises are setting ambitious carbon neutrality goals. For example, Amazon aims to achieve net-zero carbon emissions by 2040, a decade ahead of the Paris Agreement target. The World Economic Forum notes that implementing sustainable supply chain practices can enhance a company’s profitability by up to 16% and increase brand value by as much as 30%. (Kain, 2024)

2. Mitigating Climate Change : Companies play a major role in the release of greenhouse gases that add to the progression of climate change. By adopting Corporate Environmental Responsibility (CER), businesses can take proactive steps to minimize their carbon emissions, switch to renewable energy, and contribute to global initiatives aimed at addressing climate change. (Kain, 2024)

3. Regulatory Compliance: Many nations enforce rigorous environmental regulations, requiring businesses to comply for effective operation. Corporate Environmental Responsibility (CER) ensures companies comply with current regulations and anticipate future ones, mitigating legal risks. In response to regulatory mandates, businesses are enhancing environmental initiatives. For example, the European Union’s Non-Financial Reporting Directive (NFRD) mandates large corporations disclose environmental and social information, promoting transparency. (Kain, 2024)

4. Market Competitiveness: Sustainability is increasingly recognized as pivotal in enhancing business competitiveness. Enterprises prioritizing environmental responsibility may secure an edge by appealing to eco-conscious consumers, complying with regulations, and attracting socially responsible investors. There is growing investment in research and development of sustainable products and services. Patagonia, a pioneer in sustainable practices, dedicates 1% of its sales to preserving and restoring the natural environment. (Kain, 2024)

5. Cost Savings : Implementing sustainable practices results in operational efficiencies and cost savings. Energy-efficient processes, waste reduction, and resource conservation measures can enhance a company’s financial performance while simultaneously benefiting the environment. (Kain, 2024)

6. Consumers are increasingly prioritizing businesses that demonstrate environmental responsibility. The implementation of Corporate Environmental Responsibility (CER) practices can significantly enhance a company’s public image and reputation. This, in turn, attracts consumers who are ecologically conscious and fosters loyalty among a growing demographic that is concerned with sustainability. (Kain, 2024)

7.  Risk Management : Environmental risks, including resource scarcity, regulatory changes, and reputational damage, can significantly affect businesses. Corporate Environmental Responsibility (CER) assists companies in identifying and managing these risks, thereby ensuring long-term resilience and adaptability in an increasingly dynamic global environment. (Kain, 2024)

8. Employee Engagement and Satisfaction : Employees are increasingly inclined to seek employment with organizations that reflect their personal values. Corporate Environmental Responsibility (CER) initiatives can significantly enhance employee morale, engagement, and satisfaction by evidencing a commitment to ethical and sustainable business practices. (Kain, 2024)

9. Long-Term Business Viability As global awareness of environmental issues intensifies, businesses increasingly face pressure to address their environmental impact. The adoption of Corporate Environmental Responsibility (CER) represents a proactive strategy to ensure long-term viability and resilience within a dynamic market. CER is crucial for mitigating environmental harm and meeting evolving expectations of consumers, investors, and stakeholders. It constitutes a strategic and ethical imperative to contribute to the planet’s well-being while fostering sustainable business practices.

Global Initiatives.

1.      United Nations’ Sustainable Development Goals

The Sustainable Development Goals (SDGs) constitute a set of 17 global objectives established by the United Nations in 2015 as part of the 2030 Agenda for Sustainable Development. These goals offer a comprehensive framework for addressing social, economic, and environmental challenges to achieve a sustainable future for all. The SDGs build upon the earlier Millennium Development Goals (MDGs) but are more comprehensive and ambitious in their scope. They address a wide range of interconnected issues, including poverty eradication, education, health, gender equality, clean energy, environmental protection, and sustainable economic growth.

Sustainable Goals and Corporate Social Responsibility

• Goal 6 (Clean Water and Sanitation) underscores the importance of ensuring access to clean water and sanitation for all. This objective addresses water scarcity, pollution, and inadequate sanitation practices. Businesses play a pivotal role in realizing this goal, particularly through Corporate Social Responsibility (CSR) initiatives focusing on water conservation, wastewater management, and sanitation programs. Companies can contribute by integrating sustainable water usage policies, mitigating industrial water pollution, and supporting community projects to enhance water access. (Sustainable Development Goals (SDGs) and Environmental Sustainability, n.d.)

• Goal 7 (Affordable and Clean Energy) aims to ensure universal access to energy that is affordable, reliable, sustainable, and modern. It advocates for adopting renewable energy sources and enhancing energy efficiency, both critical for reducing greenhouse gas emissions and mitigating climate change. Corporations can contribute to this goal through Corporate Social Responsibility (CSR) initiatives by investing in clean energy solutions, implementing energy-efficient technologies, and supporting renewable energy projects in disadvantaged regions. (Sustainable Development Goals (SDGs) and Environmental Sustainability, n.d.)

• Goal 11, (Sustainable Cities and Communities) underscores the imperative to render urban areas and human settlements inclusive, safe, resilient, and sustainable. This goal addresses critical issues such as urbanization, air pollution, waste management, and the accessibility of green spaces. Businesses can contribute to the achievement of this goal by adopting sustainable urban planning practices, investing in eco-friendly infrastructure projects, and implementing waste reduction strategies within their operations and supply chains. (Sustainable Development Goals (SDGs) and Environmental Sustainability, n.d.)

• Goal 12 ( Responsible Consumption and Production) seeks to advance sustainable consumption and production patterns. It advocates for resource efficiency, waste reduction, sustainable management of chemicals and wastes, and environmentally sound practices. Corporations can align with this goal by incorporating circular economy principles, minimizing waste, promoting sustainable packaging, and ensuring ethical sourcing of raw materials. (Sustainable Development Goals (SDGs) and Environmental Sustainability, n.d.)

•  Goal 13 (Climate Action) emphasizes the necessity for immediate measures to combat climate change and its effects by reducing greenhouse gas emissions, enhancing resilience to climate-related disasters, and promoting climate adaptation strategies. Corporations can assume responsibility by establishing carbon neutrality objectives, investing in climate-resilient infrastructure, and participating in reforestation and carbon offset initiatives as part of their Corporate Social Responsibility (CSR) commitments. (Sustainable Development Goals (SDGs) and Environmental Sustainability, n.d.)

•  Goal 14 ( Life Below Water) and Goal 15 (Life on Land) concentrate on the conservation and sustainable utilization of marine and terrestrial ecosystems. These goals address issues such as marine pollution, overfishing, deforestation, habitat loss, and biodiversity conservation. Corporations can contribute by reducing plastic waste, adopting sustainable fishing and agricultural practices, supporting reforestation and afforestation programs, and ensuring responsible land use policies.  (Sustainable Development Goals (SDGs) and Environmental Sustainability, n.d.)

• Goal 17( Partnerships for the Goals) acknowledges the significance of global partnerships in achieving the Sustainable Development Goals (SDGs), including environmental sustainability. Collaboration among governments, businesses, civil society, and other stakeholders is crucial for mobilizing resources, sharing knowledge, and implementing effective environmental initiatives. Corporations can enhance their CSR impact by forming multi-stakeholder partnerships, engaging in cross-sector collaborations, and investing in sustainability-driven innovation. (Sustainable Development Goals (SDGs) and Environmental Sustainability, n.d.)

2.       United Nations Global Compact (UNGC)

Initiated in 2000, the UN Global Compact is a voluntary program that motivates businesses to align their strategies with ten globally recognized principles, including those related to environmental responsibility.

Key Principles:

• Principle 7: Companies should adopt a precautionary stance towards environmental issues.
• Principle 8: Businesses should engage in efforts to enhance environmental responsibility.
• Principle 9: Promote the creation and spread of eco-friendly technologies.

Impact on Corporations: It encourages companies to implement sustainable practices and report on their environmental performance. More than 15,000 companies from over 160 countries are involved in this initiative. (UN Global Compact, 2025)

3.       Paris Agreement (2015) – Corporate Climate Compliance

This is an internationally binding treaty on climate change, established under the United Nations Framework Convention on Climate Change (UNFCCC).

Key Objectives:

• Aim to keep the global temperature increase below 2°C, striving to limit it to 1.5°C above pre-industrial levels.
• Countries that are signatories to this agreement are required to set Nationally Determined Contributions (NDCs), which shape corporate climate strategies.(UNITED NATIONS, 2015)

Impact on Corporations: Businesses are required to lower their carbon emissions in accordance with governmental pledges. Numerous companies have adopted Science-Based Targets (SBTs) for reducing emissions. Financial institutions are redirecting investments towards low-carbon project

Legal Framework Ensuring Corporates compliance to Ecological Standards in India.

1.      Companies Act, 2013.

Section 135 of the Companies Act, 2013, introduced a structured framework for Corporate Social Responsibility (CSR) in India, mandating certain companies to engage in activities that contribute to societal, environmental, and economic development. A critical examination of this section reveals its applicability, obligations, and mechanisms for CSR implementation.​

Applicability Criteria:

Section 135 applies to companies that, in the immediately preceding financial year, meet any of these thresholds:​

Net Worth: ₹500 crore or more.​

Turnover: ₹1,000 crore or more.​

Net Profit: ₹5 crore or more.​

Companies meeting any of these criteria must comply with the CSR provisions outlined in the Act.​ (Government of India, n.d.)

CSR Contributions:

Eligible companies must spend at least 2% of their average net profits from the three immediately preceding financial years on CSR activities. These activities should align with the areas specified in Schedule VII of the Act, including initiatives related to education, poverty alleviation, healthcare, environmental sustainability, and more.​

CSR Committee Formation:

Companies must constitute a CSR Committee of the Board with three or more directors, including at least one independent director. If a company is not required to appoint an independent director, the CSR Committee can comprise two or more directors. If the CSR obligation is less than ₹50 lakh, the Board can fulfill the Committee’s responsibilities.​

CSR Policy Development:

The CSR Committee develops and suggests a CSR Policy for the Board’s consideration. This policy outlines the company’s approach to CSR, including principles for selecting, implementing, and monitoring activities, and formulating an annual action plan. The Board approves this policy and ensures its disclosure in the company’s annual report and website.​

Unspent CSR Funds and Transfer Obligations:

If a company fails to spend the prescribed CSR amount within a financial year, it must transfer the unspent funds to a specified account. For ongoing projects, the unspent amount should be transferred to an “Unspent CSR Account” within 30 days from the financial year’s end. This amount must be spent on CSR activities within three financial years. If unutilized after this period, it should be transferred to a fund specified in Schedule VII within 30 days from the completion of the third financial year.​ (Sharma, 2025)

Penalties for Non-Compliance:

Non-compliance with CSR provisions attracts penalties. If a company fails to transfer the unspent CSR amount as required, it faces a penalty of twice the unspent amount or ₹1 crore, whichever is less. Every officer in default may be liable to pay a penalty of one-tenth of the unspent amount or ₹2 lakh, whichever is less.​

2.       Environment (Protection Act), 1986

The Environment (Protection) Act, 1986, encompasses several pertinent sections that delineate the powers and responsibilities of the Central Government in safeguarding the environment.

• Section 3 empowers the Central Government to implement necessary measures for environmental protection, which includes the establishment of standards for emissions and hazardous substances.
• Section 5 authorizes the government to issue directives to industries, which may involve the closure, prohibition, or regulation of their operations.
• Section 7 prohibits any industry from discharging environmental pollutants beyond the prescribed standards.
• Section 15 outlines the penalties for non-compliance, which include fines up to ₹1 lakh and imprisonment for a duration of up to five years. (Parliament of India, 1986)

3.        Air (Prevention and Control of Pollution) Act, 1981

The Air (Prevention and Control of Pollution) Act, 1981, delineates specific responsibilities and powers to the Central and State Pollution Control Boards (CPCB & SPCBs) through various sections.

• Sections 16 and 17 empower these boards to establish emission standards and undertake enforcement actions.
• Section 21 mandates that industries must secure consent from the State Pollution Control Board (SPCB) prior to the establishment or operation of any facility that emits air pollutants.
• Section 22 strictly prohibits industries from discharging air pollutants beyond the limits prescribed by the Act.
• Section 37 outlines the penalties for non-compliance, which include fines and imprisonment. (CPCB | Central Pollution Control Board, n.d.)

4.       Water (Prevention and Control of Pollution) Act, 1974

• Section 24 prohibits industries from discharging pollutants into water bodies beyond the limits prescribed by law.
• Sections 25 and 26 require corporations to obtain consent from the State Pollution Control Board (SPCB) prior to establishing or expanding industrial operations.
• Section 41 stipulates penalties for non-compliance, which may include imprisonment for corporate executives. (India, 1974)

Notable CER Initiatives.

1.      U.S. : Patagonia’s Environmental Initiatives.

Patagonia, a United States-based outdoor apparel corporation, is distinguished for its dedication to environmental sustainability. The organization has instituted several initiatives aimed at minimizing its environmental impact and fostering responsible business practices. (Corporate Social Responsibility – Patagonia, n.d.)

Key Initiatives:

• Carbon Neutrality Goal: Patagonia aspires to attain carbon neutrality by 2025, concentrating on reducing emissions throughout its supply chain while continuing to expand the company. (Berkeley Haas Center for Responsible Business, 2021)
• Environmental Activism: Known as “The Activist Company,” Patagonia advocates for environmental causes and promotes governmental and corporate actions to address environmental challenges. (Cohune, 2019)
• Sustainable Materials: The company integrates recycled materials into its products and prioritizes fair trade practices. (Corporate Social Responsibility – Patagonia, n.d.)

Patagonia’s initiatives highlight its active strategy to incorporate environmental responsibility into its business practices.

2.      India : ITC Limited’s Sustainability Practices.

ITC Limited, a prominent conglomerate in India, has effectively integrated environmental sustainability into its core business strategy, thereby exemplifying Corporate Environmental Responsibility.

Key initiatives include:

• Afforestation Program: ITC has implemented an extensive afforestation program, which contributes to carbon sequestration and promotes biodiversity.
• Water Stewardship: The company prioritizes water conservation and management, achieving a water-positive status through the creation of water harvesting structures and the promotion of efficient water use.
• Sustainable Packaging: ITC emphasizes the utilization of recyclable and biodegradable materials in its packaging, thereby reducing plastic waste.

These initiatives underscore ITC Limited’s commitment to environmental stewardship and sustainable development within the Indian corporate sector. (Dev, 2024)

Conclusion.

Corporate Environmental Responsibility (CER) has become an essential component of sustainable business operations, necessitating that companies incorporate environmental factors into their activities. This article has explored significant elements of environmental legislation and their impact on corporate adherence, emphasizing both international and Indian viewpoints on corporate environmental responsibility.

 India’s Environment (Protection) Act, 1986, along with other regulatory measures like the Air (Prevention and Control of Pollution) Act, 1981, and the Water (Prevention and Control of Pollution) Act, 1974, place stringent compliance requirements on companies. These laws ensure that industries uphold environmental sustainability, reduce pollution, and comply with established environmental standards.

Globally, corporate environmental responsibility has gained traction as companies actively embrace sustainable practices. Patagonia, for example, has shown how businesses can align profitability with sustainability through initiatives like carbon neutrality targets, sustainable sourcing, and environmental advocacy. Similarly, ITC Limited in India has exemplified an environmentally aware business by achieving water-positive and carbon-positive status while investing in large-scale reforestation and sustainable packaging. These examples highlight the role of corporate initiatives in supporting legislative efforts to protect the environment.

However, despite strict laws and proactive corporate actions, challenges persist in ensuring full compliance. Many companies still prioritize economic growth over environmental sustainability, leading to environmental degradation incidents. Additionally, enforcement agencies often encounter difficulties in effectively monitoring and implementing environmental regulations. Enhancing corporate accountability through stricter oversight, incentivizing sustainable practices, and fostering public-private collaboration is crucial to improving environmental governance.

References.

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Cohune, L. J. (2019). Stepping Lightly: A case study on Patagonia’s corporate environmental and social responsibility marketing strategy. https://digitalcommons.calpoly.edu/cgi/viewcontent.cgi?article=1090&context=rptasp

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Dev, A. (2024). Harmony in Practice: A case study approach in exploring the intersection of corporate social responsibility and environmental stewardship. Journal of Law and Legal Research Development. https://doi.org/10.69662/jllrd.v1i1.4

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Sharma, P. (2025, January 18). CSR under Companies Act, 2013: Applicability, Rules & Penalties. TaxGuru. https://taxguru.in/company-law/csr-companies-act-2013-applicability-rules-penalties.html

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