Green Blunder: The environment ministry’s proposed Corporate Environment Responsibility spend for firms is a bad idea

By: | Published: May 4, 2018 3:33 AM

The environment ministry, as per a report in The Economic Times (ET), has finalised a set of guidelines that make it mandatory for a firm seeking green clearance for a project to earmark up to 2% of its proposed capital investment in the project for ‘Corporate Environment Responsibility (CER)’.

environment ministry, environment, eco friendly, Corporate Environment Responsibility So, the green ministry including compensatory afforestation under the scope of CER activities seems to have little justification. (IE)

The environment ministry, as per a report in The Economic Times (ET), has finalised a set of guidelines that make it mandatory for a firm seeking green clearance for a project to earmark up to 2% of its proposed capital investment in the project for ‘Corporate Environment Responsibility (CER)’. This will be over and above the expenditure the company will have to undertake for implementing the mandatory environment management plan (EMP) for the project-affected area.

The progress on environmental impact assessment (EIA) is less than satisfactory—while a quarter of the projects whose EIA applications had been accepted by the green ministry April 4, 2014, onwards, are yet to receive the nod, a 2016 report of the CAG on green clearances had found that in 25% of the cases, the EIA reports submitted to the ministry didn’t even comply with Terms of Reference set for the respective sectors. Against such a backdrop, adding another layer for clearance just doesn’t make sense.

How urgently things need to be set in order in the green approval ecosystem is evident from the fact that the Compensatory Afforestation Fund Management and Planning Authority was sitting on nearly Rs 42,000 crore of unutilised funds—collected from companies seeking environment and forest clearances—in January this year while just Rs 465 crore had been released to the states in FY17.

So, the green ministry including compensatory afforestation under the scope of CER activities seems to have little justification. What is worse, the guidelines say that the amount can also be spent for drinking water supply, health, education and skill development, among others.

With all these heads also covered under the mandatory CSR spend under the Companies Act, the green ministry’s guidelines not only foster confusion—and possibly even overstep its jurisdiction—but also could lead to a company being forced to spend twice the mandatory CSR amount. The ministry would do well to rethink its guidelines.

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