This article has been written by Samarth S Naik, pursuing a Diploma in Tax Litigation and Advanced Corporate Taxation from LawSikho.

This article has been edited and published by Shashwat Kaushik.

Introduction

India, the 5th largest economy in the world, has led the industrial growth and capacity building in the last decade at the global level. On the back of this rapid industrial expansion, India has achieved tremendous heights, but at the same time, there is a growing concern regarding environmental pollution and its long-term effects on the health of the environment and people alike. The crossroad between development and environmental degradation has posed questions to policymakers, activists, and business owners. Corporates being major contributors to pollution are and have been under growing pressure from the government and environmental activists to implement the rules and regulations strictly and without delay to mitigate damage to the already fragile environment. The legal framework established in India through a series of legislations, notifications, rules, and regulations to govern the corporate side of the growing problem of corruption. These laws play a pivotal role in the protection of the environment and enforce compliance on the part of corporations.

Corporate pollution

Industries, the materials needed, and the methodology involved in manufacturing, processing, and packaging have been major contributors to pollution in India. These include air pollution, water pollution, land degradation, and improper waste disposal mechanisms. These pose a serious and immediate risk to the health of people. Major contributors to pollution are power generation, manufacturing, mining, textiles, chemicals, and cement production.

Primarily there has been a growing concern about air and water pollution in India. As per the 6th Annual World Air Quality Report 2023, India is the third most polluted country in the world in terms of air pollution. The industrial sector coupled with vehicular emissions is a sizable source of particulate matter (PM2.5 and PM10), sulphur dioxide (SO2), and nitrogen oxides (NOx), all of which contribute to respiratory diseases and environmental damage. On the same footing, water pollution is also of grave concern. Discharge of untreated industrial waste and effluents into water is a leading cause of pollution of rivers, lakes, and groundwater sources.

With an eye on these issues and their serious implications cutting across the sections of population, the government has taken steps to prevent and mitigate loss to the environment due to the actions of industries and corporations.

Legal frameworks governing pollution control in India

The fundamental aspect of the legal framework towards protection of the environment has been provided for in the Constitution of India itself. Article 48A directs the state, in principle, to protect and improve the environment and safeguard forests and wildlife. Article 51A also provides for a fundamental duty of every citizen to protect and improve the natural environment. With reference to these, India from time to time has developed several laws and regulations with special emphasis on pollution control by industries and corporations.

The Environment (Protection) Act, 1986

The Environment (Protection) Act, 1986 is an effort for a holistic approach towards environmental protection in India and includes aspects related to air, water, and soil pollution. It was implemented as a response to the Bhopal Gas Tragedy (1984). The Act empowers the government to take necessary measures to prevent environmental hazards and to impose stringent rules and regulations on industries. It entrusts the government with the power to make industry-specific laws and keep a check on the compliance of the set standards. It provides for punishment in the form of imprisonment, monetary fines, or both in case of violation or non-compliance of the rules and regulations. This Act imposes absolute liability on the industries for any loss and damage, immediate or remote, caused due to their direct or indirect actions. 

The Water (Prevention and Control of Pollution) Act, 1974

The Water (Prevention and Control of Pollution) Act, 1974, focusses particularly on curbing water pollution. It is one of the earliest legislations to combat pollution. This Act established the Central Pollution Control Board (CPCB) and State Pollution Control Boards (SPCBs). These two statutory bodies are responsible for monitoring, controlling, implementing and enforcing the regulations as per the Act and any subsequent Notifications by the appropriate government. The Act provides for various compliances that have to be met by the Industries with respect to discharge and disposal of effluents into water bodies. Compliances such as compulsory treatment of water to nullify any chemical or harmful components and their effect on the water body, creatures in the water body, and the public at large; compulsory permission of the relevant authorities and Pollution Control Board before discharging industrial effluents in the water. The Act prescribes heavy penalties, fines, and imprisonment of various terms for non-compliance.

The Air (Prevention and Control of Pollution) Act, 1981

The Air (Prevention and Control of Pollution) Act, 1981, was enacted in order to take concrete steps for the prevention, control, and abatement of air pollution in India. It grants powers to the Central Pollution Control Board and State Pollution Control Boards to set standards to be followed and regulate emissions from the industries. As per the World Air Quality Report, 2023, 26 Indian cities are part of the Top 30 most polluted cities when it comes to PM 2.5 air pollution. This shows the serious nature of pollution that India is battling with. Major contributors to air pollution is caused by industries involved in manufacturing and processing, followed by vehicular emissions. The Act imposes severe punishment in the form of heavy penalties, fines, and, in some cases, imprisonment up to the term of 5 years.

Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016  

The Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, were formulated to deal with the industries that produce hazardous waste materials. The Rules provide for the regulation of such industries with respect to generation, handling, storage, transportation, and disposal of hazardous waste. Corporates are under strict supervision and are required to obtain permission from designated authorities to handle hazardous waste and dispose of such hazardous material in an environmentally sound manner. The Rules also regulate the transboundary movement of materials, including hazardous waste.

The Companies Act, 2013: Corporate Social Responsibility (CSR)

The Companies Act, 2013, introduced mandatory corporate social responsibility for certain corporations. Section 135 of the Act requires companies meeting specific financial thresholds to allocate at least 2% of their average net profit towards CSR activities, which may include environmental sustainability initiatives. CSR is not strictly a pollution control method; it incentivises corporations to invest in environmentally friendly projects and initiatives and in turn contribute to the pollution control efforts. 

Compliance mechanisms

To comply with these legal frameworks, the corporations must undertake several measures aimed at reducing their environmental impact. These measures include: 

1. Environment Impact Assessment (EIA): A mandatory provision established under the Environment Protection Act, 1986, EIA is a process in which industries are required to assess the impact their projects or products will have on the environment, which includes habitat, wildlife, and human life. Only after such assessment and upon satisfaction of the concerned authority or ministry regarding requisite compliance can the project proceed to the next stage. The report must consist of all the environmental risk factors and mitigation measures that will be taken by the corporation. The EIA process makes sure that the companies adhere to the protocols and consider the environmental consequences of their actions.
2. Environmental Management System (EMS): At times, corporations adopt Environmental Management System (EMS) as a part of their efforts towards compliance. An EMS is a well-laid-out system that the corporations follow in order to improve their environmental compliance performance. The ISO 14001 standard, an internationally recognized certification, provides a framework for developing an effective EMS. ISO 14001 provides guidance on how to consider multiple aspects of your business—procurement, storage, distribution, product development, manufacturing, etc.—so that it reduces its impact on the environment. Indian companies, particularly those engaged in global trade, often seek ISO 14001 certification to demonstrate their commitment to environmental sustainability.
3. Monitoring and Reporting: Corporates at all times have to strictly monitor their waste management, disposal, emissions, and discharge and report to the concerned authority on a regular basis regarding the same. They have to publish these reports and measures taken to deal with issues at hand as a part of their annual reports. The CPCB and SPCBs have developed guidelines for the installation of Continuous Emission Monitoring Systems (CEMS), which allow for real-time monitoring of emissions. This helps both corporations and the government act and analyse in a time-bound manner and resolve any challenges that may be posed to them.

Challenges in compliance

Although such robust and extensive legal mechanisms exist, compliance within the sphere of corporations remains shaky. Several reasons can be listed out in this regard:

1. Weak Enforcement: Enforcement on the part of the authorities is often found lacking on all fronts. This has been attributed to a lack of resources, which includes both human and monetary resources. Inadequate staffing and pressure from powerful businessmen and politicians often render these boards and authorities toothless. As a result, industries and corporations evade their responsibilities and compliances, resulting in rampant pollution of natural resources and ill effects on the human population.
2. Lack of Awareness and Technical Expertise: Technical expertise comes into question with respect to small and medium manufacturing enterprises (SMEs). They fundamentally lack the know-how and, at times, cannot afford to hire the required experts. Thus fail to implement pollution control measures, which in turn translates to poor compliance, especially amongst industries that operate in the far-flung areas.
3. Corruption and Bureaucratic Delays: Unchecked corruption at all levels of the government and lethargy of authorities in clearing or sanctioning of the orders and reports lead to exhaustion of owners of industries and corporations. They choose evasion of these requisite clearances and sanctions to keep their businesses running. Some operate with expired clearances, and some operate without them, posing a serious threat to the environment and human beings.
4. Cost of Compliance: Implementing pollution control measures at times is very expensive and cumbersome. This may be with respect to upgrading infrastructure or hiring skilled workers. The cost of installing high-end machinery and sensor-based machinery comes at a dear price, especially to SMEs. The cost-benefit analysis by such industries and corporations may opt for noncompliance as the easier path to run their businesses.

The way forward

There are plenty of ways in which corporate compliance can be improved by bypassing all these challenges. Some ways to achieve that are:

1. Incentivise environment-friendly technology and adaptation: The government must take concrete steps to help the corporations and the industries to setup and use eco-friendly technology. The government, in the form of tax benefits and subsidies, must provide some monetary relief and benefit to industries adopting ‘green technology’. This may include the installation of solar panels to draw electricity, reduced import duties on advanced machinery, and setting up of community wastewater treatment plants as a part of corporate social responsibility. 
2. Strengthening Regulatory Institutions: The regulatory institutions must be given adequate manpower and financial resources to keep a check on compliance of the regulations by the corporations and industries. The authorities must be given better pay and incentives to minimise corruption. Effective usage of technology must be inculcated to make the process of compliance clearance and certifications more transparent.
3. Corporate Leadership in Sustainability: In recent times, association of the word ‘Sustainability’ with a business provides it with a brand value in the market. This is true especially in the case of multinational companies (MNCs). Companies seeking to take advantage of this brand marketing are willing to adopt environmentally friendly measures and invest in infrastructure and practices. The government must recognise such efforts, incentivise, and promote such businesses for a much bigger impact.
4. Creation of public awareness: The government and activists alike must make a concerted effort to raise public awareness regarding environmental compliances and malpractices of the corporations. Reporting of any irregularities must be rewarded. Social media must be used as a tool to create public opinion and awareness regarding efforts of the government and corporations to preserve and conserve the environment. Public awareness and demands may pressurise the corporations into adopting environmentally friendly decisions.

Conclusion     

Pollution control in the corporate sector is of paramount importance for safeguarding the nation’s natural resources and public health. India has a well-established legal framework to deal with the issues at hand. Effective enforcement and plugging the loopholes in the statutes must take primacy in order to fight the ever-increasing threat and associated risk of pollution. Technological advancement and early adoption of such technology by the corporations as a responsibility is a useful tool in achieving meaningful pollution control. As corporations face growing environmental challenges and regulatory scrutiny, adopting sustainable practices is not only a legal requirement but also a strategic imperative for the long-term growth of the companies.

References

1. Environmental Compliance for Companies in India: Key Regulation (india-briefing.com)
2. Impact of Environmental Law on Corporate Governance – iPleaders
3. Corporate Liability for Environmental harm in India – International Journal of Law Management & Humanities (ijlmh.com)
4. Guide to Environmental Compliances in India (cs-india.com)
5. Legal instruments to curb environmental pollution in India : an analysis – iPleaders