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Modi Govt Scraps Corporate Environment Responsibility Fund

Modi Govt Scraps Corporate Environment Responsibility Fund

  • This has opened an easy way for corporates to procure prior environmental clearances, but the chances of non-compliance to the environmental commitments are now high.

In a notice issued last week, the Narendra Modi government has done away with mandatory setting aside of a certain percentage of any project’s capital investment for Corporate Environment Responsibility (CER). Instead, commitments made by the project proponent during public consultations will be included in terms and conditions for granting of prior environment clearance.

The notice was issued through an office memorandum on September 30 by the Union Ministry of Environment, Forests & Climate Change (MoEF&CC), which is headed by the Bharatiya Janata Party’s senior leader Prakash Javadekar.

According to experts working in the field of environment, while the move opens up an easy way for corporates to procure prior environment clearances, the chances of non-compliance to the commitments contained therein are also high. At present, India does not have a mechanism in place to monitor compliance with terms and conditions contained in prior environment clearances.

“The rates of non-compliance with terms and conditions of prior environmental clearances are really high in the country in the absence of a strong monitoring mechanism. It is certain that these commitments will be treated in the same manner as project proponents deal with other mandatory terms and conditions. Project-affected people will continue demanding compliance to these commitments but the complaints will keep travelling back and forth without timely redressal,” said Kanchi Kohli of the New Delhi-based Centre for Policy Research, a leading public policy think tank.


As per the September 30 memorandum of the MoEF&CC, all commitments made by the project proponent during public consultations shall be made a part of the Environment Management Plan of that particular project.

The memorandum states: “… it is hereby decided that henceforth the Expert Appraisal Committee or State Level Expert Appraisal Committee shall deliberate on the commitments made by the project proponent to address the concerns raised during the public consultation and prescribe specific condition(s) in physical terms while recommending the proposal, for grant of prior environment clearance instead of allocation of funds under Corporate Environment Responsibility.”

The Expert Appraisal Committees, at the central and state level, examine among themselves the potential negative environment impacts of establishing any particular project and recommend mitigative measures in order to offset those impacts.

Through the latest memorandum, the MoEF&CC has nullified its own order issued on May 1, 2018, that laid down guidelines upon project proponents to set aside a particular percentage of their capital investment as a fund for CER.

The percentages ranged in between 0.125% and 2% for different projects depending on whether it was greenfield or brownfield apart from its total quantum of capital investment. The activities to be undertaken under the Corporate Environment Responsibility fund were decided on the basis of issues raised during public hearings, social need assessment, relief and rehabilitation plan and so on. The utilisation of the fund was restricted strictly to concerned project-affected areas and project-affected people.


In the absence of a monitoring mechanism, the only respite that would be available with project-affected people, who in the majority of the cases comprise the most marginalised sections of the population, will be legal recourse. Experts do not see it as unlikely that these people will always find it difficult to identify and report violation of commitments.

“This will be more of a shortcut to obtain prior environmental clearance as project proponent will make any commitments to get the clearance first. If the project proponent indeed honours those commitments or follows any specific conditions laid down by the Expert Appraisal Committee, it has to be analysed from the right perspective. Most project proponents begin with lots of promises, but somewhere down the line they forget the commitments they have made in pursuit of profits,” said Rebbapragada Ravi, Chairperson of mines, minerals & PEOPLE (mm&P), an alliance of individuals, institutions and communities affected by mining.

Earlier, for any particular project, the fund set up under Corporate Environment Responsibility was in addition to the cost envisaged for the Environment Management Plan. The Environment Management Plan included measures for pollution control, environmental protection and conservation, relief and rehabilitation, wildlife and forest conservation measures and compensatory afforestation too, if applicable. However, as per the latest order, the fund has not only been done away with but all commitments to be made in lieu of the fund will also be included under the Environment Management Plan.

Again, as per the earlier order issued by the MoEF&CC in May 2018, a matrix for setting aside of funds towards CER had been devised in the backdrop of the fact that different formulas were being adopted by expert appraisal committees for working out the percentage of capital investments without following any common principles. The matrix had been worked out in consultations with various central government ministries as well as industry bodies including the Associated Chambers of Commerce of India and the Federation of Indian Chambers of Commerce & Industry.

Nevertheless, the May 2018 order was challenged by the real estate lobby in the national capital region (NCR). The NCR wing of the Confederation of Real Estate Developers of India (CREDAI) filed a civil writ petition against the order in Delhi High Court, a fact which also finds mention in the September 30 office memorandum issued by the Modi government. The matter is still pending in the high court for disposal.

This article first appeared on Newsclick on 9th Oct.

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