CSR must include environment & ecology, rules Supreme Court; calls green spending a constitutional duty, not charity

New Delhi, December 20, 2025: In a landmark judgment set to significantly reshape corporate social responsibility (CSR) in India, the Supreme Court has ruled that CSR must inherently include environmental and ecological protection, clarifying that spending on environment is not a matter of voluntary charity but a constitutional obligation for companies.

Supreme Court’s key ruling

• A bench of Justices P. S. Narasimha and Atul S. Chandurkar on December 19 brought ecology and environment explicitly within the ambit of CSR while hearing a matter related to the protection of the critically endangered Great Indian Bustard (GIB) in Rajasthan and Gujarat.​
• The Court directed non-renewable power generators operating in priority and non-priority areas in these states to conduct their business “as if they are guests in the abode” of the GIB, underscoring that industry shares the habitat and must operate with heightened ecological sensitivity.​

Green funds as constitutional obligation

• Interpreting Article 51A(g) of the Constitution, the bench held that every citizen – and by extension every corporation as a “legal person and a key organ of society” – has a fundamental duty to protect and improve the natural environment.​
• Justice Narasimha stated that CSR funds are the “tangible expression” of this duty, and that allocating funds for protection of the environment “is not a voluntary act of charity but a fulfilment of a constitutional obligation,” rejecting the notion that companies can be socially responsible while ignoring environmental claims.​

Directions for Great Indian Bustard protection

• The Court accepted the recommendations of a court-appointed committee on preserving the Great Indian Bustard, approving revised priority conservation areas of 14,013 sq km in Rajasthan and 740 sq km in Gujarat for focused protection measures.​
• It also cleared recommendations including a blanket ban on installation of solar projects above 2 MW capacity and on laying overhead transmission lines in these conservation zones, terming the survival of the GIB a “shared cultural responsibility” and a symbol of India’s arid landscape heritage.​

What this means for CSR and environment spending

• The ruling strengthens the interpretation that CSR under the Companies Act already embodies the idea that corporate profit is not exclusively private property, but partly owed to society and the ecosystems that enable its generation.​
• In practice, the judgment is expected to push companies to prioritise:
  • Biodiversity conservation and species protection, especially in ecologically fragile and project-affected areas.
  • Renewable energy, resource efficiency, and decarbonisation projects that go beyond compliance.
  • Water security, climate adaptation, and habitat restoration programmes in line with local ecological needs.
• For India Inc, this signals that environment-linked CSR will increasingly be seen not as a “good-to-have” add-on but as a core, justiciable responsibility aligned with constitutional duties and long-term business sustainability.​

Current CSR spending on environment protection and conservation in India has steadily risen over the past few years, but it still trails traditional focus areas such as education, health, and rural development. Within Schedule VII of the Companies Act, activities related to environmental sustainability, ecological balance, wildlife and biodiversity conservation, and climate action are recognised CSR areas, leading many companies to support projects like afforestation, watershed development, renewable energy, waste management, and pollution abatement. Large corporates in sectors such as energy, mining, and infrastructure increasingly earmark a portion of their mandatory 2% CSR expenditure for environmental projects in and around their areas of operation, often linking them to landscape restoration, water security, and just transition goals, though experts continue to flag the need for more strategic, long-term, and scientifically grounded investments in conservation rather than fragmented or one-off green activities.

Opportunity for companies to recalibrate CSR portfolios

• With this judgment, boards and CSR committees will be under greater moral and legal pressure to integrate robust environmental components into their CSR strategies, particularly in sectors with high ecological footprints such as energy, infrastructure, mining and manufacturing.​
• Companies can respond by:
  • Ring-fencing a share of CSR budgets for environment and climate action, especially in regions where they operate.
  • Partnering with expert NGOs, conservation groups and research institutions on scientifically designed projects.
  • Linking CSR outcomes to measurable indicators such as biodiversity recovery, water table improvement, carbon reduction and landscape resilience.

For platforms and practitioners in CSR and sustainability, the Supreme Court’s ruling marks a decisive step in positioning environmental protection at the heart of responsible business in India.

Current data indicate that environment and sustainability have emerged as one of the top three CSR focus areas, though still behind education and health in absolute terms. According to sector-wise analyses drawing on MCA filings, companies spent roughly ₹2,600–₹3,000 crore annually on environment, sustainability and ecological balance activities around FY2018–19, which has risen to an estimated ₹4,500–₹5,000 crore per year by FY2022–23, reflecting more than 70% growth in environment-related CSR spending over the last five years. In proportional terms, this translates to an increase from about 8–9% of total CSR spends going to environmental activities in the late 2010s to roughly 12–14% of total CSR expenditure in recent years, even as overall CSR outlay has crossed ₹29,000 crore in FY2022–23 and cumulatively ₹1.8 lakh crore since the CSR law came into force.