Pay 2% of capital investment for green clearance: Environment Ministry to Corporates

NEW DELHI: The environment ministry has firmed up guidelines that will require every corporate seeking green clearance to set aside up to 2% of its capital investment for Corporate Environment Responsibility (CER).

The guidelines make it mandatory for companies to set aside funds for CER over and above what is required for executing the environment management plan in a projectaffected area.

While brownfield (expansion) projects would be required to earmark 0.125% to 1% of additional capital investment for CER purposes, the slab for greenfield projects ranges from 0.25% to 2% of the capital investment.


The exact quantum, officials said, will be decided for every project by the Expert Appraisal Committee when it comes up for green clearance.

Bound to be Challenged in Court
The subject has been in discussion for a while now with the ministry repeatedly insisting on creating a separate category for CER funds and projects, rather than assuming it to be part of the implementation of the environment impact assessment plan.

The move, however, has been criticised by a group of environmentalists who point out that it’s bound to be challenged in court.

“Environment Impact Assessment (EIA) process in India is defunct… It is, therefore, important that the ministry improves the EIA process and its implementation. Instead, it is now specifying how much money companies should spend on CSR (ministry has conveniently termed it as CER or Corporate Environment Responsibility).

But CSR is no business of the ministry. Companies have to implement CSR under the Companies Act.

They also have to do social impact assessment and R&R under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act. What environment ministry is doing is to duplicate and complicate the situation on the ground,” Chandra Bhushan, deputy director-general of Centre for Science and Environment, told ET.

At present, Section 135 of the Companies Act lays down Corporate Social Responsibility (CSR) for every company with a net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore in a financial year.

The environment ministry, however, has observed in guidelines that CSR does not necessarily cover all projects. “Environment clearance given to a project may involve a situation where the concerned company is yet to make any net profit or is not covered under the Companies Act.”

CER activities will include measures like pollution control, wildlife and forest conservation, compensatory afforestation and rehabilitation and resettlement of displaced persons.

Funds can be used for creating drinking water supply infrastructure, sanitation, health, education and skill development, among others.