Corporate Social Responsibility And The Environmental Liability

Posted on November 19, 2011 in Environment

By Adeena Jamal:

The Brutland report published in 1997 made several business and management scholars consider as to how and why corporations should incorporate environmental concerns into their own strategies. Today, companies have accepted their responsibility to do no harm to the environment. CSR is defined as the duty to cover the environmental implications of the company’s operations, products and facilities; eliminate waste and emissions; maximize the efficiency and productivity of its resources; and minimize practices that might adversely affect the enjoyment of the country’s resources by future generations. Corporate Social Responsibility has been making an increasingly prominent impact in the Indian social psyche by supplementing developmental projects towards betterment of the standard of life. The term itself encompasses a lot of connotations such as compliance, philanthropic and business approaches and the social primary and social obligation approaches Corporate Social Responsibility involves the legal, ethical, commercial and other expectations society has for business and making decisions that fairly balance the claims of all key stakeholders.

The main aim today is to realize the role of Judiciary in checking out the corporate entities with respect to environment pollution. It is vital for companies to examine whether internationally agreed environmental principles and nationally applicable environmental liability regimes justify progressive change with in corporate governance law. It is to examine the alternative trend of states to introduce civil liability requiring corporate entities to contribute directly towards the establishment of either an international compensation fund for environmental damage or compulsory insurance schemes for such damage. The few decades back, economic development and environment quality were thought of as independent entities, but we now find them closely related. The concept of sustainable development, indeed, carries with it the premise that economic, environmental and social well-beings are interrelated. The concept of corporate social responsibility is wider in its basic nature and has immense depth in it. The recent corporate sector has the duty which is more or less indicative towards the society in various dimensions. The corporate has the duty to protect the human rights they have to ensure the welfare of the society at large and they have to protect the environment These corporations also can ensure the sustainable development, it demonstrates that the corporate has to ensure that while developing the economy there is no destruction of natural resources and develop the economy without destroying the future generations and we should ensure that our future generations has the resources not worse than what we presently possess if not better in several aspects. The present debate mainly attracts the attention towards the complete success and effectiveness of the voluntary compliance towards the environmental laws, legal requirements, honest financial accounting shown by the companies and the boundaries defined by it. Environmental Law has been regulating the activities of a company in several ways. Corporations now have been including managerial approaches that embody environmental principles. New age corporations have been encompassing these techniques in all aspects and stages of manufacturing, marketing, outsourcing and implementation.

Liability for companies has to be treated differently from the issue of state liability for environmental damage under public international law. However, it is highly crucial to ascertain this area as it pertains directly to the responsibilities of that particular company and their directors in that arena of decision making. At a domestic level, companies can be liable under the national law of the country in which they operate, for the damage which they can cause. A certain level of liability for the damaged caused will therefore vary from jurisdiction to jurisdiction.

On an international level, there is absence of comprehensive regimes of international liability for harm caused to the environment. However, in respect of certain extra-hazardous wastes, international agreements have been signed to mitigate the liability out of it. As Sands emphasizes, ‘States remain reluctant to put in place rules which have the potential to impose distinct restrains on the conduct of potentially hazardous activities, as well as being aware of the significant costs to the public sector1. Therefore, liability regimes have only been mentioned for operators with the potential to cause certain types of harm such as oil spills, nuclear accidents and also for those dealing in the field of hazardous wastes.

The issue with directors or companies responsibility is not that there are loopholes in the law but precisely the opposite .The law that checks on the decision making processes’ for directors in relation to the environment is very clear, but they have to act in the company’s genuine interest, their main aim should be to maximize the wealth and the value of the company not in a manner which is necessarily in the best interests of the environment.