Environmental compliance tops the priority list for most companies today. The senior management in companies is increasingly realizing that environmental issues cannot be brushed aside anymore. They clearly see the value in long-term sustainability over short-term compliance costs. With increasing focus on issues like pollution control, waste management, compensatory afforestation, natural resources conservation, climate change adaptation etc. companies are discussing environmental issues more than ever. With the Securities and Exchange Board of India (SEBI) mandating reporting on environmental, social and governance (ESG) parameters from the next financial year, there is a drastic shift from how companies approached environmental issues earlier.
While most companies understand and appreciate the importance of environmental compliance, at times inconsistencies in regulatory action creates unforeseen challenges for companies. Issues relating to applicability of authorisations for waste management, identification of land for compensatory afforestation, applicable standards for a niche category of industry, categorization of certain products, practices etc. keep cropping up from time to time. While it may be unfair to blame even the regulators at times, such absence of clarity results in delays and costs for companies, which is completely avoidable. More importantly, requirements imposed retrospectively may create genuine difficulties for even the most compliant companies. The requirement in plastic waste management for endorsement of quarterly progress reports by urban local bodies is one such example.
The environmental laws in India have created what could arguably be one of the best regulatory frameworks in the world. We have specific laws to address specific environmental issues, be it pollution, waste management, biodiversity, forests, wildlife, coastal areas, impact assessment of industries etc. More importantly, we are amongst the very few countries in the world to have a specialised court/tribunal to adjudicate environmental matters. Our laws definitely need to be updated regularly and at times even consolidated to ensure clarity for investors and industries but this should not be at the cost of dilution of such laws. While there is a greater need for strong environmental laws to promote sustainable development, there is also a need to ensure that the consents, clearances and compliances do not unnecessarily become a hurdle for companies that are compliant, responsible and environmentally conscious.
The efforts by the regulatory authorities to protect and preserve India’s environment is clearly bearing positive results. More importantly, it is the proactive role of the judiciary, especially the National Green Tribunal and the Supreme Court which has helped protect India’s natural environment.
“For decades, the Supreme Court has passed landmark judgments, which have shaped India’s environmental jurisprudence. However, at times concerns have been raised about instances of judicial overreach. Be it issues relating to the jurisdiction of a tribunal, suo moto cognizance in matters, the quantum of fines being imposed or more importantly orders being passed without according the parties an opportunity to be heard, such instances create confusion and affect investor confidence.”
While environmental matters have to be dealt on priority due to the urgency and sensitivity in most matters, we need to be careful to ensure that no injustice is caused to any party and they are all at least granted an opportunity to present their case before the court or tribunal.
Transparency and consistency in regulatory action will ensure that there is clarity for the companies and they clearly know the consequences for their acts and omissions. While this will instil fear in the minds of the violators, it will also boost the confidence of the law-abiding companies as there will be no rude shocks. There is therefore a greater need for regular training of the regulatory officials, improving the strength of the workforce, ensuring people with requisite technical skills are hired and more importantly ensuring that they have a clear understanding of their powers and responsibilities. This will also help reduce the burden of the judiciary as most regulatory issues are required to be addressed by the regulators themselves.
Most companies have already realised the importance of environmental compliance and are way ahead of the curve. Others will soon follow suit. Those who don’t, will face regulatory action and bear the brunt of non-compliance, and justifiably so. With initiatives like ESG reporting gaining prominence in India as well, companies are bound to ensure that they perform well on such parameters. With the global call for climate action through initiatives like the net-zero agenda and nations including India working to achieve sustainable development goals, most Indian companies have already made voluntary commitments towards climate action and achieving sustainability. It is important that such initiatives are recognised and appreciated and our law and policy create frameworks to achieve these green goals without creating unnecessarily hurdles in sustainable development.
This article was originally published in The Economic Times on 7 June 2021 Written by: Nawneet Vibhaw, Partner. Click here for original article
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