This article on ‘Liability of Multinational corporations for environmental pollution in India: A Study‘ is written by an intern Sukriti Chowdhury at Legal Upanishad.
Significantly, since MNCs are major contributors to the global economy, they have considerable political influence on the global level. When it comes to holding MNCs accountable for environmental degradation, the dominant position of these corporate conglomerates is not finely distributed against that of the victims. The advent of environmentally harmful manufacturing methods and supplies used in manufacture is frequently used to reduce production costs, which has a gradual but accumulative influence on the environment.
Although we lack in having such accurate figures to determine the amount of pollution caused by companies and even if we possessed such information, it would be tough to crosscheck their accuracy. There are various divisions of corporate businesses that would have the capacity to pollute and degrade the environment. The article aims to examine the scope of regulations applicable to multinational corporations (MNCs) in terms of their ecologically deteriorating activities and environmental quality standards and throws light on Corporate Social Responsibility and suggests practices for betterment.
WHAT IS A MULTINATIONAL CORPORATION?
A multinational corporation (MNC) functions in at least one nation along with its native country and has business-related activities as well as other assets there. It typically includes offices and/or industries in different nations, besides a centralized, headquarters from where universal global management is controlled. These enterprises, often called multinational, stateless, or transnational corporate organizations, have revenues that surpass many under-developed countries. In this era, multinational corporations play a significant role in socioeconomic, cultural, and political challenges. As a result of this expanding propensity in multinational corporations, international law has started to address “corporate social responsibility.” Environmental issues are among the most critical aspects of CSR. (Liability of Multinational corporations for environmental pollution in India)
What is corporate social responsibility?
Corporate social responsibility is a legal construct imposed by the government. As a result, whether or whether business entities with legal identity adopt it, they should ideally conform to it as it has legal legitimacy backed up by a sanction.
CSR’s basic concept is that it is for the common good. This form of legislation is passed to appeal to the majority. Jeremy Bentham’s definition of the greatest good takes priority here. Individual validity, as Ronald Dworkin highlights, turns subordinate. Another viewpoint is that because the business utilizes current societal resources and labour, they must be held legally responsible for it because it is in return for what they receive from society.
According to Austin, Allen, and Hibbert, the law is an absolute duty imposed by the state.
Salmond, rejects the notion of absolute liability, thinking that a right should be provided first, followed by a corresponding duty. As a result, he believes the law is unjust in this regard.
“The absolute liability rule is a variant of the strict liability rule. This rule is applicable with no exception, and anybody who breaks it is responsible for their actions. This liability as an absolute liability is defined by absolute liability and enormous retraction.” 
In the instances of M.C. Mehta against UOI and Bhopal Gas Leak, the Supreme Court of India upheld absolute liability. In these judgments, the Supreme Court extended the strict liability rule established by the House of Lords of the United Kingdom in Rylands V. Fletcher.
CORPORATE ACCOUNTABILITY PRINCIPLES
- Society and the environment must be prioritized by the government and the public.
- Public engagement must be an element of every policymaking process.
- States shall stop enacting measures that pollute the environment and violate human rights.
- Either where they are located or where they act, companies should be accountable to binding rules.
- States should mandatorily make extensive research monitoring and conception to grave accountability for corporate goods and services.
- States should promote a race to the pinnacle by prohibiting companies from taking actions that are forbidden in their native country because of ecological or human rights considerations.
- States should adopt regulations that encourage transparency in all corporate and government acts that impact the climate and human rights, such as commerce, taxation, and finance.
LIABILITY OF MNCS UNDER ENVIRONMENTAL LAWS
Environmental law is usually categorized under administrative law. In practice, nevertheless, the entire subject of environmental law is, to a large measure, criminal. The most prevalent form of environmental law is to define certain regulatory standards on business, detailing the permissible quantities and composition of air pollutants, and prosecute offenders as environmental criminals.
India’s environmental legislation arose from the Stockholm Conference on Human Environment in June 1972, which was another global regulatory framework. The Indian legislature was fast to pass legislation aimed at pollution control, reduction, or elimination, at least in letter form absent of spirit.
As a result, in 1976, two articles, 48A and 51A, were included by the legislature in the Indian Constitution. Article 48A of the Constitution appropriately mandates the state to strive to maintain and protect the natural environment and safeguard the nation’s forests and fauna. Similarly, Article 51A, clause (g), lays a responsibility on every Indian citizen to safeguard and enhance the natural environment and exhibit empathy for living beings. The combined consequence of these two articles appears to be that both the ‘State’ and the ‘people’ are eventually required as per the Constitution to preserve, perceive, safeguard, and develop the environment. (Corporate Social Responsibility in India: A Constitutional and Theoretical Commentary)
The Water Act of 1974, India’s premier environmental law, was similar to the existing comprehensive system of laws when it was implemented. This Act was merely meant to facilitate the certification-based laws. Environmental laws in India genuinely came into their own when the judiciary started to analyze environmental laws more severely and create key tenets for ecological sustainability. Companies were compelled to wear “green spectacles” after the country’s Apex Court arose as the protector of the country’s natural setting. The December 1984 Bhopal Gas Leak Disaster increases the difficulty of protecting wildlife, air, water, heritage, and the environment.
A multinational firm accused of contaminating and dehydrating freshwater supplies for the benefit of its operations is Coca-Cola. The Ganga -river being polluted by harmful factories situated on its banks was emphasized in a case filed in the Supreme Court by social activist M.C. Mehta. The Supreme Court declared the shutdown of many toxic tanneries in Kanpur in the Ganga Water Pollution case. (M.C. Mehta vs. Union of India (AIR 1988 SCR (2) 538).)
In the Taj Mahal case, the Supreme Court ordered that factories were the major ingredients used, where coal and coke in Taj Trapezium (TTZ) were causing damage to the Taj Mahal and must either switch to natural gas or be transferred away from TTZ. (Agarwal) (M.C.Mehta v. Union of India, AIR 1997 SC 734)
- It is discovered that the current perception of the CSR policy is low (41%), indicating that raising awareness of CSR is needed to make CSR programs more fruitful. Various stakeholders, particularly the media, can make people more aware by emphasizing the necessity, importance, and outstanding job performed by corporations in this issue.
- It was highlighted that at the grassroots, collaborations among all stakeholders, such as the corporate sector, personnel, community groups, the government, and society at large, are either not well-conceived and functioning or are ineffective.
- It is suggested that practical and functional methods of interaction among all three primary stakeholders, the government, non-governmental organizations, and the business sector, be collaboratively analyzed and handled in terms of driving the developmental strategy farther in mission mode.
- It was discovered that the government did not intervene in the implementation of CSR operations except to formulate and provide guidelines. As a result, the government should begin evaluating CSR initiatives done by companies and begin rewarding those firms and organizations and their partner non-governmental organizations that have efficaciously incorporated different CSR projects to meet the advanced needs of the poor and disadvantaged people.
- To determine and comprehend the level of CSR effectiveness, it is necessary to perform in-depth quantity and quality investigations of companies with the help of a systematic survey of companies in India.
Due to the worldwide dangers of serious ecological barriers, it is past time for judicial activism, as our legislative system, despite its best efforts, is still falling short of refilling the discrepancies. It’s also to be remembered that, as our Supreme Court has declared, the environment and growth are two faces of the very coin. If one is modified, it is almost absolute that the other will be impacted as well. Environmental protection and maintaining ecological equilibrium is a duty that must be undertaken not just by the government, but also by every person, organization, and organization. It is a moral necessity and fundamental duty recognized in India’s Constitution, Article 51 A (g).
- Agarwal, V. K. (n.d.). Environmental Laws in India: Challenges for enforcement. Retrieved from https://www.sbsc.in/pdf/resources/1586097435_environmental_law.pdf
- Corporate Social Responsibility in India: A Constitutional and Theoretical Commentary. (n.d.). LAWOCTOPUS. Retrieved from https://www.lawctopus.com/academike/corporate-social-responsibility-in-india/#:~:text=According%20to%20Section%20135(1,to%20spend%20on%20CSR%20initiatives.
- Gouda M., S. K. (n.d.). Corporate Social Responsibility in India. Trends, Issues and Strategies. 227-232. Retrieved from https://eds.p.ebscohost.com/eds/ebookviewer/ebook/ZTAwMHR3d19fMTY0MTEzN19fQU41?sid=1e243134-1cff-4494-8971-99ab93385e02%40redis&vid=0&format=EB&rid=1
- Liability of Multinational corporations for environmental pollution. (n.d.). Retrieved Feb 8, 2022, from Advocatespedia: https://advocatespedia.com/Liability_of_Multinational_corporations_for_environmental_pollution
- M.C. Mehta vs. Union of India (AIR 1988 SCR (2) 538)..
- M.C.Mehta v. Union of India, AIR 1997 SC 734.
- Mahavar, S. (n.d.). Analysing Environmental Law on the basis of vicarious and corporate liability. Retrieved from BLOG- IPLEADERS: https://blog.ipleaders.in/analysing-environmental-law-basis-vicarious-corporate-liability/
- Namballa, V. C. (n.d.). Global Environmental Liability: Multinational Corporations under Scrutiny. 1 (2). Retrieved from https://d1wqtxts1xzle7.cloudfront.net/33476619/Global_Environmental_Liability_.pdf?1397580788=&response-content-disposition=inline%3B+filename%3DGlobal_Environmental_Liability_Multinati.pdf&Expires=1644338761&Signature=DGg-CD-SNiA0moi61wsRsNTrX748XowTxY3-