CSR for the environment and animal welfare

Yes: CSR can fund tree planting, water conservation, wildlife and biodiversity, clean air and soil, waste management and animal welfare, because item (iv) of Schedule VII covers all of them. The catch is that a great deal of environmental work is already required of companies by other laws, and none of that can count.

Item (iv) is one of thirteen in Schedule VII, the list in the Companies Act, 2013 of the activities CSR money can pay for (Schedule VII at a glance has the others). This guide, for CSR and sustainability teams and for environmental and animal welfare NGOs, explains what item (iv) says, what qualifies, where the line with legal obligations falls, how the Ministry of Corporate Affairs (MCA) has settled the grey areas and what good practice looks like.

What item (iv) says

In plain words, the item covers:

• Ecosystems and biodiversity: forests, grasslands, wetlands, mangroves, and the plants and animals that live in them.
• Natural resources: water conservation and harvesting, watershed development, soil health and energy saved for communities.
• Quality of soil, air and water: pollution reduction, waste management and restoring degraded land and water bodies.
• Agroforestry: trees on farms, which help both incomes and the land.
• Animal welfare: shelters, veterinary care, rescue and humane management of street animals.
• The Clean Ganga Fund: a direct contribution to a fund named in the Schedule.

This guide also cites the MCA’s frequently asked questions on CSR (General Circular 14/2021, 25 August 2021) as “FAQ” and a number. They set out the Ministry’s reading of the law; they aren’t law, but companies and auditors rely on them. FAQ 3.13 says Schedule VII “must be interpreted liberally to capture the essence of the subjects”, so climate adaptation or plastic waste collection fits even though neither is named.

How much CSR goes to the environment

Five of the National CSR Portal’s roughly 29 “development sectors” match item (iv). The sectors are reporting categories, not Schedule VII items.

Together they came to ₹3,522.01 crore in 2023-24, about 10% of the ₹34,908.75 crore companies spent on CSR. Environmental sustainability on its own was the third-largest sector, after education and health care (PIB, 25 March 2026).

Projects that clearly qualify

Village water work can also count as rural development under item (x), and drinking water as item (i). Choose the item that matches each project’s main purpose, and keep to it.

The big exclusion: what the law already requires

Rule 2(1)(d)(vi) of the CSR Rules excludes “activities carried out for fulfilment of any other statutory obligations under any law in force in India”. For environmental work this rule bites more often than any other, because companies carry many environmental duties:

• Conditions in an environmental clearance, such as a green belt around a plant or commitments made for the project.
• Conditions in consents to establish and operate under the water and air pollution laws, such as effluent treatment and emission controls.
• Compensatory afforestation when forest land is diverted for a project.
• Extended producer responsibility for plastic packaging and other waste a company puts on the market.

If a clearance or licence already requires it, it isn’t CSR, whatever Schedule VII area it falls in. Our guide to what doesn’t count as CSR has the other exclusions.

The company’s own operations are excluded too, as its normal course of business (Rule 2(1)(d)(i)): solar panels on its own factory roof, energy efficiency in its plants or cutting its own emissions are good business, not CSR.

Grey areas, and how to handle them

Green credits

The Green Credit Rules, 2023, made under the Environment (Protection) Act, 1986, reward voluntary environmental actions, including tree planting on degraded land that state forest departments identify. The methodology notified on 22 February 2024 says such credits may be exchanged to meet compensatory afforestation requirements, and may be used for reporting “under corporate social responsibility under the applicable rules made under any law”. That doesn’t change the CSR Rules: the planting still has to fit item (iv) and avoid the exclusions. If a company uses the credits to meet a legal requirement, such as compensatory afforestation, the planting has served a statutory obligation and can’t also be CSR. Decide how any credits will be used before the project starts, and check the current methodology.

Carbon credits and project income

Revenue a CSR project earns is surplus (FAQ 3.4), and under Rule 7(2) surplus can’t become business profit: it must go back into the same project, into the Unspent CSR Account, or to a Schedule VII fund within six months of the year’s end. So if carbon credits from a CSR plantation are sold, the money stays in CSR. If a company wants to retire credits from a CSR project against its own emissions targets, the project starts to serve its business. No FAQ settles this, so take advice first.

Planting on company land

Trees planted on the company’s own premises improve its own property, and around a plant they are often a clearance condition anyway. Plant on public or community land, with the written agreement of the panchayat, the municipality or the forest department.

Plantation drives and branding

Under FAQ 4.3, CSR is meant to run “in a project or programme mode rather than as a one-off event”, and brand building “as a collateral benefit” doesn’t spoil it. A one-day branded planting event with no aftercare is closer to marketing than to environmental sustainability. A four-year programme with survival audits, which also carries the company’s name, qualifies.

Assets

Solar plants, water structures, equipment and vehicles are capital assets. Under Rule 7(4) they must be held by a Section 8 company, registered public trust or registered society with charitable objects and a CSR registration number, by the project’s beneficiaries as self-help groups, collectives or entities (a water users’ association, for example), or by a public authority such as the gram panchayat. Never by the company. See capital assets in CSR.

Funds

The Clean Ganga Fund is named in item (iv), so a contribution to it counts. Contributions to other environmental funds don’t (FAQ 3.16).

Animal welfare

Animal welfare has been one of the fastest-growing CSR areas. Shelters, rescue and treatment, veterinary camps for street and working animals, sterilisation and vaccination programmes, cow shelters and wildlife rescue centres can all qualify. Three laws shape the work:

• The Prevention of Cruelty to Animals Act, 1960 sets the basic standards of care.
• The Animal Birth Control Rules, 2023 govern sterilisation and vaccination of street dogs, which local bodies run with recognised organisations.
• The Wildlife (Protection) Act, 1972 controls work with wild animals and inside protected areas, which needs the forest department’s permission.

Choose partners with veterinary staff and clear standards of care, and measure outcomes such as animals treated and rehomed, and vaccination coverage in an area, not just camps held.

Good practice: trees that survive and water that lasts

Trees

Many plantings fail in their first years. Projects that work choose native species suited to the site, plant at the right time of year, protect saplings from grazing, water them through the first dry seasons and replace losses. They involve the people who will look after the trees, and they count survival, not saplings. An ongoing project can run for the year it starts plus three financial years, which fits a planting programme with aftercare. The India State of Forest Report, published by the Forest Survey of India, gives district figures for forest cover.

Water

Start with the water balance of the village or watershed: how much rain falls, where it goes and who uses it. The Central Ground Water Board’s assessments show which blocks are over-exploited. Align with the government’s water conservation campaigns, such as Jal Shakti Abhiyan: Catch the Rain and Mission Amrit Sarovar, without paying their costs: FAQ 3.17 says CSR shouldn’t fill “resource gaps in Government Schemes”. See CSR and government schemes.

What to measure

See choosing indicators for setting targets and baselines.

For NGOs

• Ask about the company’s legal obligations before you agree a project, so you don’t end up delivering a clearance condition under a CSR label.
• Get land and permissions in writing: the panchayat’s resolution for common land, the forest department’s permission for forest land or protected areas.
• Budget for aftercare and offer survival-linked tranches. Companies trust partners who report losses honestly.
• Have your paperwork ready: registration on Form CSR-1, the legal form and income-tax registrations the Rules require and, for an NGO that no company or government set up, a three-year record of similar work. See how NGOs can get CSR funding.
• Plan volunteer days as part of a programme, not as the programme. Volunteers’ time can’t be valued as CSR spending (FAQ 3.18).

Environmental CSR also feeds a company’s ESG reporting, but the two aren’t the same: see ESG explained. The Academy’s CSR Essentials and The SDGs and India courses go deeper.