Connection between the Water (Prevention and Control of Pollution) Act, 1974 and ESG Framework

Connection between the Water (Prevention and Control of Pollution) Act, 1974 and ESG Framework

1. ESG in Context

ESG stands for Environmental, Social, and Governance, a framework for evaluating a company’s sustainability and ethical impact.

  • E (Environment): Pollution control, waste management, resource efficiency, emissions, etc.

  • S (Social): Employee welfare, community health, social responsibility.

  • G (Governance): Compliance, ethical conduct, transparency, and accountability.

A. “Environmental” Aspect – Direct Link

1. Pollution Control = Core Environmental Compliance

The Water Act, 1974 directly governs the E in ESG.
 It ensures industries:

  • Do not pollute natural water bodies,

  • Treat sewage and effluents before discharge,

  • Maintain consent under Sections 25 and 26 for any effluent release.

Thus, a company’s ESG performance on environmental metrics depends on its adherence to this Act.

2. Water Management & Resource Use

  • Efficient use and recycling of water reduce the environmental footprint.

  • Regular audits and reporting under ESG now require disclosure of water consumption, effluent quality, and wastewater treatment — all tied to the Water Act’s compliance norms.

3. Zero Liquid Discharge (ZLD) & SDG Alignment

  • Companies adopting Zero Liquid Discharge or advanced wastewater treatment show ESG leadership.

  • This aligns with UN Sustainable Development Goal (SDG) 6 – Clean Water and Sanitation.

B. “Social” Aspect – Indirect Link

  1. Community Health & Safety

    • Preventing contamination of rivers, lakes, and groundwater protects local communities’ health and agriculture.

    • Thus, compliance with the Water Act reflects social responsibility under ESG.

  2. Corporate Citizenship

    • Companies can go beyond compliance by supporting local water conservation, rainwater harvesting, or river rejuvenation projects — enhancing their social impact scores.

C. “Governance” Aspect – Compliance & Oversight

  1. Legal Compliance

    • Adherence to the Water Act is a mandatory governance obligation.

    • Boards are expected (under SEBI’s BRSR – Business Responsibility and Sustainability Reporting) to ensure all environmental laws are followed.

  2. Risk Management

    • Violations of the Act (e.g., illegal discharge) can lead to legal penalties, reputational loss, and ESG rating downgrades.

    • Proper internal governance mechanisms — monitoring, audits, board oversight — reduce such risks.

  3. Transparency and Disclosure

    • ESG frameworks emphasize public reporting of water usage, discharge, and compliance.

    • Data from the SPCB consents, inspection reports, and treatment plant operations feed into ESG disclosure metrics.

D. Practical Example

Aspect

Legal Provision (Water Act)

ESG Relevance

Consent to Discharge (Sec. 25–26)

Ensures effluent standards are met

Environmental compliance indicator

Treatment of Trade Effluents

Mandates treatment before disposal

Water management & pollution prevention

Reporting to SPCB

Compliance and inspection records

Transparency & governance

Penalties for Violation

Legal accountability

ESG risk & governance

Community Impact

Prevents contamination

Social responsibility & stakeholder health

E. Integration into Corporate ESG Policy

A company’s ESG Policy should reflect Water Act compliance by including:

  • Regular water audits and effluent monitoring

  • Board-level oversight on environmental compliance

  • Public disclosure of water performance indicators

  • Employee training on pollution control

  • Supplier audits for water sustainability


✅ In short:

The Water Act provides the legal backbone for the "E" in ESG, reinforces “G” through compliance and governance, and supports “S” through community well-being.

#ESGCompliance #EnvironmentalLaw #CorporateGovernance #Sustainability #AbhinandanWrites

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