COP-26 & Climate Ambitions
In the autumn of 2021, the Prime Minister of India addressed a summit in Glasgow, Scotland. The speech was delivered at COP-26, which brought together dignitaries from across the world. It was in the midst of this "global brainstorming on climate change"[1] that the Prime Minister presented to the world the Panchamrit- five nectar elements to battle climate change. This was not mere sophistry but comprised an ambitious plan of action. The goals announced during the address included an increase in the non-fossil energy capacity and a significant reduction in the country's carbon emissions. The most zealous announcement was regarding the target of carbon neutrality by 2070. Needless to say, translating the action plan into groundwork would require several policy initiatives.
The Expanding Sphere of Auditing Activity
Even before the COP-26 summit, the government of India was running several climate-change programmes, inter alia, the National Solar Mission, the National Mission for Enhanced Energy Efficiency, the National Mission on Sustainable Habitat, and the National Water Mission. The threat from climate change is imminent. Notwithstanding the urgency, the progressive aspirations expressed at the global conference would only add to the list of active government projects. Heightened government activity in any area spells the increased role of the office of the Comptroller and Auditor General (CAG), as the implementation of any scheme involves the allocation and utilization of funds. The CAG must conduct audits of the expenses of the National and State governments to gauge the economic efficiency and effectiveness. Since the finances available to the state are sourced from the general public, the role of the CAG becomes indispensable to the democratic process. This is true for all public expenditure and a fortiori those which involve schemes to combat climate change.
Environmental Audits: The Objectives
The CAG has, at its disposal, several tools to execute its mandate, and none is as instrumental as the Environmental Audit (EAs) in the context of Climate Action. To begin with, the World Bank defines an environmental audit in the following words:
"A methodical examination of environmental information about an organization, a facility or a site, to verify whether, or to what extent, they conform to specified audit criteria."[2]
In other words, it refers to an assessment of the performance of a programme based on environment-related criteria. The criteria that the above explanation speaks of might be based on local, national or global standards. Taking into account the enormous quantum of funds infused into climate-change policies, the instrumentality of Environmental Audits becomes exceedingly clear. The 2022 budget, for example, allocates Rs 1,500 crore ($200 million) to the Renewable Energy Sector alone. The Climate Change audit guidelines (2013) published by the office of the CAG make a very similar claim-
"The allocation of substantial amounts of public funds for implementing environment programmes and schemes in the annual budgets enhances the scope of environmental audit."[3]
Environmental audits perform two-fold functions. They inform the general public of the adequacy of government efforts in protecting the environment, whilst also aiding the government in dealing with the climate crisis. The role of the CAG, in this framework, is to verify the information provided by government organisations about their activities and the related environmental impact. The precise objective of each audit will vary depending on the type of audit performed.
The office of the CAG regularly submits reports to the President of India under Article 151(1) of the Constitution. Such reports investigate the adequacy and effectiveness of programmes and interventions related to Pollution Control, Afforestation, Biodiversity, Environmental Education, etc. One such report was the Environmental Compliance Report (2009). At the onset, the project makes clear its objective of creating “awareness and urgency”[4] about conservation and protection of the environment. An incident of such audits is the evaluation of nodal agencies in charge of the subject area of the audit. For example, a report on the afforestation programmes would also shed light on the workings of the Ministry of Environment and Forests.
Categories of Environmental Audits
There are three primary subsets of Environmental Audits, i.e., financial audits, regulatory and compliance audits, and performance audits. Financial audits ensure that an identified financial reporting framework gets followed for all project implementation. The framework should account for “environmental costs, obligations, impacts and outcomes.”[5] Compliance Audits, on the other hand, evaluate whether governmental actions are carried out in conformity with pertinent environmental laws and standards. Lastly, Performance Audits provide assure the economy, efficiency, and effectiveness of Environmental Programmes. This involves investigating intended and latent, direct and indirect effects of programmes. An aggregate study of the three evaluation methods describes the degree to which a programme has achieved its goals. Before an Environmental Audit is carried out, the auditor should have a clear picture of its aims and purview. In addition to the standard dimensions (financial, compliance, and performance audits), there may be other environment-related audits.
Conclusion: “A Part of the Solution”
The past 20 years have witnessed heightened global awareness of environmental issues, leading to a rethinking of the roles and duties of the government. A major incident of the expansion in climate literacy is the demand that organisations be held liable for actions that adversely impact the environment. As noted by INTOSAI, the climate crisis cannot be reversed overnight by Supreme Audit Institutions (SAIs). Nevertheless, tools like Environmental Audits could form a part of the solution. The general public has confidence in the objectivity of the workings of the Comptroller and Auditor General. The following passage from the Audit Guidelines, 2013(cited above) fittingly illustrates this point:
“Considering the growing concern over environmental degradation and climate change across the world, the findings and conclusions of the SAI…will have increasing acceptance and are sure to influence the process of decision making at national and regional levels.”
The SIA plays a crucial role in sensitising policy makers by highlighting the existing deficiencies and encouraging them to view environmental challenges holistically. The performance of entities and schemes (and their conformity with established laws) can only be reliably assessed by the conscientious efforts of the CAG. Such an assessment is indispensable for combatting environmental degradation. This endeavour should include testing the availability, effectiveness, and compatibility of an Environment Management System (EMS) with international standards. In conclusion,
“Trends towards environmental degradation can be slowed and even reversed by active governmental interventions. In this context, public auditors must play a greater role in the evaluation of governments’ efforts in conservation and protection of the environment.”[6]
[1] Ministry of External Affairs, https://www.mea.gov.in/Speeches-Statements.htm?dtl/34466 (last visited 1st September, 2022) [2] The World Bank, http://web.worldbank.org/archive/website01541/WEB/0__-1137.HTM (last visited 1st September, 2022) [3] The Comptroller and Auditor General of India, The Comptroller and Auditor General of India, https://cag.gov.in/uploads/media/EA-Manual-FINAL1-9-20200729114112.pdf (last visited 1st September, 2022) [4] Comptroller and Auditor General of India, Report No. 17 of 2010-11, https://cag.gov.in/en/audit-report/details/3213 [5] Ibid. at Pg. 42 [6] The Comptroller and Auditor General of India, https://cag.gov.in/uploads/media/EA-Manual-FINAL1-9-20200729114112.pdf (last visited 1st September, 2022)
This post is authored by Harsh, student of Hidayatullah National Law University, pursuing (BA LLB).