Introduction
The Environment Audit Rules, 2025 (“the Rules”) notified by the Ministry of Environment, Forest and Climate Change on 29 August 2025, represent a far-reaching administrative intervention in India’s environmental compliance architecture.
The Rules attempt to institutionalise a system of structured, periodic auditing of projects, processes, and activities that have environmental impact. They are explicitly grounded in the powers conferred on the Central Government under Sections 3, 6, 20 and 25 of the Environment (Protection) Act (“EPA”) and are designed to supplement existing mechanisms by creating a professional class of registered environment auditors. The expectation is that a credible audit mechanism will generate reliable environmental data, encourage self-compliance, and enable green finance instruments. Conceptually, therefore, the Rules seek to reimagine compliance as a continuous, data-driven process rather than a static approval.
However, in this article, we explore the potential pitfalls of these rules. First, we take a broad look at the operational structure and legal framework of the Rules. Then, we explore two possible critiques: the uneven distribution of authority between auditors and regulators, as well as the limited transparency around audit findings and the impact this has on Procedural Environmental Rights of stakeholders. Thus, we argue that the Rules, though intended as a move in the right direction, must see further improvement to operationalize a proactive environmental management regime.
The Legal Framework and Operational Structure
The Rules define “Certified Environment Auditor” as an individual accredited by a designated agency, and a “Registered Environment Auditor” as an individual or a firm comprising two or more certified auditors. The “Environment Audit Designated Agency” (“EADA“) is a body notified by the Central Government to conduct examinations, register auditors, monitor performance, and organise training. “Green approvals” collectively refers to all licences, authorisations, and clearances issued under the principal environmental enactments: the EPA, the Air Act, the Water Act, Forest (Conservation) Act, and the Wildlife (Protection) Act. The “environment audit” itself is defined expansively as any systematic verification, inspection, or analysis of a project, activity, or process having a bearing on the environment, carried out by a registered auditor.
The auditor’s duties include undertaking environmental audits, conducting sampling and analysis of emissions, effluents, and waste, assessing pollution control systems, reporting violations, and computing environmental compensation where directed. Auditors may also verify self-compliance reports and perform verification functions under the Green Credit Rules, the Ecomark Rules, or under Environmental Impact Assessment (“EIA”) and Coastal Regulation Zone notifications. The EADA certifies and registers auditors, monitors their performance, and maintains a public register.
The scheme incorporates a code of conduct requiring integrity, independence, and confidentiality (Rule 11). Projects are assigned through random selection (Rule 13), with overall supervision by a steering committee chaired by an Additional Secretary (Rule 15). The government retains powers to issue directions, resolve conflicts, and clarify interpretive issues. Notably, if an auditor’s findings conflict with those of a government officer, the latter’s report prevails, subject to written reasons and approval at the Joint Secretary level.
Potential Pitfalls and Systemic Contradictions
The Rules are extensive in nature, covering a variety of situations. However, they have certain weaknesses that threaten to blunt their effectiveness. This section examines two such central weaknesses: the uneven distribution of authority between auditors and regulators, and the limited transparency around audit findings. Together, they illustrate how structural imbalance and restricted access to information may weaken the Rules’ effectiveness.
- Asymmetrical Authority
A fundamental difficulty arises from the asymmetrical distribution of authority between private auditors and public regulators. Rule 16(2) provides that, in the event of a conflict, reports prepared by government officials shall prevail over those of registered environment auditors. This provision effectively strips private audits of any binding or even persuasive authority, relegating them to a purely advisory status.
The problem is not merely one of hierarchy but of institutional design. Stakeholders are now expected to invest in certified audits that can be overruled at the discretion of a regulator. The unpredictability this introduces undermines the very rationale for creating an accredited audit mechanism. A company that has complied with all procedural formalities (hiring a registered auditor, submitting detailed data, and implementing suggested corrective measures) may still find its audit rendered meaningless if a government official issues a contradictory finding.
The rule also risks spawning bureaucratic duplication. By retaining the power to override audit outcomes, the government essentially preserves two parallel verification systems: one external, one internal, without clarifying their respective scopes. Instead of reducing administrative burden through professionalised third-party audits, the framework may increase transaction costs. Regulators, uncertain about the legal weight of private reports, may insist on their own inspections before accepting any conclusions. This can lead to procedural congestion and deter investment.
A related concern is that privately commissioned auditors may face structural incentives to present findings favourable to their clients, which may necessitate a government audit as well. However, prioritising government verification over private audit reports does not meaningfully resolve this problem. Instead, it creates two distinct problems. The first, as identified above, is that it merely substitutes one opaque decision-maker for another, while retaining the costs of both systems. Second, as has been argued, a government audit does not allay concerns of bias for government companies. Thus, if the objective is to address auditor bias, a more proportionate response may lie in stricter accreditation standards, randomised audit allocation, disclosure of conflicts of interest, or ex post liability for negligent or misleading reports. The current framework instead preserves executive discretion without correcting the underlying incentive distortion.
Alternatively, t a tiered authority model may be adopted as well. Audit reports could be accorded prima facie validity, binding unless rebutted by evidence of procedural irregularity, conflict of interest, or material error. The government’s role should be supervisory rather than substitutive, focused on sampling and verification rather than on wholly overriding. Another approach could involve joint validation, where regulators review a random subset of audit outcomes and issue concurrence or objections within a defined timeframe. This would preserve governmental oversight while still giving audits operational meaning. Additionally, the Rules could specify standardised conflict-resolution mechanisms, for instance, requiring written reasoning for any government departure from an audit finding, subject to review by the Steering Committee under Rule 15. While this may be read in judicially, a clarification would circumvent avoidable regulatory costs. Such procedural checks would not only safeguard auditor credibility but also align with administrative law principles of reasoned decision-making and proportionality. Without them, Rule 16(2) risks collapsing the intended balance between regulatory supervision and professional independence into a hierarchy that serves neither efficiency nor accountability.
- Transparency and the Environmental Procedural Rights
Transparency is another area of concern. Although the Rules require a public register of auditors (Rule 5), they do not mandate publication of audit reports. Environmental audit data (covering emissions, violations, and corrective measures) is essential for public participation and for investors evaluating ESG compliance. Keeping such information confidential between the government, auditor, and project proponent contradicts the constitutional jurisprudence developed in cases such as Vellore Citizens Welfare Forum v. Union of India, which affirmed the right to environmental information as a part of Article 21 of the Constitution of India. The same has been observed in the context of Art. 19(1)(a), concerned with the right to freedom of speech and expression as well.
This becomes especially relevant in the context of Procedural Environmental Rights (“PERs”), a topic that has seen recent discourse in the Indian context as well . The three components of PERs are: access to environmental information, public participation in environmental decision-making, and access to environmental justice. These are embodied in Principle 10 to the Rio Declaration on Environment and Development, 1992, with the access to environmental information pillar seen in Section 3 to the EPA. While these are primarily concerned with the right to information regarding environmental pollution, we submit the same should apply more broadly as well, in line with the understanding of PERs as being crucial to realising a substantive right to a clean environment As Gill argues, PERs may manifest in the form of participation parity or access to justice. This may be, for instance, assessed by determining the contours of legal ‘standing’ and checking for who can approach courts for relief in environmental matters.
The rationale for extending the right to environmental information beyond pollution-specific contexts lies in the normative structure of environmental rights themselves. PERs are not confined to data about pollutants or emissions; rather, they embody the principle that environmental decision-making must be transparent, participatory, and accountable. Access to information, in this sense, is not only instrumental to reducing pollution but fundamental to enabling citizens to monitor the State and private actors, to participate in policy design, and to secure compliance with environmental norms. Thus, the right to environmental information, even beyond pollution data, is an essential condition for participatory governance and environmental democracy. Given the recognition of the right to access information under Article 19(1)(a), the very fact of information being accessible is intrinsically desirable, as observed by the Supreme Court in the Electoral Bonds Case (ADR v. Union of India). In other words, it represents the democratisation of information and ensures public trust/approval in environmental projects.
The dissemination of such information is crucial for instrumental reasons as well. First, access to information is the foundation for the other procedural rights, as citizens cannot effectively discharge their fundamental duty to protect the environment under Art. 51A(g) without opportunities for accessing information. Second, in decision-making processes, such as the EIA procedure, it is considered imperative for the affected person to be fully informed of the project proponent’s Environmental Management Plan (“EMP”) for dealing with likely environmental damage. The public disclosure of the EC letter, making its factum and content easily accessible to a common person, is necessary to enable a potential appellant to successfully utilize their appeal right before the National Green Tribunal (“NGT”). Consequently, it can be seen that PERs help secure substantive environmental rights.
This logic underpins the broader argument that dissemination of audit information must be an integral part of the Rules. The transparency obligations inherent in Article 19(1)(a) and the procedural rights embodied in international and domestic law would be hollow if environmental audits which are intended precisely to verify compliance remain confidential. Moreover, PERs are interdependent. Access to information enables participation, and participation, in turn, facilitates access to justice. When audit data is publicly available, citizens can question deficient mitigation plans, identify non-compliance, and invoke remedies before forums such as the National Green Tribunal. Public dissemination therefore transforms audits from internal administrative exercises into mechanisms that secure substantive environmental rights. It operationalises the constitutional vision of informed environmental citizenship under Articles 21, 19(1)(a), and 51A(g). Accordingly, the duty to publish environmental audit reports flows naturally from the logic of PERs: information access is not ancillary to environmental protection but constitutive of it.
Conclusion
The idea underlying the rules that environmental compliance should be continuous, data-driven, and professionally verified is sound and, in our opinion, desirable. Properly implemented, environmental audits could provide the empirical foundation for a transition from reactive enforcement to proactive management. To achieve that goal, however, the framework requires further refinement. The most immediate reform would be to provide for public disclosure of audit summaries, giving communities access to environmental performance data. Moreover, establishing an independent appellate body and a professional council for auditors would strengthen accountability and safeguard independence.
In conclusion, the Environment Audit Rules, 2025 embody both promise and peril. They promise a modern, integrated compliance framework capable of aligning India’s environmental governance with global sustainability norms. Yet, they also risk reproducing the proceduralism that has long plagued environmental regulation of transparency, accountability, and participation are not hard-wired into the system. Ultimately, the effectiveness of the Environment Audit Rules, 2025 will hinge on how well they translate their progressive intent into implementation.
[Ed Note: This piece was edited by Aditi Bhojnagarwala and published by Vedang from the Student Editorial Team.]
