Environmental Insolvency: Integrating ESG Risk Assessment In The Corporate Restructuring
- IJLLR Journal
- 21 minutes ago
- 1 min read
Mohan Kumar N, LLM, Amity Law School, Amity University, Bengaluru.
Jyotirmoy Banerjee, Assistant Professor, Amity Law School, Amity University, Bengaluru.
ABSTRACT
This research explores the intersection of environmental concerns and insolvency proceedings within India's legal framework. Corporate restructuring processes often overlook environmental liabilities. This oversight creates significant risks for creditors, communities, and ecosystems. The Insolvency and Bankruptcy Code, 2016 (IBC) lacks explicit provisions for environmental liability assessment. Companies undergoing restructuring frequently escape environmental obligations. The resulting “environmental insolvency” threatens sustainable development goals. This paper examines how Environmental, Social, and Governance (ESG) risk metrics can be integrated into insolvency proceedings. ESG considerations remain peripheral in India's bankruptcy regime despite growing global emphasis. The National Green Tribunal has attempted to address this gap through judicial interventions. However, systematic frameworks remain absent. This research analyzes comparative approaches from jurisdictions like the EU and US. It proposes legislative amendments to the IBC for mandatory ESG risk assessments. The paper recommends regulatory guidelines for valuation of environmental liabilities. It advocates for institutional capacity building among resolution professionals and adjudicating authorities. The findings contribute to developing an environmentally conscious insolvency regime that balances economic recovery with ecological protection.
Keywords: Environmental Insolvency, ESG Integration, Corporate Restructuring, Environmental Liability, Corporate Governance, Sustainable Restructuring.
