On 29 August 2025, the Ministry of Environment, Forest and Climate Change, Government of India (MoEF&CC) notified the Environment Audit Rules, 2025 (Rules) under the Environment (Protection) Act, 1986 marking a development in India's environmental governance. The Rules introduce a structured framework for independent environmental audits aimed at improving compliance, transparency and accountability in environmental regulation.
The Rules prescribe setting up of an Environment Audit Designated Agency which will be notified by the central government from time to time and will be responsible for overall management of the environment audit regime. It will also be responsible for certifying, registering and monitoring the performance of Environment Auditors. It would prescribe the eligibility, required qualifications and screening and examination systems for such Environment Auditors.
The Environment Auditors would be certified and registered by the Environment Audit Designated Agency and their role and responsibilities would include but would not be limited to the following:-
- Undertaking environmental audits of projects, activities, and processes governed by relevant laws and regulations.
- Conducting sampling, analysis, and evaluation of emissions, effluents, waste management systems and pollution control measures.
- Reporting violations or non-compliance and calculating environment compensation as required.
- Preparing, submitting, and verifying environment audit reports and self-compliance reports.
- Performing audits and verification activities as assigned by authorities under applicable environmental frameworks such as Green Credit Rules, Ecomark Rules, Extended Producer Responsibility frameworks under various waste management rules, Environment Impact Assessment Notification, Coastal Regulation Zone Notifications etc.
The Rules prescribe two methods for certification of Environmental Auditors though recognition of prior learning and through national certification examination the details of which would be provided by the central government. The Rules also prescribe for formation of a steering committee which would be responsible for the implementation, monitoring, and supervision of the Rules.
Under the Rules, the Central Government has the power to give directions or issue guidelines in order to ensure effective implementation of the Rules. To ensure impartiality and prevent any conflict of interest, the Rules provide that the Environment Auditors will be randomly assigned to projects and that Environment Auditors shall not undertake audits of related parties such as those in which they have financial stake or have provided services to before etc.
Further in case of a conflict between audit reports submitted by a Registered Environment Auditor and reports submitted by a Central or State Government official, the report of the official shall be deemed to be final, and shall prevail for reasons to be recorded in writing and after due approval of the Joint Secretary or equivalent level officer-in-charge of the affairs of Environment Auditors.
The Rules are one among the several initiatives undertaken by the Government of India to reinforce environmental governance and advance its commitments on climate action, sustainable development, and the principles of LiFE (Lifestyle for Environment). By institutionalising independent audits, the framework also supports the broader ecosystem of Environmental, Social, and Governance (ESG) disclosures, green finance, carbon markets, and other market-based mechanisms that incentivise positive environmental actions.
The audit regime is designed to supplement the current monitoring and compliance framework and is expected to ease the burden on the Central Pollution Control Board (CPCB), the Regional Offices of the MoEF&CC, and the State PCBs/Pollution Control Committees. The regime would help bridge the existing manpower, resources and infrastructure gaps and other limitations faced by regulatory authorities and while it will result in a higher compliance burden for the industry, it will help ensure greater transparency, enforceability, accountability and effective monitoring of environmental compliance across the nation. These audits will also help implement many of the government schemes such as the ESG disclosure requirement and ESG ratings by SEBI, carbon trading scheme, green credit scheme, compensatory afforestation, green bonds, climate financing and more. Therefore, these Rules are a crucial step in moving from mere compliance to bonafide sustainability.
Authors: Vanita Bhargava, Partner, Nandita Chauhan, Principal Associate and Tijil Thakur, Associate at Khaitan & Co. Views are personal.