Industries that have an environmental impact will now be required to allocate at least 5 percent of their Corporate Social Responsibility (CSR) spending toward environmental protection and enhancement.

This requirement is outlined in the Professional Social Responsibility Implementation Procedures, 2025 , issued by the Ministry of Industry, Commerce and Supplies. The procedure sets a minimum spending threshold for industries obliged to conduct an Initial Environmental Examination (IEE) or Environmental Impact Assessment (EIA).

The procedures apply to industries across various sectors, including those operating storage yards for construction materials with investments exceeding Rs 50 million in machinery and equipment, distilleries and breweries with a daily capacity of up to 500,000 liters, and industries producing beverages, vegetable ghee, or edible oil. It also covers tea, coffee, and herb processing plants with daily processing capacities above 1 metric ton, sugar mills producing up to 3,000 metric tons per day, and food industries with daily production above 10 metric tons. Additionally, the regulation applies to leather processing facilities handling up to 15,000 square feet daily, and industries producing items such as bitumen, batteries, jute, incense sticks, and those assembling vehicles or producing cigarettes and matches, depending on their investment and capacity.

The provision has been made mandatory under Sub-rule 2 of Rule 43 of the Industrial Business Regulations, 2021. It stipulates that the allocated CSR budget for environmental protection must not be spent for the profit of the business itself or directed to programs or individuals associated with the business, including shareholders or affiliated organizations.

Khagendra Bahadur Basnet, Director of the Technology and Environment Branch at the Department of Industry, said this is the first time such a provision has been introduced for industries. According to him, the 5 percent CSR spending rule will apply specifically to industries that have been designated by the Ministry of Forests and Environment to carry out an IEE or EIA.

Industries required to conduct an Environmental Impact Assessment (EIA) include those with investments exceeding Rs 2 billion in machinery and equipment—excluding sectors like software development, online services, internet, radio broadcasting, or consulting using digital tools. Other industries requiring EIAs are large-scale distilleries with production capacities above 500,000 liters per day, pulp and paper mills producing over 100 metric tons daily, cement and clinker plants producing more than 3,000 metric tons daily, and lime production units with the same threshold. Mineral processing industries with large capital investments, and those generating over 40 megawatts of renewable energy for internal use, also fall under this category. In total, 31 industrial sectors must conduct an EIA, while the Ministry of Forests has identified 80 types of industries requiring preliminary environmental screening.

The CSR spending provision stems from the Industrial Business Act, 2019 , which mandates that medium and large industries, or small and cottage industries with annual revenues above Rs 150 million, must allocate at least 1 percent of their annual net profits toward CSR activities. Basnet clarified that the new procedure now mandates that 5 percent of this CSR allocation be directed specifically to environmental protection.

Previously, there was no such provision tying CSR spending directly to environmental sustainability. The Environment Protection Regulations, 2020 , introduced by the Ministry of Forests and Environment, guide the need for IEE and EIA based on industry investment and capacity, and the new procedures aim to reinforce those regulations by ensuring industries also invest in mitigating their ecological impact.