The curious case of mandatory CSR in India: Instance of a paradigm shift or an ineffectual imposition?

Abstract

As per the section 135 of the Companies Act, 2013, which came into effect from April, 2014, corporate social responsibility (CSR) expenditure became mandatory for eligible companies in India. As a result, India became one of the few countries in the world where CSR practice and expenditure is compulsory for business houses. Today, the world witnesses a rising and ever-bolstering demand for socially responsible behavior by the transnational mega corporations. Numerous multilateral agreements such as the UN Global Compact, the UN Sustainable Development Goals, the environment, society, governance (ESG) Indexes, and the sustainability investment funds reflect the recognition of the crucial role that corporations can have in building a sustainable future for the planet and its inhabitants. In the backdrop of these developments, how should a manager view the law of compulsory CSR which came into force in India? The case study examines the arguments put forth by those who defend the provision as a means of transforming corporations into proactive agents of social change, and those who are skeptical of its efficacy. The case study tries to juxtapose the debates over the significance of compulsory CSR practices, with the various theoretical formulations of the meaning and relevance of corporate social responsibility itself.