Law and Corporate Social Responsibility (CSR)

Neetu Sharma, September 2016

On April 1, 2014, India became the first country to legally mandate corporate social responsibility (CSR). The new rules in Section 135 of India’s Companies Act made it mandatory for companies of a certain turnover and profitability to spend 2% of their average net profit for the past three years on CSR. While in theory CSR has traditionally meant as « Corporate Social Responsibility (CSR) is a Company’s commitment to operate in an economically, socially and environmentally sustainable manner, while recognizing the interests of its stakeholders » in the new CSR Law it entails allocation and spending of 2% of the net profit by the companies with turn over of over INR 5000 crores and net profit of INR 500 crores, on social development. While its seems a very welcome step that explores the transformative role of law, taken towards the social development, the analysis of the refurbished legal understanding and its efficacy in addressing the issue of climate change tell a different story. Not only the issue of environment has not been dealt with adequately by the corporates, earmarked funds for CSR have also been diverted through various unscrupulous means such as creation of foundation and payment of own employees. Financial analysis has also pointed towards huge under spending of CSR funds as well by the companies. India is currently making attempts to plug these gaps and make CSR effective in its true spirit.

This analysis of experiential insights of applying responsibility framework traces the origin of the phenomenon ‘rights and responsibility’ framework in South Asian context.

This case study/analysis is based on the original reference text ‘Presentation of A proposal for The Charter of Human Responsibilities’ and ‘Towards Cultures of Responsibilities -Engaging With Human Rights Defenders on Ethics, Rights and Responsibilities’, edited by Dr. John Clammer and Sudha.S,- A document on reflection of a series of dialogues with individual and socio professional groups on Ethics, Rights and Responsibilities and consultations with the civil society organisations, professionals and eminent jurists and academic in India and the rest of South Asia.

Downloads: csr_law_and_climate_change_-_india.pdf (490 KiB)