Legislated Corporate Social Responsibility (CSR) in India: The Law and Practicalities of its Compliance

When India enacted the Companies Act, 2013, it became one of the few countries of the world to make Corporate Social Responsibility (CSR), a legal obligation for a large number of Indian companies. Using a comprehensive analysis of companies’ CSR disclosures and the interviews of relevant stakeholders, this article provides a bird’s-eye view on the major issues plaguing the current regulatory framework on CSR in India. In addition, this article highlights the major differences between privately owned and government companies on their motivations, approaches and challenges to the implementation and enforcement of CSR law of India. This article finds that the Indian CSR regulations are excessively broad and provide wide flexibilities that are possibly being misused, and hence, need legislative amendments to make them more concise, and improve accountability and transparency. From a broader corporate law perspective, this article finds that while the current company law in India may have adopted a more stakeholder-centric approach by its construction, the approach of many companies towards the enforcement and implementation of CSR and the law remains essentially shareholder centric. In light of the above observations, the article suggests that the existing regulatory framework needs to be strengthened with several legislative measures such as stricter auditing and monitoring measures for third-party implementing agencies and pre-and post-project impact assessment mechanisms.