Taking Stock of India’s Mandatory CSR Legislation Four Years Out
In 2013, India adopted a mandatory “comply or explain” corporate social responsibility (CSR) law requiring companies to spend 2% of their net profits on local social causes or explain—in their annual reports and on their websites—why they have failed to do so. With the five-year anniversary of this legislation approaching, the Duke Human Rights Center at the Kenan Institute for Ethics recently held a two-day workshop with the goal of taking stock of the law and its impact, focusing on both the philanthropic and corporate responsibility landscapes.
Practitioners from a wide variety of fields, including academic scholars and business leaders from both the U.S. and India, gathered at KIE on June 4th and 5th, to discuss conceptual, empirical, and policy-related questions related to CSRs. The workshop was funded by the Duke India Initiative.
Suzanne Katzenstein, research scholar and the project director at the Duke Human Rights Center at the Kenan Institute for Ethics, as well as the workshop’s organizer, has long been interested in India’s CSR law. “Considering how unusual and innovative it is, there has been very little interdisciplinary conversation about the law, and even less discussion between academics and practitioners,” she says. “This workshop seemed ideal: bringing people together, who normally don’t have the opportunity to interact, to reflect on and discuss the law.”
A presentation early in the conference by Shankar Venkateswaran, MBA and retired chief of the Tata Sustainability Group, acknowledged that the broader impact of the mandatory law may be that companies think of their role in society differently. “CSR legislation has the potential to rewrite the normative role of business in the community and to transform how corporations think about their role in inclusive development, in line with the National Voluntary Guidelines for Responsible Business,” he said. “At the very least, the legislation has meant that the topic has become a conversation at the board level, elevating its status.”
Other questions and issues discussed during the two days of sessions included:
- What is the objective of the 2013 CSR and how do we measure its impact? What kind of effect is the law having on poor communities it is intended to help?
- How should we understand the broader impact of the law beyond potentially affecting corporate culture? How is it changing the character and role of NGOs, as NGOs now aim to receive funds under the law? What does it signify in terms of the retrenchment of the state providing public services or the expansion of the state in channeling corporate philanthropy for certain development projects?
- How do CSRs differ across different types of companies, such as public and private? How does the law interact with corporate governance structures in India?
The “Four Years Out” workshop was a rare and valuable opportunity to have many interdisciplinary—and international—practitioners gathered together to discuss the progress, problems, and promise of CSR in India. As more and more countries around the world—and especially in Asia—learn about India’s mandatory legislation and become interested in adopting something similar, it will become increasingly important to have a consistent definition of what is meant by a CSR and procedures for how they are implemented.
As more and more countries around the world—and especially in Asia—learn about India’s mandatory CSR legislation and become enthusiastic to adopt something similar, it will become increasingly important to have a consistent definition of what is meant by CSR and how one is implemented.
“It is rare to have so many interdisciplinary practitioners gathered together to talk about the same topic. This is a great opportunity,” says Aaron Chatterji, associate professor at Duke’s Fuqua School of Business. “This is a law that has gotten so much press, that other countries are going to look at this law and say ‘we want this.’ Many people will be looking for the literature on this (type of law), to understand what they should do.”
— Emily Bowles