Corporate Responsibility in India: Academic Perspectives on the Companies Act 2013

Abstract

Developing prosperous and inclusive societies requires a reformulation of the business-society nexus toward sustainability. This means that all economically motivated behaviors of firms also need to consider their social and environmental impact, and all social and environmental policies their impact on the business sector and the economy. With the Companies Act 2013, the Indian government adopted a legislative approach to reconfigure the business-society nexus. Mandating what has been considered discretionary elicited an extensive academic debate. To study this India-specific political corporate social responsibility (CSR), we employ Content Configuration Analysis on 70 local and international English-language book chapters, research articles, reports, reviews, and expert commentaries published between 2013 and 2019 to develop a typology of the advantages and disadvantages associated with the Companies Act 2013. Among a large number of positions for and against the Act, we find that arguments extolling its advantages concurrently appear as disadvantages in other texts. This paradox is indicative of the difficulties of satisfying stakeholder expectations, as well as the complexities corporate responsibility programs face in India. Nonetheless, CSR as a policy tool allows the Indian government to instrumentalize the growing success of the business sector to address local and national needs and expectations. By systematizing the opportunities and challenges associated with the Companies Act 2013, we show how, similar to China, context and culture influence India's socioeconomic development trajectory beyond the conventional market economy canon. Our analyses reveal how advantages and disadvantages are frequently connected to multiple stakeholders, including the government, business, and society. We conclude by highlighting the contribution this study makes to the field of political CSR.

Reimagining Corporate Social Responsibility in the Era of COVID-19: Embedding Resilience and Promoting Corporate Social Competence

“…If made mandatory, CSR policy is an ex ante legislative approach that prescribes and specifies CSR activities in the future. Ex ante rather than ex post regulatory instruments [97] for corporate behaviours, such as the corporate duty to draft, publicise, and enforce CSR policy, focus on a proactive attention to policy and rules that will have an impact on directors' compliance and their behaviours, so as to develop and plan for ethical, justiceoriented behaviours rather than engaging in an ex post analysis of outputs with the focus on corrective and distributive justice. Such a mandatory ex ante approach will direct future corporate behaviour and enable directors to reach broader goals beyond the triple bottom line [98].…”

CSR practices and Sustainable Development Goals: Exploring the connections in Indian context

“…Drawing the convergences and divergences between SDGs and Schedule VII is quite important so as to identify whether the CSR efforts are directed to the SDGs or not. In India, the microactivities or Schedule VII of the Companies Act 2013 have linkages with the macro SDGs (Bergman et al, 2019). SDGs are intended on the basis of People, Planet, Prosperity, Peace, and Partnerships known as the 5Ps of purposes and principles of the Charter of the UN.…”

“…However, due to the “comply or explain” principle, it was argued that the legislation reflects corporate favoritism (Bergman et al, 2019). After long years of silence, the Narendra Modi led NDA government planned to bring structural changes in the CSR provisions.…”

Changing CSR practices of corporates – a study of institutionalization of mandated corporate social responsibility in India

“…Corporate social responsibility (CSR), till recently, has been understood as a voluntary act (Sarkar and Sarkar, 2015), but the recent adoption of legal frameworks by countries such as Indonesia, France, Denmark and the latest development in India has challenged the voluntary notions of CSR (Bergman et al , 2019; Sarkar and Sarkar, 2015) and attempted to institutionalize it. The Indian Companies Act, 2013, has made CSR spending and reporting mandatory for specific categories of companies to bring homogenization in the practices of corporates (Bergman et al , 2019; Ministry of Law & Justice 2013, 2013; Sarkar and Sarkar, 2015). In this natural experiment from voluntary to mandatory form, the paper explores how the CSR legislation has changed and institutionalized corporates’ practices of organizing CSR in India.…”

“…Specifically, the Indian Government’s CSR guidelines (known as department of public enterprises DPE guidelines) for central public-sector enterprises (CPSEs) pushed them toward compliance rather than making CSR a part of their core practices (Sharma, 2013; Shukla and Donovan, 2014). The voluntary guidelines could not compel corporates to adhere to the norms and institutionalize practices among corporates; resultantly CSR’s uptake was low (Raju, 2014; Sarkar and Sarkar, 2015; Shukla and Donovan, 2014; Bergman et al , 2019). It was reported that only large firms with high net worth, profits, sales and age were spending on CSR activities and reporting them (Sarkar and Sarkar, 2015).…”