Sustainable Development Goals
Abstract/Objectives
In recent years, Corporate Social Responsibility (CSR) has garnered substantial attention as a means to achieve sustainable development. Notably, India became the first nation to legally mandate specific expenditures on CSR for corporate entities, in accordance with criteria such as profit, income, or net worth. This followed an amendment to the Companies Act, 2013 in April 2014, which also stipulated the activities and areas that would qualify for this purpose. This thesis delves into the intricacies of Section 135 of India’s Companies Act, 2013, which pertains to CSR. It clarifies the criteria requiring companies to contribute two percent of their average net profit over the preceding three years to CSR activities. In instances where firms fail to fulfill this obligation, they are mandated by the board to provide a rationale for their non-compliance. The research further aims to evaluate the potential impact of mandatory CSR regulation on corporate CSR expenditure, analysing the evolution of CSR in India before and after the legislation was enacted in 2013. The factors promoting and impeding CSR expenditure are also examined in depth. Primary data was collected via expert interviews and surveys, along with databases such as the Companies Act of 2013, Ministry of Corporate Affairs websites, National CSR portal, and the Indian Institute of Corporate Affairs. Upon evaluation of the gathered data, the research concludes that there has been a significant upswing in CSR activities among firms affected by Section 135.
Results/Contributions

Over the past two decades, there has been significant emphasis in economic studies on the role of law for economic development. This research proposes that the origin and nature of a nation's legal system significantly influence its economic performance. Theories suggest that common law nations often exhibit more economic development than civil law nations, due to their stronger support of the market economy and better protection of shareholders' interests. The role of legal institutions in economic growth, especially in developing countries, is gaining attention.

However, the outcomes of instituting common law in emerging economies have often been unsatisfactory. Notably, China has shown remarkable economic growth, even in the absence of strong legal institutions. Hence, it's argued that legal institutions might not always be crucial for economic growth, given that other rules or institutions (such as social norms or a strong government) can serve as substitutes. Thus, it remains unclear why legal systems vary among nations and whether these differences can be solely explained by economics.

In the Indian context, the mandated Corporate Social Responsibility (CSR) has had a positive impact on the corporate sector's social obligations. The transition from voluntary to mandatory CSR has led to a significant increase in CSR reporting and expenditure since 2014. However, CSR contributions have decreased significantly in recent years due to the Covid-19 pandemic. Despite the challenges ahead, a well-structured guidance system for CSR could assist the government in addressing issues such as poverty, illiteracy, and gender inequality in India.

Keywords
Corporate Social ResponsibilityMandatedCompanies Act2013; IndiaCSR EffectivenessMotivationsChallenges
References