The Evolution Of Corporate Social Responsibility Legislation In India

The concept of “corporate social responsibility” originated in the United States.Because of the different perspectives and standards for looking at corporate social responsibility,scholars have not yet made a unified definition of the concept of corporate social responsibility.Most countries around the world take the approach of encouraging and guiding enterprises to voluntarily fulfill their social responsibilities.In contrast,in Section 135 of the Indian Companies Act,2013,the requirements and scope of CSR are made mandatory.This breakthrough regulation is the result of multiple reasons,such as religion,economy,politics,law,and the international environment.The development of corporate social responsibility in India has roughly undergone three stages of change: the first stage,guided by the government,from self-discipline to hetero-discipline;the second stage,through formal legislation,from voluntary to compulsory;the third stage after several legislative revisions,from soft law to hard law.So far,India’s CSR legislation imposes seemingly very tough legal obligations on companies,showing the characteristics of hard law.In fact,the legislative changes of corporate social responsibility in India are due to the lack of governance capacity of the Indian government.Unlike most western countries,the development of corporate social responsibility is out of the original intention of safeguarding public interests.India hopes to force enterprises to share their national governance tasks through the mandatory method of corporate social responsibility.However,this dislocation of subject and responsibility leads to vague requirements in its legislation and weak mechanism in its implementation,as well as the final soft law effect.This paper is divided into four chapters.The first three chapters take the legal development process of corporate social responsibility in India as a clue,and the fourth chapter summarizes and thinks.The first chapter introduces the self-discipline period and hetero-discipline period of CSR in India,and analyzes the reasons for its standardization transformation.From the pre-industrialization period to 2009,India’s corporate social responsibility was still in a state of self-discipline,which can be roughly divided into four stages of development.First,from the pre-industrialization period to 1914,influenced by Indian religious traditions,enterprises mainly engaged in philanthropy to undertake social responsibility.Second,from 1915 to 1960,with the spread of Gandhi’s trustee theory,India’s corporate social responsibility was mainly manifested in the form of promoting social development and resisting colonial rule.Third,from1961 to 1980,under the guidance of the government’s planned economic model,CSR in India is manifested in that private enterprises consciously respond to the government’s strict regulation of business.Fourth,from 1981 to 2009,after India’s economic liberalization,CSR became a new business development strategy for enterprises.Thereafter,since the release of “the Corporate Social Responsibility Voluntary Guidelines” in 2009,the Indian government has successively issued a series of guiding documents for corporate social responsibility,which regulates and guides the practice of corporate social responsibility in India.India’s corporate social responsibility has changed from self-discipline to hetero-discipline.On the one hand,it has its specific historical background and social reasons.It is not only a measure of the Indian government to reduce the resistance to domestic economic development,achieve social equity,and reduce the gap between the rich and the poor;It is also affected by the international environment,which is a kind of catering and compromise made by the Indian government to the international community in order to attract foreign investment.The second chapter introduces the legislative discussion,specific provisions and subsequent detailed rules of corporate social responsibility in the 2013 Indian Companies Act,and then analyzes the reasons why Indian corporate social responsibility has changed from voluntary rules to mandatory regulations.Before the enactment of the Indian Companies Act 2013,there was a series of legislative discussions on CSR provisions.The Indian Congress put forward different opinions and specific implementation suggestions on whether corporate social responsibility should be included in the law,and discussed the mandatory nature of the clause.From a review of the complete discussion record of the Indian Legislative Council,it can be seen that the provisions on the corporate social responsibility system in the draft new company law are not perfect,and the specific implementation rules need to be further refined.Article 135 of the “Indian Companies Act” makes mandatory requirements for corporate social responsibility,specifying the applicable conditions of mandatory corporate social responsibility,the limit on the amount of expenditure,the terms of“compliance or interpretation”,etc.;The category and scope of activities of social responsibility,which is an attempt to replace the definition of corporate social responsibility.Since there are many problems in Article 135,in 2014,the Ministry of Corporate Affairs of the Indian government formulated and issued “the Companies(Corporate Social Responsibility Policy)Rules”,which detailed the specific norms and procedures of Article 135 of the Indian Companies Act.The mandatory provisions on corporate social responsibility in the 2013 Indian Companies Act are actually follow-up measures to strengthen self-discipline to heteronomy.On the one hand,it is affected by historical background,social issues and the international external environment;At present,the mandatory CSR is also related to the economic depression,political crisis and corporate law reform in India at that time.The third chapter examines the implementation of CSR clauses in India,as well as the revision of CSR legislation after 2014 and the reasons for the revision.The mandatory provisions of corporate social responsibility have their own shortcomings,and their implementation also reflects a series of problems,indicating that the legislation of corporate social responsibility provisions in India is flawed.Judging from the legal provisions,the “compliance or interpretation” clause of Section 135 weakens the mandatory implementation,and the “minimum expenditure2%” clause limits the internal motivation of enterprises to fulfill their social responsibilities.In addition,the ambiguity of the definition of corporate social responsibility,the inherent openness,and legislative models that deviate from the core of corporate social responsibility all indicate that Section 135 of the Indian Companies Act itself has legislative flaws.As far as practice is concerned,through the inspection of the implementation of Odisha,it can be seen that the implementation of mandatory corporate social responsibility in India is arbitrary,difficult to implement for a long time,and there is a lack of external supervision in the implementation process.In response to and addressing these issues,the Indian government has revised CSR-related legislation.Following the revisions to the CSR clauses in 2019 and 2020 respectively,the Companies(Corporate Social Responsibility Policy)Rules 2014 of will be supplemented in 2021.After the new coronavirus spread in India in 2020,a series of notices were issued to guide enterprises to fulfill their social responsibilities around the prevention and control measures of the new crown epidemic,and further detailed explanations and supplementary explanations were given on the content of mandatory corporate social responsibility.The fourth chapter further considers the characteristics of corporate social responsibility in India,and explores the deep reasons behind mandatory legislation and its fundamental legal nature.India’s corporate social responsibility legislation has distinct characteristics,which are different from Western corporate social responsibility theory and practice.In terms of legislative form,India’s corporate social responsibility legislation is mandatory.In terms of legislative model,India requires companies to fund and support charitable causes in disguise,which is charitable in nature.Why corporate social responsibility in India presents the characteristics of coercion and charity? The underlying reason is that the Indian government has insufficient national governance capacity,lacks the ability to maintain a good social order and provide basic public services.Therefore,it is hoped that enterprises will be forced to share their national governance tasks through corporate social responsibility.This is the fundamental reason why India has changed the voluntary principles of CSR in the West and understood CSR in a narrow sense.Essentially,India’s mandatory corporate social responsibility has a hard-and-soft nature.India’s CSR legislation imposes seemingly very strong legal obligations on companies,exhibiting hard-law characteristics,but has de facto soft-law effects due to its vague legal requirements and weak enforcement mechanisms.