CSR law in India

CSR Law in India - a generic viewpoint

Every business is associated with acost to its society and environment. A socially responsible business practicetakes care of both the aspects by adopting real and measurable interventionsfor its stakeholders and society as a whole. In this regard, the"Corporate Social Responsibility" (CSR) has been evolved as anintegral tool to sustainable business practices in recent time.

Probably India is the only countrywhere CSR has been mandated under its Companies Act. However, the objective ofthis CSR act was set holistically as a response to advocacy for companies toplay a pivot role in eradicating social problems. While evolved as a law in2014, the framework of Indian CSR law is based on sustainable developmentattributes which in turn commemorates the essence of Millennium DevelopmentGoals (MDGs) of United Nations. The prescribed eligibility criteria forcompanies and the accounting of CSR spend are also established in a conducive mannerthat makes the mandate easy acceptable to the companies.

But at the same time the CSR law inIndia somehow lacks a result based approach. Any mandate or policy enforcement demandsregular monitoring, review and reporting of the actions; whereas Indian CSR lawdoes not keep a provision of independent monitoring and review. Also thestructure of reporting or disclosure of CSR spend entailed by Ministry ofCorporate Affairs (MCA) is generic, remains silent on verification protocol anddoesn’t stipulate burdens of non-compliance. Therefore, it seems that theexisting framework does not emphasis on putting inclusive implementation of CSRactions, rather it relies on comply-or-explain philosophy. As the current CSRlaw is an amalgamation of voluntary actions from the companies with anobligatory social investment, hence the delivered social benefits must bereviewed by govt. on periodic manner. It will enable water-tightening thepolicy framework and augment the ethical obligation to obey the law in spirit.

Therefore, an effective MRV (i.e.Monitoring, Review and Verification) system is essential to be embedded intothe CSR framework so that outcomes are better quantifiable and CSR journeybecomes robust and sustainable in long run. Also, a periodic review inside thepolicy framework is equally important as current law provisions containindistinct idioms and somewhat permit a high degree of self-interpretationwhich can undermine the objective of the CSR legislation.