CSR: India's Mix of Mandate and Market

India has adopted a Companies Act that mandates minimum CSR spending requirements for corporations operating in that country. The new regulations apply to domestic companies and multinationals, and to public and private companies, that meet the defined monetary standards. The Act requires companies to spend two percent of the average net profit from the last three years on CSR initiatives. Companies can choose not to comply with these regulations, but must submit a disclosure about their non-compliance. There is no official penalty for non-compliance—lawmakers hope that companies will meet the CSR requirement because of public pressure and reputational concerns. It will be interesting to see if this combination of legal prescription and open market forces yields the desired intent: to increase CSR among the business community in India.

John Howell, Editorial Director