Legitimising CSR through the institutional backup – gauging compliance of the Indian corporate sector in the mandatory regime

Abstract

Purpose

This study aims to calculate the corporate social responsibility (CSR) expenditure made by companies as per the provisions of Section 135 of Companies Act 2013 and check the status of compliance/non-compliance of these provisions in the mandatory regime of CSR.

Design/methodology/approach

Based on a sample of top 500 Indian companies listed on Bombay Stock Exchange, the study compares the CSR expenditure required to be incurred by companies with the actual CSR expenditure made by them over a time span of seven years and calculates the extent of surplus or deficit attained by them starting from the year of inception of CSR provisions, 2014–2015, till the most recent year, 2020–2021.

Findings

The findings indicate that the average CSR expenditure made by Indian corporate sector is less than the mandatory requirement. More than half of the companies do not comply with the CSR regulations of the country. Even the “Most Profitable” companies fail to contribute the minimum required amount towards social activities akin to their counterparts in the “Less” and “Least” profitable categories.

Practical implications

The disobedience towards the statutory provisions implies that Indian companies are non-compliant towards CSR guidelines despite the regulative institutional pressure that makes CSR a mandatory practice to legitimise it.

Originality/value

The study contributes to the CSR literature in the light of the transformed regulative institutional environment in India. It includes a comprehensive analysis of compliance of companies with the revised statutes over all the years since the inception of new mandatory guidelines on CSR till the most recent time period on a representative sample, thus, making the findings robust and generic with respect to India.

Citation

Bhatia, A. and Dhawan, A. (2023), "Legitimising CSR through the institutional backup – gauging compliance of the Indian corporate sector in the mandatory regime", International Journal of Law and Management, Vol. 65 No. 6, pp. 614-634. https://doi.org/10.1108/IJLMA-05-2023-0104