Will legalizing corporate social responsibility get businesses to participate in welfare activities – the case of India
ISSN: 1746-5680
Article publication date: 25 May 2022
Issue publication date: 10 January 2024
Abstract
Purpose
The purpose of this study is to investigate the role and impact of state regulation of corporate social responsibility (CSR) spending on company actions and to examine whether making mandatory CSR encourages businesses to engage in social welfare projects. Additionally, the authors also investigate whether these CSR expenditures can enable India to meet the Sustainable Development Goals (SDGs) 2030.
Design/methodology/approach
CSR expenditure data from the government repository of 22,531 eligible companies in India were studied from FY2014–2015 to FY2019–2020. CSR spending is further classified according to development areas of Schedule VII of the Companies Act, 2013, and mapped with the SDGs to see which ones the corporations have prioritized.
Findings
CSR spending increased from INR 10,066 crore in 2014–2015 to INR 24,689 crore in 2019–2020. Companies have prioritized CSR expenditure on education, followed by health care and rural development. The number of companies spending more than the mandated expenditure increased by around 75% from 2014–2015 to 2019–2020. However, the “comply or explain” approach of the law has led to a major number of companies spending zero on CSR. Companies have generally concentrated on moving CSR funds to designated funds rather than using them for capacity development to instill social responsibility culture.
Originality/value
This study provides evidence of the impact of mandatory CSR expenditure on welfare activities and SDGs. Unlike previous research, the results of this study are based on CSR expenditures rather than voluntary CSR scores.
Keywords
Acknowledgements
The author(s) received no financial support for the research, authorship and/or publication of this article.
Conflict of interest: The author(s) declare that there is no conflicts of interest attached with this manuscript.
Originality statement: The author(s) certify that this is their own unique work, not previously published and is not under consideration for publication anywhere. The paper accurately represents the authors’ own research and analysis and appropriately acknowledges coauthors and coresearchers. The results are suitably contextualized, and the sources are appropriately cited. The paper’s content is the responsibility of all authors, who directly and actively contributed to its creation. The authors have not adopted any tables, contents, figures from third-person copyright material.
Data availability statement: The data that support the findings of this study are available from the corresponding author(s) upon reasonable request.
Citation
Narayanan, S. and Singh, G.A. (2024), "Will legalizing corporate social responsibility get businesses to participate in welfare activities – the case of India", Society and Business Review, Vol. 19 No. 1, pp. 1-22. https://doi.org/10.1108/SBR-10-2021-0199
Publisher
:Emerald Publishing Limited
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