Tarun Khanna, Director of the South Asia Institute and Jorge Paulo Lemann Professor at Harvard Business School, wrote an op-ed in The Indian Express about corporate social responsibility, arguing that targeted investments should be driven by a knowledge of how CSR fits into company strategy.
The prospect of mandated corporate social responsibility (CSR), as directed by the India’s Companies Act, 2013, prompts revealing reactions from all and sundry. For the sceptics of organised, especially large-scale, enterprise, CSR is an oxymoron. For those who fear the encroaching hand of the state, it smacks of an incremental tax by another name (and, worse, another one that people will evade).
Nonetheless, CSR mandated by law is now a fait accompli, under the new Companies Act. Publicly traded companies exceeding certain size and profitability thresholds must spend 2 per cent of their net profits on CSR. Even prior to this, Indian corporations, like others worldwide, engaged in a spectrum of activities they deemed their social responsibility, for better or worse. Virtually all the websites of the top 10 (by revenue) publicly traded enterprises in each of India’s public and private sectors trumpet their CSR efforts. Companies feel that a stated commitment to CSR will burnish their brands and attract talent, or it might just be a managerial perquisite, that is, a licence for managers to spend on their favourite activities in the guise of doing something seemingly legitimate.