India May Make CSR Spending Mandatory

Mandatory spending on corporate social responsibility (CSR) is nearing a reality in India. Such a move may provide a signal to industrial nations around the world that CSR is no longer just a voluntary standard.

India’s Corporate Affairs Minister, Murli Deora, has circulated a draft bill requiring private enterprises to earmark 2% of the average profit of the preceding three years for CSR activities. The draft bill also requires companies to disclose to their shareholders the CSR related policies adopted by the company. How to implement the mandatory spending provision will be left to industry itself.

Murli Deora, echoing industrialist Ratan Tata’s concerns, said, “It is quite surprising that they (companies) do not spend even half a per cent of their profit in social welfare, but they forget that a prosperous society is a must for their own survival.”

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