To Legislate or Not: That Is the Question—Comparing CSR Intent and Effects in Economies with Voluntary CSR and Legislated CSR

Abstract

Multinational companies (MNCs) often debate whether or not corporate social responsibility (CSR) is worthwhile pursuing, whether it is a cost for mere window dressing or whether it is an investment with promising and interesting outcomes. On the other hand, governments debate whether CSR should be legislated or voluntary. Hence, while some MNCs engage in CSR voluntarily pursuing the benefits, other MNCs are ‘forced’ to engage in CSR—regardless if they believe in the concept or not. There are various examples and approaches. Among developed economies, for example, we find Sweden who does not have CSR legislation (yet the majority of Swedish MNCs are highly active in voluntary CSR) and Denmark, Germany and Canada with various degrees of industry-specific legislation. In emerging economies, we find, for instance, Mauritius, Indonesia and India legislated CSR to cover precise monetary contributions towards the social, economic and environmental development of these countries. Whether the global economy gravitates towards some degree of responsible capitalism or not, the discussion and arguments for and against mandatory CSR is likely to increase in the near future. To contribute to the debate, this chapter describes the differences between CSR among MNCs in Sweden (a developed economy believing in voluntary CSR) and India (an emerging economy) where CSR is mandatory by law. Our research indicates that MNCs in both economies (with voluntary or legislative CSR) strategically benefits from CSR and that CSR legislation positively affects MNCs in at least one emerging economy (India).

Paper submission to the International Conference on CSR, Germany, Cologne, 1st–3rd of August, 2016.

Annexure: Schedule VII of the Companies Act, 2013

1.1 Schedule VII of the Companies Act, 2013

• (i) Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation, including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of Sanitation and making available safe drinking water;

• (ii) Promoting education, including special education and employment enhancing vocational skills especially among children, women, elderly, and the differently-abled and livelihood enhancement projects;

• (iii) Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

• (iv) Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water, including contribution to the Clean Ganga Fund set-up by the Central Government for the rejuvenation of river Ganga;

• (v) Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;

• (vi) Measures for the benefit of armed forces veterans, war widows and their dependents;

• (vii) Training to promote rural sports, nationally recognised sports, para Olympic sports and Olympic sports;

• (viii) Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government

• (ix) Rural development projects.

• (x) Slum development.