CSR Policies in Different Countries: A Comparative Analysis

Abstract

This chapter discusses the policies pertaining to CSR and their implementation in different countries in comparison to Indian CSR. Precise mandate of CSR is to achieve better management of all the stakeholders and to ensure greater accountability. It may be based upon philanthropy or inclined towards transparency, ethics or community good. Environment, social and economic dimensions are the foremost priorities of almost all the nations, but main focus areas vary depending upon the national history, policies, laws etc. along with people’s preferences. The implementation of CSR is also affected by the active or passive role being performed by the government. The thrust of the chapter will be to analyse the role of the government, its goals, priorities and policies, which go in a long way to impact CSR. The legislative mandate of CSR and its implementation in India will be analysed specifically, in comparison to USA and Norway, which have better CSR rankings than India. Keywords: CSR, policies, implementation, government, ranking.

1. Introduction

Corporate Social Responsibility (CSR) ensures commitment of corporates to humanity. It is not in a charitable sense but a responsibility owed for the resource use. CSR as a coinage of legal vogue is relatively of recent provenance. As an operable concept, one cannot set finger on a definite date. It is understood to have a rough conceptualization as a business concept in 1914 when Fredrick Goff, a reputed banker established Cleveland Foundation with the objective of accepting donations from multiple sources and utilize it for philanthropic purposes [1, 2]. According to [3], the concept of CSR takes road in Rome where the ancient laws prescribed for asylums, homes for poor and old etc. This concept of social responsibility of corporations he posits was adopted in the English Law in the Middle Ages. The Crown substantialized corporations as vehicles of social development. This role of social development via corporations was then exported to the Crown’s colonies. Even before Romans, and the English systems, in India, the ancient texts, that is, the Vedas prescribed the concept of CSR although not in several and clear words. In [4], the Vedic texts are interpreted to point towards core CSR principles. Vedas mention that the economic structure should be developed on the basis of ‘Sarva loka hitam’, which means ‘wellbeing of all the stakeholders’. The ecosystem of businesses forms a big part of large economic structure and, if viewed from the Vedic perspective, it underlines the implicit social commitments that the businesses must espouse. With the pinnacle advent of ‘age of industrialization’ in the mid and late nineteenth century, new challenges for small business and labour market cropped up. To sooth the challenges, businesses introduced and began creating workplace value for the labourers in form of better working conditions [5].

The introduction of the term CSR surfaced in 1950s to chalk out the boundaries of the corporations. It was during this decade of 1950–1960 when academic scholarship gained traction for attempting to start CSR research on a social level of analyses [6]. The research provided necessary impetus for a structured system of CSR. CSR Policies of different countries are modelled on different considerations, viz., philanthropic, ethical, legal, and economic or an amalgam of these. The aim of the chapter is not to lay down a detailed map on theoretical considerations of CSR policy, rather the aim is to study the nature of CSR policies in select countries. It is imperative to know the content of the CSR policy not only from the standpoint of practical pondering and deliberations. It is equally be-telling of the government’s commitment to hold the corporations socially accountable. It has been briefly informed above that CSR like activities were majorly mandated through laws or government’s/Crown’s diktats. Placed alternatively, some external authority was required to make the businesses socially responsible. The first question that passes the mind appertains to how the business is made socially responsible? The answer though may appear to be simple by way of regulation but saying so would be far from the truth, both in theory and practice. The current research also aims to unravel the complexities that underlie in the drafting of CSR Policy. A CSR policy may be explicit, or prevail purely in practice. Again, the nature, and scope such policy varies according to several domestic considerations. For the purpose of examining, it in fair manner, comparative analysis is used. Further, the functional utility of the research lies in CSR policy reform.

The previous studies in CSR Policy reform exhibit a gap in comparative studies in CSR legal policy. In fact, it is still in its nascent stages and is labelled as an “emergent field” [7]. As correctly pointed out in [8], empirical studies produce non-comparable results owing to different operational definition of CSR. The studies in the comparative CSR field have a lot to offer from a legal policy reform perspective but have been not opted for frequently. In this light it becomes important to have a glance through the existing literature in the mentioned context. It is not intended to be a comprehensive survey of the literature. The literature points towards the growing trend of inter-country CSR study for the purposes of cross-country learnings and policy reform. No findings of the previous studies could be compared to the present study in lock, stock and barrel since the three countries selected form a unique set of analysis for comparison. Factoring this caution in mind, a brief literature survey would be helpful in establishing the gap that the required study intends to fill, in particular, and the utility of cross-country comparisons in general.

In [8], different types of comparative studies for CSR outlined which replace the unit of analysis for comparison. It posits the comparisons could be legal or institutional. The former centres on the governmental policy of CSR, while the latter on various stakeholders involved in the CSR across countries like investors, employees, top management etc. The illustrative examples are majorly drawn from the West which serves as a shortcoming [8, 9]. Later academic scholarship began becoming inclusive with comparing the west with the global south countries, for instance, with South Africa [10]. The findings of the study confirm that CSR activities depend on the socio-political settings of a country at least when UK and South Africa were compared [10]. In 2016, a breakthrough scholarship emerged that focused on multiple countries CSR policies [11]. It however missed on India and Norway as countries of study. In order to plug the scholarly gap, the current research studies US, Norway and India’s CSR policies.

In order to facilitate a systematic enquiry, the chapter is divided in four parts. The first part is the introduction itself; the second part delves into government’s role in CSR promotion generally. The next part forms the main thrust of the chapter where CSR policy of different countries are analyzed. The last part comprises of conclusion and suggestions for reforms. Comparative CSR could be in terms of continents, region like European Union or SAARC, institutions, or stakeholders. Inter-country comparisons still less picked unit of study.

Before moving on to next part, a few clarifications merit mention. First, it is impossible to be exhaustive on CSR policy of different countries but being illustrative would suffice the understanding. Second, commitment of government is assessed in terms of nature of CSR policy. Third and a related point, there may be other parameters to assess the role of government towards CSR but policy pursual on any given matter is reflective of the commitment in the strongest, thus policy is considered to be reflective of the degree of government’s commitment to CSR. Fourth, all comparisons would be arbitrary depending on the perspective and points of comparison. The countries selected for CSR policy comparison are on the basis of CSR rankings [12]. These countries as the readers will see in the following parts also exhibit eclectic approaches to CSR policy. Authors have used qualitative-doctrinal approach to research.

2. Role of government in CSR

There is a fundamental knot in understanding the governmental role in CSR fuelled by the belief of CSR being purely voluntary. The untying of knot involves answering a few pressing concerns circling around why the government should establish regulatory regime for CSR or what benefit does CSR regulation bring to the society? The answer is complex drawing from multiple standpoints which may often be cross-cutting. The factors responsible for governmental intervention to regulate CSR can be broadly classified into two, deliberate, and involuntary institutional factors.

2.1 Deliberate considerations

Government opts to control and regulate CSR for it considers it to be prudent for a variety of reasons. These reasons weigh in for the regulation of CSR through state’s arm. CSR as conceptualized here compliments the government’s efforts juxtaposition its substitution.

2.1.1 Promoting social-welfare goal

First, the government indulge in CSR regulation because it coincides with the policy broader objectives of a nation [13]. For instance, Part IV of the Indian Constitution charts out Directive Principles of State Policy (DPSP). DPSP enumerate the socio-economic justice promises that India has made to its citizens. All Indian policies ought to take directional drive towards the goal of DPSP realization [14]. For example, Article 38 directs that “the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life”. Article 41 lays down the role of the state as provider of work, education, and assistance in cases of unemployment, old age, and disablement, and in other cases of undeserved want.

That apart, states in India have been banking on CSR related activities to fulfil promises of welfare state. In Night Shelter Matters [15], civil and human rights of homeless and destitute persons under Article 21 (right to life and personal liberty) were broached before the Indian Supreme Court. Various states in India were directed to file affidavits before the Supreme Court on the steps undertaken to alleviate the misery of shelterless persons. State of Andhra Pradesh in its affidavit submitted that assistance of philanthropic organizations and corporations as a part of their CSR activities in the development of night shelters.

In PDS Matters [16], the Central Vigilance Committee which was tasked to ensure food grains distribution to the 150 poorest districts in India recognized the role of CSR initiatives towards the fulfilment of this goal. It recommended the setting up of community kitchens under the CSR Programme to serve cooked foods in the areas where people cannot afford food grains even at a subsidized price.

2.1.2 Recognition of transnational CSR

Second, having a form of regulation even though soft-regulation is perceived as conducive to global modernity. Corporations going global is a self-evident reality. To make themselves apposite to the socialization of markets, CSR is exhibited transnationally. For a host of reasons this calls for governmental intervention. It can assist the corporations in their efforts to better realize CSR. The bearing of regulation is especially acute in developing nations where the corporates can deliver cost-free education, health services, and other labour rights to the workers and their families [17]. All of this is to be understood in the backdrop of absence of global CSR framework, and labour conventions chiefly fastened the responsibility to the states. Governmental intervention can fix this international policy lacuna to certain extent and simultaneously share the responsibility of labour welfare.

2.1.3 Investors priority towards socially relevant businesses

Third, the CSR policy interventions have permanently altered the ways in which business routines were conducted. The stakeholders now look for socially relevant business and assess the difference that business corporations are making on social and environmental fronts [18]. It is widely recognized that social-impact efforts create real value for all stakeholders. The USA stands as a towering example to this fact. After 2010, a growing number of investors are seeking information on labour policies, carbon footprint, gender representation in the board room etc. [19].

2.1.4 CSR as a system of co-governance

Fourth, CSR has activated a system of co-governance. The welfare areas which hitherto were the exclusive domain of government are now being shouldered by the corporates [20]. Society’s governance is no longer a monolith under the government but is under a new tripartite governing arrangement mediating the relationships amongst the state, corporates and the civil society. CSR policy in this context lays down the ground rules for corporations.

2.2 Involuntary institutional factors

A pre-discursive CSR policy concern via government instrumentation may be posed, ‘Can a government function without CSR policy in the era of globalization?’, even theoretically. The answer is hotly debated from all sides. Afore-mentioned reasons for governmental intervention delineate the role of CSR in protection of certain valuable human rights that a state actor guarantees to the citizens. Even if one assumes the standpoint that the entire gamut of welfare activities can be insulated from the corporations, the million-dollar quagmire regarding transnational nature of corporations remains a sitting concern. The state cannot regulate corporations to their international reach and stretch. Taking these and more theoretical and practical considerations that germinate from the role of corporations in contemporary today, a class of political CSR scholars are pressing to view corporations as an important political actor.

2.2.1 Corporations as promoters of human rights

Political actor role of corporations, the scholars argue entail facilitating, and implementing certain civil, political and socio-economic rights which a citizen is legitimately expecting for the state. A level ahead expansion of this paradigm of corporations as political actors put forth the means to social ends as carrying equal importance. It is a considerate view that the corporations should have stakeholders’ consultation in discharging the mandate of CSR [21]. The entire set-up is not within a loosely hanging system based on pure volunteerism but is run within the four corners of legal policy of a nation state.

2.2.2 Corporations and popular legitimacy

The policy regulation notwithstanding non-mandatory nature is generally understood to be complied by the corporations especially the top business tycoons. These CSR compliances are believed to increase the societal acceptance of the corporations in absence of an electoral process legitimizing their existence [22]. According to [23] there are two types of legitimacy, input and output. Input legitimacy, in principle, refers to involvement of stakeholders in setting CSR standards. Output legitimacy is oriented towards the capability of the government or corporations to realize the expectations of the citizens. It is submitted that a sound CSR policy should be a combination of input and output factors. However, output factors require some further detailing due to the contextual relevance. If the government places a particular social issue on the fore-front, it is submitted that it has a potential of ‘bandwagon effect’ [24]. It implies that once a specific initiative gains societal relevance which may be deliberately brought to the fore by the government, a large number of corporations may direct its CSR initiatives towards it. The government here uses its popular appeal to exert soft pressure on corporations. The corporations on their end experience the competitive pressure. Needless to mention, there is no fixed standard to assess the performance of this proposition in objective terms. The normative appeal of the proposition lies in its inherent rationality.

The policy of government towards CSR requires separate enumeration to assess the governmental commitment to CSR. Studying the CSR policy of different countries involves only a broad overview of those policies. It excludes specific Public-Private Partnerships which may be labelled as CSR in some countries. It is so because such partnerships operate more in relation to specific contracts than as a general matter of policy.

3. Comparative analysis of CSR policies

In the above part one is familiarized with the ‘why’ of governmental involvement in CSR policy. This part compares the CSR policy of India with Norway, and USA. As mentioned in the first part, Norway and USA are chosen for comparison with India on the basis of the rankings. Some more elaboration is required which justify the countries selected for the CSR policy comparison. The head of Norway, King Harald mentioned close culture attraction to India [25]. It adds to the fact of increasing in flux of corporate investment in India by Norway which makes her one of the biggest investors to India in Northern Europe [26]. Selection of Norway as a country for comparison may serve two additional purposes. First, since the investments from Norway to India are on an upwards trajectory, the Norwegian companies will need to be appraised of Indian CSR policy and a comparison would only facilitate to deepen and smoothen the compliance with Indian CSR policy. Second, Norway would be a representative of working a CSR policy in civil law system. On a bird’s eye view, it enables the reader to appreciate the differences and synergies between CSR policies in a civil law system, here, Norway, and a common law system like India and USA.

USA is selected for comparison on two further grounds. First, USA has maximum FDI in India, reflecting the presence of American corporation in India. It makes it the biggest non-Asian country to invest in India. Otherwise, it is only second to Singapore as of 2021 [27]. Second and a simpler reason for selection of USA as a comparator is for her being a strong representative of a common law system. India is the base country with which USA and Norway are compared. India is opted as the base country again for two key reasons. First, the authors are from India and have a sufficiently better understanding of CSR policy of India. Second, the comparison can provide useful insights to revamp Indian CSR policy.

3.1 Indian CSR policy

The umbrella Company Law in India is, Companies Act, 2013 (CA, 2013) which statutorily introduced the concept of CSR in India. Its predecessor Companies Act, 1956 did not provide for CSR. However, the Ministry of Corporate Affairs introduced Voluntary CSR Guidelines in 2006 which reproduces core principles of CSR including care for all stakeholders, respect for human rights, worker’s rights and welfare, social and inclusive development etc. For implementation under the 2006 guidelines, companies were afforded with a free hand to earmark funds for CSR and activities. The 2013 Act makes a stark shift to a mandatory CSR regime. It makes discharge of CSR by the companies inescapable if it fulfils certain financial soundness criteria as per Section 135 of CA, 2013. Accordingly, CSR is mandatory in India if a corporation fulfils any one of the three enumerated criteria. First, the net worth of the corporation is at least rupees 500 crore or more. Second, its turnover is 1000 crores or more. Third, net profit of the corporation is rupees 5 crore or more. The corporations which cross any of these three mentioned limits incur a mandatory obligation to incur at least 2% of its average net profits for the immediately preceding three financial years. The CSR expenditure has a couple of legal riders. The amount spent on CSR initiatives cannot be taken by the corporation as expenses for the purposes of the business or profession. Moreover, there are no tax exemptions on CSR per se. The direction of spending qua CSR is vested in the corporation. It must constitute a committee of the Board of Directors comprising of three or more directors and this committee will lay down the CSR policy of the corporation. The corporations that spend on CSR as per its CSR policy are required to maintain the record of the same on an annual basis in its annual report. Additionally, the corporations must give preference to the local areas around where it carries it operations. All of this is required to be disclosed on the corporation’s website. Failure to comply with the prescribed CSR spending has to be justified by the Board in their CSR report [28].

Section 135 was amended in 2019 to make corporations toe the line of CSR. The amendment is pecuniarily and personally punitive. Pecuniary punitiveness requires transfer of the un-utilized funds to one of the funds mentioned in schedule VII of CA, 2013 within 6 months from the end of the financial year. If the CSR funds are tied to a continuing project, the un-utilized amount is required to be transferred to an unspent CSR account within 30 days from the end of financial year and is required to be spent within 3 years. If still the funds remain unspent after the lapse of mentioned period of 3 years, the amount is required to be transferred to one of the funds mentioned in schedule VII. The schedule enumerates several social-welfare activities, example given, eradication of hunger, poverty or promotion of education or gender equality etc. Violation of this provision may invite a fine ranging from rupees 25,000 to 25 lakhs; or it involve a personal punitive penalty where every defaulting officer may be punished with imprisonment up to 3 years; or both [29].

In addition to the legislation, the government also passed CSR Rules, 2014 which were amended in 2021. The rules minutely chart out the working of CSR mechanism in India. Dealing with all the aspects of all these rules is subject of another research work, some important points deserve a fair announcement. First, the definition of CSR under the rules is an exclusive one. It states CSR to mean activities done by the corporations in pursuance of Section 135 of CA, 2013. Rule 2(d) of CSR Rules, 2021excludes routine business activities; any activity undertaken outside India except for training of Indian sports; direct or indirect contribution to political part under Section 182 of CA, 2013; activities benefitting employees as mentioned in Section 2(k) of Code on Wages, 2017; sponsorship activities by corporations; and activities which the corporates are bound to perform by virtue of law [30].

The rule reveals inherent role that India ascribes to CSR. India contemplates role of corporations as co-partners in deliverance of social-welfare measures. Recall, as discussed in the first part, during early modern times, welfare of employees qualified as a socially responsible behaviour of the corporations. The 2021 CSR rules make it categorically definite that it is not by specifically excluding employee benefits from the definition of CSR. The claim is further buttressed by schedule VII of CA, 2013 which lays down broader agendas that can be traced to socio-economic promises made in nature of DPSP under Part IV of the Indian Constitution. For instance, Article 45 of Constitution of India, 1950 provides a progressive obligation on the state for free and compulsory education for all children till they complete 14 years of age. Schedule VII of CA, 2013 also lists spending on education as one of the CSR activities. The corporations in India cannot divulge CSR spending to activities of the kind which are alien to Schedule VII. This clarification was issued by Ministry of Corporate Affairs (MCA) in its General Circular No. 21/2014 [31]. It goes on to substantiate the mandatory role of corporations that Indian government ascribes to them in socio-economic development of the country.

The CSR activities through rule making power can be extended to suit the felt needs of the Indian society. For instance, in 2020 MCA notification number 526(E) extended the routine business of companies engaged in research and development activity of COVID-19 related vaccine, drugs and medical devices for three financial years, 2020–2021, 2021–2022, and 2022–2023 with certain conditions relating to separate disclosure of such activities in the companies’ annual reports, and mandatory partnership with one of the organizations mentioned in item (ix) to Sch. VII of CA, 2013 [32]. Further a series of amendments were introduced in the Sch. VII during the period 1st April, 2020 to 31st March, 2021 to encourage the flow of funds of companies towards national issues. Contributions made to Prime Minister’s Citizen Assistance and Relief in Emergency Situation Fund, Central Armed Police Force, Central Paramilitary veterans and their dependents including windows are also counted in CSR activities now. Moreover, contributions to Public Funded Universities and autonomous bodies under Department of Science and Technology, Department of Biotechnology etc. that conduct research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goas also qualify for CSR [32, 33]. These recent amendments exhibit the India’s stance on CSR which is sensitive to the prevailing currents of the society. The Indian CSR’s official website acknowledges the public-private partnership through CSR in transforming India [34].

3.2 Norwegian CSR policy

Gro Harlem Brundtlan, three times Norway’s Prime Minister (1974–1979) and before it, once was the Environment Affairs Minister hard pressed for Norway to be a leading role model in CSR. This ethical approach of Norway has deeper historical roots than Brundtlan’s leadership. The Hague movement of Norway influenced the businesses in early 19th century. The movement mooted for carrying business with an appeal to the higher purpose- God. For instance, one of the important tenets of the movement was fair treatment to the employees [35]. The movement can still find reverberations in Norway’s approach to CSR.

The Norwegian state is immensely involved in CSR since it is engrossed in business through direct or indirect ownership of big corporations. It entails that the corporations voluntarily assist the local communities in which they operate. This may be so without pasting the label of CSR [35]. Such a system coupled with Norway’s welfare and egalitarian values culminates to strong sentiment for society [36]. In 2007, Norway organized an international conference on CSR and sustainable development. The outcome was a report on CSR in a global economy where Norway affirmed that its corporations in home and foreign should maintain strong CSR process [37].

The dominant driver of CSR ecosystem in Norway is its culture. This culture has marked its presence in several legislations that ensure socially responsible behaviour by the corporations. For instance, Gender Equality Act, 1978 intends to achieve the salutary of aim of promoting gender equality and improving the position of women in education, employment and cultural and professional advancement. Likewise, The Pollution Control Act, 1981 provides for participation of corporations in EU Eco-Management and Audit Scheme to assess corporations’ environmental performance. There are several other legislations handling important issues of CSR in piece-meal yet poignant manner. Human Rights Act, 1991; Greenhouse Gas Emission Trading Act, 2004; Labor Market Act, 2004; The Social Welfare Act, 2009 and examples of legislation galore [37].

The principal enactment that prescribes CSR disclosures is Accounting Act, 1998 (AA, 1998). It provides for mandatory disclosures of CSR activities undertaken by the corporations. AA, 1998 was amended in 2013 by the Norwegian Parliament to strengthen the disclosures. It requires big business corporations to supply information regarding the steps undertaken by them to integrate considerations qua human and labour rights, social issues, environmentally friendly practices, and anti-corruption business strategies. The quality of disclosure must be such that it enables one to understand the corporation’s development, results, position and consequences of its activities [38]. Big corporations are businesses that satisfy at least two of the three conditionalities. First, the corporations have a sales revenue of 70 million NOK or more. Second, the balance sheet total is 35 million NOK or more. Third, there are 50 or more full-time employees in the financial year [39].

This is not to dispel the role of Small and Medium Enterprises (SMEs) in Norway. As brought up at the beginning of this segment, Norway has a strong culture of CSR. Despite absence of legal obligation, the SMEs in Norway find out practical ways to integrate CSR element in their business strategies. SMEs either pay close attention to the environmental impact of their products or focus on human rights obligations in consultation with the stakeholders. This becomes more so important when the number of legally defined big corporations in Norway is just around 2%. Role of SMEs then becomes central to Norway’s performance in CSR [37]. It can be inferred that Norway’s business culture rather than legal framework plays an important role in its CSR engagement.

However, the data available reflects a need for concrete CSR policy in Norway. There are weak CSR monitoring and enforcement mechanisms in the country. As per a 2009 study, only 10% companies are in compliance with environmental reporting law, and only half of the companies abide by the legal provisions on working conditions and gender equality. The key reason as the study suggests is lack of monitoring on compliance by the Norwegian authority. The law is equally facilitating by vagueness of the words. For instance, the AA, 1988 requires ‘information ‘that could cause a not insignificant impact on the external environment’ [40]. The companies may use the loophole present and categorize their practices as causing insignificant harm on environment and thereby evading the reporting requirements.

3.3 American CSR policy

The US economy has been fairly unregulated. The labour and capital operate relatively on free market forces. It implies there are lesser state provisions for the US. There is no hard law that insists the corporations to spend a specific amount on CSR activities. The main legitimating factor for US corporations to do CSR is the legitimate expectation of people. This expectation in fact is popularly proclaimed as the propeller of CSR in the US. In 1971, the Committee for Economic Development expressed the concept of social contract between businesses and the society. The businesses are able to operate because of public consent, therefore they owe a duty to constructively serve the society. There are three duties appended to the corporations as per the social contract. First, to supply jobs and promote economic growth through businesses. Second, the business should be run fairly and honestly to the employees. Third and most important, businesses should involve themselves in bettering the community and environment in the vicinity of their operations [41].

Charactering feature of US CSR policy is its voluntariness in societal engagement notwithstanding absence of legislation mandating it. The stated voluntariness in CSR activities has compelled scholars to view corporations as citizens which are to help other citizens [42]. However, there are soft pressures which are created by the government for corporations to be socially responsible. There are in place policies and voluntary checks that include soft laws where the large corporations have to report their CSR related activities. There are government agencies which use CSR initiatives to guide the corporations in human rights, labour and other social and environmental issues. A good exemplar of the same is US Bureau of Economic and Business Affairs which has a CSR team. The main function of it is to promote responsible business practices and inculcate sustainable development and simultaneously ensuring economic security. It provides corporations necessary support to engage in human rights, women’s rights, local economy affairs, industrial relations etc. [43].

The aforementioned facilities are available to facilitate corporates as good citizens. In addition, like Norway, there is fragmentary legal framework to ensure good and socially responsible behaviour by the corporations. For instance, Patient Protection and Affordable Care Act, 2010 and the Health Care and Education Reconciliation Act, 2010 were introduced to combat bad practices of insurance companies like policy revocations on mere technicalities, premium loadings etc. This made insurance companies more socially responsible. Bureaucratic set up is also used to ensure socially responsible behaviour. A case on point is of US Bureau of Energy Resources which promotes use of clean energy sources [43]. The US CSR work is mainly driven by people’s expectations and further assisted and buttressed by the government and to a lesser extent by legislation.

The US has marked an upward trajectory in reporting the CSR activities done by it. Still and all, those reports may not disclose an accurate scene since only a few reports are audited [44]. Despite CSR activities, the US is adversely affected on climate change count. Environmental Lobbyists are pressing for a stringent environmental policy change and compliance by the companies [45].

3.4 Comparison of India with Norway and US

CSR policies across the three studied jurisdictions stemmed from different concerns and accordingly took shape. The role of government in respective jurisdictions can be assessed from the historical roots that CSR policies have. The Indian policy can benefit from the learnings of US and Norway. It is not to suggest that the US or Norway CSR policies are unblemished but slightly better than what India has.

3.4.1 Sentiment of CSR policy

Sentiment underlying a CSR policy framework is of utmost relevance since it directs the future of the policy along those sentiments. India’s sentiment that ignited the mandatory CSR in 2013 was to co-partner businesses in the national development agenda [46]. When one views Section 135 of CA, 2013 and CSR Rules, 2014 as amended in 2021, it can be safely inferred that the government intends that CSR should be performed by big companies as a partner in socio-economic development. This is oriented towards calculated policy direction of the government after due deliberations. The intrinsic motivation to give back to society is less.

Norway situates its policy within the business culture, it is a part and parcel of the way of business conduction in Norway. This is due to a range of reasons beginning from presence of government in direct or indirect ownership of businesses, believing in service of higher purpose and so on. This cultural ecosystem encourages SMEs to undertake CSR activities even though it is not mandatory.

USA’s is at the far end of the CSR policy laxity. CSR activities are based on a social contract between the corporations and the society. Interestingly, the contract does not mention government as a party. Likewise, is the policy. Corporations actively pursue CSR activities because of societal expectations. This is mediated by few legal interventions as discussed above where the government is mainly a facilitator to corporations for doing CSR. Norway and USA are operating more on involuntary institutional forces rather than the deliberate policing by the state. It is further suggested that US and Norway needs to tighten the monitoring mechanisms of CSR compliance to ensure genuine deliverance.

3.4.2 Regulatory framework

One of the common features in USA and Norway is their fragmentary CSR policy framework. Instead of having a dedicated law towards CSR, it is fragmented across multiple statutory requirements for corporations. Norway’s AA, 1998 still makes space for some disclosure and mandatory requirements of CSR but US has no mandatory CSR provisions.

Since Norway treats CSR as an integral part of running a business, the government is heavily involved in action of CSR. In USA, having regards to the general public pressure, the corporations generally perform CSR activities even though the law does not mandate it.

India stands in stark contrast. In India CSR is mandated through CA, 2013 and CSR Rules, 2014. In case of non-performance of CSR, depending on the situation the funds would either be earmarked for CSR activities in the following year or would have to transfer to one of the activities enumerated in Schedule VII of CA, 2013. This clips away not only the regulatory arbitrage that the corporations may otherwise would have found, but also reduced the space with the government to encourage CSR as a culture. Section 135 of CA, 2013 only mandates bigger businesses to perform CSR and the government cannot increase the role of SMEs in CSR, for any such step may fall foul of law, that is, Section 135 and be struck down.

4. Conclusion and suggestions for reform

In this chapter, authors have investigated the comparative perspective of CSR. In doing so, a crisp preliminary incursion was made into the interest of government in intervening in CSR matters and policy. A government may shape CSR policy in a way to co-partner the role of corporations in socio-economic development of the country or it may have to promote CSR owing to involuntary factors of political considerations like people’s legitimate expectation.

Different countries adopt several approaches to foster a congenial climate for CSR. India has made CSR mandatory through law subject to certain qualifications. The US has no particular hard law mandating CSR performance by the businesses. Norway’s approach sits in between India and USA. She has statutorily mandated CSR by big corporations but simultaneously CSR is also encultured as a routine of doing business. India can learn a few lessons from Norway and US. First, the government should start organizing seminars to raise corporate consciousness about CSR and provide incentives to SMEs for conducting CSR activities. It would go a long way to create a CSR culture and encourage sustainable practices by businesses. Second, the government should actively monitor CSR activities to ensure compliance. The current system relies on self-discipline and honesty of the corporations without any external checks. Third, the current rules do not allow corporations to spend on CSR activities that run beyond 3 years. The rule should be made flexible to allow the corporations to invest in multi-phased projects stretched over years. This flexibility is available in the US and Norway where no specific time prescriptions for CSR projects. Fourth, local community should be made part of the CSR activities for a meaningful stakeholder consultation, in case the projects are being undertaken in those communities. Fifth, specific rules should be laid down with regard to making Public-Private Partnership projects as a part of CSR.

Globalization has made the world a single big market place with businesses playing a pivotal role in the economies of the world. That apart, they also are now creating value for sustainable environment and better life by pitching to stand for specific social concerns via CSR route. The system of CSR should be so synchronous and smooth that it encourages businesses and provide maximal space for pursuing good social practices.