30th July 2015 | By Grainne |
I’ve previously written about my interest in the development of India’s legal requirement that larger companies spend 2% of pretax profits on Corporate Social Responsibility (CSR) initiatives. I came across this article which raises a number of problems in relation to this attempt to “mandate virtuous behavior by businesses”.
The writer points to the lack of penalties for non-compliance. Penalties can be enforced on companies only for failing to report on spending rather than on not spending the required amount. It could however be argued that in the interests of pragmatism it is far easier to track companies who fail to report and that those who do actually spend the required amount are likely to want to shout about it. However with news reports in India suggesting that as many as two-thirds of companies have failed to meet their obligations it does not appear that penalties for failing to report are being enforced.