Emerging Structural Response of the Corporate Sector – Early evidence on Mandatory Commitment


The Indian corporate sector witnessed a major structural change in terms of Corporate Social Responsibility (CSR) becoming mandatory through Companies Act, 2013. During the preceding decade, there were detailed debates on social responsibilities of business and a few follow-up actions. These ultimately culminated into CSR becoming mandatory, at least for larger companies that qualify for coverage. Compliance becoming effective immediately communicated the seriousness of policy intent. This study examines the emerging structural response of the Indian private sector on mandatory social commitment.
This study is based on the dataset developed using Prowess. The dataset consists of 89 large Indian private, unaffiliated companies with turnover of Rs. 1,000 crores or above during the last financial year. Early evidence suggests that in spite of mandatory provisions in terms of company level policies put in place and director level committee’s involvement in overseeing the efforts on social commitment, compliance is far short of the required levels. CSR spend compliance by companies in our study’s sample for the recent three-year period in terms of firm-year spend adherence was only at 2/3rd mark. In other words, a third of the firm-year compliances were missing for reasons. Variations were observed around (a) industry, (b) firm size/age, and (c) aggregate performance. This paper presents observed trends around different characteristics, discusses implications and generalizability, and shares future research directions.

Key words: Corporate Social Responsibility, Mandatory Social Commitment, Policy Reforms, Corporate Response, CSR


Sustainability is expected to be the essence of antecedents, process and the outcomes of any business. It is a marked change since the oft-quoted statement that social responsibility of business is to increase its profits (Friedman 1970). In line with the globally sweeping attitudinal transformation, the Indian corporate sector too witnessed a major structural shift in terms of Corporate Social Responsibility (CSR) becoming mandatory.

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