India's mandatory CSR policy: implications and implementation challenges

The increasing emphasis on social responsibility across the world is not new (Warhurst, 2005) and many countries require companies to disclose information about their environmental, social and employee-related impact, as well as their diversity policy (The Hauser Institute, 2015). India took CSR to the next level by mandating it for all companies through the recently introduced Section 135 in the Companies Act (2013). The provisions of the section require companies to establish a CSR committee consisting of three members of the Board of Directors to develop a CSR policy and review the CSR activities and prepare periodic reports. The above mentioned CSR infrastructure therefore necessitates significant capacity building within companies. With respect to implementation, companies may channel their resources through qualified nongovernmental organisations (NGOs). Consequently NGOs will also require significant capacity building. In this paper we identify the implications of the new guidelines that are worthy of consideration; these implications are for companies that meet the criteria to and therefore must comply with the provisions contained in Section 135, the organisations (including NGOs) that will implement the activities and other general implications. Furthermore the paper suggests mechanisms by which several of these challenges can be met and managed.