CORPORATE LAW CIA 1

[Document subtitle]

CARINA CHUGANI
19203356
SAHANA SADANAND
1920345
SHALINI SURENDAR
1920368
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 ARTICLE 1

Title of the Article: Communicating Corporate Social Responsibility in the post mandate
period: Evidence from India

Author’s Name: Nayan Mitra, Asif Akhtar & Ananda Das Gupta

Source: International Journal of Corporate Social Responsibility

Date of Publication:  27 June 2018

The URL for Article: https://jcsr.springeropen.com/articles/10.1186/s40991-018-0033-

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Reviewer’s Name: Sahana Sadanand

Introduction of the Article:

 Lately, firms feel strongly to communicate their CSR efforts, as it is mandated by the Section
135 of the Companies Act, 2013. Thus, Corporate Communication on CSR became
extremely relevant. The article goes on to explore the effect of CSR or its Communication on
the firm performance, which is its main objective. In the beginning of the article,
comparisons of the perspectives of various Companies for communicating their CSR efforts
over the years is made, along with various theories/philosophies by renowned people like
Rath and Gurtoo, Kotler and Lee. Later on, we see how CSR, its Communication and Firm
performance depend on each other as stated before. The Literature Review goes on to enlist
the research gaps in the article, such as the difference in CSR in developed Western countries
and those in developing countries like India. The findings of this research thus forms some of
the early theoretical bases for study in mandated CSR in an emerging country like that of
India. 

Review of the Article:

After the passing of the Companies Act, 2013, large stable companies underwent major
disassembly and overhaul to become mandated, objective and transparent to the Government,
stakeholders and the Companies themselves. Thus, study of mandated CSR, under the
Section 135 and Schedule VII of the Companies Act, 2013, became a new area for
knowledge creation. That is when Corporate Communication on CSR became extremely
relevant.

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In the introduction of the article, various philosophies of different companies with respect to
their CSR effort has been identified by different scholars. Kotler and Lee in 2005 observed
that while some companies opt for “don’t be shy” strategy, others have a company policy to “
let others do the talking.” Das and Gupta in 2012 observed that overdoing the declarations of
rightness and good intentions could cause mistrust of consumers and stakeholders, leading to
opposite results.

Soon after, we discuss Four Broad CSR Eras before and after Year 1950 till 1978, which are
as follows:

 Philanthropic era [upto 1950s] – companies generously donated to charities

 Awareness era [1953-1967] - recognition of the overall responsibility of business in

community affairs

 Issue era [1968-1973] – focus on specific issues like racial discrimination, pollution

 Responsiveness era [1974-1978, continuing beyond] – taking serious organizational

actions to address CSR issues

In the 1990s, Corporate Social Performance (CSP), stakeholder theory, sustainability etc.
took centre stage. They were micro-definitions that fell under the umbrella of macro-concepts
of CSR,  namely, “shareholder value, societal value and stakeholder value” as stated by Rath
& Gurtoo, 2012.

Shaista and Sara (2014), evaluated and found a positive correlation between CSR and
organizational performance. CSR is associated with profitability, both in financial and non
financial means. McGuire et al. (1990) provided evidence indicating that the reputation-
performance effect goes both ways.

Hypothesis:
H 1 : There is a significant relationship between CSR Communication and (Variable)
Corporate Social Responsibility.
H 2 : There is a significant relationship between (Variable) Corporate Social Responsibility
and Firm Performance.

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The research gaps mentioned in the articles are inferred barely 2 years in the CSR Mandate,
which came into force with the Companies Act 2013 (Appendix 1) that was introduced in
India after replacing the 57 years old Companies Act of 1956.

This study by Mitra was an adaptation of “Corporate Social Responsibility: A study of

Strategic Management and Performance in Swedish Firms.”, with qualitative research as a
base. The database for this research was from ‘large, stable companies,’ who had to spend
2% of their average net profits made during the three immediately preceding financial years,
in pursuance of its CSR policy, under the Companies Act of 2013. 

Companies from the Indian Institute of Corporate Affairs (IICA) repository of the ‘Top 2500

CSR Companies’ formed the sampling frame of the research, and they fell within the CSR
statute under the Company’s Act, 2013.

Conclusion:

This research comes to the following conclusions : CSR Communication has a positive as
well as a significant relationship with (Variable) Corporate Social Responsibility. (Variable)
Corporate Social Responsibility has both a positive and significant relationship with Firm
Performance.

Mandated CSR is a new area of study as one of the pioneers of CSR mandate, is India itself,
having brought CSR under its statute only in the year 2013. This article had adequate
information for its research and started off quite early after the introduction of Companies
Act, 2013. The analysis has been done fairly well, and multiple theories and statements of
various people has been used throughout.

References:

Nayan Mitra, René Schmidpeter: The Why, What and How of the CSR Mandate: The
India Story
https://link.springer.com/chapter/10.1007/978-3-319-41781-3_1

BSR : India Companies Act 2013: Five Key Points About India’s “CSR Mandate”
https://www.bsr.org/en/our-insights/blog-view/india-companies-act-2013-five-key-points-
about-indias-csr-mandate

Selin Türkel , Aysun Akan : CSR Communication: A Turkish Industry Example

https://link.springer.com/chapter/10.1057/9781137388551_7

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 ARTICLE 2

Title of the Article: A STUDY OF CORPORATE SOCIAL RESPONSIBILITY

REPORTING IN INDIA

Author’s Name: Ghanasham S. Joshi

Source: Journal of Management (JOM)

Date of Publication: November-December 2018,

The URL for Article:

https://www.iaeme.com/MasterAdmin/uploadfolder/JOM_05_06_018/JOM_05_06_018.pdf

Reviewer’s Name: Sahana Sadanand

Introduction of the Article:

This study is aimed at examining compliance by companies in the Metal and Energy sectors
under Section 135 of the Companies Act, 2013, and CSR focus areas along with the
financing in these areas. Earlier, reporting on environmental and social issues were voluntary,
but in India, after the Companies Act, 2013, the entire outlook has changed vividly. Investors
are also encouraging green companies for investments. Ministry of Corporate Affairs (MCA)
issued a circular on June 18, 2014 stating that CSR activities undertaken must be relatable to
Schedule VII of the Companies Act 2013. The present study investigates CSR reporting
practices as per Indian Companies Act, 2013.

Review of the Article:

The compliance of the companies under the Act is examined throughout the article, with
proper data and conclusions. The Companies Act is applicable to all those companies having
a net worth of INR 500 crore, or turnover of INR 1000 crore, or net profit of INR 5 crore
during any financial year. These companies should spend not less than 2% of the average net
profits. The Act has mandated mentioning major CSR details in CSR Annual Report in the
companies’ Board Report. Details such as CSR Policy, web link address of said policy,
overview of CSR projects to be undertaken etc. must be mentioned. An independent director
should formulate and monitor these policies in a CSR Committee.

To identify research gaps in CSR reporting in India, a brief review of earlier works was done.
Murthy and Abeysekera (2008) find that firms use dual strategies in reporting their human

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resource and social relations to legitimize their activities to stakeholders. This shows that
investors and shareholders are more keen to invest in responsible business practices, as
concluded by Mishra and Suar (2010). Gautam and Singh (2010) find that most annual
reports do not mention the amount spent on CSR activities in their reports or balance sheets.

The study is based on 10 companies in Nifty Energy [Petroleum, Gas etc] and Nifty Metal
[ Mining] Index listed on NSE as on November 30, 2018. It showed that the Energy sector
had 70% government companies while the Metal sector has 60% private companies.

Table 3 in the article shows how most companies (70%) opt for combination of direct
implementation and agencies for CSR implementation. This is where NGO’s play a huge
part. Tables 4&5 talk about CSR Committees where the numbers are gradually increasing,
though their effect may not be proportional to these increasing numbers.

The article further goes on to compare these companies’ Target CSR outlay and actual
amount spent. Initially in 2015, companies spent only about 85-87% of the amounts, but
gradually they spent a lot more than targeted, even if they were under loss (Jindal Steel,
Vedanta) with exceptions from Bharat Petroleum Corp. Ltd.

Conclusion:

Health, sanitation and education sectors took the top positions for total money spent on CSR
for both the years 2015 and 2016 as seen in Top 100 KPMG’s India’s CSR Reporting survey.
This data is verified by the CSR spending of Metal and Energy sectors where more than 50%
& 85%of CSR funds were spent on these areas from 2015-2017. It is observed that very few
companies report on administrative overheads.

Thus, this study shows that most companies report the activities as per the requirements
under section 135 of the Act. Except BPCL, Hindustan Zinc Ltd, most companies spent more
than 2% of the required spending. Findings suggest overall improvement in compliance in
2017 compared to 2015.

References:

Corporate Social Responsibility (CSR) as Per Companies Act, 2013 :

https://taxguru.in/company-law/corporate-social-responsibility-csr-companies-act-2013.html

Arundhati Ramanathan: Energy sector is the highest spender on CSR:

https://www.livemint.com/Companies/hh5mAyQFUpcYma2e4BkzVJ/Energy-sector-is-the-
highest-spender-on-CSR.html