An unprecedented experiment in corporate social responsibility is now underway in India. That country has become the first in the world to mandate corporate social responsibility. A new law requires companies to spend two percent of their net profit on social development. The potential sums involved are as big as the country.<br /><br />The Indian Institute of Corporate Affairs estimates that 6,000 Indian and multi-national companies fall under the new regulation. It projects that CSR spending in India could rise to over $3 billion annually, triple the current rate. But since its adoption, questions have been raised as to the new law’s implementation. A conference held in India in June by the Global Reporting Initiative issued the Mumbai Declaration, a statement that while the bill was good news, it could lead to problems such as forced philanthropy, tick-the-box behavior, corruption, and masking of data to avoid compliance. Many companies will be undertaking CSR initiatives for the first time, and many small- to medium-sized businesses without dedicated CSR teams will have to form new partnerships so that their CSR-designated funds can be effectively applied.
