Corporate Social Responsibility as Obligation: Lessons from India

Abstract

Even Milton Friedman, who assigned corporations only with the responsibility of increasing profits, had acknowledged that corporations are to conform to the “basic rules of the society” for their very existence. According to Friedman, the idea of social responsibility could only be voluntary. Such as view, however, ignores the entrenched nature of corporations in the social fabric. If corporations ought to pursue an irresponsible and unidirectional profit motive in negation to all other social and environmental considerations, there are moral reasons why a society would not want corporations to be constituents of the society. In the backdrop of the legally mandated corporate social responsibility (CSR) contribution in India, in this essay I argue that no real idea of responsibility can be discretionary in the sense that it depends on the whims and fancies of a corporation. If responsibility is to be real, it must be compulsory. The Constitution of India envisages such responsibility for the various social actors including the citizens and the state (and corporations, by judicial interpretation). Such an idea of obligatory responsibility, which permeates the Indian constitution, is akin to what Iris Young calls social connection responsibility that is diffused in the society rather than emanating from liability for fault.

Keywords: Corporate Social Responsibility (CSR), mandatory responsibility, social connection responsibility, India

JEL Classification: M14, K22, G34