Application of Mandatory Corporate Social Responsibility (CSR) in India- Carrot and Stick Approach -

The concept of Corporate Social Responsibility (CSR) which is oriented from the U.S. has strengthened the importance of application in current societies. Especially, the international corporations have moved to the developing countries, causing the environmental problems based on their industrial functions. In this regard, states are trying to mandate social accountability or responsibility for these corporations. In India, the Oleum Gas Leak case involved a gas leakage accident which caused massive damage in in 1985. Consequently, the Indian judiciary upheld social responsibility based on the Absolute Liability theory. Based on this discussion, India became the first state to mandate CSR by law. It also possibly expects the close relations between politics and economics in India through the mandatory CSR enacted. Then, it might also cause some corruption because the corporations might financially support certain environmental movements or government projects that are initiated by the politicians. Also, it needs to discuss whether the social cost caused by commercial and business activities could put obligation on corporations’ shoulders. Furthermore, even though it might provide a fundamental protection for the socially disadvantaged, it needs to consider that the corporations could obligate the duty for the society. In this paper, it needs to be discussed whether CSR should be mandatory or a voluntary duty, how it can be enforced and how penalties for non-compliance should be implemented. This paper identifies these possible issues in India and reviews various tribunal cases to develop and suggest proper implementation.