CORPORATE SOCIAL RESPONSIBILITY

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CORPORATE SOCIAL RESPONSIBILITY : WHY IT SHOULD BE A LAW : A LESSON FROM INDIA B.A.R. Ruwanthika Ariyaratna

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CORPORATE SOCIAL RESPONSIBILITY : WHY IT SHOULD BE A LAW : A LESSON FROM INDIA:

CORPORATE SOCIAL RESPONSIBILITY : WHY IT SHOULD BE A LAW : A LESSON FROM INDIA B.A.R. Ruwanthika Ariyaratna LL.B ( Hons ) Colombo, Attorney-at-Law Lecturer in Law Department of Legal Studies Faculty of Humanities and Social Sciences The Open University , Sri Lanka

Corporate Social Responsibility (CSR):

Corporate Social Responsibility (CSR) Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Road Map:

Road Map Research Problem Research Objectives Rationale for Research Literature Review Research Methodology Results and Discussions Conclusion and Recommendation Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Research Problem:

Research Problem Why the concept of Corporate Social Responsibility should be a law? Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Research Objectives:

Research Objectives Find the importance of CSR for the benefit of developing countries, specially focusing on Sri Lankan scenario. Investigate the effectiveness of existing domestic mechanisms which use to enforce CSR policies. Identify the loopholes in existing domestic mechanisms. Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Research Objectives (Cont...):

Research Objectives (Cont...) Analyze the Sri Lankan context in comparison with Indian legal framework. Emphasize the effectiveness of introducing a legal framework to enhance CSR policies in domestic law. Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Rationale for the Research:

Rationale for the Research CSR gives many environmental and social benefits for the developing countries. However, they need strong mechanism to enhance CSR because their corporate sector totally depends on foreign investments. To address this issue, law can play a significant role in striking balance between economic and social rights. Therefore, Sri Lanka need to consider for introducing legal framework to enforce CSR in an effective manner. Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Literature Review :

Literature Review “Essentially, CSR recognizes that corporations are not only responsible to their shareholders, but owe, or should owe, particular duties to persons or communities directly or indirectly affected by their operations; such persons or communities comprise a corporation’s “stakeholders.” (OECD Principles of Corporate Governance,1999) “ With increasing awareness of this gap between the haves and the have-nots, this scrutiny will only increase over time and societal expectations will be on the rise. Many companies have been quick to sense this development, and have responded proactively while others have done so only when pushed” (Hand Book in CSR in India, 2013) Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Literature Review (Cont...):

Literature Review (Cont...) “ As a result of mounting public pressure, consumer awareness, and other forces, the MNE is forced to self-regulate in the sphere of human rights (broadly understood) and the environment. This self-regulation and cleansing, undertaken voluntarily by corporations, is known as corporate social responsibility (CSR), or “corporate citizenship.” ( Bantekas , 2004) Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Research Methodology:

Research Methodology This study is based on normative research. Primary Sources - International Instruments - Legislations Secondary Sources - Text Books - Research Articles - Statistic Reports Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Results and Discussions:

Results and Discussions Importance of CSR in developing countries CSR Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Results and Discussions (Cont...):

Results and Discussions (Cont...) Existing enforcing mechanisms and loopholes in Sri Lanka Corporate Sector Companies' Act No.7 of 2007 does not provide any legal framework relating to implementing CSR policies However, many companies devote to undertake CSR Programmes according to their own policies. There is no standard format for issuing CSR reports in Sri Lanka. Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Results and Discussions (Cont...):

Results and Discussions (Cont...) The Indian Example Section 135 of the Indian Companies' Act, 2013 Every company, private limited or public limited, which either has a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or net profit of Rs 5 crore , needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility activities Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Results and Discussions (Cont...):

Results and Discussions (Cont...) The Indian Example According to Schedule VII of the Act, activities that can be undertaken by a company to fulfill its CSR obligations include eradicating hunger, poverty and malnutrition, promoting preventive healthcare, promoting education and promoting gender equality, setting up homes for women, orphans and the senior citizens etc.. The Act also require companies to set-up a CSR committee consisting of their board members, including at least one Independent director Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Results and Discussions (Cont...):

Results and Discussions (Cont...) Effectiveness of the new CSR law in India As a result of this new law 8000 Indian companies be required to invest more than 2 billion in social programmes . Eg : Hinduatan Uniliver - Lifebuoy hand washing initiative Mahindra Group - Spark the rise fund Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Conclusion and Recommendation:

Conclusion and Recommendation Sri Lanka do not have strong mechanism to enhance CSR in corporate sector. The Indian example shows that CSR policies can effectively regulate through a legal framework. Therefore, Sri Lanka need to consider incorporating SCR policies into domestic Company Law. Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

Thank You:

Thank You Ruwanthika Ariyaratna . LL.B ( Hons ) Colombo, Attorney-at-Law

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