"From Vision to Reality:
Amit Sachdeva's Role in Institutionalizing CSR in India" the man behind the modern Corporate Social Responsibility in India
On April 1, 2014, India became the first country to legally mandate that companies spend 2% of their average net profit on Corporate Social Responsibility (CSR) activities. This landmark legislation, embedded in Section 135 of India’s Companies Act, was the culmination of nearly a decade of tireless advocacy by renowned Indian Lawyer, Amit Sachdeva. A true Gandhian, Inspired by Mahatma Gandhi’s trusteeship model, which views wealth as a trust to be used for the benefit of society, Sachdeva embarked on a mission to integrate corporate giving into the core strategies of businesses in India.
Sachdeva’s journey began in 2007 when he observed that many national and multinational companies were operating with a purely capitalist mindset, focusing solely on profit maximization. These companies often neglected their broader impacts on society and the environment. Sachdeva believed in a balanced approach combining elements of capitalism and socialism, emphasizing the Triple Bottom Line: People, Planet, and Profit. He argued that businesses should not only seek financial gains but also consider their effects on the environment and the well-being of future generations. Many businesses, he noted, had a narrow vision focused on short-term profits, often at the expense of societal welfare.
Motivated by the Gandhian principle of trusteeship, Sachdeva began engaging with key stakeholders in India’s corporate and political spheres. From 2007 to 2013, he held numerous meetings with corporate leaders, industrialists, policymakers, and government ministers. His goal was to generate support for the idea of mandatory corporate giving and to incorporate CSR into the core strategies of businesses.
India’s commitment to inclusive growth was already reflected in its 11th Five Year Plan (2007), which emphasized the importance of integrating marginalized sections into the development process. This plan laid the foundation for subsequent initiatives by the Ministry of Corporate Affairs (MCA). In 2008, the MCA introduced the theme of responsible business, signifying a shift towards aligning corporate practices with ethical and responsible principles. This was followed by the release of the CSR Voluntary Guidelines in 2009, encouraging companies to integrate CSR policies into their overall business strategies and secure board-level approval.
The parliamentary standing committee’s 21st report in 2009 further advocated for statutory disclosures on CSR activities, emphasizing transparency and accountability. This led to the refinement of guidelines in 2011, resulting in the National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business. These guidelines were further revised in 2019 as the National Guidelines on Responsible Business Conduct (NGRBC), aligning with the United Nations Guiding Principles on Business & Human Rights.
The introduction of the Companies Act 2013 marked a pivotal moment in India’s CSR journey. Replacing the Companies Act of 1956, the new legislation included Section 135, which mandated CSR obligations for listed companies in India. This section outlined requirements for the execution, funding, and reporting of CSR projects, making India the first country to legislate CSR activities and mandatory reporting under its Companies Act. This legal mandate ushered in a new era of corporate responsibility, ensuring that businesses actively contribute to the welfare of society and the environment.
Sachdeva’s advocacy was rooted in the philanthropic traditions of pre-independence industrialists who were inspired by Gandhi’s trusteeship model. Visionaries like Jamsetji Tata, G. D. Birla, and others were instrumental in establishing educational, medical, and religious institutions, driven by a sense of duty towards societal welfare. However, the advent of the new economy in the 1990s shifted the focus towards profit maximization, overshadowing the earlier philanthropic ethos.
In response, Sachdeva championed the idea of mandatory CSR, advocating that businesses must take responsibility for the communities and environments in which they operate. He believed that companies with effective CSR programs not only contribute to societal welfare but also enhance their profitability and brand reputation. Over the years, corporations have increasingly relied on CSR programs—including social issue marketing, philanthropic efforts, employee volunteer initiatives, and diversity and inclusion work—to build their brands and satisfy customers.
Sachdeva’s vision for mandatory CSR spending involved extensive planning and engagement with business and political leaders across India. His efforts culminated in the historic legislative mandate of 2014, which institutionalized CSR as a core component of corporate governance in India. The new rules in Section 135 of India’s Companies Act made it mandatory for companies with a certain turnover and profitability to spend 2% of their average net profit for the past three years on CSR activities. This legislative change not only brought much-needed reforms in the areas of governance, transparency, and accountability but also institutionalized Corporate Social Responsibility (CSR) as an essential aspect of business operations.
To further promote the idea of CSR and foster dialogue among stakeholders, Sachdeva organized nationwide CSR Live Week conferences, inviting corporate leaders, policymakers, and other stakeholders to discuss the importance of corporate giving. He also published a comprehensive paper on various corporate social initiatives and the need for accelerated efforts in this area. This paper was later compiled into what is known today as the "CSR Good Book," a widely circulated and referenced compendium for CSR, ESG (Environmental, Social, and Governance), and sustainability professionals, students, researchers, journalists, and academics across the country.
The CSR Good Book serves as a crucial resource, offering insights and best practices for companies looking to enhance their social responsibility efforts. It underscores the importance of integrating CSR into business strategies and highlights successful initiatives that have made significant impacts on society and the environment. The book has become an essential guide for those committed to advancing corporate responsibility and sustainability.
For his relentless efforts and significant contributions, Amit Sachdeva is widely recognized as the "CSR Man of India." His advocacy has been instrumental in helping many nonprofit organizations, charitable trusts, and NGOs raise CSR funds, thereby creating a substantial social impact for marginalized and underprivileged communities. From education to health, livelihood to skill building, Sachdeva’s initiatives have fostered meaningful change across various development sectors in India.
As of the 2021-22 fiscal year, the impact of India’s CSR mandate is evident in the substantial investments made by companies towards social causes. A total of 19,043 companies contributed an impressive INR 26,278.71 crore towards CSR activities. These efforts spanned 40 states and Union Territories, covering 43,388 CSR projects across 14 development sectors. This extensive reach underscores the transformative potential of mandatory CSR, driving inclusive growth and sustainable development in India.
In conclusion, India's journey to becoming the first country to legally mandate CSR spending was a long and transformative process, driven by the visionary leadership of Amit Sachdeva. His unwavering commitment to the Gandhian principle of trusteeship and his extensive advocacy efforts played a pivotal role in shaping India’s CSR landscape. The legislative mandate of 2014 marked a significant milestone, ensuring that businesses actively contribute to societal welfare and environmental sustainability. By embedding CSR into the legal framework, India has set a global precedent, reaffirming the principle that businesses have a moral obligation to serve the greater good of society and the environment. This pioneering effort has not only enhanced corporate governance in India but also inspired a global movement towards more responsible and sustainable business practices.