Trapping India’s CSR in a legal net: will the mandatory trusteeship contribute to triple bottom line?

Abstract

The social responsibility of business is to increase profits.’ This was the title of an article by Nobel laureate, economist, and an evangelical supporter of free enterprise, Milton Friedman (1970), published in The New York Times Magazine. Friedman argued that a corporate executive is an employee of shareholders and his responsibility is to make as much money as possible while conforming to the basic rules of society embodied both in law and ethical system. The qualification—embodiment of an ethical system in particular—is good enough to justify fulfilling corporate social responsibility (CSR) by private sector. In fact, it cannot be asserted that shareholders are interested only in the single bottom-line of profit in their books of accounts. Profits are inextricably linked to communities and environment without which a firm cannot operate effectively. Therefore, CSR efforts help a firm attain the triple bottom line (TBL) of profit, people, and planet. More than two centuries prior to Friedman, another free trader and father of modern economics, Adam Smith (1761), had already echoed the social responsibility aspect of business in his treatise The Theory of Moral Sentiments. In the Indian subcontinent, Mahatma Gandhi had introduced the concept of trusteeship and voluntary individual philanthropy, which found support among many industrialists. G. D. Birla, for example, was always very liberal in donating money to Gandhi if any of his projects were held back due to want of money (Chakrabarty, 2011)