COMPARATIVE ANALYSIS OF CORPORATE SOCIAL RESPONSIBILITY IN INDIA & USA

Introduction

“The merchants’ power of production should always be encouraged,” the Mahabharata says of enterprise. Merchants strengthen the realm, improve agriculture, and grow its commerce, and a wise king ought to be considerate toward them, for no monarchy can be wealthier than its merchants. Traditional Indian belief holds that businesses need communities and communities need businesses, and that economic growth and poverty eradication are fuelled by commercial energy.

The recognition of business identity as a social identity is one of the most significant developments in business and entrepreneurial thought. Over time, companies began to recognize that responsibility to society promotes their own reputation and image, and merchants were increasingly moved to share a portion of their profits in promoting the well-being and goodness of society. The idea of corporate social responsibility (CSR) originated from this innate dedication to society.

After independence, CSR in India became increasingly significant as a result of newfound freedom and the realization of the nation’s own growth aspirations. Being on par with developed countries was one of independent India’s main goals, and the twentieth century saw the consolidation of a trajectory sparked by social, business, and political leaders. Inclusive value systems and visionary leadership established the economic foundations on which businesses began to institutionalize CSR.

This paper examines the distinctive CSR environments of India and the United States, with reference to the broader trends observed in Australia and Europe. It considers the main forces behind CSR in each region, such as stakeholder expectations, market forces, and legal requirements.

Author’s note flagged for review: the paper’s stated scope includes Australia and Europe, but the chapters below develop only India and USA in full detail. Consider either adding dedicated Australia and Europe chapters or narrowing the stated scope to match the content delivered.

Significance of the Study

This comparative study examines how CSR is understood from an Indian standpoint in contrast to other industrialized nations (the USA, Australia, and Europe). It aims to:

Recognize Global Trends: By contrasting CSR practices across these regions, the study identifies emerging difficulties, best practices, and global trends.
Inform Policy Development: The study offers insight to help policymakers in each region create and improve CSR laws, incentives, and assistance programs.
Enhance Business Performance: Understanding the relationship between CSR and business performance helps businesses maximize their return on social and environmental impact.
Encourage Stakeholder Engagement: The study encourages organizations, governments, NGOs, and other stakeholders to better understand and collaborate on shared CSR goals.
Encourage Innovation: Examining effective CSR programs across regions surfaces creative strategies and industry best practices that can stimulate further CSR innovation.

Review of Literature

1. Fifka, M.S., “Corporate Responsibility Reporting and Its Determinants in Comparative Perspective: A Review of the Empirical Literature and a Meta-Analysis,” Business Strategy and the Environment (2013).
This paper examines CSR reporting and its determinants across countries, focusing on the role of a CSR committee within a company. While acknowledging the substantial body of research on European companies, Fifka highlights the need for more comparative studies including companies from North America and Australia.

2. Baughn, C.C. and Bodie, N.L., “Corporate Social and Environmental Responsibility in Asian Countries and Other Geographical Regions.”
This paper explores corporate social and environmental responsibility (CSER) practices across regions, including Asian countries, finding that CSER activity in North America was relatively lower than in Europe, and analyzing CSER performance across twenty different dimensions.

3. Bhatia, A. and Makkar, B., “CSR Disclosure in Developing and Developed Countries: A Comparative Study,” Journal of Global Responsibility (2020).
This study compares CSR disclosure levels between developed nations (the USA and Europe) and developing economies (India, China, and South Africa), finding that developed countries tend to exhibit higher levels of CSR disclosure.

4. Rahim, M.M. and Sayeed, M.A., “Reaching an Aim Differently? Corporate Social Responsibility Regulation in Australia and India,” Cardozo International & Comparative Law Review (2024).
This paper examines differences in CSR regulation between Australia and India, arguing that the effectiveness of CSR regulation depends on the competitive advantage gained by companies, and noting that the standard of CSR reporting in India is generally lower than in the United States and Europe.

5. Vollero, A., Yin, J., and Siano, A., “Convergence or Divergence? A Comparative Analysis of CSR Communication by Leading Firms in Asia, Europe, and North America,” Public Relations Review (2022).
Using communicative institutionalism and content analysis of corporate websites, this study explores whether CSR communication practices among leading firms converge or diverge across regions.

6. Fisher, V.E., Mahoney, L.S., and Scazzero, J., “An International Comparison of Corporate Social Responsibility,” Issues in Social and Environmental Accounting (2016).
Using the Sustainalytics Global Platform database, this study analyzes CSR scores for 4,643 companies across six regions on environmental, social, and governance factors, finding that Africa, Europe, and South America generally scored higher than North America, Latin America, and Asia-Pacific, and that governance was the highest-scoring category while environmental performance scored lowest.

7. Sharma, S., “Examining CSR Practices in India and the United States,” International Journal of Social Science and Humanities Research, Vol. 5, Issue 3 (2017).
This paper examines the evolution of CSR practices in India and the United States, focusing on the impact of the mandatory CSR guidelines under India’s Companies Act, 2013, and contrasting them with the voluntary reporting approach in the United States.

Objective of the Study

To understand the diverse approaches to CSR:
Examine the regulatory frameworks, policy initiatives, and stakeholder engagement models in each region, and analyze how these factors influence the nature and scope of CSR activities undertaken by businesses.

To identify key similarities and differences in CSR practices:
Compare the dominant focus areas of CSR in each region (environmental sustainability, social impact, human rights), the drivers of CSR (legal mandates, market pressures, societal expectations), and the role of different stakeholders in shaping CSR agendas.

To assess the effectiveness of CSR initiatives:
Evaluate the social and environmental impact of CSR activities, the challenges of measuring and reporting on CSR performance, and the link between CSR and business performance.

To identify emerging trends and best practices:
Explore the rise of sustainable finance, the integration of ESG factors into investment decisions, and innovative approaches such as technology-driven impact measurement and multi-stakeholder partnerships.

To provide insights for policymakers and businesses:
Offer recommendations for improving CSR policies and regulations, provide guidance for businesses developing CSR strategies, and contribute to a more sustainable and equitable global business environment.

Research Questions

How do the regulatory frameworks for CSR differ across India, the USA, Australia, and Europe? How effective are government policies in incentivizing and supporting CSR activities in each region? How do businesses engage with stakeholders to develop and implement effective CSR strategies? What are the dominant focus areas of CSR in each region? What are the emerging trends in CSR, such as sustainable finance, ESG integration, and stakeholder capitalism? What are the future challenges and opportunities for CSR in each region, and how can these be addressed?

Research Methodology

Legal research locates and evaluates relevant information to inform legal analysis. Any legal inquiry involves identifying and analyzing issues to arrive at objective conclusions following thorough investigation, and the quality of that inquiry depends on an effective methodology and a well-defined problem statement. Because CSR is deeply embedded in Indian custom and law, this study applies a doctrinal legal research method to examine the concepts, practices, and frameworks of CSR, with specific analytical focus on the legal frameworks in India and the United States.

This paper is organized into four parts: an examination of CSR in India, tracing its historical evolution and constitutional foundations; an examination of CSR in the United States, focusing on its voluntary, market-driven character; a comparative analysis of the two frameworks; and a concluding chapter summarizing key findings and offering suggestions.

CSR in India

The evolution of Indian CSR can be traced through five broad historical stages:

Before 1850: The pre-industrialization era
1860–1920: The rise of business philanthropy
1920–1960: The growth of business philanthropy
1960–1980: CSR growth
1980–2000: CSR stabilization
After 2000: Creative and innovative strategic CSR practices

Initial Stages of CSR in India
Indian industrialists began the practice of corporate philanthropy in the nineteenth century by creating trusts and establishing endowed institutions under the leadership of their respective business dynasties.[1] In the early days, philanthropy was the primary force behind CSR, and it was closely linked to custom, family, religion, and culture. The growing wealth generated by early industrialization led manufacturers to embrace CSR more readily up until the 1850s.

During periods of famine and plague, nearly all of the leading industrialists donated their money and savings to help address the resulting societal crises.[2] The renowned business families of the era, including the Tatas, Godrejs, Bajajs, Modis, Birlas, and Singhanias, each made substantial contributions to social development and community well-being.

Second Phase
The second phase of Indian CSR history can be linked to the independence movement. Industrialists were asked to generously support the cause of the movement, and many did so willingly. Mahatma Gandhi popularized the idea of trusteeship during this period, holding that businesspeople should look out for the interests of the average person.[3] “I want to end capitalism almost, if not quite, as much as the most advanced socialist,” Gandhi stated of the trusteeship idea, “but our approaches are different; my philosophy of trusteeship is neither a band-aid solution nor a disguise.” Industrialists’ contributions aided the independence struggle, the attainment of freedom, and the subsequent nation-building process.[4] Gandhi’s remarks, such as his call that Indian companies should be run like temples of India, encouraged many businesspeople to embrace his ideas and abide by his principles.

Third Phase
This period is notable for India’s strong adoption of a mixed economy and its emphasis on the growth of public sector enterprises. During this time, India also enacted numerous laws relating to labour and environmental protection. People-oriented CSR strategies were shaped in part by the public sector enterprises that drove much of India’s economic development. Professional management practices took hold during this era, not only in public sector organisations but across a number of private sector organisations as well, signaling the decline of the earlier command-and-control system.

Fourth Phase
This phase marks a critical juncture for the field’s advancement in academia, research, and practice. Companies increasingly adopted expert, system-based management over conventional management techniques, and CSR itself became incorporated into commercial strategy. In the early 1990s, India underwent full economic liberalization, marking the beginning of the globalization process.[5] Liberalization, privatization, and globalization together accelerated the economy’s growth trajectory. Alongside these developments, the field of CSR saw remarkable scholarly advancement, and companies adopted CSR more quickly as academic attention aligned with the management sciences. Indian exports increased during this period as new product and service lines were introduced, requiring Indian businesses to swiftly adopt global business techniques, international management practices, and quality standards, which in turn accelerated the adoption of CSR and its associated good practices.

CSR in Contemporary Times

In the early years, only large corporations stepped forward to donate a portion of their profits toward the benefit of society. Over time, guided by the conventions individual business families had embraced, these donations became increasingly expected rather than purely voluntary.[6] Across the four phases described above, this practice evolved into a full business strategy, and today, practically every organisation incorporates CSR into its core business strategy.

When discussing CSR in India, it is worth considering Wipro chairman Azim Premji’s framing of the issue: he notes in his sustainability report that the modern world requires three “E’s”: ecological sustainability, an equitable society, and economic growth, and that enterprises must be instrumental in advancing all three. He argues that civil society and government should collaborate toward this purpose, with companies that support it playing a crucial role in its success. With the assistance of regional organisations, businesses such as Hindustan Unilever Ltd., Maruti Suzuki India Ltd., and Bharat Petroleum Corporation Ltd. (BPCL) pursue their own tailored CSR objectives. The majority of Indian CSR activity focuses on healthcare, education, community development, and the environment.

Section 135 of the Companies Act, 2013[7]
The Companies (CSR) Rules, framed in 2014, set out a summary of what constitutes corporate social responsibility.[8] Under these rules, CSR includes, but is not limited to:

Projects or services related to the areas listed in Schedule VII of the Companies Act; or
Projects or services consistent with a company’s board-approved CSR policy, provided that such projects fall within the areas listed in Schedule VII.[9]

Since 2009, thinking around mandatory CSR in India has evolved considerably. Some critics’ unfavourable views of Section 135 stem from an interpretation that mandatory CSR signals India’s failure as a welfare state.

Three arguments about Section 135 emerge from the historical relationship between Indian enterprise and social commitment, grounded in customary and ethical behaviour rooted in Indian cultural values. The first is that Section 135 gives CSR a new orientation, shifting it away from an inherent corporate value and toward a compulsory activity resembling corporate charity; compulsory adoption risks undermining firms’ voluntary commitment to society. The second is that, under Section 135, the Board of Directors makes decisions regarding CSR policy and initiatives, and while the Board may be aware of social needs in general, it is not necessarily required to attend to the actual, specific needs of the communities the company serves. The third is that existing laws and regulations already require businesses to meet certain social obligations, which raises questions about the necessity of a further compulsory CSR mandate. These three points should be kept in mind when evaluating Section 135.

Applicability of Section 135 of the Companies Act, 2013
The following categories of business must comply with the Act’s CSR requirements: every company meeting the relevant thresholds, the holding company of such a business, the business’s subsidiaries, and applicable foreign companies operating in India.

Under Section 135(1), companies meeting any of the following thresholds are required to establish a CSR committee to carry out designated CSR activities:

Net worth of Rs. 500 crore or more; or
Turnover of Rs. 1,000 crore or more; or
Net profit of Rs. 5 crore or more.

CSR and the Preamble of the Indian Constitution[10]
The Preamble of the Indian Constitution outlines the document’s foundational values and objectives. India’s founding fathers had a keen awareness of the many facets of the country’s social condition; many of the era’s leaders had been educated abroad and were acutely conscious of how India compared to the industrialized countries of the time.

This awareness was shaped by the enormous wealth and poverty gaps, pervasive social disparities, and unevenness in political and economic fairness that they observed. In Union of India v. Pushpa Rani,[11] the Supreme Court noted that the framers’ awareness of these disparities led them to embed such concerns directly in the Preamble. Through its contributions, CSR aims to help eradicate discrimination in society; first and foremost, it pledges to create a fair and equal work environment and to reduce, and ultimately end, discrimination in society.[12]

CSR and Constitutional Provisions

1. Article 19(1)(g): Right to Trade and CSR[13]
Guarantees the freedom to practice any trade, business, or occupation, subject to reasonable restrictions for public welfare, in alignment with the Directive Principles of State Policy (DPSP). Judgments such as State of Bombay v. F.N. Balsara[14] and State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat[15] uphold such restrictions in the interest of the general public. CSR activities align with ethical business practices and promote societal welfare without violating Article 19(1)(g).

2. Article 37: Directive Principles and CSR
Declares the DPSP fundamental to governance, guiding the State in creating laws. CSR aligns with DPSP principles found in Articles 38, 39(b), 39(c), 41, 45, 46, 47, 48A, and 49, focusing on social justice, welfare, and sustainable development.

3. Key Directive Principles Linked to CSR
Article 38(1):[16] Advocates reducing inequalities and ensuring social, economic, and political justice; CSR initiatives target underprivileged groups, reducing disparities in income and access.
Article 39(b) & (c):[17] Calls for equitable distribution of resources and the building of an egalitarian society; CSR focuses on compensating for resource utilization and aiding deprived communities.
Article 41:[18] Ensures employment, education, and public assistance; CSR programs support education, livelihood opportunities, and aid for senior citizens.
Article 47:[19] Promotes better living standards and public health; CSR helps address hunger, improve sanitation, and provide safe drinking water, particularly for those below the poverty line.
Article 48A:[20] Protects the environment and forests; CSR initiatives promote ecological balance, forest conservation, and pollution control.
Article 49:[21] Protects national monuments and cultural heritage; CSR enables funding for the preservation of places of national importance.

CSR in the United States

Globalization has increasingly integrated the world economy through expanded trade and investment. Between 1990 and 2002, global exports and imports grew from $1.5 trillion to $3.8 trillion, while foreign direct investment in developing countries grew even more quickly, from $22 billion to $154 billion. This has brought about improved economic growth and rising employment in both developed and developing countries.[22]

Globalization has also produced negative societal effects and raised concerns about the growth of multinational corporations in developing countries. The treatment and working conditions of foreign workers in business supply chains, health and environmental concerns, and human rights issues (particularly in authoritarian states) are among the difficulties facing US multinational corporations.[23] Widespread reporting on these detrimental effects has left some US multinational corporations with a notably poor reputation.

US-based multinationals establish operations and purchase goods from suppliers in developing countries, where the ethical, legal, and regulatory frameworks differ significantly by nation.[24] Environmental and labour protections are not well developed in certain developing countries, requiring companies to establish their own internal systems and operating standards in these situations.

The media, socially conscious investors, and non-governmental organisations exert considerable pressure on firms, and stakeholders by default expect the highest standards of operation across a global firm’s entire supply chain. Through policy work by groups such as the Kenan Institute, members of Congress have also supported CSR-related initiatives.

Faced with these operational pressures, US businesses have implemented CSR initiatives to sustain smooth operations. To combat HIV/AIDS and other illnesses common in the countries where they operate, US corporations have established health initiatives, and have donated nearly $453 million to relief efforts following the tsunamis that struck South and Southeast Asia and Africa.

The Umbrella Concept
The United States treats CSR as a broad, umbrella concept encompassing company policies addressing a wide range of concerns, including labour, human rights, and the environment.[25] Businesses are expected to take a number of steps to address these issues, with major CSR stakeholders, including governments, investment groups, civil society, and multilateral organisations, all exerting influence.[26]

Global CSR is expected to cover human rights, labour, the environment, and social conditions in developing nations, and this is broadly the direction US CSR takes as well.[27] US businesses adopt a range of CSR practices, from voluntary philanthropy to government-mandated environmental reporting. These formal CSR activities can be grouped into the following categories:

Business Ethics
Community Development
Environment
Governance
Human Rights
Marketplace
Workplace

US business leaders set their own priorities and practices within these categories, and report on them accordingly.[28]

Corporate Governance
Corporate governance concerns the procedures and policies that a board of directors develops to carry out its obligations to stakeholders and investors. American businesses develop processes for communicating with stakeholders, conduct board and CEO performance reviews, and adopt formal board guidelines.

Community Development
Community development involves creating corporate policies to address economic issues facing local communities, particularly underserved and underprivileged groups. Employing and training underprivileged workers, partnering with minority- and women-owned firms, and establishing facilities for underprivileged communities are among the methods US companies use. Some US-based businesses have also built schools across various regions of Africa for eligible communities.

Role of Government
The World Bank identified four main governmental roles related to CSR in 2002: mandating, cooperating, facilitating, and endorsing. Governments can support CSR in a number of ways, including through direct recognition of companies via awards, by offering incentives to businesses that pursue social and environmental gains, and by collaborating with the private sector and civil society to address complex social and environmental issues.

Governments should have certain fundamental laws and regulations in place before attempting to mandate CSR, and developed countries have taken steps to improve the effectiveness of their CSR frameworks. Through discussions among the business community, trade unions, civil society organisations, and other CSR stakeholders, the European Union established the European Commission to help address these challenges.

Regulatory Framework
The US government works to foster corporate environments that support CSR initiatives, and it collaborates with national governments in the countries where US corporations operate.[31] Through a range of policies, the US government also works to support and safeguard US business interests abroad. The Department of Labor, for instance, sets out basic labour rights, norms, and acceptable working conditions applicable in developing nations, while the International Compliance Assurance Division of the Environmental Protection Agency (EPA) collaborates with other governments to help ensure that businesses adhere to environmental regulations.

Comparative Analysis

CSR in India, the USA, Australia, and Europe varies considerably, shaped by regional laws, policies, and societal priorities. In India, CSR is mandatory under the Companies Act, with a focus on social and economic development. In the USA, CSR remains voluntary, driven by market forces, investor expectations, and frameworks such as the GRI and ESG standards. Australia emphasizes voluntary CSR practices aligned with governance principles, ethical supply chains, and community support, while Europe follows a regulated yet flexible approach under EU directives such as the NFRD and CSRD, with a strong focus on sustainability and stakeholder engagement. Each region prioritizes different sectors, reflecting its own social, cultural, and environmental context. The table below summarizes the principal differences between the Indian and US frameworks in greater detail.

Aspect	India	USA
Legal Framework	CSR is mandatory under Section 135 of the Companies Act, 2013, for certain companies.	CSR is voluntary but guided by frameworks such as the Dodd-Frank Act and other ESG initiatives.
Key Guidelines/Policies	Section 135 mandates companies to spend 2% of net profits on CSR activities.	No federal mandate; companies follow Sustainability Reporting Guidelines (GRI) and ESG trends.
Scope of CSR Activities	Focuses on education, healthcare, environment, rural development, and poverty alleviation.	Driven by philanthropy, diversity, equity, and environmental sustainability.
Enforcement	Non-compliance requires an explanation in the board report (“comply or explain”).	Voluntary, with market pressure; companies face scrutiny from investors and consumers.
Reporting Requirements	Annual CSR reporting mandatory for eligible companies.	Sustainability and CSR reports are common; adherence to standards like GRI and SASB is voluntary.
CSR Drivers	Law-mandated, with a focus on social and economic development.	Market-driven, shaped by consumer preferences, investor expectations, and reputational risk.
Stakeholder Engagement	Emphasizes development in underprivileged and rural areas.	[Author to review — source text lists this identically to India; consider revising to reflect the US’s investor- and consumer-driven engagement model.]
Popular Frameworks Followed	Section 135 compliance, Schedule VII, and National Guidelines on Responsible Business Conduct (NGRBC).	GRI, SASB, UNGC, and CDP.
Prominent CSR Sectors	Education, health, poverty, environment, and rural development.	Diversity, climate change, community development, and racial justice.

Conclusion and Suggestions

Corporate social responsibility has become an essential component of global commercial commitment. Rising concern about climate change has increased acceptance of CSR as a core operating duty for firms everywhere, and as CSR reporting becomes required in more nations, its effectiveness has steadily increased.

Global partnerships for sustainable development have been a central focus of CSR policy at the international level.[30] By disseminating shared practices worldwide, national CSR policies reinforce one another and increase the overall effectiveness of globalization, underscoring the growing importance of firms operating responsibly.

Since CSR first began to gain traction as a field, numerous definitions have been proposed, and its steady rise in importance has guaranteed the continuous growth of contextual knowledge and academic scholarship. CSR was first conceived as a foundation for corporate self-regulation in service of social responsibility.

Across India, the USA, Australia, Europe, and many other regions, CSR reflects a blend of regulatory requirements, voluntary initiatives, and stakeholder expectations. India emphasizes legal mandates, the USA prioritizes market-driven approaches, Australia adopts ethical integration, and Europe fosters regulatory-backed sustainability. The global trend underscores the growing importance of businesses as active contributors to societal well-being and environmental protection, with companies increasingly recognizing CSR as a strategic tool for long-term growth, brand reputation, and stakeholder trust.

References

[1] Mohan, A. (2001). Corporate Citizenship in India: Evolution, Current Perspectives, and Future Expectations. Journal of Corporate Citizenship.
[2] Sundar, P. (2013). Business and Community: The Story of Corporate Social Responsibility in India. Sage Publications.
[3] Gandhi, M. K. (1939). Constructive Programme: Its Meaning and Place. Navajivan Publishing House.
[4] Guha, R. (2007). India After Gandhi: The History of the World’s Largest Democracy. Macmillan.
[5] Rangarajan, L. N. (1992). Economic Liberalization and the Changing Face of CSR in India. Economic and Political Weekly.
[6] Sharma, S. (2017). Examining CSR Practices in India. International Journal of Social Science and Humanities Research.
[7] The Companies Act, 2013, § 135 (India).
[8] Companies (Corporate Social Responsibility Policy) Rules, 2014 (India).
[9] Schedule VII, The Companies Act, 2013 (India).
[10] The Preamble of the Constitution of India.
[11] Union of India v. Pushpa Rani, (2003) 4 SCC 125 (India).
[12] India’s Constitutional Values and Corporate Social Responsibility (2012), at p. 30.
[13] The Constitution of India, art. 19(1)(g).
[14] State of Bombay v. F.N. Balsara, AIR 1951 SC 318 (India).
[15] State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat, AIR 2005 SC 2492 (India).
[16] The Constitution of India, art. 38(1).
[17] The Constitution of India, art. 39(b), (c).
[18] The Constitution of India, art. 41.
[19] The Constitution of India, art. 47.
[20] The Constitution of India, art. 48A.
[21] The Constitution of India, art. 49.
[22] The Impact of Globalization on Multinational Corporations in Developing Countries. Journal of International Business Studies, Vol. 45, Issue 2 (2013), at p. 55.
[23] State of Corporate Social Responsibility in the U.S., Kenan Institute Working Groups (2015).
[24] Corporate Social Responsibility in the 21st Century (2014), at p. 90.
[25] Corporate Social Responsibility in Practice. Harvard Business Review (2016), at p. 80.
[26] Corporate Social Responsibility: A Global Perspective (2017), at p. 112.
[27] U.S. Corporate Social Responsibility: Voluntary and Mandated Practices. Business & Society Review (2015), at p. 32.
[28] Corporate Governance: Best Practices and Guidelines (2013), at p. 60.
[29] World Bank. The Role of Government in Corporate Social Responsibility (2002), at p. 20.
[30] International Labour Organization, Guidance on Corporate Social Responsibility (2008).