Open Access Research Article
MANDATORY CORPORATE RESPONSIBILITY IN INDIA: SECTION 135 CSR, BRSR DISCLOSURE AND ENVIRONMENTAL LIABILITY AS DISTINCT REGULATORY REGIMES
Abstract
Abstract
Corporate
responsibility in India has moved through three overlapping stages: an early
period in which social spending was philanthropic and left to managerial
discretion; an intermediate period in which policy instruments defined
responsible business conduct without compelling it; and a present period in
which company law and securities regulation have converted significant parts of
social and environmental responsibility into enforceable legal duties.
Describing India merely as a jurisdiction with "mandatory CSR"
understates what has occurred. The more accurate description is a layered
system of mandatory corporate responsibility, composed of three regimes that
overlap in purpose but remain doctrinally distinct. Section 135 of the
Companies Act, 2013 obliges qualifying companies to constitute a Board-level
committee, spend a prescribed proportion of average net profit on Schedule VII
activities, and account for unspent amounts through a defined transfer
mechanism. The Securities and Exchange Board of India has separately required
major listed entities to disclose structured sustainability information, moving
from the Business Responsibility Report to the more detailed Business
Responsibility and Sustainability Report and, most recently, to BRSR Core,
which subjects a narrower set of indicators to phased third-party assessment or
assurance. Independently of both regimes, Indian environmental jurisprudence
imposes preventive and restorative obligations on polluting enterprises that
cannot be discharged through voluntary social expenditure elsewhere in the
business.
This
article develops that argument through doctrinal analysis of Section 135, the
Companies (Corporate Social Responsibility Policy) Rules as revised from 2021
onward, the successive SEBI circulars that built the BRSR and BRSR Core
framework, and Indian case law establishing the separate legal content of
environmental responsibility. It also engages critically with the principal
empirical studies of Section 135, which complicate any simple narrative of
success. Firms subject to the mandate increased CSR participation, yet some
large firms that had previously spent above the statutory benchmark reduced
spending after the law took effect, and firms that voluntarily undertook CSR
before 2014 appear to have reduced it once a common statutory floor removed much
of its signalling value. These findings do not show that mandatory CSR has
failed; they show that an expenditure floor changes incentives in ways an
input-based compliance regime cannot detect, and they justify a stronger
emphasis on independent impact assessment than on the raw percentage of profit
committed.
The
article contends that the next phase of Indian corporate-responsibility law
should not centre on a larger compulsory expenditure figure but on
strengthening the connection between expenditure, verified outcome and
disclosed evidence. This requires distinguishing outputs from outcomes in
impact assessment, preserving the additionality principle that excludes
expenditure already owed under other law, allowing CSR reporting and BRSR
indicators to become technically interoperable without collapsing two distinct
legal concepts into a single score, and directing enforcement toward
misclassification, diversion and material discrepancies between claims and
verifiable performance rather than toward the ordinary failure of a
well-designed but unsuccessful project. The analysis is current to 27 September
2026 and accounts for the Corporate Laws (Amendment) Bill, 2026, which proposes
raising the Section 135 net-profit threshold from five crore rupees to ten
crore rupees and had not been enacted as at the date of this article
notwithstanding the Joint Parliamentary Committee report of 3 August 2026. On
the evidence examined here, India's transition from voluntarism to mandatory
governance is real, but its completion now depends less on the size of the
statutory obligation than on whether reported compliance can be shown, credibly
and independently, to correspond to the outcomes it is meant to produce.
Published Paper
Author Details
Authors: AKSHAJ GARG
Registration ID: 1013224 | Published Paper ID: IJLRA13224
Year: Sep-2026 | Volume: 3 | Issue: 6
Approved ISSN: 2582-6433 | Country: Delhi, India
Page No.: 1578-1596
Article Information
MANDATORY CORPORATE RESPONSIBILITY IN INDIA: SECTION 135 CSR, BRSR DISCLOSURE AND ENVIRONMENTAL LIABILITY AS DISTINCT REGULATORY REGIMES
Authors: AKSHAJ GARG
- Journal IJLRA
- ISSN 2582-6433
- Volume 3
- Issue 6
About Journal
International Journal for Legal Research and Analysis
- AbbreviationIJLRA
- ISSN2582-6433
- AccessOpen Access
- LicenseCC 4.0
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