title: Regulating corporate social responsibility in the UK and India: an analysis from the perspective of stakeholder protection
Creators: name: Singh, Snehita
Publisher: name: University of Glasgow
Year: 2022
Subjects: subject: Corporate social responsibility, stakeholder interests, director’s duty, decision-making, disclosure, stakeholder engagement, due diligence.

description: The notion of corporate social responsibility (CSR) emphasises the way directors manage the companies. It focuses on how a company takes responsibility for its impact on the various stakeholders, extending the corporate purpose beyond the narrow shareholder-primacy framework. This thesis explores how CSR should be regulated from a legal perspective by analysing the current legal framework for CSR in the United Kingdom (UK) and that of India. The reform of directors' duties and disclosure are methods for protecting stakeholders in the two jurisdictions. Disclosure is identified to be crucial but not sufficient to safeguard stakeholders fully. While it creates some level playing field in the UK by giving information to the stakeholders about the company, in India, the lack of enforcement of the reporting requirements and inadequate verification of the information provided by companies lead to a tick-box approach. The implication of the comparative research on the legal framework demonstrates the differences in the approach to regulating CSR. The UK gives flexibility to its directors to manage the affairs of the company. The enlightened-shareholder-value (ESV) approach of the UK Companies Act 2006 (CA 2006) prioritises shareholder's interests over stakeholders. India adopts a pluralist approach but gives importance to the philanthropic approach under section 135 of the Indian Companies Act 2013 (CA 2013), and overall, the framework is prescriptive and more towards hard law. However, in both countries, the substantive duty under section 172(1) of CA 2006 and section 166(2) of CA 2013 gives directors a wide discretion to integrate stakeholder interests without telling them how to do it. Stakeholder interests have been largely marginalised due to the black-box method of decision-making, and therefore, the question arises as to how to secure accountability for stakeholders. This thesis identifies several potential techniques to protect stakeholders. The substantive duty of directors must be implemented through process-based regulation. Stakeholders must be empowered to be able to influence director's decisions. The key legal reform identified is the 'purpose provision', which should also be reflected in the director's incentive plans. The implementation of a broader purpose should be supported by a due diligence process implemented by a mandatory approach. A provision for stakeholder engagement such as Provision 5 of the UK Corporate Governance Code will have a preventive or precautionary effect on the decision-making process, thus, potentially improving the quality of decisions. Such process-focused mechanisms control the factors that contribute to decision-making by establishing a process that incorporates good techniques and incentives in each corporate governance system to protect stakeholders.