Faculty Seminar | The Hocus Pocus of Corporate Purpose and the Visible Hand of the State – Insights from India’s CSR Experience
December 18, 2019
The paper was presented by Ms. Akshaya Kamalnath, Lecturer (Corporate Law) , AUT Law School, Auckland.
Abstract: Can corporate law solve the most serious global problems we have? Corporations do have a role to play in issues like climate change, the consequences of using artificial intelligence without adequate safe guards and even inequality. But should corporate law be the vehicle to solve these problems? This article argues that the purpose of the corporation or the ‘corporate purpose’ is invoked as a kind of hocus pocus to attribute vague responsibilities to corporations.
If we allow this kind of hocus pocus to gain ground, we should also be aware that the State will have a dominant say in how corporations are run. Not only will this affect the actual business of the corporation, it will also stifle voluntary programs that corporations might have set up, for the benefit of any set of stakeholders or the society in general. The article studies the mandatory CSR law in India to illustrate this argument. The Indian experiment is useful because it has gone further than most countries in requiring corporations to solve societal problems. The problems it has run into are useful pointers for other countries considering widening or changing corporate law to accommodate a scenario where the corporate purpose must include social goals, as defined by government. The article concludes that the better approach is to incentivize corporations to future-proof themselves against reputational and other damage by incorporating sustainability into its risk metrics.