ABSTRACT
Corporate social responsibility is now an essential and fundamental part of doing business and has evolved into a strategic commitment. Historically, corporate social responsibility in the world and in India has its roots in the philanthropy and charitable activities of businesses. Today, it is associated with public expectations, legal mandates, brand reputation and strict scrutiny with legal consequences for non-compliance. India is the first country to statutorily mandate corporate social responsibility for the companies which are specified under section 135 of the Companies Act, 2013. In a time when businesses are closely watched and corporate integrity is crucial, failures in corporate social responsibility can severely damage a company’s reputation and lead to significant legal and financial troubles. Such failures can damage trust and weaken stakeholder confidence, ultimately affecting a company’s financial performance and market position. Over the years, non-compliance of corporate social responsibility has led to many companies facing legal consequences and reputational damages like Volkswagen Emissions Scandal. The article examines the relationship between CSR failures and corporate liability. The article explores the impact of CSR related failures on corporate reputation using real-world examples. The aim of this article is to investigate the extent to which CSR failures lead to corporate liability and reputational damage, as well as how companies can reduce these risks through effective CSR strategies.
Key Words: Corporate Social Responsibility (CSR), Corporate Liability, Corporate Reputation, Legal Consequences, Non-compliance, CSR Strategies
- INTRODUCTION
Today corporate social responsibility has become one of the important aspects of strengthening business. The corporate world is not limited to doing business, but is now associated with public expectations towards businesses to have sensitivity towards communities around which they work and sensitivity towards environment, ensuring sustainability. If there is a failure towards carrying out such responsibilities, its reputation is at risk. Such intangible assets of the company like brand reputation, public trust, customer loyalty is what actually decides its long-term success. Corporate social responsibility not only looks after the public interests but also of businesses. Corporate social responsibility can be traced in India through Section 135 of the companies Act, 2013 with legal consequences for non-compliance. Such non-compliance and facing legal consequences can tarnish a company’s reputation including the weakening of the stakeholder’s confidence and affecting the company’s market position. At the same time complying with it can ensure a good impact on reputation. Hence the aim of this paper is to investigate the extent to which CSR failures can lead to corporate liability and reputational damage.