CORPORATE SOCIAL RESPONSIBILITY COMPLIANCE IN EXTRACTIVE INDUSTRIES BEFORE AND DURING COVID-19: EVIDENCE FROM INDIA

Abstract

This study investigated the behavior of companies regarding their CSR spending level as per the 2% CSR spending criteria proposed in Section 135 of the Indian Companies Act 2013. In addition, the difference between the Govt. and non-Govt. firms’ CSR spending levels are investigated. Furthermore, the impact of CSR committee attributes and certain firm-level characteristics, such as age, leverage, liquidity, and profitability, on the CSR spending level was investigated. Finally, the impact of COVID-19 on CSR spending levels is also investigated. A sample of 100 companies from the extractive industry listed on the Bombay Stock Exchange (BSE) was chosen to examine the CSR spending level and engagement in CSR activities using content analysis for 2016-2022. The results showed that Govt. owned companies have made more than the required CSR spending. Activities such as "Promoting education and employment enhancing skills among children, elders and women" followed by "Promoting health & sanitation, eradicating hunger & poverty and availability of safe drinking water" are the most common areas for spending CSR budget while environmental sustainability is the third most prioritized area. CSR committee independence and cash flow availability significantly influence firms’ CSR spending. Furthermore, highly leveraged companies do not exceed the required CSR spending. Regarding the effect of COVID-19, companies with increasing trends have started to identify new avenues for spending on CSR budgets, as there were no policy guidelines available from the government. This study’s findings have important implications for policymakers and regulators.

Key Words: CSR Spending Level; CSR Engagement Activities; COVID-19; State-Ownership; Companies Act 2013