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CS Professional · CSR and Social Governance · CSR and Sustainable Development Goals

A board member of Himalaya Power Ltd says the SDGs are legally binding on companies in India and failure to meet them attracts penalty under the Companies Act, 2013. The company secretary corrects this. Which statement reflects the correct position?

The SDGs are a voluntary, non-binding global framework, so companies may align CSR projects with them but face no penalty merely for not meeting them. The legally enforceable CSR obligation comes from the Companies Act, 2013, the CSR Rules and the activities listed in Schedule VII.

  1. ASDGs are binding treaty obligations on every company that operates in India
  2. BSDGs are a voluntary global framework; companies may use them to guide CSR, while the statutory CSR obligation arises from the Companies Act and the CSR RulesCorrect
  3. CSDGs replace Schedule VII, so CSR spending must follow only the SDG list
  4. DSDGs bind only listed companies, through SEBI penalties for non-alignment

Explanation

The SDGs are a non-binding, voluntary UN framework addressed to governments, with business encouraged to contribute. A company's legal CSR duty comes from the Companies Act, 2013 and the CSR Rules, with eligible activities in Schedule VII. The Schedule VII list is not replaced by the SDGs, so the Schedule VII option is wrong.

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