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

Mahi Pharma Ltd, an Indian company, signs the UN Global Compact and commits to its principles. Its CSR head claims that signing the Compact makes the company's CSR spending under Indian company law unnecessary because the Compact is legally binding and replaces national obligations. Which statement is correct?

The claim is wrong. The UN Global Compact is a voluntary initiative with ten principles on human rights, labour, environment and anti-corruption. It is not a binding treaty and does not replace or exempt a company from statutory CSR obligations under the Companies Act, 2013 where applicable.

  1. AThe claim is correct because the Global Compact is a binding treaty enforceable against signatories
  2. BThe claim is incorrect because the Global Compact is a voluntary initiative and does not replace statutory CSR obligations under the Companies Act, 2013Correct
  3. CThe claim is correct only if the company is listed
  4. DThe claim is incorrect because the Global Compact applies only to governments

Explanation

The UN Global Compact is a voluntary corporate sustainability initiative built on ten principles covering human rights, labour, environment and anti-corruption. It is not a treaty and does not displace statutory CSR duties if the company meets the Companies Act thresholds. It is also aimed at businesses, not only governments.

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