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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Governance Influencers

Tanvi Foods Ltd wants to sign a global initiative launched by the UN in 2000 under which companies commit to align operations with ten universal principles on human rights, labour, environment and anti-corruption, and report annually on progress. The board asks how it differs from a mandatory statute. Which statement is correct?

The initiative is the UN Global Compact, which has ten principles on human rights, labour, environment and anti-corruption. It is voluntary, so joining creates a commitment and reporting expectation but no statutory penalty in India. Sarbanes-Oxley is a US statute and the Cadbury Code is a UK code.

  1. AIt is the UN Global Compact, a voluntary initiative, so participation does not create statutory penalties in India for non-adherenceCorrect
  2. BIt is the UN Global Compact, and non-adherence attracts penalties under the Companies Act, 2013
  3. CIt is the Sarbanes-Oxley Act, applicable to all Indian companies
  4. DIt is the Cadbury Code, binding on Indian listed companies by law

Explanation

The UN Global Compact, launched in 2000, has ten principles in four areas and is voluntary. Signing it is a commitment, not a statutory obligation, so no Companies Act penalty flows from it. Sarbanes-Oxley is a US law and Cadbury is a UK code, neither directly binding on Indian companies.

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