Abstract
The purpose of this paper is to discuss the implications of mandatory corporate social responsibility (CSR) contributions: the CSR levy. Using public interest theory as the theoretical lens, this paper adopts a pro-regulation approach and justifies the introduction of the CSR levy in Mauritius, based on the economic and business environment prevailing at the time. Secondary literature sources are used to investigate. Two further questions related to mandatory CSR are investigated: Does the CSR levy result in a competitive disadvantage? Does the CSR levy reduce profits? We conclude that the CSR levy does not disadvantage firms due to the uniform amount and its universal application. Furthermore, it can attract Foreign Direct Investment (FDI) and Socially Responsible Investment (SRI). However, the CSR levy does negatively impact on profits but has the potential to pay higher returns in the future if viewed as an investment. This research needs to be complemented by studies that empirically investigate the impacts of the CSR levy on companies and sectors in Mauritius.
Highlights
The idea of corporate social responsibility (CSR) dates back to the 20th century (Kristoffersen, Gerrans and Clark-Murphy [1]) and companies have been disclosing information about various aspects of their social and environmental performance for over a century (Deegan [2])
Two further questions related to mandatory CSR are investigated: Does the CSR levy result in a competitive disadvantage? Does the CSR levy reduce profits? We conclude that the CSR levy does not disadvantage firms due to the uniform amount and its universal application
In light of the above discussion, the following research questions arise: 1) Should CSR be mandatory? 2) Does mandatory CSR bring competitive disadvantage? 3) Does mandatory CSR decrease profits? This study aims to shed light on these questions by considering Mauritius as a case study
Summary
The idea of corporate social responsibility (CSR) dates back to the 20th century (Kristoffersen, Gerrans and Clark-Murphy [1]) and companies have been disclosing information about various aspects of their social and environmental performance for over a century (Deegan [2]). While the debate was initially centred on CSR reporting, three countries (e.g. Mauritius, India and Indonesia) have gone further and imposed a mandatory CSR contribution by firms (CSR levy). This decision attracted much criticism especially in Indonesia where the legality of mandatory CSR was challenged before the Constitutional Court (Waagstein [5]). Mauritius is a pioneer in introducing a CSR levy on all companies irrespective of size and industry. This is in stark contrast with India and Indonesia which apply mandatory CSR selectively. A proper appreciation of the local political and social forces at play are important to understand the pro-regulation approach to CSR in the case of Mauritius
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