The Government of India has joined a selection of other countries who think that the best way of achieving CSR is to tax companies extra.

The government has agreed that the Companies Act 2009 should require companies to set aside 2% of average net profits to donate to activities of a charitable nature.

For some companies this will be cheap. Take the example of Dow Chemicals' subsidiary Union Carbide - the one they bought after it had killed something in the region of 20,000 inhabitants of Bhopal via a chemical leak. Two percent of net profits of a subsidiary which at the time was dormant would be next to nothing. So Corporate Social Responsibility for that company in that case under the proposed amendment would equate to a big fat nothing.

The legislation is hinged on a wilful misunderstanding of the true nature of CSR. Corporate responsibility is not about giving something back; it is about not inflating profits in the first place by undertaking activities that place the public or the environment in harm's way, or that otherwise create public costs.

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