Social Impact Investing

In 1995, item S50K of the Income Tax Act of Mauritius mandated that companies
registered in Mauritius paid 2% of their annual book profit to contribute to the social and
environmental development of the country. In 2014, India also enacted a mandatory
minimum CSR spending law. Under Companies Act, 2013, any company having a net
worth of 500 crore or more or a turnover of 1,000 crore or a net profit of 5 crore must
spend 2% of their net profits on CSR activities. The rules came into effect from 1 April
2014.
Crises and Their Consequences
Crises have encouraged the adoption of CSR. The CERES principles were adopted
following the 1989 Exxon Valdez incident. Other examples include the lead paint used
by toy maker Mattel, which required the recall of millions of toys and caused the
company to initiate new risk management and quality control processes. Magellan
Metals was found responsible for lead contamination killing thousands of birds in
Australia. The company ceased business immediately and had to work with
independent regulatory bodies to execute a cleanup. Odwalla experienced a crisis with
sales dropping 90% and its stock price dropping 34% due to cases of E. coli. The
company recalled all apple or carrot juice products and introduced a new process called
"flash pasteurization" as well as maintaining lines of communication constantly open
with customers.
Geography
Corporations that employ CSR behaviors do not always behave consistently in all parts
of the world. Conversely, a single behavior may not be considered ethical in all
Page 61 of 140