Impact of Legal Enforcement of CSR on SDGs

By now, it is generally accepted that we need to make progress in terms of sustainable development. It is also generally accepted that a measurement framework promotes monitoring and increases accountability. Combining the two ideas, the UN developed a set of universal goals, known as the Sustainable Development Goals (SDGs). These goals consist of 17 SDGs with 169 targets. Various countries are using different methods to make progress on achieving the goals. One of the most obvious ways to expedite progress would be to pass appropriate laws.
This chapter is one of the first attempts at analyzing the economic and financial ramifications of country efforts towards achieving these goals by passing laws. Specifically, it empirically examines the impact of passing appropriate laws on attaining SDGs. We examine various hypotheses using the Difference-in-Difference (DiD) approach. We test three hypotheses. The first two assess whether a country’s SDG performance and its firms’ financial performance improve with the passage of these laws. The third examines the performance of two comparator countries - one with a CSR law in place and one without. We take India as a test case for the first two hypothesis and compare India and Indonesia for the third one. We find that the SDG performance improves after implementing a CSR law, while the financial performance of firms is affected adversely. We also find that a country with mandatory CSR laws performs poorly compared to one with no such law in place.