Corporate social responsibility (CSR) is a modern business practice. It aims to achieve a medium of self-regulation in which the company or the corporation is encouraged to be more socially accountable to the public.
What is CSR?
- CSR is the practice whereby a corporate invests some of its profits back into the social development projects like drinking water, sanitation, education and infrastructure for the societies in which they operate or choose to fund.
- It is also known as corporate citizenship.
- By employing CSR, a company or corporate can be made sensitive to its social impact which may also include its economic and environmental footprint.
- By engaging in CSR, a company aims to enhance society and have a positive impact on the environment.
- A CSR activity may be individual, store or location-specific for small companies to even national and transnational levels for the multi-national corporates.
- In India, it is mandatory for corporates to spend part of their proceeds on CSR.
- In India, every company with a net worth of INR 500 crore or turnover of INR 1,000 crore or net profit of INR 5 crore should spend 2% of the average profits it made over the previous three years on social development.
Benefits of CSR
- Through the implementation of the CSR programs like philanthropy, and volunteer efforts of their employees, a business can positively impact benefit society while also providing some good advertising for its brands.
- Studies have found that CSR activities help create a strong bond between the employees of a company, increase the morale of the workers and provide a strong social connect.
Why is it in the news?
- In the latest Companies Act amendment, the non-compliance of CSR a jailable offense and plans to impose a hefty fine of INR 25 lakh on the company and INR 5 lakh on the defaulting officer.?
- The government says that companies are not filing data with the government on CSR activities and this is challenging and sad.
- Compared to PSUs which spend an average of INR 10 crore on CSR, private players were found to spend just INR 95 lakh.
Half of all companies in India do not file the CSR reports with the Ministry of Corporate Affairs.