Corporate Social Responsibility
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.
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Corporate Social Responsibility
Corporate Social Responsibility is a self-regulatory mechanism which ensures its active compliance with the spirit of the law, international norms and ethical standards. United Nations Industrial Development Organization defined it as the responsiveness of businesses to stakeholders’ legal, social, ethical and environmental expectations. According to UNIDO, it is a management concept where companies integrate environmental and social concerns in interaction with their stakeholders’ and also in their business operations. It is a way through which other companies achieve a balance of environmental, social and economic imperatives.
Who Are All Covered By CSR Norms?
Any and every company which has a net worth of Rs 500 crore or more or a turnover of Rs 1000 crore or more in any financial year has to constitute a CSR committee and spend at least 2% of the net profit made by the company during the last 3 financial years as CSR under the Companies Act 2013
What Are CSR Eligible Activities ?
Activities relating to:
- Poverty, malnutrition, eradicating hunger, health care including sanitation and preventive healthcare and making available safe drinking water
- Ensuring ecological balance, environmental sustainability, protection of flora and fauna, animal welfare, conservation of natural resources and maintaining soil, air and water.
- Measures for the benefit for war widows, armed forces and their dependents.
- Training to promote nationally recognized sports, rural sports, Paralympic sports and Olympic sports.
- Projects on Rural Development
- Funds or contribution provided to technology incubators which are approved by central government.
- Protection of national heritage, site of historical importance, works of art, promotion and development of traditional arts and handicrafts.
- Promoting gender equality, setting up homes and hostels for women, empowering women etc.
- Promoting education which includes employment enhancing vocational skills especially among women, children and differently-abled.
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