“CSR isn’t a particular programme, it’s what we do every day, maximizing positive impact and minimizing negative impact.”
Corporate social responsibility (CSR) is a way that a company manage its business processes to produce an overall positive impact on society. It covers sustainability, social impact and ethics, and done correctly should be about core business – how companies make their money -, not just add-on extras such as philanthropy.
C.S.R. is not a novelty. The activities of CSR have been carried out around the world since ancient time.
Corporate social responsibility is a broad concept that may take various forms depending on the company and industry. With the help of CSR programs, not only businesses can benefit society but can also boost their brands. CSR activities can help forge a stronger bond between employees and corporations; boost morale, and help both employees and employers feel more connected with the world around them.
“CSR can be very hard for employees to relate to if we don’t make it tangible to their everyday working lives.”
The history of CSR can be traced back to 5000 years in Ancient Mesopotamia around 1700 BC, when King Hammurabi introduced a code in which builders, innkeepers or farmers were put to death if major inconvenience or deaths of local citizens was caused due to their negligence.
It was with the publication of Bowen’s Social Responsibility of Businessmen in 1953 that the term Corporate Social Responsibility was coined.
MEANING OF CORPORATE SOCIAL RESPONSIBILITY
Corporate social responsibility is based on the idea that any business has social obligations which are beyond just making a profit. Corporate social responsibility is the duty of the organizations and businesses to contribute to the economic development of the country. It aims at improving the standard and lives of society as a whole.
When a person helps others in any manner such as giving charity, donations, donating blood, providing food, shelter, providing medical aid, etc., he shows his social responsibility towards the society or the community which he is a part of.
Similarly, when an organization or an enterprise steps forward to help the society/ the state/ the country by contributing an amount out of their profits, or by establishing such institutions which would benefit the society, such act is called as corporate social responsibility.
SECTION 135 OF THE COMPANIES ACT, 2013
Corporate Social Responsibility was introduced under Section 135 of the Companies Act, 2013. Amongst the various provisions stated by the Act, the Government of India makes it mandatory for a particular class of profitable companies to contribute their share of profits for the cause of social activities through a dedicated procedure prescribed by the CSR rules and regulations.
The CSR provisions within the Act is applicable to companies with an annual turnover of Rupees 1,000 crore and more, or a net worth of Rupees 500 crore and more, or a net profit of Rupees 5 crore and more. The Act also requires such companies to constitute a Corporate Social Responsibility Committee of the Board with at least one Independent Director.
The CSR Committee has the following functions to carry out:
- to formulate and recommend the policy which would indicate activities to be undertaken by the company;
- to recommend the expenses to be incurred on such activities and
- time to time monitor the CSR policy from.
The above mentioned recommendations are to be made to the Board of the company, after which the Board shall take into consideration such recommendations and approve the same. It shall be the responsibility of the Board to ensure the implementation of the activities mentioned in the policy.
The Act encourages companies to spend a minimum of 2% of their average net profit earned in the previous three years on CSR activities. However, this amount must be utilized within a period of three years from the date of transfer, and failing to do so, the fund must be deposited in to one of the specified funds. If a company fails to comply with the provisions prescribed in the new amended Section 135 of the Companies Act, 2013, the company will be liable to a penalty of an amount which will be more than Rupees 50 Thousand but less than Rupees 25 Lakhs. The Act also prescribes that every officer of such non-compliant company will be penalized with a fine that is more than Rupees 50 Thousand but less than Rupees 5 Lakhs, or up to 3 years of imprisonment as punishment, or both.
The Act lists out a set of activities eligible under CSR. Companies may implement these activities taking into account the local conditions after seeking board approval. Number of activities which can be undertaken by a company under CSR have been specified under Schedule VII of the Act. The Companies Rules, 2014 has defined the term ‘Corporate Social Responsibility (CSR)’ as “Corporate Social Responsibility (CSR)” means and includes but is not limited to :
- Projects/ programs related to activities specified in Schedule VII to the Act; or
- Projects/ programs related to activities undertaken by the board of directors of a company (Board) in enforcement of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company, provided that such policy will cover subjects listed in Schedule VII of the Act.”
As per the Ministry of Corporate Affairs notification dated 27th February, 2014 these activities include:
- Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water;
- Promoting education, employment enhancing vocational skills among children, women, elderly, and the differently abled and livelihood enhancement projects;
- Promoting gender equality, women empowerment, setting up homes and hostels for women and orphans, setting up day care centres and such other facilities for senior citizens and preventive measures for reducing inequalities faced by socially and economically backward groups;
- Ensuring ecological balance, environmental sustainability, protection of flora and fauna, animal welfare, agro forestry, conservation of natural resources and maintaining quality of soil, air and water;
- Protection of national heritage, art and culture including restoration of historical buildings and sites and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts;
- Measures for the benefit of armed forces veterans, war widows and their dependents;
- Training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports;
- Grants to the Prime Ministers’ National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
- Donations/ funds provided to technology incubators located within academic institutions approved by the Central Government;
- Rural development projects.
GOVERNANCE
Section 135 of the Act lays down certain guidelines that companies need to follow while developing their CSR programme. The CSR committee is responsible for preparing a detailed plan on CSR activities, including the number of expenses, the type of activities, roles and responsibilities of various stakeholders and a monitoring mechanism for such activities. The CSR Committee may also ensure that any income accrued to the company by way of CSR activities should be credited back to the community or CSR corpus.
REPORTING
The new Act requires that after considering the recommendations made by the CSR committee, the board of the company shall approve the CSR policy for the company. The Board must disclose the contents of the policy in its report and also publish the details on the company’s official website. The Board shall specify the reasons of failure in its report if the company fails to spend the prescribed amount.
MAJOR COMPANIES CONTRIBUTING TO CSR IN INDIA
Tata Group
The Tata Group in India carries out various CSR projects. Most of these programs are for community improvement and poverty alleviation. It has engaged in number of activities such as women empowerment, income generation, rural community development, and other social welfare programs. The Tata Group provides scholarships and endowments for numerous institutions in the education sector.
The group also engages itself in healthcare projects, viz. the facilitation of education for children, immunization, and the creation of awareness of AIDS. Other areas include economic empowerment through agriculture programs, environment protection, providing sports scholarships, and infrastructure development, like hospitals, research centres, educational institutions, sports academy, and cultural centres.
Tata Chemical
Tata Chemicals Ltd strive to serve the nationally and locally deprived communities, present in their area of operations. The BEACON programme highlights their focus:
Blossom: Promotion and development of native handicrafts
Enhance: Overall enhancing the quality of life
Aspire: Education and vocational skill development
Conserve: Investment in Bio-diversity, natural resources and global climate change management resulting in increase in environment sustainability
Nurture: Health care, sanitary solutions and safe drinking water.
Ultratech Cement
Ultratech Cement is involved in welfare work across 407 villages within the country getting to create sustainability and self-reliance. Healthcare and family welfare programs, education, infrastructure, environment, social welfare, and sustainable livelihood are its spotlight.
The company has organized medical camps, immunization programs, sanitization programs, school enrollment, plantation drives, conservation programs, industrial training, and organic farming programs.
Mahindra & Mahindra
Mahindra & Mahindra (M&M) is an Indian automobile manufacturer. For the purpose of promoting education, it established the K. C. Mahindra Education Trust in 1954 and Mahindra Foundation in 1969. Its focus is to assist economically and socially disadvantaged communities in the educational sector.
Its CSR programs invest in scholarships and grants, livelihood training, healthcare for remote areas, water conservation, and disaster relief programs. M&M runs programs such as Nanhi Kali focusing on education for girls, Mahindra Pride Schools for industrial training, and Lifeline Express for healthcare services in remote areas.
Hindustan Zinc Ltd
Hindustan Zinc Ltd. aims at harmonious and equitable growth through its CSR activities. They have an internal committee and monitoring programs, which are established to keep a check upon its social responsibility measures.
Bharat Petroleum Corporation Ltd
Bharat Petroleum Corporation contributes to the development of the country through its active participation in the energy sector. Its sustainable involvements and activities are spread over urban, semi-urban, rural and tribal areas.
Infosys
As a part of their CSR activities, Infosys provides programs of quality education to its citizens, increasing their IT skills and proficiency.
Coca-Cola Multinational
Coca-Cola aims at maximizing profit as well as a social benefit. It tries to create a difference through its CSR activities. Its aim is to contribute a minimum of 1% of its annual income to charitable causes. In its policies, it states the necessity to adopt ethical values and practices.
Coca-Cola Company (KO)
In 2010, Coca-Cola started the 5by20 initiative to empower women across the globe, announcing the following:
“The Coca-Cola Company’s global commitment to enable the economic empowerment of five million women entrepreneurs across the company’s value chain by 2020.”
CONCLUSION
The concept of corporate social responsibility is as old as trades and businesses in India. The only thing was that it was never penned down. CSR was primarily associated with only institutional buildings before moving to community development through various projects. The CSR has been introduced by the Companies Act, 2013 under Section 135. The provision mandates the companies with an annual turnover of Rupees 1,000 crore and more, or a net worth of Rupees 500 crore and more, or a net profit of Rupees 5 crore and more to contribute at least 2% of average net profits towards the development of the society. Small and medium enterprises (SMEs) can collaborate with other organizations to make their contribution at optimal costs. The SMEs significantly contribute to the economic growth of India. Mahindra and Mahindra, Infosys, Tata Group, etc are some out of many of the companies that successfully implement CSR activities in various fields like that of education, health, women empowerment, community development, environment, etc.
REFRENCES
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- CSR Amendments 2019, India Filings, available at, https://www.indiafilings.com/learn/csr-amendments-2019/
- Handbook On Corporate Social Responsibility In India, P.W.C., available at https://www.pwc.in/assets/pdfs/publications/2013/handbook-on-corporate-social-responsibility-in-india.pdf
- Ibid.
- Corporate Social Responsibility in India, India Briefing, available at, https://www.india- briefing.com/news/corporate-social-responsibility-india-5511.html/
- A. Khurana, India’s Top Companies for CSR Initiatives in 2018, Cross Barriers (08/11/2018), available at, https://crossbarriers.org/indias-top-companies-for-csr-initiatives-in-2018/
- Corporate Social Responsibility in India, India Briefing, available at, https://www.india- briefing.com/news/corporate-social-responsibility-india-5511.html/
- Ibid.
- A. Khurana, India’s Top Companies for CSR Initiatives in 2018, Cross Barriers (08/11/2018), available at, https://crossbarriers.org/indias-top-companies-for-csr-initiatives-in-2018/
- Ibid.
- Corporate Social Responsibility in India, India Briefing, available at, https://www.india- briefing.com/news/corporate-social-responsibility-india-5511.html/
- A. Khurana, India’s Top Companies for CSR Initiatives in 2018, Cross Barriers (08/11/2018), available at, https://crossbarriers.org/indias-top-companies-for-csr-initiatives-in-2018/
