WHAT IS CSR OR CORPORATE SOCIAL RESPONSIBILITY?

CSR or Corporate Social Responsibility is a management concept. Under it companies integrate social and environmental concerns in their business operations.

CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives.

In this sense it is important to draw a distinction between CSR and charity, sponsorships or philanthropy. Even though the latter can also make a valuable contribution to strengthen its brand, the concept of CSR clearly goes beyond that.

Promoting the uptake of CSR among SMEs requires approaches that fit the respective needs and capacities of these businesses.

CSR and Triple Bottom-line Approach

The TBL approach is used as a framework for measuring and reporting corporate performance against economic, social and environmental performance. It is an attempt to align private enterprises to the goal of sustainable global development.

The perspective taken is that for an organization to be sustainable, it must be financially secure, minimize (or ideally eliminate) its negative environmental impacts and act in conformity with societal expectations.

Key CSR issues

Environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labour standards and working conditions. Employee and community relations, social equity, gender balance, human rights, good governance, and anti-corruption measures.

A properly implemented CSR concept can bring along a variety of competitive advantages. These include enhanced access to capital and markets, increased sales and profits. Also included are improved productivity and quality, efficient human resource base, improved brand image and reputation.

SYNONYMS OF CSR

Corporate Citizenship – The extent to which business are socially responsible for meeting legal, ethical and economic responsibilities placed on them by shareholders.

Corporate Responsibility – It is the duty and rational conduct expected of a corporation; accountability of a corporation to a code of ethics and to establish laws.

Corporate Social Responsibility – A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates.

THE COMPANIES ACT, 2013 AND CSR

As per as Corporate Social Responsibility is concerned, the Companies Act, 2013 is a landmark legislation that made India the first country to mandate and quantify CSR expenditure.

The inclusion of CSR is an attempt by the government to engage the businesses with the national development agenda. The details of on corporate social responsibility is mentioned in the Section 135 of the Companies Act, 2013.

The Act came into force from April 1, 2014. Every company which either has a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or net profit of Rs 5 crore, needs to spend at least 2% of its average net profit on CSR.

The CSR activities in India should not be undertaken in the normal course of business and must be with respect to any of the activities mentioned in Schedule VII of the act.

The corporations are required to setup a CSR committee which designs a CSR policy which is approved by the board and encompasses the CSR activities the corporations is willing to undertake.

The act also has penal provisions for corporations and individuals for failure to abide by the norms. The details of the same are highlighted in the act.

SCHEDULE VII OF SECTION 135

(l) In Schedule VIl, for items (i) to (x) and the entries relating thereto, the following items and entries shall be substituted, namely :-

“(i) eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water;

(ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;

(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for the promotion of sanitation;

(v) protection of national heritage, alt and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;

(vi) measures for the benefit of armed forces veterans, war widows and their dependents;

(vii) training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports;

(viii) contribution to the Prime Minister’s 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;

Related Reading

National CSR Portal