Author: G.Harini, 4th Year B.A.LL.B., Government Law College, Theni
INTRODUCTION:
Corporate Social Responsibility has undergone many changes and developments in India recently. CSR is a concept that has gained considerable significance in the business world, especially in India, where companies are increasingly realizing the importance of giving back to society. In India CSR is not only a voluntary activity but also a mandatory obligation under the Companies Act, of 2013.CSR implies a concept, whereby companies decide voluntarily to contribute to a better society and a cleaner environment. This concept helps the companies to voluntarily integrate social and other useful concerns in their business operations for the betterment of their stakeholders and society. This article discusses Corporate Social Responsibility’s Scope and Features, CSR Committees, and Companies funding CSR Activities in India.
WHAT IS CSR?
Corporate Social Responsibility(CSR) is defined in Section 135 of the Companies Act of 2013. Companies with net worth exceeding five hundred crore or turnover exceeding rupees one thousand crore or net profit exceeding rupees five crore are required to form a CSR Committee of the Board and formulate a CSR policy the company shall not spend less than two percent of its average profit in the last three financial years on CSR Activities.
Corporate social responsibility (CSR) is a strategy undertaken by companies to not just grow profits but also to take an active and positive social role in the world around them. The term is also associated with the related term corporate citizenship.
CSR is an approach that espouses the notion that a company can do good in the world and make a difference in improving social order. It’s a topic that can engage the board of directors in an organization, as CSR reflects company culture and business practices. Social responsibility is a broad topic; it includes human aspects, such as having ethical labor practices both internally and as part of a larger supply chain.
THE SCOPE OF CSR:
The world constantly keeps changing and so do customer expectations. Today, customers are more inclined to associate with businesses that are proactively working towards addressing social and environmental issues by proactively taking corporate social responsibility initiatives. CSR is a ethical way to elevate the corporate responsibility of your business and it acts as a framework to the company.
Here, are the some of the scope of the corporate social responsibility:
Human Resources
CSR is concerned with the impact of organizational activities on the people who constitute the Human Resources or assets of the organization. These administrative activities include training programs, recruitment practices, stability of the workforce, promotion policies, etc.
Fair Business Practices
CSR is concerned with the relationship of the company to special interest groups. Special interest groups include minorities, employment of women, and employment of other special interest groups. This area also deals with socially responsible practices abroad and support for minority businesses.
Supply Chain
Corporate Social Irresponsibility in the supply chain has greatly affected the reputation of companies, leading to a lot of costs to solve the problems. Ensuring that providers have appropriate CSR policies, ethical trading, elimination of pollution and non-recycled packaging, and eliminating exploitative labor practices amongst contractors.
Employee Volunteering
Employees are encouraged to get involved in CSR activities for a good cause. Along with experience, employees accumulate an arsenal of talents on their way. The spirit of volunteering encourages the personal and professional growth of the employees. Additionally, the workplace becomes a more positive and productive place to work.
Community Development
Organizations can expand their CSR initiatives to community development activities. This would involve health-related activities, education support, encouragement of arts, and other community activities. Through community development activities, organizations can not only offer better and healthier living but also provide a platform for like-minded individuals to come together and explore new ideas.
CSR COMMITTEE:
Section 135(1) requires every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year to constitute a corporate social responsibility committee of the board.
The CSR Committee shall consist of three or more directors, out of which at least one director shall be an independent director. The composition of the CSR Committee shall be disclosed in the board’s report.
The CSR Committee is responsible for:
Formulating and recommending to the board, a CSR policy indicating the activities to be under taken by the company:
Recommending the amount of expenditure to be incurred on the CSR activities:
Monitoring the CSR policy of the company from time to time.
COMPANIES FUNDING CSR ACTIVITIES IN INDIA:
India is the only country in the world with a legislature on mandatory CSR. The biggest obligations in the country are obligated to spend 2% of their net profits under CSR according to Companies Act of 2013.
The below are the few companies:
Reliance Industries Limited
Tata Consultancy Services Limited
HDFC Bank Limited
ICICI Bank Limited
Infosys Limited
Hindustan Unilever Limited
State Bank Of India
Housing Development Finance Corporation Limited
Adani Enterprises Limited
ITC Limited.
CONCLUSION:
In India CSR is no longer just a voluntary activity but a mandatory obligation for certain companies in India. The legal framework of CSR in India has evolved significantly, with the government introducing new regulations and guidelines to promote CSR. CSR in India was legislated with the hope that it would create a change within the attitude of the corporate institutions, who would repay to the society in an exceedingly big way because it was the society whose needs helped them prosper in the first place. This article discussed about CSR’s scope and its committee.
FREQUENTLY ASKED QUESTIONS:
Whether CSR is voluntary or mandatory in India?
In India, CSR is mandatory as per Companies Act of 2013.
Which section of the Companies Act of 2013 defines CSR?
Section 135 of the companies Act of 2013 defines CSR.
