Author: Dwarakamai Vishnudas, Christ (deemed to be) University , Bengaluru.
What Is CSR?
Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public.
By practicing corporate social responsibility, also called corporate citizenship, companies are aware of how they impact aspects of society, including economic, social, and environmental. Engaging in CSR means a company operates in ways that enhance society and the environment instead of contributing negatively to them.
Abstract:
Corporate Social Responsibility (CSR) in India has developed as an integral component of corporate governance, focusing on the ethical functioning of corporations, social well-being, and environmental sustainability. The framework of legal provisions that deal with the company’s CSR is primarily the Companies Act 2013, which makes it mandatory for certain qualifying companies to carry on specific activities for CSR, as well as report on it. This article will focus on legal jargon, evidentiary support, the landmark case, and finally conclude with key takeaways and FAQs.
Use of Legal Jargon
Section 135 of the Companies Act, 2013 makes it mandatory for companies that meet specified criteria—net worth of ₹500 crore or more, or turnover of ₹1000 crore or more, or a net profit of ₹5 crore or more—to constitute a CSR Committee. The Committee must formulate and recommend to the board, a CSR policy, which shall indicate the activities to be undertaken, ensure activities covered under Schedule VII of the Act, and finally check the compliance of the policy. For example, companies are required to spend at least 2% of the average net profits made during the three immediately preceding financial years. If a company does not do so, it has to give reasons for not spending such amount in the Board’s report. Thus, it ensures that legal obligation is created to explain the reasons for not meeting the expenditure requirement to ensure accountability and transparency.
The Evidence
The enactment of Section 135 of the Companies Act, 2013, has indeed played a big role in scaling up CSR initiatives across sectors in India. Studies suggest a surge in the average CSR spend, with companies investing in activities such as education, health, poverty alleviation, and the environment. Data from the Ministry of Corporate Affairs (MCA) shows year-on-year growth in CSR spending. Companies like Reliance Industries, Tata Consultancy Services, and Infosys are investing heavily in CSR activities by integrating business strategy with social and environmental objectives.
Landmark Case: Tata Steel’s CSR Initiatives
Tata Steel has numerous CSR initiatives undertaken in various ways under community development, health, education, and environmental sustainability. The case of Tata Steel can be referred to as a landmark one. One of the main initiatives taken is the Tata Steel Rural Development Society (TSRDS) that focuses on the development of the rural sector by agriculture, education, health, and livelihood. Tata Steel has received numerous accolades for its CSR initiatives, which have become a measure for other business houses to follow
Infosys’s Top CSR Activities:
Infosys Foundation: Activities in healthcare, education, rural development, and disaster relief.
Infosys Science Foundation: Promote Scientific Research and Innovation.
And the Impact it had Created is by Built-up educational infrastructure – schools and libraries.
Healthcare facilities and camps for medical aid in remote areas. Funded for disaster relief activities during natural calamities.
ITC Limited Key CSR Activities:
e-Choupal: An initiative for the empowerment of farmers by applying technology.
ITC Mission Sunehra Kal: The focus areas are watershed development, sustainable agriculture and social forestry.
And its impact is Agricultural efficiency and increase in farmers’ income. Improved water management in the rural areas. Environmental responsibility through afforestation program.
Reliance Industries Limited (RIL) Major CSR Initiatives:
Reliance Foundation: Works in the areas of rural transformation, education, healthcare, urban renewal, and disaster response.
Project Drishti: It is an initiative for providing vision correction to the underprivileged people.
Outcome:
Impact on enhancing living standards in rural areas through rural development initiatives.
Quality health and education facilities. Improved urban infrastructure and environment.
Hindustan Unilever Limited (HUL)
Key CSR Activities:
Project Shakti: Empowers rural women by providing them training and opportunities to become micro-entrepreneurs.
Water for Public Health: Ensures access to clean drinking water in rural and urban areas.
Impact:
Improved income levels and economic independence for rural women. Enhanced public health through access to clean water.
Wipro
Key CSR Activities:
Wipro Cares: Focuses on education, healthcare, and disaster relief.
Wipro Earthian: An environmental sustainability education program.
Impact:
Improved educational facilities and quality of education in underserved areas. Provided healthcare services and supported disaster-affected regions. Promoted environmental awareness and sustainability practices.
Mahindra & Mahindra Key CSR Activities:
Nanhi Kali: An educational venture for underprivileged girls.
Lifeline Express: The mobile hospital train provides healthcare services in far-flung areas.
Impact:
More girls got access to education from the economically weaker background. Very critical healthcare services were made available in far-flung under-served regions.
Vedanta Resources Key CSR Activities:
Nand Ghar: State-of-the-art Anganwadis for children and mothers.
Sustainable Livelihood Programs: Focuses on increasing employability and income generation.
Impact:
Better facilities regarding early childhood education and healthcare. More employability and increase in income levels of communities due to skill development.
Aditya Birla Group
Key CSR Activities:
Aditya Birla Centre for Community Initiatives and Rural Development: Works in the field of education, healthcare, sustainable livelihood, and infrastructure development.
Project Swachh: The mission looks after sanitation and hygiene.
Impact:
Upgradation of rural educational and healthcare infrastructure. Sanitation infrastructure and awareness thus made better public health.
Conclusion
CSR in India has gone through a renaissance, prompted mainly by legislative dictum incorporated under the Companies Act, 2013. Corporate strategies embracing CSR have led to significantly high levels of contributions toward societal and environmental well-being. Landmark cases such as Tata Steel demonstrate the power of well-implemented CSR strategies in delivering and driving sustainable development. As more and more companies realign their operations with the CSR objectives, the framework acts as a strong tool for establishing corporate accountability and social responsibility.
FAQ
Q1: What is the compulsory CSR spending for eligible companies under Indian law?
A1: Eligible companies are required to spend at least 2% of the average net profits of the company made during the three immediately preceding financial years, according to Section 135 of the Companies Act, 2013.
Q2: What if a company is unable to meet its CSR requirement?
A2: If there is a shortfall by a company in spending the required amount under its CSR, then the company has to provide the reasons for not spending that amount in its Board’s report. The act ensures transparency and accountability.
Q3: What are the common areas where Indian companies spend their CSR money?
A3: Common areas are education, healthcare, poverty eradication, environment sustainability, and rural development under Schedule VII of the Companies Act, 2013.
Q4: Can you give me an example of a company that has good CSR practices in India?
A4: One of the prominent companies is Tata Steel, with extensive CSR activities that cover community development, healthcare, education, and environment sustainability.
Q5: What are the impacts of the Companies Act, 2013 on the CSR activities of India?
A5: The Act has significantly increased CSR activities and expenditure, fostering a culture of corporate responsibility and aligning business strategies with social and environmental objectives.
