Corporate Social Responsibility(CSR)


In today’s economic and social environment, issues related to social responsibility and sustainability are gaining more and more importance, especially in the business sector. Business goals are inseparable from the societies and environments within which they operate.While short-term economic gain can be pursued, the failure to account for longer-term social and environmental impacts makes those business practices unsustainable.

Corporate Social Responsibility (CSR) can be understood as a management concept and a process that integrates social and environmental concerns in business operations and a company’s interactions with the full range of its stakeholders.

Corporate social responsibility is a form of corporate self-regulation integrated into a business model.

CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. In some models, a firm’s implementation of CSR goes beyond compliance and engages in “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.

CSR aims to embrace responsibility for corporate actions and to encourage a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others”.

The term “corporate social responsibility” became popular in the 1960s and has remained a term used indiscriminately by many to cover legal and moral responsibility more narrowly construed.

When did CSR emerge in India ?

The evolution of corporate social responsibility in India refers to changes over time in India of the cultural norms of corporations’ engagement of corporate social responsibility(CSR), with CSR referring to way that businesses are managed to bring about an overall positive impact on the communities, cultures, societies and environments in which they operate. The fundamentals of CSR rest on the fact that not only public policy but even corporates should be responsible enough to address social issues. Thus companies should deal with the challenges and issues looked after to a certain extent by the states.

Among other countries India has one of the most richest traditions of CSR. Much has been done in recent years to make Indian Entrepreneurs aware of social responsibility as an important segment of their business activity but CSR in India has yet to receive widespread recognition. If this goal has to be realised then the CSR approach of corporates has to be in line with their attitudes towards mainstream business- companies setting clear objectives, undertaking potential investments, measuring and reporting performance publicly.

In 2014, India became the world’s first country to enact a mandatory minimum CSR spending law. Under Companies Act, 2013, any company having a net worth of 500 crores or more or a turnover of 1,000 crore or a net profit of 5 crores must spend 2% of their net profits on CSR activities. The rules came into effect from 1 April 2014.

What are the rules and regulations of CSR?

According to the Companies Act 2013 , the Central Government makes the following amendments –

  • Eradicating hunger, poverty and malnutrition ,promoting preventive health care and sanitation and making available safe drinking water.
  • Promoting education , including special education among children, women elderly and differently abled
  • 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.
  • Ensuring environmental sustainability, ecological balance, protection of flora and fauna.

What are the Practices of CSR ?

ISO 26000 is the recognised international standard body for CSR. The ISO 26000 standards benefit CSR because they provide clarity on an organisation’s concepts, terms and definitions related to social responsibility. ISO 26000 intends to assist organisations in contributing to sustainable development. The standards provide insight into trends and characteristics of social responsibility. ISO 26000 therefore aims to integrate, implement and promote socially responsible behaviour throughout the organisation and in its engagement with its stake holders.

It is important for businesses not only to provide products and services to satisfy the customer, but also to ensure that the business is not harmful to the environment in which it operates. In order for an organisation to be successful, the business must be built on ethical practices. Companies are increasingly pressurised to behave ethically. This pressure comes from customers, consumers, governments, associations and the public at large. ISO 26000 was created with this in mind, to provide guidance on the international standards on CSR. It is intended for organisations in both public and private sectors, in developed and developing countries.

What are the CSR Policy?

We recognise that we must integrate our business values and operations to meet the expectations of our stakeholders. They include customers, employees, investors, suppliers, the community and the environment.

  • We recognise that our social, economic and environmental responsibilities to these stakeholders are integral to our business. We aim to demonstrate these responsibilities through our actions and within our corporate policies.
  • We take seriously all feedback that we receive from our stakeholders and, where possible, maintain open dialogue to ensure that we fulfil the requirements outlined within this policy.
  • We shall be open and honest in communicating our strategies, targets, performance and governance to our stakeholders in our continual commitment to sustainable development.

What are the new rules of CSR ?

In August 2013, the Indian parliament passed the Indian Companies Act, 2013 (the “New Act”), which has replaced the Companies Act of 1956. The New Act has made far-reaching changes affecting company formation, administration and governance, and it has increased shareholder control over board decisions. The New Act is being implemented in stages, and we have been monitoring its progression.

With the passage of the Companies Act, 2013 the mandate for corporate social responsibility (CSR) has been formally introduced to the dashboard of the Boards of Indian companies. The industry has responded positively to the reform measure undertaken by the government with a wide interest across the public and private sector, Indian and multinational companies.

  • Corporate Social Responsibility (“CSR”) defined under the CSR Rules
  • Applicable to every company including branch and project offices of a foreign company in India
  • Dispensed with the requirement of independent director for private limited and unlisted companies
  • Social business projects removed from Schedule VII
  • CSR expenditure includes ‘spending’ as well as ‘contribution’
  • Non clarity on tax treatment for undertaking CSR activities
  • Regulatory fault-line between foreign contribution and CSR regime
  • Deletion of social business projects whether valid?
  • Whether alteration of the Schedule an abdication of legislative power?