Corporate Social Responsibility: Shaping a Sustainable Future.
CSR: Building a Better Tomorrow, Today
Corporate Social Responsibility (CSR) refers to a company’s voluntary initiatives and activities aimed at contributing to social, economic, and environmental well-being, beyond its statutory obligations and for the benefit of society at large. CSR activities are typically aligned with the company’s core values, business model, and stakeholders’ interests. Here are some key aspects and requirements related to CSR:
1. Legal Framework
- In India, the Companies Act, 2013 mandates certain classes of companies to spend a minimum amount on CSR activities. These include companies with:
- a net worth of INR 500 crore or more, or
- a turnover of INR 1,000 crore or more, or
- a net profit of INR 5 crore or more during any financial year.
- Such companies are required to constitute a CSR Committee of the Board, formulate a CSR policy, and spend at least 2% of their average net profits of the preceding three financial years on CSR activities.
2. Scope of CSR Activities
- CSR activities typically cover areas such as:
- Eradicating hunger, poverty, and malnutrition.
- Promoting education, including special education and employment-enhancing vocational skills.
- Gender equality, women empowerment, and empowerment of marginalized groups.
- Ensuring environmental sustainability, ecological balance, and conservation of natural resources.
- Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development.
3. CSR Policy
- Companies are required to formulate a CSR policy that outlines their CSR objectives, focus areas, implementation approach, monitoring mechanisms, and the modalities of execution.
- The CSR policy should be approved by the CSR Committee and should be disclosed on the company’s website.
4. CSR Committee
- Companies subject to CSR requirements are required to constitute a CSR Committee of the Board consisting of at least three directors, including an independent director.
- The CSR Committee is responsible for formulating and recommending the CSR policy, monitoring its implementation, and ensuring compliance with CSR obligations.
5. Reporting Requirements
- Companies are required to include a report on CSR activities in their annual report, disclosing details of the CSR initiatives undertaken during the year, amount spent, and the impact of such initiatives.
- The CSR report should be prepared in accordance with the CSR Rules prescribed under the Companies Act, 2013 and should be approved by the Board of Directors.
6. Monitoring and Evaluation
- Companies are encouraged to establish mechanisms for monitoring and evaluating the impact of their CSR activities, ensuring transparency, accountability, and effective utilization of CSR funds.
By complying with CSR requirements and undertaking meaningful CSR initiatives, companies can contribute positively to society while enhancing their reputation, stakeholder engagement, and long-term sustainability.