Corporate social responsibility
- 1. CORPORATE SOCIAL RESPONSIBILITY (CSR) Dr.S. Madhuri Paradesi Associate Professor SPMVV Tirupati
- 2. Meaning • CSR refers to economic, environmental , social and governance responsibilities of business. CSR economic social Environmental Governance
- 3. History • CSR first evolved with big manufacturing companies • 1956 Act did not mandate a company to spend on CSR activities , and there is no requirement to constitute a CSR committee • The Ministry of Corporate Affairs (MCA) had introduced the CSR voluntary guidelines in 2009 • Companies Act 2013 clearly stated that companies should have a more long-term plan in place of CSR, as small initiatives are not enough • Thus new companies made mandatory for certain class of profitable enterprises to spend profits on social welfare activities • Relevant rules have been framed under Companies(CSR Policy) Rules, 2014
- 4. CSR committee • Section 135 of the 2013 act, seeks to provide that every company having a net worth of 500 crore INR, or more or a turnover of 1000 crore INR or more, or a profit of five crore INR or more , during a financial year shall constitute the CSR committee of the board. • These committee needs to comprise of three or more directors, out of which, at least one director should be an independent director • The composition of committee shall be included in the board’s report
- 5. CSR Policy • CSR POLICY 'CSR Policy" relates to the activities to be undertaken by the company as specified in Schedule VII to the Act and the expenditure thereon, excluding activities undertaken in pursuance of normal course of business of a company. • The CSR Policy of the company shall, inter-alia, include the following, namely:- 1. a list of CSR projects or programs which a company plans to undertake falling within the purview of the Schedule VII of the Act, 2. specifying modalities of execution of such project or programs and implementation schedules for the same; 3. monitoring process of such projects or programs; and 4. The CSR Committee shall recommend the amount of expenditure to be incurred on the activities referred in CSR Policy
- 6. Activities specified in schedule VII : Activities which may be included by companies in their Corporate Social Responsibility Policies:— • (i) eradicating extreme hunger and poverty; • (ii) promotion of education; • (iii) promoting gender equality and empowering women; • (iv) reducing child mortality and improving maternal health; • (v) combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases; • (vi) ensuring environmental sustainability;
- 7. Remaining activities • (vii) employment enhancing vocational skills; • (viii) social business projects; • (ix) contribution to the Prime Minister's National Relief Fund or any other • fund set up by the Central Government or the State Governments for • socio-economic development and relief and funds for the welfare of the Scheduled • Castes, the Scheduled Tribes, other backward classes, minorities and women; and • (x) such other matters as may be prescribed.
- 8. Types of projects with CSR Expenditure: The 2014 Rules clearly define what can be included and what must be excluded under CSR expenditure Activities included in CSR expenditure: Expenditure on programs related to CSR Activities approved by the board , and on the recommendations of the CSR Committee Expenditure on building capacity of CSR team (up to 5% of expenditure)
- 9. Activities excluded from CSR expenditure: Political contribution Activities solely for benefits of employees and their families Activities that are in pursuance of business as usual/ activities undertaken in pursuance of normal course of business of company.
- 10. Advantages of CSR • It improves value and profitability • It enhances organisation’s reputation • It assist to bring motivation among the employees • Long term future of business • better brand recognition • increased sales and customer loyalty • organisational growth
- 11. Disadvantages of CSR • It needs higher costs and expenses • Subject to greater scrutiny • Risk to Reputation • Competitive Disadvantage
- 12. The companies (CSR) Amendment Rules 2015: • Ministry of corporate affairs has brought out amendments relating to CSR by widening the list of entities through which companies can undertake CSR activities
- 13. Conclusion • CSR is often called the bottom line approach: sustainability in environment, social community and business • The law is here and so is the implementation mandate