All You Need to Know about Corporate Social Responsibility (CSR)
Corporate Social Responsibility, or CSR, stands for a corporation’s initiatives that aim towards the betterment of the society and the environment.
In India, as well as the majority of the top economies in the world, the corporates are required to invest a small portion of their revenue for the welfare of the people.
The reasoning behind CSR is that the corporates affect the environment-their factories emit toxic gases, the land they purchase is converted into industrial structures, etc. So, to counterbalance these negative effects on the environment, they must undertake some initiatives that can improve the lives of the people as well as the ecosystem.
CSR in India
In India, the provisions of CSR are applicable to the companies as per Sub Section 1 of Section 135 of the Companies Act, 2013. It says that companies that have an annual turnover of Rs. 1,000 crores or more, or net worth of Rs. 500 crores or more, or net profit of Rs. 5 crores or more, are required to set up Corporate Social Responsibility Committee of the Board.
The CSR committee is responsible for the following:
- To draft a Corporate Social Responsibility Policy which covers the various activities and initiatives to be undertaken by the company
- Suggest the capital requirement for the CSR policy initiatives
- Monitor the CSR policy from time to time and make changes whenever necessary
The corporates on which CSR is applicable are required to spend a minimum of 2% of the profits made in the previous 3 financial years to practice its Corporate Social Responsibility Policy.
Some of the major areas of focus notified under the Companies (Corporate Social Responsibility Policy) Rules 2014, and Section 135 of the Companies Act 2013 are the following:
- Promotion of healthcare and sanitation
- Gender equality and women empowerment
- Education and employment
- Environmental sustainability, forest conservation, etc.
- Training in rural sports and nationally recognized sports