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CORPORATE SOCIAL RESPONSIBILITY- AN OVERVIEW
WHAT'S INSIDE Introduction
Benefits of a good CSR Policy
Companies Act take on CSR Policy
Conclusion
How can we help
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INTRODUCTION Corporate Social Responsibility refers to business practices involving initiatives that benefit the society. A business’s
CSR can encompass a wide variety of tactics, from giving away a portion of company’s proceeds to charity, to
implementing “greener” business operations. CSR is becoming more mainstream as forward thinking companies
embed sustainability into the core of business operations to create shared value for business and society. Sustainability
is not just important about people and plants but is also vital for business success. CSR represents the policies,
practices and initiatives a company commits in order to govern themselves with honesty and transparency and have a
positive effect on social and economic well-being.
BENEFITS OF A GOOD CSR POLICY • A good reputation makes it easier to recruit employees.
• CSR will help a company in retaining staff thereby reducing the costs and disruption of recruitment and
retraining.
• Employees are better motivated and staff productivity will increase.
• CSR helps a company in ensuring that it is complying with the regulatory requirements.
• Activities such as involvement with the local community are ideal opportunities to generate positive press
coverage.
• Understanding the wider impact of a business can present opportunities to develop new products and
services.
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COMPANIES ACT, 2013 TAKE ON CSR POLICY The Ministry of Corporate Affairs has notified Section 135 and Schedule VII of the Companies Act, 2013 as well as the
provisions of the Companies ( Corporate Social Responsibility Policy) Rules, 2014 to come into effect from April 1, 2014.
With come from April 1, 2014, every company, private limited or public limited, which either has a net worth of Rs 500
crore or a turnover of Rs 1000 crore or net profit of Rs 5 crore, needs to spend at least 2% of it’s average net profit for
the immediately preceding three financial years on corporate social responsibility activities. The CSR activities should not
be undertaken in the normal course of business and must be with respect to any of the activities mentioned in Schedule
VII of the 2013 Act. Contribution to any political party is not considered to be a CSR activity and only activities in India
would be considered for computing CSR expenditure.
The net worth, turnover, and net profits are to be computed in terms of Section 198 of the 2013 Act as per the profit and
loss statement prepared by the company in terms of Section 381(1) (a) and Section 198 of the 2013 Act. While these
provisions have not yet been notified, is has been clarified that if net profits are computed under the Companies Act,
1956 they need not be recomputed under the 2013 Act. Profits from any overseas branch of the company, including
those branches that are operated as a separate company would not be included in the computation of net profits of a
company. The CSR Rules appear to widen the ambit for compliance obligations to include the holding and subsidiary
companies as well as foreign companies whose branches or project offices in India fulfil the specified criteria. There is a
need for clarity with respect to the compliance obligations of a company as well as its holding and subsidiary
companies.
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CONCLUSION It is almost impossible for a large company to survive in the absence of a strong CSR policy. CSR kind of relates the
business organization with the outside public and the world in a way that the society considers the business
organization to be one of their own. Absence of a CSR policy raises a question on the moral code of the company. It is
very important for an organization to work towards the betterment of the society and CSR policy lets the people put
their trust in the organizations and make them believe that they are working for the people.
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