Corporate Social Responsibility: Driving Positive Change in Society

Corporate Social Responsibility (CSR) is a mandatory provision under the CSR Companies Act 2013, evolving from the erstwhile voluntary provision under the Companies Act 1956. CSR enables sustainable development for corporates and society at large, acting as a framework for companies to contribute to the betterment of society and the people who drive corporate growth. By implementing Corporate Social Responsibility, companies give back to society while aligning business practices with social accountability.

CSR is a type of business self-regulation with the aim of social accountability and positively impacting society. Some of the prominent ways a company can embrace and implement a CSR-first approach include:

• Being environmentally friendly and eco-conscious
• Promoting equality, diversity, and inclusion in the workplace
• Treating employees with respect
• Giving back to the community
• Ensuring business decisions are ethical

Applicability under CSR Companies Act 2013

Section 135 of Companies Act 2013 read with companies (CSR policy) rules 2014 provides that provisions pertaining to CSR shall be applicable on the following class of companies:

• Every company having a net worth of Rs. 500 crores or more OR
• Turnover of Rs. 1000 crores or more OR
• Net profit of Rs. 5 crores or more.

These companies are required to adhere to the CSR contribution rules to ensure meaningful societal engagement.

CSR Contribution Rules and Spending Requirements

The board of every company referred above shall ensure that in every financial year, the company spends an amount equal to at least 2% of the average net profits made during the last 3 preceding years towards the activities specified under Schedule VII of the Companies Act 2013. The board shall also ensure that administrative overheads shall not exceed 5% of the total CSR expenditure of the company during the same financial year.

CSR Benefits for Companies

CSR has become an important consideration for organizations, and the good it does for the company makes it a worthwhile investment. It also creates a positive image for the company. Large-scale corporations have over time set a standard, that upcoming businesses emulate. CSR initiatives play a crucial role for major corporations to improve living standards through climate change, and effective implementation of policies on water and energy usage. Here are some of the benefits of CSR:

• Increased employee satisfaction
• Increased customer loyalty
• Increased employee engagement
• Attract and retain top talent
• Enhanced brand position
• Organizational growth

Through CSR benefits for companies, businesses not only meet legal obligations under Section 135 CSR compliance but also create a positive societal footprint, enhancing stakeholder trust and business resilience.

By implementing Schedule VII CSR activities, companies can address pressing social challenges while reinforcing a responsible and sustainable business model.