While there is no single definition of Corporate Social Responsibility (CSR) which is accepted globally, each definition underlines the impact of businesses on the societies and the expectations of societies on the businesses. Traditionally, CSR means philanthropic work such as donations, charity etc. done by the companies. But now the concept of CSR has evolved globally and it also includes all related concepts such as corporate citizenship, strategic philanthropy, shared value and business responsibility towards the society. The EC defines CSR as “the responsibility of enterprises for their impacts on society”. To completely meet their social responsibility, enterprises “should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders.”
India is a county of contradictions. On one hand, India is the fastest growing economy and one of the largest economies, it also has the largest number of people living in poverty. This shows the income inequality problem of Indian economy. Even many companies’ contributions to the society were also under scrutiny. In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013, which was passed by both Houses of the Parliament, and had received the assent of the President of India on 29 August 2013. The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit of five crore INR and more. The new rules were made applicable from the fiscal year 2014-15 and thereafter. It also required companies to set-up a CSR committee consisting of their board members, including at least one independent director. The Act encourages companies to spend at least 2% of their average net profit in the previous three years on CSR activities. For public sector companies in India, CSR has been also looked upon as closely linked with the principle of sustainable economic development, which demands that organizations should make decisions and act based not only on financial factors but also on immediate and long term social and environmental consequences of their operations and activities.
Author:
Prof. Hardik Gandhi, Assistant Professor, Unitedworld School of Business (UWSB)
Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.
