Corporate Social Responsibility (CSR) is a means through which a company incorporates environmental, social and human development concerns into its planning and actions to ensure that its operations are ethical and beneficial for society. CSR in India has traditionally been seen as a philanthropic activity.

 

However, with the introduction of Section 135 in the Companies Act 2013, India became the first country to have statutorily mandated CSR for specified companies. The Act requires companies with a net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more, or a net profit of Rs. 5 crore or more during the immediately preceding financial year, to spend 2% of the average net profits of the immediately preceding three years on CSR activities.

 

It enumerates the activities that can be undertaken and the manner in which the companies can undertake CSR projects/programs.

 

 

It must, however, be known that even though the companies are mandated to undertake CSR activities, they are not monitored per se by the government and how they invest the 2% of their average net profits is totally at their discretion.

 

It is not like the companies will deposit the 2% to a pool account which in turn will be overseen by the government. As such, every company has its own CSR policy which differs from company to company. No wonder then that some companies have engaged in selective CSR tasks that ultimately benefit their brand value and help them prosper rather than activities that genuinely help the society at large.

 

Eminent scholars have claimed that companies while having enormous fiscal resources lack adequate knowledge of existing public problems and policy measures. As a result, their CSR efforts are misguided and do not help the public in the long run with sustaining benefits. CSR activities carried out by companies often clash with their commercial and other vested interests which are prioritized over serving the society.

 

Furthermore, it is also claimed by scholars that social issues often cannot be solved by money alone and most corporations do not want to look beyond fiscal measures to help the society. They also do not realize that money can often worsen existing problems.

 

 

CSR was meant to help in transferring excess capital from the haves to the have-nots via acts of charity. CSR in India was made mandatory with a hope to bring about changes from the ground level with the help of the corporate world in association with the local administration.

 

Unfortunately, it hasn’t turned out to be as expected due to procedural and policy inadequacies which have failed to set up a fool proof method of imparting CSR. As suggested by eminent scholars, the CSR law needs to be amended to make it simple, monitorable and sustainable for the long term if it is to achieve the purpose it was mandated for in the first place.

 

 

Mokokchung Times

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