Corporate social responsibility

1. CORPORATE SOCIAL
RESPONSIBILITY
(CSR)
Dr.S. Madhuri Paradesi
Associate Professor
SPMVV
Tirupati

2. Meaning
• CSR refers to economic, environmental , social and governance
responsibilities of business.
CSR
economic
social
Environmental
Governance

3. History
• CSR first evolved with big manufacturing companies
• 1956 Act did not mandate a company to spend on CSR activities , and there is no
requirement to constitute a CSR committee
• The Ministry of Corporate Affairs (MCA) had introduced the CSR voluntary
guidelines in 2009
• Companies Act 2013 clearly stated that companies should have a more long-term
plan in place of CSR, as small initiatives are not enough
• Thus new companies made mandatory for certain class of profitable enterprises
to spend profits on social welfare activities
• Relevant rules have been framed under Companies(CSR Policy) Rules, 2014

4. CSR committee
• Section 135 of the 2013 act, seeks to provide that every company
having a net worth of 500 crore INR, or more or a turnover of 1000
crore INR or more, or a profit of five crore INR or more , during a
financial year shall constitute the CSR committee of the board.
• These committee needs to comprise of three or more directors, out
of which, at least one director should be an independent director
• The composition of committee shall be included in the board’s report

5. CSR Policy
• CSR POLICY 'CSR Policy" relates to the activities to be undertaken by the
company as specified in Schedule VII to the Act and the expenditure
thereon, excluding activities undertaken in pursuance of normal course of
business of a company.
• The CSR Policy of the company shall, inter-alia, include the following,
namely:-
1. a list of CSR projects or programs which a company plans to undertake
falling within the purview of the Schedule VII of the Act,
2. specifying modalities of execution of such project or programs and
implementation schedules for the same;
3. monitoring process of such projects or programs; and
4. The CSR Committee shall recommend the amount of expenditure to be
incurred on the activities referred in CSR Policy

6. Activities specified in schedule VII :
Activities which may be included by companies in their Corporate Social
Responsibility Policies:—
• (i) eradicating extreme hunger and poverty;
• (ii) promotion of education;
• (iii) promoting gender equality and empowering women;
• (iv) reducing child mortality and improving maternal health;
• (v) combating human immunodeficiency virus, acquired immune
deficiency syndrome, malaria and other diseases;
• (vi) ensuring environmental sustainability;

7. Remaining activities
• (vii) employment enhancing vocational skills;
• (viii) social business projects;
• (ix) contribution to the Prime Minister's National Relief Fund or any
other
• fund set up by the Central Government or the State Governments for
• socio-economic development and relief and funds for the welfare of
the Scheduled
• Castes, the Scheduled Tribes, other backward classes, minorities and
women; and
• (x) such other matters as may be prescribed.

8. Types of projects with CSR Expenditure:
The 2014 Rules clearly define what can be included and what must be
excluded under CSR expenditure
Activities included in CSR expenditure:
Expenditure on programs related to CSR Activities approved by the
board , and on the recommendations of the CSR Committee
Expenditure on building capacity of CSR team (up to 5% of
expenditure)

9. Activities excluded from CSR expenditure:
Political contribution
Activities solely for benefits of employees and their families
Activities that are in pursuance of business as usual/ activities
undertaken in pursuance of normal course of business of company.

10. Advantages of CSR
• It improves value and profitability
• It enhances organisation’s reputation
• It assist to bring motivation among the employees
• Long term future of business
• better brand recognition
• increased sales and customer loyalty
• organisational growth

11. Disadvantages of CSR
• It needs higher costs and expenses
• Subject to greater scrutiny
• Risk to Reputation
• Competitive Disadvantage

12. The companies (CSR) Amendment Rules
2015:
• Ministry of corporate affairs has brought out amendments relating to
CSR by widening the list of entities through which companies can
undertake CSR activities

13. Conclusion
• CSR is often called the bottom line approach: sustainability in
environment, social community and business
• The law is here and so is the implementation mandate