This document discusses corporate social responsibility in India. It outlines how CSR has historically been an important part of Indian society since ancient times. The Companies Act of 2013 now mandates that large companies spend 2% of their net profits on CSR activities related to issues like poverty, education, health, environment and more. If companies fully comply with this law, it is estimated they could positively impact over 100 million people each year through these activities. However, current spending on CSR by companies in India is below the target amount in the law. Increased CSR spending is expected to improve social indicators and companies' reputations.

1. Corporate Social Responsibility:
Mission Possible
By:
Dr. Manoj Kumar
GCCBA, Chandigarh
mkbhambu@hotmail.com

2. Corporate Social Responsibility:
Mission Possible
O Indian society has always been pioneer in social responsibility from
the very early days of civilization.
O Duty “Dharma” has been given great importance in the Indian
society from the Vedic period.
O Sarva loka hitam in Vedanta referred to ‘well-being of stakeholders’.
O Sukhasya mulam dharma - the basis of happiness is dharma
(Kautilya).
O Vashudhaiva Kutumbakam- the whole world is like a family; the
concept given in Hitopadesa by Narayana
O As per Bhagwat Geeta teaching of “Dharma-Duty” and “Karma-
Action” CSR should begin with Individual Social Responsibility or
Personal Social Responsibility and should go beyond Corporate
Social Responsibility to Global Social Responsibility.

3. Corporate Social Responsibility:
Western Society
O Wallace B. Donham, Dean of Harvard Business School in 1920s indicated
that the “future of civilization” was also part responsibility of businesses.
O Then by the beginning of the welfare state in the 1930s, literature on CSR
started to appear fueling debate about business and society.
O The term “corporate social responsibility” was not coined until 1953 by
Howard Bowen in his book, “Social Responsibilities of the Businessman”.
O Between the 1960s to the 1980s, further debates on CSR, particularly
about the nature of responsibilities and who was/were to be responsible
for society continued .
O Edward Freeman’s ‘Stakeholder Theory’ in 1984, that CSR became a
management practice.
O CSR has grown to include environmental management, corporate social
performance, stakeholder partnerships, poverty, and sustainability.

4. Definitions of CSR
O Corporate Social Responsibility (CSR) is a
management concept whereby companies integrate
social and environmental concerns in their business
operations and interactions with their
stakeholders. (UNIDO).
O The World Business Council for Sustainable
Development defines CSR as “the continuing
commitment by business to contribute to economic
development while improving the quality of life of the
workforce and their families as well as of the
community and society at large.”
O In short, CSR is a voluntary management action for
well-being of the society with a view to create a
positive image as a corporate citizen.

5. CSR Lead in Companies Act, 2013
O The Companies Act, 2013 states under section
135(1):
O Every company having net worth of Rs. 500 crore
or more, or
O turnover of Rs. 1,000 crore or more or
O a net profit of Rs. 5 crore or more during any
financial year shall
O constitute a Corporate Social Responsibility
Committee of the Board consisting of three or more
directors, out of which at least one director shall be
an independent director.

6. O (2) The Board's report under sub-section (3) of
section 134 shall disclose the composition of the
Corporate Social Responsibility Committee.
O (3) The Corporate Social Responsibility Committee
shall,—
O (a) formulate and recommend to the Board, a
Corporate Social Responsibility Policy which shall
indicate the activities to be undertaken by the
company as specified in Schedule VII;
O (b) recommend the amount of expenditure to be
incurred on the activities referred to in clause (a);
and
O (c) monitor the Corporate Social Responsibility
Policy of the company from time to time.

7. O (4) The Board of every company referred to in
sub-section (1) shall,—
O (a) after taking into account the
recommendations made by the Corporate Social
Responsibility Committee, approve the
Corporate Social Responsibility Policy for the
company and disclose contents of such Policy in
its report and also place it on the company's
website, if any, in such manner as may be
prescribed; and
O (b) ensure that the activities as are included in
Corporate Social Responsibility Policy of the
company are undertaken by the company.

8. O (5) The Board of every company referred to in sub-
section (1), shall ensure that the company spends, in
every financial year, at least 2% of the average net profits
of the company made during the three immediately
preceding financial years, in pursuance of its CSR Policy:
O Provided that the company shall give preference to the
local area and areas around it where it operates, for
spending the amount earmarked for Corporate Social
Responsibility activities:
O Provided further that if the company fails to spend such
amount, the Board shall, in its report made under clause
(o) of sub-section (3) of section 134, specify the reasons
for not spending the amount.
O Explanation.—For the purposes of this section “average
net profit” shall be calculated in accordance with the
provisions of section 198. (Ministry of Corporate Affairs,
Government of India, 2013)

9. Schedule VII of the Companies
Act, 2013
O Activities which may be included by companies in
their Corporate Social Responsibility Policies
O Activities relating to:—
O (i) eradicating extreme hunger and poverty;
O (ii) promotion of education;
O (iii) promoting gender equality and empowering
women;
O (iv) reducing child mortality and improving
maternal health;
O (v) combating human immunodeficiency virus,
acquired immune deficiency syndrome, malaria
and other diseases;

10. O (vi) ensuring environmental sustainability;
O (vii) employment enhancing vocational skills;
O (viii) social business projects;
O (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
O (x) such other matters as may be prescribed.
(Ministry of Corporate Affairs, Government of
India, 2013)

11. Potential of CSR @ 2%
Activities Impact
Eradicating extreme
hunger and poverty
(Can feed throughout
the year @ Rs. 60/day)
1,14,15,525
Persons below
poverty

12. Potential of CSR @ 2%
Activities Impact
Promotion of
Education
(Annual Fee and cost of
books @ Rs. 3000 p.a.
8,33,33,333
Student in
Government
Schools

13. Potential of CSR @ 2%
Activities Impact
Promoting Gender Equality
and Empowering Women;
(Rs. 10000 per women)
2,50,00,000
Women

14. Potential of CSR @ 2%
Activities Impact
Reducing child mortality
and improving maternal
health; (Rs. 10000 per
pregnancy for care)
2,50,00,000
Women &
Children

15. Potential of CSR @ 2%
Activities Impact
Combating Human
Immunodeficiency Virus,
acquired immune deficiency
syndrome, malaria and other
Diseases (Rs. 100000 cost of
ART p.a.)
25,00,000 HIV
with CD4 count
between 350-500
cell/mm3

16. Potential of CSR @ 2%
Activities Impact
Ensuring environmental
sustainability; (Rs 200 for
planting and caring 1
sapling to protect it to
become a tree)
1,25,00,00,000 New
tree per annum to
fulfill the Dream of
each one Plant one p.a.
or We can clean one
big river p.a.
completely)

17. Potential of CSR @ 2%
Activities Impact
Employment enhancing
vocational skills
(Rs. 25,000 per Youth
for skill development)
1,00,00,000 Youth
with Enhanced skill
p.a.

18. Potential of CSR @ 2%
Activities Impact
Social Business Project
(Rs 5,00,000 per
business)
5,00,000
new social
Entrepreneurs
p.a.

19. Potential of CSR @ 2%
Activities Impact
Prime Minister’s Relief
Fund
Those eligible companies
who will fall short of CSR
spending target will tend to
donate in PM Relief Fund
and such other funds than to
report the fact in Final
Accounts.

20. Is it Possible
O Yes, any of the above item individually
O Or right combinations of above all

21. What is Happening?
O Studies have established: More the CSR spending better
the reputation & profits of the company. So, Companies
will tend to spend more than the minimum stipulated 2% of
average profits in the years to come.
O Even groups with good standing are doing it already.
O Tata group is spending at an average of Rs. 1,000 crore
per annum.
O But it is not the case with all the companies. Top 100
companies based on net sales in the year 2012 has spent
only Rs. 1765 Crore against a stipulated amount of
Rs.5611 Crores, that amount to just 31.46% of the target
amount. (Mitu Jayashankar, 2013).

22. What will Happen?
O HDI will improve from the present position of 135.
O Social Progress Index will improve.
O Credibility of the companies will improve
O Brand India will improve