Author: Debasmita Mohanty Batch: 2014-15 Event: Socio Managers

1. THE NEW CSR RELATED AMENDMENT : A BOON OR A BANE
The EC1 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 . CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (Triple-Bottom-Line Approach), while at the same time addressing the expectations of shareholders and stakeholders. Philanthropic activities are only a part of CSR, which otherwise constitutes a much larger set of activities entailing strategic business benefits .
India emerges as an economy with an uneven distribution of the benefits of growth and this has resulted in much unrest among the masses as a whole and the poor in specific. The new amendment in Companies policies and introduction of CSR as a mandatory activity is clearly a boon for the economy. The new CSR spend is mandatory for companies that have a net worth of Rs 500 crore or more , or a turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more in a financial year. So now Companies will have to necessarily spend 2% of their average net profits in previous three preceding financial years towards CSR ( Corporate Social Responsibility ).
In a country where one-third of the population is illiterate, two-thirds lack access to proper sanitation and 400 million people still live on less than US$2 per day, the passage of this law is considered as a positive step forward in ensuring that business contributes to equitable and sustainable economic development. As per Indian Institute of Corporate Affairs , a minimum of 6000 Indian Companies will be required to take CSR initiatives and an estimated CSR contribution from these companies will be around Rs 20,000 crore INR. This combination of regulatory as well as societal pressure has meant that companies have to pursue their CSR activities more professionally .
The huge contribution from profit-making firms will ensure that the development percolates from the higher up to the poorest of the poor. Now that it has been made a compulsory activity , Enterprises will ensure that they spend the CSR fund wisely . So the policy paves a way for the inflow of financial support to the destitute and poor populace.
CSR in India tends to focus on what is done with profits after they are made. On the other hand, sustainability is about factoring the social and environmental impacts of conducting business, that is, how profits are made. Hence much of the Indian practice of CSR is an important component of sustainability or responsible business, which is a larger idea, a fact that is evident from various sustainability frameworks.
In India , the community is an important stakeholder and many companies have started realising that the ‘license to operate’ is no longer given by governments alone, but communities that are impacted by a company’s business operations. Thus a robust CSR programme that meets the aspirations of these not only provides them with the license to operate, but also to maintain the license , thereby precluding the ‘trust deficit’.
Several human resource studies have linked a company’s ability to attract , retain and motivate employees with their CSR commitments. Interventions that encourage and enable employees to participate are shown to increase employee morale and a sense of belonging to the company .

2. There are certain innovative CSR initiatives emerging , wherein companies have invested in enhancing community livelihood by incorporating them into their supply chain. This has benefitted communities and increased their income levels, while providing these companies with an additional and secure supply chain.
The traditional benefit of generating goodwill , creating a positive image and branding benefits continue to exist for companies that operate effective CSR programmes. This allows companies to position themselves as responsible corporate citizens.
Another aspect of the act is that the companies will have to give preference to local areas and areas around which they operate for spending the amount earmarked for CSR activities. So now the enterprises will take care of the communities in and around and help the residents to improve their standard of living.
Keeping in view the above mentioned impacts that the new CSR policy will have on our economy , I honestly feel that it is a boon for both the economy and its people. I earnestly wait to see the tremendous impact and changes that this policy will bring in our society and on its people.
References :
- Facts presented has been taken from a report on CSR by CII .