Corporate Sustainability/Social Responsibility or CSR refers to the way businesses should be managed to bring an overall positive impact on the communities, cultures, societies and environments in which they operate. The fundamentals of CSR rest on the fact that not only public authorities but even corporates should be responsible for social issues.
With the implementation of the Companies Act, 2013, India became the first country in the world to mandate corporate social responsibility by law. Section 135 of the new Companies Act, read with the CSR Rules, mandates companies meeting certain criteria to set aside two per cent of their net profits for undertaking and promoting socially beneficial activities and projects in India. The act broadly lists CSR areas as: hunger and poverty, education, health, gender equality and women empowerment, skills training, environment, social business projects and promotion of rural and national sports. The entire list can be accessed here. The mandated 2% CSR investment in the new Indian Companies Bill is a novel solution to India’s social problems. However, while a bare reading of the new CSR rules may indicate a simple approach, a close analysis of the fine print leaves ample room for ambiguity at various places. There is still widespread confusion on what exactly counts as CSR and what benefits can the companies get with the latter still in discussions, trying to figure out a way to create a working model to realize the full potential of the mandate. An absence of an appropriate monitoring mechanism, although, raises the risk of directionless spending.
This platform is dedicated to demystifying CSR from a legal and management perspective through research and analysis of CSR practices prevailing among corporates and social enterprises across the world.