Corporate Social Responsibility-Analytical Short Insight.
Post on 27,January 2017   6:00 AM
By - PolyEyes Staff
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Concept broadly refers to the cultural norms of organizations and corporation’s engagement whether public or private, in a way that business causes an overall positive impact on the communities, cultures, societies and environments in which they function.

Companies should deal with the challenges and issues looked after to a certain extent by the states

Definition of the term CSR: The term CSR has been defined under the CSR Rules which includes but is not limited to:

  • Projects or programs relating to activities specified in the Schedule.
  • Projects or programs relating to activities undertaken by the Board in pursuance of recommendations of the CSR Committee as per the declared CSR policy subject to the condition that such policy covers subjects enumerated in the Schedule.

Legal provisions: Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to:

  • A company net worth of the company to be Rs 500 crore or more.
  • Turnover of the company to be Rs 1000 crore or more.
  • Net profit of the company to be Rs 5 crore or more.
  • As per the CSR Rules, the provisions of CSR are not only applicable to Indian companies, but also applicable to branch and project offices of a foreign company in ndia.

Activities included in CSR list:

  • The activities that can be done by the company to achieve its CSR obligations include eradicating extreme hunger and poverty.
  • Promotion of education.
  • Promoting gender equality and empowering women.
  • Reducing child mortality and improving maternal health.
  • Combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria and other diseases.
  • Ensuring environmental sustainability, employment.
  • Enhancing vocational skills, social business projects.
  • 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.
  • Relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women and such other matters as may be prescribed.

What does the recent statistics and survey say ?

  • Spending by companies is majorly in combating various diseases and promotion of education that accounts 44% of the total expenditure of a company.
  • eographically, more than 25% of all CSR spending happens in 5 states like Maharashtra, Gujarat, Andhra Pradesh, Rajasthan, and Tamil Nadu while north east states are mostly neglected.
  • Since till date, i.e. before the law has been introduced CSR spending is not reported so it can’t be clearly deduced whether CSR spending has increased or decreased.
  • Evidently, under the pretense of CSR spending corporates have increased their profit as it results in brand building, employee engagement and good public relations which saves lot of money for companies kept under marketing and promotion of products.
  • CSR law can be seen as an indirect way to increase corporate tax, which is already among the highest in the world (Based on survey by KPMG, India –34.61%, World Average –24.09%) as it is spent on social welfare program which does not generate profit for the firms. This high rate not only makes Indian firms less competitive in international market but also hampers foreign investments in India.
  • Social and Environmental initiative is promoted but no emphasis is laid upon implementation of these practically.
  • Non-availability of well-organized nongovernmental organizations in remote and rural areas that can identify real needs of the community and form a bridge between them and companies to ensure real time effective aid.
  • There is a lack of agreement or cohesive work atmosphere between various local agencies regarding CSR projects resulting in redundancy, also paving in path for competitive spirit between the two parties and dispute of interest arise.
  • The legal viability talks about only few headings like eradicating extreme hunger and poverty, promoting education, social business projects which is too vague to work as legal definition.
  • CSR does not talk about penalties in case of noncompliance.

Conclusion: CSR as a subject or discipline must be introduced at business schools, colleges and universities to sensitize students about social and development issues and the role of CSR in helping corporate houses strike a judicious balance between their business and societal concern

Lastly government must reward corporate firms and other stakeholders implementing projects under CSR.

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