Introduction to Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a concept that originated from the Companies Act of 2013, which was implemented in India. This act mandates that companies must engage in activities that contribute to socially and environmentally relevant causes. The objective of CSR is to encourage companies to interact and operate with stakeholders who have a vested interest in the company’s operations. This approach is often called the “Triple-Bottom-Line-Approach” because it aims to enhance the company’s financial interests and its responsibilities towards society as a whole.
The Companies Act of 2013 introduced a notification on February 27, 2014, which included Section 135. According to this section, CSR activities are mandatory for all companies, irrespective of their nature (government, private, or others). This means that all companies operating in India must allocate a portion of their profits towards CSR initiatives.
Impact of CSR in India
Despite a large rise in spending, the Ministry of Corporate Affairs (MCA) has emphasised the minimal impact of CSR programmes in India. CSR spending in FY21 was Rs 26,210 crore, up 80% from FY16, according to the MCA. Reportedly, the impact of these monies, however, needs to be more broadly felt, and there is a need to improve their visibility and effectiveness.Â
The Ministry also pointed out that some states have gotten a much higher share of CSR funds due to variables such as the presence of important firms, industrial development, and social development needs. For instance, statistics suggest that the northeastern states of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura received a mere 0.91% of the funds in FY 2020-21.
“Corporate Social Responsibility (CSR) projects have to have the right balance of capital and operational spending and should be self-sustaining so that programmes run “seamlessly and efficiently”
The MCA said
The Fate of CSR during COVID, 2020
The Government of India established the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES) to address the COVID-19 crisis and provide aid to those affected.Â
To assist companies in directing their CSR funding towards COVID-19 relief efforts, Invest India, National Investment Promotion and Facilitation Agency that helps investors looking for investment opportunities and options in India, leveraging its extensive network and relationships, has created a dedicated CSR assistance cell. This cell helps companies allocate their CSR funds to various governmental and non-governmental organizations, as well as central and state-level funds specifically set up for COVID-19 relief.
The Agency had developed an online repository of over 30 relief funds, enabling corporates and volunteers to easily find and connect with organizations in need of financial or other support for their activities. In addition, according to sources, Invest India had facilitated the donation of essential supplies, including over 1,086,100 pieces of personal protective equipment (PPE), critical care equipment, and other commodities, to frontline organizations.
Overall, Invest India’s COVID-19 response has played a crucial role in facilitating CSR contributions, connecting organizations in need with resources, and coordinating the distribution of essential supplies to support relief efforts across both central and state levels.
Conclusion
In summary, CSR in India is a legal requirement imposed to ensure that companies in India take an active role in addressing social and environmental issues. It obligates companies to invest in socially and ecologically relevant causes, promoting a holistic approach to business that considers financial interests and responsibilities to society and the environment aimed at long-term sustainability.
Although there has been a significant increase in CSR spending in India, the MCA acknowledges the limited impact of these programs and emphasizes the need to improve their visibility and effectiveness. The importance of proper allocation of funds and the implementation of self-sustaining projects to ensure a seamless and efficient CSR operation have also been highlighted.
