Corporate Social Responsibility in India

Corporate Social Responsibility (CSR) involves practices that enable corporations to positively impact society. CSR aims to contribute to societal goals while enhancing brand reputation and ensuring sustainable business practices.

Historical Context

Pre-1991

Before 1991, CSR in India was largely voluntary. Companies primarily focused on philanthropy and community development.

Post-1991 Liberalisation

The economic reforms of 1991 led to increased foreign investment. This competition prompted companies to adopt structured CSR practices. CSR began to evolve into a strategic business component.

Legal Framework

Companies Act, 2013

The Companies Act of 2013 introduced mandatory CSR provisions. Section 135 requires certain companies to allocate at least 2% of their average net profits from the last three years to CSR activities.

Applicability

Companies must comply if they meet any of the following criteria:

• Net worth of ₹500 crore (approximately $67 million)
• Turnover of ₹1,000 crore (approximately $134 million)
• Net profit of ₹5 crore (approximately $670,000)

CSR Rules

The Companies (Corporate Social Responsibility Policy) Rules, 2014, provide detailed guidelines on CSR activities. These rules cover reporting and implementation processes.

Key Areas of CSR Activities

Education

CSR initiatives focus on improving access to quality education. This includes vocational training and scholarships for underprivileged students.

Health

Health-related CSR programs aim to enhance healthcare access. They also promote sanitation and disease prevention efforts.

Environment

Environmental CSR activities promote sustainability. Companies work to reduce carbon footprints and conserve biodiversity.

Rural Development

Projects aimed at rural development focus on improving infrastructure. These initiatives enhance livelihoods and overall quality of life in rural areas.

Gender Equality

CSR initiatives increasingly empower women and promote gender equality. Efforts are made to create equitable workplaces and support women in society.

Major Players in CSR

Public Sector Undertakings (PSUs)

Public Sector Undertakings like ONGC, NTPC, and Indian Oil allocate budgets for CSR initiatives. They play important role in community development.

Private Corporations

Major private corporations, including Tata Group, Infosys, and Wipro, are known for extensive CSR programs. They often lead in innovative CSR practices.

Non-Governmental Organisations (NGOs)

NGOs collaborate with corporations to implement CSR projects effectively. These partnerships enhance the reach and impact of CSR initiatives.

CSR Reporting and Transparency

Mandated Reporting

Companies must disclose their CSR activities in annual reports. This transparency encourages accountability.

Frameworks

Many companies adopt global frameworks for reporting. The Global Reporting Initiative (GRI) and United Nations Sustainable Development Goals (SDGs) guide CSR impact measurement.

Challenges in CSR Implementation

Compliance

Ensuring adherence to legal requirements poses challenges. Companies must effectively utilise CSR funds to meet obligations.

Impact Measurement

Measuring the actual impact of CSR initiatives can be difficult. Companies often struggle to quantify benefits to communities and the environment.

Awareness

Smaller companies may lack awareness of CSR obligations. This gap can hinder their participation in CSR activities.

Recent Trends

Increased Focus on Sustainability

There is a growing emphasis on environmental sustainability. Companies are increasingly prioritising climate change initiatives.

Stakeholder Engagement

Stakeholder engagement is becoming more prevalent. Companies involve stakeholders in CSR planning and execution for better outcomes.

Digital Transformation

Technology and social media enhance CSR outreach. Digital platforms enable companies to engage with communities effectively.