Applicability of Corporate Social Responsibility(CSR)

Applicability of (CSR) Corporate Social Responsibility 

Corporate Social responsibility is in fact, an initiative from the government, wherein a company takes voluntary steps in promoting social welfare activities. Now, there are various domains in which a company can contribute and move forward with its CSR activities.

In a company's board, there should be a CSR committee for the purpose of taking part in CSR activities. A CSR committee is responsible to look forward towards the spendings and activities in which the company is involved.

Table Of Content

What is Corporate Social Responsibility(CSR)

Corporate social responsibility is a way of managing businesses designed to voluntarily integrate social and environmental concerns into business operations.

It involves integrating social and environmental concerns into a company's operations and interactions with its stakeholders beyond what is legally required from them.

CSR goes beyond the mere goal of profiting and calls for sustainability and responsible business operation. The broad activities involved in CSR must therefore address the social, economic, and environmental challenges facing the entire society.

Types of CSR activities for a company

The activities of CSR may cover the following initiatives:

• Philanthropy and charitable giving: Companies may donate funds, resources, or services to support various causes, organizations, or communities.
• Environmental sustainability: Businesses can adopt practices aimed at reducing environmental impact using renewable energy, limiting waste and pollution, and the adoption of sustainable practices across the supply chain.
• Ethical labour practices: Companies can make sure that there are appropriate employment conditions, safety at work, and no child labour or exploitation in supply chains.
• Community Development: Businesses can contribute or assist local communities in infrastructure development, educational programs, healthcare access, and skills training.
• Diversity and Inclusion: The companies can encourage diversity in their workforce by providing equal opportunities to all employees, irrespective of their race, gender, ethnicity, and background.
• Stakeholder Involvement: Engaging with employees, customers, suppliers, and communities to understand issues of concern and integrating feedback into decision-making processes.

Applicability of Corporate Social Responsibility(CSR) 

The provision of CSR applies to all types of entities in India, such as a registered company, its subsidiary, its holding company, and foreign company.

The revenue threshold for a company to provide for CSR activities is as follows.

• Net worth more than 500 crore
• Turnover above 1000 crore
• Net profit more than 5 crore

What is the Importance of CSR?

The importance of Corporate Social responsibility - CSR - is:

• Social Impact: CSR activities give business a chance to contribute positively to solving various social problems and supporting sustainable development. Firms may be involved in different kinds of activities, such as philanthropy, community development programs, and employee volunteer activities; thus, all these definitely contribute to creating a difference in areas like education, healthcare, poverty alleviation, and environmental conservation.
• Reputation and Brand Image: Through CSR, the company improves its reputation and brand image. It helps in gaining the trust and loyalty of customers, employees, and other stakeholders by portraying a company concerned about social and environmental responsibility. The positive brand image would attract customers, investors, and top talent, hence providing a competitive advantage to the company.
• Involvement of Stakeholders: CSR provides a channel for active involvement of a firm with numerous stakeholders, such as employees, customers, suppliers, and broader communities, along with government agencies. By involving the stakeholders in decision-making processes and hearing their concerns, it is possible to forge closer relations and enhance transparency toward building shared values.
• Risk Management: The CSR practice can help in identifying potential risks arising out of ESG issues. Companies may mitigate the risks regarding reputational damage, regulatory compliance, supply chain disruptions, and other operational issues by being proactive on these matters.
• Long-term Sustainability: CSR persuades business operations to be sustainable, considering long-term outlooks in society and the environment. Companies can work through these social and environmental factors in ways that contribute toward future generations, efficiently utilizing resources, and reducing negative impacts on the planet.

Applicability of CSR Committee

• All such companies on which the CSR criteria apply will have to compulsorily constitute a CSR Committee to look after all the CSR activities in the company.
• There is a provision for having 3 or more directors in the CSR committee, and one director must be an independent director.
• A company having any amount in its unspent CSR account should constitute a CSR committee and comply with the CSR provisions.

Duties of CSR Committee

The key objective of a CSR committee is to facilitate planning, implementation, and monitoring activities of CSR initiatives in the company. Its responsibilities may include:

• Formulating CSR policy and strategy: The committee helps in developing the company's CSR vision, mission, and policies in line with the core values and business objectives of the company. It identifies the priority areas for CSR interventions and sets targets and timelines for implementation.
• Resource Allocation: This committee provides the number of finances and other resources to be utilized in corporate social responsibility initiatives. The projects proposed, their respective budgets and resource needs, are analyzed to assure that the commitments the company assumes related to CSR are satisfactorily financed.
• Project selection and oversight: It is responsible to select certain projects and initiatives regarding CSR with predefined criteria. It also monitors the ongoing projects, reviews their impacts, and aligns them with the CSR objectives of the company.
•   Stakeholder Engagement: The committee engages all the stakeholders, such as employees, communities, NGOs, and government bodies, to identify issues of relevance, seek input, and develop collaborations for the successful implementation of CSR. It makes sure that the respective CSR initiatives of the company address the needs and expectations of the stakeholders.
• Disclosure and reporting: The committee ensures that the preparation and submission of CSR reports are made to regulatory authorities. It sees to it that activities involving CSR are well-documented and reported to the stakeholders, with a view toward transparency and accountability.

List of Activities to be included in CSR Activities 

List of activities to include in CSR as per schedule VII of the companies Act, 2013 are :

• Education promotion
• Gender equality
• Women empowerment
• Reducing child mortality
• Improving maternal health
• Combating HIV/AIDS, maternal and other diseases
• Social Business projects
• Contribution to Prime Minister’s Relief fund
• The sustainability of the environment
• Employment enhancing
• Vocational skills
• Eradication of hunger and poverty

Conclusion

In conclusion, the applicability of the CSR committee depends upon the legal requirement and regulations of the jurisdiction in which the company operates. The committee plays an important role in overseeing and guiding the CSR activities of the company.

The CSR committee, through policy setting, resource allocation, project selection, stakeholder involvement, and transparency of reporting, helps companies assume their social and environmental responsibility.

Consult with Professional Utilities to plan for CSR activities in your organisation, and take a leap forward in implementing the most effective CSR strategies in your company.