What is Corporate Social Responsibility (CSR) in India?

Corporate Social Responsibility (CSR) has become essential for a positive global change. It is an approach of purpose driven business. In other words, CSR can be said to be a business model. It allows companies to combine ethical, environmental, and social considerations into their operations. Companies will be able to make a positive impact globally. This helps to build strong brands and improve employee engagement. It also builds trust with customers. This also focuses on sustainable growth for the future. In this blog, you will get guidance on Corporate Social Responsibility.

What is Corporate Social Responsibility?

Corporate Social Responsibility refers to a business model. It allows companies to integrate social, environmental, and ethical considerations into their operations. They also integrate them into their process of decision-making. In short, we can say it is a CSR. The CSR is also called corporate citizenship. It is a compulsory requirement for companies under section 135 of the Companies Act, 2013. This is applicable from the date effective from April 1, 2014. This means it helps businesses to run smoothly for all stakeholders. Thus, it focuses on making a positive and sustainable impact on society. This also helps the environment in a positive way.

Purpose of Corporate Social Responsibility

Corporate Social Responsibility (CSR) focuses on companies making a positive impact. It mainly happens through social, environmental, and community-led initiatives. The role of CSR is to confirm that companies are socially responsible. They run in a sustainable and ethical manner. So, it has a positive impact on society and the environment. They just go beyond by focusing on profits.

However, this helps to reduce harmful effects for the company. It requires businesses to achieve sustainable growth. So, it is also about being good and making a difference in people's lives. It confirms that companies have a positive impact on the planet and society.

Types of Corporate Social Responsibility

Listed below are the four types of Corporate Social Responsibility (CSR):

a) Environmental responsibility

CSR focuses on creating a positive environment. A company reduces negative environmental impact and promotes sustainability. They mainly help with:

· It utilizes renewable energy

· Recycling materials

· Reducing pollution and emissions in manufacturing

· Eliminates waste

· Sustainability

· Climate action

· Conservation, and so on.

b) Ethical responsibility

Corporate Social Responsibility confirms that company runs fairly and ethically. This covers fair practices for all customers. It is mainly more than an official requirement. It includes:

· Fair business practices

· Transparency

· Governance, etc.

c) Philanthropic responsibility

Corporate Social Responsibility states that a company must help society. They can help society with:

· Donating money to charities on time

· They must work only with suppliers who shares similar good values

· They should give funds on educational programs

· Sponsoring Community events to bring money

· Establishing Foundation

· Healthcare, etc.

d) Economic responsibility

This is considered as the foundation of the pyramid. It aims to make money while following laws and doing the right thing. It can contain:

· Paying Taxes

· Creating jobs

· It generates value for stakeholders

Thus, it makes a long-term value.

Objectives of CSR

Listed below are the key objectives of CSR:

Promote Ethical Business Practices

The business needs to operate in a way that provides fair treatment for all people. The business should conduct its activities with openness and honesty. They must also maintain environmental protection and community development.

Support Community Development

The organization invests its resources in local communities. This makes educational, healthcare, infrastructure, and job opportunities.

Enhance Brand Image and Reputation

A company can create a strong public image. They can create it by supporting social initiatives. This can lead to increase customer loyalty and higher investor trust.

Foster Employee Engagement and Satisfaction

The organizations needs to show workers its dedication to CSR programs. These initiatives will make employees feel better about their jobs. They will increase their commitment to the organization.

Contribute to Sustainable Development

The organization focuses on creating sustainable economic and social systems. It can be done during developing environmental solutions. These efforts suits to:

a) Poverty reduction

b) Climate Change

c) Resource Management

Adhere to Legal and Regulatory Requirements

The organization must follow all applicable environmental protection regulations. They must also follow all applicable labor and social welfare regulations. These regulations exist at both local and international levels.

Applicability of Corporate Social Responsibility in India

The rules of CSR apply to every company that meets any of the following conditions. These conditions must have been met in the last financial year.

Here are the key conditions:

a) Net worth exceeding to Rs.500 crore

b) Turnover limit that is more than Rs.1000 crore

c) Net profit exceeding to Rs.5 crore

The Board of Directors of each company must follow CSR rules. This confirms that the company spends at least 2% each financial year. This amount represents the company's average net profits from the last three years. It is stated in the company's CSR policy.

If the company has not been operating for three full years, it needs to give 2% of its average net profits from the past few years as part of its CSR policy.

Key Benefits of CSR

There are some benefits of the Corporate Social Responsibility

Improved Brand Reputation

CSR allows companies to use environmental responsibility. They also allows them to do ethical practices to improve brand image.

Attraction and Retention of Talent

It helps companies to hire the talented workers for their business operations.

Enhanced Customer Loyalty

Many customers choose to support companies. This helps to bring positive impact to the society and the environment.

Risk Mitigation

CSR helps to reduce business risks. It can be done by improving relationships with stakeholders, regulatory bodies, and the community.

Conclusion

Corporate Social Responsibility (CSR) is an essential business model. It is stated as per Section 135 of the Companies Act 2013. This brings long-term business success and a positive impact. Companies are focuses on good practices for their core operations. This also brings societal well-being. These practices also improve brand reputation and employee engagement. If you still have a query about CSR, reach out to Online Legal India.

FAQ

Q1. What is Corporate Social Responsibility (CSR)?

Corporate Social Responsibility means a business model. A company works hard to help society and the environment. They reduce the harmful effects to bring a positive impact. They are accountable to their employees, customers, and the community. This confirms that their business practices are ethical, sustainable, and socially responsible.

Q2. Is CSR is applicable to all companies?

No, the CSR is not applicable to all companies. As per Section 135 of the Companies Act, 2013 in India, it is required only for companies that meet specific financial thresholds. These thresholds need to be met in the end of the financial year.

Q3. What are the four types of CSR?

The four types of CSR are:

1. Environmental responsibility
2. Ethical responsibility
3. Philanthropic responsibility
4. Economic responsibility

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.