By- Adv. Aditi Singh (B.A. LLB from Galgotias University)

Society is one of the most important pillars in Economic Development, the growth depends on the consumption of the resources available and provided by the society. The survival of the companies and the growth of society go hand in hand. One cannot exist in the absence of the other. Henceforth, the companies are made bound to look after the development of the society in which it exist, which is supported by a legal provision under section 135 of Companies Act 2013.


CORPORATE SOCIAL RESPONSIBILITY, the name itself reflects the objective which is, the fulfillment of the social responsibility by a Corporate Body. CSR has widely imprinted its importance and has become crucially important in Indian Corporate Scenario with the objective of fulfilling legal, social, ethical, commercial and every possible needs of the society. As per the said legal provision, the companies having a net worth of rupees 500 crores or more; or turnover of rupees 1000 crore or more; or net profit of rupees 5 crores or more during any financial year, shall be obliged to constitute a Corporate Social Responsibility Committee. It is mandatory for every company falling under the above stated category to spend 2% of the average net profit from the last 3 financial year, on CSR activities (as provided under Schedule VII of Companies Act 2013).

Background of CSR-

“Our Vedas say- a man can live individually but can survive only collectively”. The chief aim of the state is in regard to the welfare of the public. The system provides a protocol to monitor and enhance the commitment and trust amongst the members of society. The concept of CSR was recognized widely with the publication of a book named “Social Responsibilities of a Businessman” by HOWARD BOWEN in the year 1953. But the concept was admired in the 1990s. Corporate Social Responsibility is a lifelong commitment by the corporate bodies to the society in order to behave ethically and to contribute to the economic development of the society.

Why CSR??

The corporate bodies functioning at a larger scale realized that apart from growing, it is also important to establish a good healthy and sustainable relationship with the community at large. It is the prime responsibility of the corporate body to maintain a trustworthy relation with the society in which it exists. According to the transforming era, it has been acknowledged as the need of the society. When a corporate body exists in the society it is totally dependent upon the resources made available like land, labor, infrastructure, etc for the conveniently carrying forward the business. Since the society provides so much to the corporate, it’s the duty of the corporate to look after the development of the society as well, CSR is the vice-versa responsibility of corporate towards the society in favors of the resources made available. The motive behind CSR is to uplift society and providing a standard of living to the people living, by providing various facilities and services to the same. It also works to protect society and the environment as well from any kind of exploitation. It focuses on the sustainable usages of the resources and not merely just uses the resources, for its own benefit. The four important fields which have to be covered under the ambit of corporate social responsibility are;


ENVIRONMENT is a natural source of resources provided to every entity working either at large or small scale. So the prime responsibility of the CSR committee is a monitor that the natural resources should not be hampered in the working of the entities, over-utilization of resources should be prohibited, pollution-causing plans should be annulled and further steps to be adopted in order to conserve the environment.


The companies should adopt some policies in favor to the labor welfare such as providing a proper workplace ensured with safety and hygiene, various training and development program should be conducted by the companies and many more steps for the satisfaction of the human resource.


Any corporate body should neither support nor involve itself in any kind of abusive, unfair, and immoral practices. Strict actions should be taken in order to avoid such situations in the future. The company should accept and appreciate the values behavior nature and conduct of person or persons in the organization and society.


Goodwill of the company helps in survival, which could be maintained by taking care of the stakeholders of the company. The corporate body should look after its customers, suppliers, shareholders investors, creditors and all those who play a prominent role in the functioning of the company.


Various major steps had been initiated by the government towards the development of the society, amongst which the formulation of CSR-committee is the prominent one. Developing a society is a collective mechanism, at large. It requires the effort by every participant existing in the society as a whole. The government has made CSR a mandatory and a legal provision.


Before the enactment of the Companies Act 2013, corporate social responsibility was not legally bounded but afterward, it was imposed as a legal mandate on every corporate body on which it is applicable. The government inspires the corporate body to fulfill the social needs of the society such as education, research and development, welfare and many more. The environmental and labor laws are the most important laws that are needed to be followed by the corporate as they are bound towards its employees and environment. The government plays a crucial role in ensuring that the CSR practices are being followed by every corporate body such as Unilever, Johnson & Johnson, Birla Group and many more.

The government has made mandatory for the companies to publish its CSR- report mentioning the social activities performed by the company annually, on the website of the company. A prescribed form has to be adopted by the board of directors to publish its report at the end of the financial year. The report must contain detailed information about the CSR-committee and its members and the Policy adopted by the CSR-committee.

The provision of CSR also imposes a penalty if the concerned body fails to publish the CSR-report annually at the end of every financial year. In case the corporate body fails to meet the provisions laid by, the company will be made liable for the payment of a fine which shall not be less than 50,000 and may extend to 25,00,000/-. The person who is at default shall be punished with the imprisonment of 3 years or fine which shall not be less than 50,000 and may extend to 5,00,000/-( in accordance with section 134(3)(o) and section 134(8) of Companies Act 2013)The act imposes penalty only in case of non-disclosure of the information in the context of CSR activities but does not hold them liable for not undertaking CSR activities.


eStartIndia Team

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