Corporate Social Responsibility The idea of CSR first came up in 1953 when it became an academic topic in HR Bowens, Social

Responsibilities of the Business. Since then, there has been continuous debate on the concept and its implementation. Although the idea has been around for more than half a century, there is still no clear consensus over its definition. One of the most definitions is from the World Bank Group, stating, Corporate social responsibility is the commitment of businesses to contribute to sustainable economic development, community and society at large, to improve their lives in ways that are good for business and for development. Another definition by United Nations Industrial Development Organisation 1 include: Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (Triple-Bottom-LineApproach2), while at the same time addressing the expectations of shareholders and stakeholders. While at the same time addressing the expectations of shareholders and stakeholders. In this sense it is important to draw a distinction between CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy. Even though the latter can also make a valuable contribution to poverty reduction, will directly enhance the reputation of a company and strengthen its brand, the concept of CSR clearly goes beyond that. While European Commission defines3 it as, the responsibility of enterprises for their impacts on society. To completely meet their social responsibility, enterprises should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders

http://www.unido.org/what-we-do/trade/Corporate Social Responsibitiy/what- is-Corporate Social Responsibitiy.html 2 People planet profit, also known as the triple bottom line, are words that should be used and practiced in every move an organization makes. People relates to fair and beneficial business practices toward labour, the community and region where corporation conducts its business. Planet refers to sustainable environmental practices. A triple bottom line company does not produce harmful or destructive products such as weapons, toxic chemicals or batteries containing dangerous heavy metals for example. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up 3 http://ec.europa.eu/enterprise/policies/sustainable- business/corporate-social-responsibility/index_ en.htm

And as per Companies (Corporate Social Responsibility Policy) Rules, 20144 CSR to mean and include but not limited to:

projects or programs relating to activities specified in the Schedule; or projects or programs relating to activities undertaken by the Board in pursuance of recommendations of the CSR Committee as per the declared CSR policy subject to the condition that such policy covers subjects enumerated in the Schedule.

Core Elements of csr The CSR Policy should normally cover following core elements: 1. Care for all Stakeholders: The companies should respect the interests of, and be responsive towards all stakeholders, including shareholders, employees, customers, suppliers, project affected people, society at large etc. and create value for all of them. They should develop mechanism to actively engage with all stakeholders, inform them of inherent risks and mitigate them where they occur. 2. Ethical functioning: Their governance systems should be underpinned by Ethics, Transparency and Accountability. They should not engage in business practices that are abusive, unfair, corrupt or anti-competitive. 3. Respect for Workers' Rights and Welfare: Companies should provide a workplace environment that is safe, hygienic and humane and which upholds the dignity of employees. They should provide all employees with access to training and development of necessary skills for career advancement, on an equal and nondiscriminatory basis. They should uphold the freedom of association and the effective recognition of the right to collective bargaining of labour, have an effective grievance redressal system, should not employ child or forced labour and provide and maintain equality
4

Rule 2 (c)

of opportunities without any discrimination on any grounds in recruitment and during employment. 4. Respect for Human Rights: Companies should respect human rights for all and avoid complicity with human rights abuses by them or by third party. 5. Respect for Environment: Companies should take measures to check and prevent pollution; recycle, manage and reduce waste, should manage natural resources in a sustainable manner and ensure optimal use of resources like land and water, should proactively respond to the challenges of climate change by adopting cleaner production methods, promoting efficient use of energy and environment friendly technologies. 6. Activities for Social and Inclusive Development: Depending upon their core competency and business interest, companies should undertake activities for economic and social development of communities and geographical areas, particularly in the vicinity of their operations. These could include: education, skill building for livelihood of people, health, cultural and social welfare etc., particularly targeting at disadvantaged sections of society.5 CSR IN INDIA CSR in India has traditionally been seen as a philanthropic activity. And in keeping with the Indian tradition, it was an activity that was performed but not deliberated. As a result, there is limited documentation on specific activities related to this concept. However, with the global influences and with communities becoming more active and demanding, there appears to be a visible trend, that while CSR remains largely restricted to community development, it is getting more strategic in nature (that is, getting linked with business) than philanthropic, and a large number of companies are reporting the activities they are undertaking in this space in their official websites, annual reports, sustainability reports and even publishing CSR reports. But, these reports are not published as per any law as no provisions for CSR exists in the Companies Act, 1956, though the Ministry of Corporate Affairs had issued corporate social responsibility voluntary guidelines 2009.
5

India, Ministry of Corporate Affairs, Corporate Social Responsibility Voluntary Guidelines 2009

And On 27 February 2014, the Ministry of Corporate Affairs, Government of India notified Section 135 of the Companies Act, 2013 and with it the Companies (Corporate Social Responsibility Policy) Rules, 2014. Section 135 and the CSR Rules have now been made applicable with effect from 1 April 2014. Key provisions as per Companies act, 2013 Definition: While the Companies Act used CSR as a nomenclature without actually defining it, the notified rules have defined the term CSR to mean and include but not limited to: projects or programs relating to activities specified in the Schedule; or projects or programs relating to activities undertaken by the Board in pursuance of recommendations of the CSR Committee as per the declared CSR policy subject to the condition that such policy covers subjects enumerated in the Schedule

Applicability It covers all companies in India meeting any one or more of the following conditions: Turnover of INR 1,000 crores or more Networth of INR 500 crores or more Net Profit of INR 5 crores or more The corporate social responsibility (CSR) contribution would have to be at least two per cent of the average net profit, made during the three immediately preceding financial years. While Section 135 (1) of Companies Act brings under its purview every company which would mean to include a company incorporated in India. The CSR Rules have made an attempt to broaden the definition of the term 'company' to include a foreign company having a branch or project office of a foreign company. CSR Committee A CSR committee of the board should be constituted. It should consist of at least three directors out of whom at least one is an independent director. This composition will be disclosed in the boards report as per sub-section (3) of section 134.

Functions of CSR Committee: i. Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII of the Act. ii. Recommend the amount of expenditure to be incurred on the activities iii. Monitor the Corporate Social Responsibility Policy of the company from time to time. iv. Prepare a transparent monitoring mechanism for ensuring implementation of the projects / programmes / activities proposed to be undertaken by the company.

APPOINTMENT OF INDEPENDENT DIRECTORS ON THE BOARD The CSR Rules have dispensed with the requirement of appointing an independent director on the CSR Committee of the Board of an unlisted company as well as a private company. Further, the CSR Rules have relaxed the requirement regarding the presence of three or more directors on the CSR Committee of the Board. In case where a private company has only two directors on the Board, the CSR Committee can be constituted with these two directors. The CSR Committee of a foreign company shall comprise of at least two persons wherein one or more persons should be resident in India and the other person nominated by the foreign company.

Responsibility of the Board of Directors

To ensure that atleast 2% of average net profit of last 3 preceding years is spent on CSR activities every year. Net Profit shall mean, net profit before tax as per books of accounts and shall not include profits arising from branches outside India. 2% CSR spending would be computed as 2% of the average net profits made by the company during every block of three years. For the purpose of First CSR reporting the Net Profit shall mean average of the annual net profit of the preceding three financial years ending on or before 31 March 2014. To approve the CSR Policy after considering recommendations of CSR Committee. To disclose CSR policy and initiatives in Boards report and Companys website. To ensure that activities reflected in CSR policy are actually undertaken by company. If the company does not spend 2% of net profits as required, then Board to report the reasons in the Boards report.

MODALITIES FOR UNDERTAKING CSR ACTIVITIES Conducting CSR through a third party: CSR activities can be undertaken through a registered society or trust or a Section 8 Company under the Companies Act. In this regard, the CSR Rules have liberalized the participation of a third party to undertake CSR activities on behalf of the spending company provided it fulfills the relevant track record of three years in undertaking similar projects or programs. Such an entity would have to follow the specifications and modalities regarding utilization of funds, monitoring and reporting requirements as provided by the spending company. Conducting CSR through group entities: Autonomy to the companies to carry out their CSR activities through their own or holding or subsidiary or associate companys registered society or trust or Section 8 Company have been provided. Collaborating or pooling resources: Collaboration with other companies for undertaking CSR projects or programs is also permitted subject to the condition that the collaborating companies are in a position to report separately as per the reporting requirements under the Companies Act.

Activities covered under csr as per schedule VII

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to: 1. Objective to efface the daily life segments including poverty, malnutrition and hunger while enhancing the standard of living and promoting the facets of better health care and sanitation. 2. Initiative to promote the different segments of education including special education and programs to enhance the vocation skills for all ages like children, women, elderly and conducting other livelihood enhancement projects. 3. Aim to bring the uniformity in respect of different sections of the society to promote gender equality and other facilities for senior citizens and developing hostels for women and orphans and taking initiative for empowering women and lowering inequalities faced by socially and economically backward groups. 4. Elevate the segment of flora and fauna to bring the ecological balance and environmental sustainability in respect of animal welfare, conservation of natural resources and ago forestry while maintaining the quality of air, water and soil. 5. Enhancement of Craftsmanship while protecting art and culture and measures to restore sites of historical importance and national heritage and promoting the works of art and setting up of public libraries.

6. Steps to bring worthy to the part of war windows, armed force veterans and their departments. 7. Sports programs and training sessions to enhance the level of rural sports, nationally recognized sports, Paralympic sports and Olympics sports. 8. Favoring to Prime Minister's National Relief Fund and contribution to other fund set up by the central government to promote socio-economic development and welfare of the schedule castes and Schedule Tribes and for supporting backward classes, minorities and women. 9. To uplift the technology of incubator that's comes under academic institutions and which are approved by the Central Government. 10. Introducing varied projects for Rural Development.

policy making The Companies Act, 2013 requires every company to put out its CSR policy in the public domain. The guidance provided in the Act and the rules on what constitutes a CSR policy are that it should: exclude normal business activities of the company contain a list of the CSR projects or programmes which the company plans to undertake during the implementation year. While specifying the annual report requirements, the rules go on to say is that the company must provide: a brief outline of its CSR policy, including the statement of intent reflecting the ethos of the company, broad areas of CSR interest and an overview of activities to be undertaken a web link to the CSR policy including the full list of projects, activities and programmes proposed to be undertaken by the company REPORTING It is mandatory for companies to disclose their CSR Policy, programs/projects undertaken and amount spent in their report and the CSR Rules provide for a separate format. The report containing details of such activities and CSR policies have to be made available on the companys website for informational purposes.

Conclusion(need to edit)
While the introduction of CSR provision in the Companies Act is a welcome step, however the current discourse of corporate philanthropy without giving any express autonomy to companies in choosing their CSR activities may not yield the desired outcome. By allowing only selected list of activities within the Schedule in a sectional manner may end up encouraging only a passive participation by corporates towards CSR activities. In order to enable corporates to participate fully in the philanthropy space, the participation must start with a more inclusive management of CSR policies where government and industry work side by side, which does not assume that (social) business and CSR are incompatible. Thus, the policy-makers should frame rules for social business projects instead of eliminating it from the scheme of CSR regime altogether. Although Section 135 of the Companies Act did not contemplate enlarging the scope of companies to cover foreign companies in the first place, the CSR Rules nonetheless included foreign companies within its scope. It seems the central government is not opposed to the idea of allowing excessive delegated powers to the executive to make such changes in the Companies Act which cannot be brought unless an amendment to the original Act is proposed. The CSR Rules, in essence, exceeds its legislative mandate; and this aspect needs to be considered by the policy makers. By expanding the scope of CSR to include foreign companies, its impact on such companies may be manifold. In light of the ambiguity surrounding financial computation of foreign companies, it needs to be seen how practical it would be for branch or project offices to participate in CSR activities. In order to retain the advantage of having a CSR provision in the Companies Act, MCA must also facilitate greater convergence with tax and foreign contribution laws in India