Why corporate do CSR?

 

Society has its share of issues and problems. NGOs, Government try to resolve it, but the magnitude is very high. Corporate are important stake holders of society and have the strengths of skilled people, technology, access to funds and reach to find meaningful solutions to social issues. Hence, corporate get involved in taking up projects related to ‘doing social good’ with a wish to ‘give back to society’. The basic philosophy behind such CSR initiatives is that a corporate just like an individual has a duty to society. CSR thus works on a dual agenda to:

 

• Reduce the negative effects to eradicate the harmful effects caused by a firm’s processes and product-usage.

• Increase its positive contributions by using its resources, core competence, people and funds for the benefit of society and the environment.

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CSR in India

 

Social needs are greater in India than in most other countries and Corporate Social Responsibility is also not new for India. The effort corporates are making to address various issues is also visible to everyone. Nearly all leading corporate in India are involved in corporate social responsibility (CSR) programs in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. In fact Large Indian corporate houses such as Tata and Birla have been imbibing the case of social in the operation long before CSR became popular cause. In spite of such successful examples, CSR in India is in a very nascent stage, most of the time it is misunderstood for ‘corporate philanthropy’ / ‘doing good to society’. It is still one of the least understood initiatives in the Indian development sector. Lack of understanding of CSR, inadequately trained personnel, absence of CSR standards, policies and best practices, etc. are further adding to the reach and effectiveness of the CSR initiative.

 

Changed CSR Scenario in India

 

The Companies Act, 2013, published in the Gazette of India on 30th August 2013, brought a sweeping changes in the way companies operate and are regulated in the country. The historic Section 135 of the Act on Corporate Social Responsibility (CSR) embodies the essence of what the development sector in India today needs – a strategic injection of corporate innovation, technology, managerial skills and impact orientation. Therefore, the Act aims at motivating companies to ensure that they spend, in every financial year, at least two per cent (2%) of their average net profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy.

 

The qualifying companies that come under the ambit of Section 135 are those that have (1) net worth of rupees 500 crore or more; or (2) a turnover of rupees 1000 crore or more; or (3) a net profit of rupees 5 crore or more during any fiscal year. These companies are expected to spend the prescribed 2% amount on CSR activities for the applicable year based on the indicative sectors as provided under Schedule VII of the Act.

 

It is estimated that over 16,000 companies will fall under the ambit of this law, generating approximately INR 20,000 Crores of CSR capital annually.

 

As the new law rolls-out, it is apparent that companies that were already involved in CSR as well as those that will now be required to start this activity, would both need extensive professional assistance on CSR from experts in the domain, this is where MAC comes to your rescue, to know more about what we can do for your organization.