A term that is immensely relevant in today’s context and must be focussed on by the companies in India is Corporate Social Responsibility. Corporate Social Responsibility refers to the responsibility or duty that a company owes to the consumers or the society at large.
Corporate Social Responsibility arose due to various reasons. Firstly, a company utilises the resources of the society and it is hence a moral responsibility of the company to give back to the society for the usage of the society’s resources. Secondly, in order to increase the confidence of the existing customers of the company it becomes immensely important to indulge in activities to prove that a company takes genuine care of its consumers. Lastly and more importantly, Corporate Social Responsibility can be used as a tactic to attract a large number of new consumers to the market by increasing its popularity. This results in the fulfilment of the main objectives of every company, that is, to survive, to maximise profits and further expand to capture the share in market.
Corporate Social Responsibility can be of various kinds but its target is to uplift a certain section of society, be it the poor, the uneducated, etc. Hence, these activities involve providing of facilities like drinking water taps for free, providing aid to hasten the sanitation process in a particular area, indulging in charity to those below the poverty line, and so on. The recent trend of Corporate Social Responsibility has been a donation towards improving the quality of the environment as performed by the ITC Group.
Over the past few years, multiple companies have strategized to bring about various changes in society in the name of Corporate Social Responsibility. The Tata Group is a leader in this aspect with poverty alleviation and social welfare programmes as well as healthcare. The Mahindra Group also indulges in various activities such as education and infrastructure. These are some examples of companies today indulging in Corporate Social Responsibility.
With the changes brought in by the Companies Act, 2013, an immensely important transformation has arisen in the form of the introduction of Corporate Social Responsibility as mandatory across certain companies that have a prescribed amount of turnover, net worth and net profit (Section 135, Companies Act, 2013). On meeting any of these criteria, 2 percent profits are to be allotted for Corporate Social Responsibility.
The Act also calls for a Corporate Social Responsibility Committee to monitor and draft the policies of Corporate Social Responsibility that can be put to use. Such a Committee will be responsible for coming up with strategies for potential activities that can be enforced after approval by the Board of Directors.
Corporate Social Responsibility is extremely beneficial and essential to the society. For a developing country like India, one of the most major issues is poverty. An efficient way to tackle this problem is to create a mechanism where the companies that are receiving large amounts of profit provide aid to the poor and enable their upliftment. This is a step towards development that the Companies Act, 2013 encourages through Corporate Social Responsibility.