Corporate Social Responsibility(CSR) is a corporate initiative to assess and take responsibility for company’s effect on environment and impact on social welfare and to promote positive social & environmental change.
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or responsible business) 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-Line- Approach), while at the same time addressing the expectations of shareholders and stakeholders.
India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to The Company Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger.
Today, obviously, organization’s attachment to great Governance, Social and Environmental (ESG) act is normal and the message of good corporate citizenship has been adopted. Organizations can be sure there will be stakeholders – clients, employees, investors or media – checking they walk the talk.
“The ministry of corporate affairs (MCA) has notified Section 135 and Schedule VII of the Companies Act, 2013, which relate to corporate social responsibility (CSR) that will be effective from April 1, as part of the new Companies Act. The norms will apply to companies with at least Rs 5 crore net profit or Rs 1,000 crore turnover or Rs 500 crore net worth.
These companies will have to spend 2 per cent of their three-year average annual net profit on CSR activities in each financial year.”
CSR is no longer about just caring for global warming. It is rather a broader concept of a business’s overall impact on local communities in culture. Instead a company’s performance is judged in the widest way possible showing how strategic objectives and material topics actually support the long-term creation of value for the business and society at large.
While aiming to earn more & more profit, organizations should also focus on how and from where it is earned. This requires the mindset for many employees in the organization to move away from thinking and acting in quarterly reporting cycles towards long term investments by taking account of their company’s impact on future generation.