Initiatives to simplify Corporate Social Responsibility (CSR) rules
Recently, Corporate experts have sought to simplify the rules of Corporate Social Responsibility (CSR) from the government.
Under this, companies urged that, if a company deals with the treatment and vaccination of COVID-19 on its employees, then that corporate behavior should be covered under Corporate Social Responsibility.
It should be noted that at present, the expenditure incurred by companies for the welfare of their employees is not counted as a part of mandatory CSR expenditure.
Benefit
- The grant of corporate expenditure on immunization under the Corporate Social Responsibility on Employees will promote vaccination for the unorganized workers in the manufacturing sector and strengthen the health system.
- It may be noted that in the year 2020, the Ministry of Corporate Affairs had allowed companies to spend CSR funds for relief work related to COVID-19 under which the company can spend on research and development of COVID medicines, vaccines and medical devices.
Corporate Social Responsibility:
- Corporate social responsibility is in fact a tool to implement the principle of trusteeship of the Father of the Nation, Mahatma Gandhi. Gandhi ji believed that industrialists and rich people should become the trustees of their wealth and discharge social responsibility.
- That is, they should not consider themselves the master of wealth but only their trustee, that is, the guardian. Industrialists earning crores of rupees per year should realize their social responsibilities. CSR has been applied to companies under this principle.
- Under Corporate Social Responsibility (CSR), companies can make their expenditures in social and environmental related areas.
Impact Assessment Studies:
- It is an assessment of the direct and indirect changes on the beneficiaries targeted by CSR projects and the environment around them.
Corporate Social Responsibility: Companies Act, 2013
- The concept of CSR in India is governed under Section 135 of the Companies Act, 2013. India is the first country in the world to make CSR mandatory.
- The provision of CSR applies to companies whose annual net worth is Rs 500 crores or annual income of 1000 crores or annual profit is more than 5 crores.
- The Act states that companies will have to spend 2% of the average of three years net profit on CSR activities. As per the Act, companies also have a provision to set up a Corporate Social Responsibility Committee.
- The provisions of CSR do not only apply to Indian companies, but also to the branch of a foreign company in India and the project office of a foreign company.
CSR activities:
The 7th schedule of the Companies Act lists the activities which fall under the purview of CSR. These are-
- Eradication of poverty and hunger.
- Promotion of education, gender equality and women empowerment.
- Preparations to fight human immunodeficiency virus, acquired immunodeficiency syndrome and other disease.
- Ensuring environmental balance.
- Contribution to the Prime Minister’s National Relief Fund and any fund created for socially and economically backward people and any fund set up by the Central or State Government for development and relief, etc.
Injeti Srinivas Committee for Corporate Social Responsibility:
This committee was formed in the year 2018 under the chairmanship of Injeeti Srinivas. This committee recommended section 7 of the Companies Act-2013 (SCHEDULE VII) to be consistent with the Sustainable Development Goals.
Source – The Hindu
