“Corporate social responsibility” means the company’s effort to take the responsibility of the environmental and social well being. The government of India had introduced the corporate social responsibility in the year 2009. It says every company having a net worth of 500 crores or more or 1000 crores or more, to mandatorily have a corporate social responsibility committee, the company should have three directors out of which one should be an independent director. The CSR committee needs to formulate the policies on which the company is going to work. The committee shall also look into the implementation and monitoring of these policies. It will also be required to look into the amount of money or expenditure to be incurred and monitoring that and any money arising out of the CSR should be redirected to the CSR only and not used for any other purpose of the company.
The company has to take into account the consideration the recommendations of the committee and should be used by the company. The committee shall formulate policy including activities specified like the eradicating hunger/ poverty, malnutrition , promoting and preventing health care, it also includes promoting education , promoting gender equality, ensuring environmental sustainability, protection of national heritage, measures for the benefit of the armed forces , training to promote rural sports , nationally recognized sports , rural development projects. Nearly 16000 registered companies or 1.6% of the registered company base are attracted by this provision. It even looks into the physical changes like the climate changes or the fall in material resources like the water resources or the energy resources.
The history of corporate social responsibility has 4 phases of development. 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 where the policy covers subjects enumerated in the Schedule. The fundamentals of CSR rest on the fact that not only public policy but even corporate should be responsible enough to address social issues. Much has been done in recent years to make Indian Entrepreneurs aware of social responsibility as an important segment of their business activity but CSR in India has yet to receive widespread recognition.
SEBI has mandated the inclusion of Business Responsibility Reports as part of the annual reports of the Top 100 listed entities based on market capitalization at BSE and NSE. It is mandatory to make these reports available on the website of the company. CSR will help companies to devise strategies to leverage their core competencies in delivering better economic, environment and social value to their stakeholders. The CSR rules apply to the subsidiary as well as the foreign companies. Generally the areas taken for the functioning of the CSR activities are local areas and areas around which the company operates. Along with the annual report the Board of directors are asked to present the CSR with it and it should be presented in the manner prescribed in the manual. Where the website of the company is available the CSR report is to be published on the website mandatorily. The rules are applicable to both private and public firm.