Corporate Social Responsibility Under Section 135 of Companies Act 2013

What is CSR?

Corporate Social Responsibility (CSR) refers to the efforts made by companies to contribute positively to society while achieving their business goals. It’s about going beyond legal and profit obligations to address social, environmental, and ethical issues. Think of it as businesses giving back to society in meaningful ways.

The Evolution of CSR in India

CSR has ancient roots in India, dating back to the Vedic period when kings and merchants fulfilled social responsibilities through charitable acts like building temples, inns, and wells. Over time, CSR evolved through four phases:

1. Charity and Philanthropy (Pre-1850): Wealthy merchants supported society during crises and built community infrastructure.

2. Trusteeship (1850–1947): Mahatma Gandhi’s idea of "trusteeship" encouraged business leaders to use their wealth for societal development.

3. Government Regulation (1947–1980): With the rise of public sector undertakings, private businesses were regulated, but CSR efforts remained limited.

4. Sustainable Strategies (1980-Present): Liberalization and globalization prompted companies to integrate CSR into their core strategies.

CSR Today: Beyond Philanthropy

CSR now focuses on the triple bottom line: economic, social, and environmental goals. It’s no longer just about charity but about adopting sustainable and ethical business practices that benefit all stakeholders, including employees, customers, communities, and the environment.

Legal Framework in India

India is the first country to mandate CSR through the Companies Act, 2013. This law requires certain companies to:

Allocate 2% of their average net profits for CSR activities.

Focus on areas like education, healthcare, gender equality, and environmental sustainability.

Why is CSR Important?

1. Builds Trust: Consumers and employees prefer companies that are socially responsible.

2. Enhances Reputation: CSR boosts a company’s brand image.

3. Drives Sustainability: Companies that invest in CSR contribute to long-term societal and environmental health.

4. Regulatory Compliance: CSR helps businesses meet global and local ethical standards.

Examples of CSR Activities

Promoting education and vocational training.

Supporting healthcare and sanitation initiatives.

Reducing environmental impact through eco-friendly practices.

Contributing to community development projects.

The Way Forward

CSR isn’t just a responsibility; it’s an opportunity for businesses to align profitability with purpose. Companies must continue to innovate their CSR strategies, ensuring they address real-world issues and make a lasting impact.

As the Rigveda teaches: "A businessman should benefit from business like a honeybee, which gathers nectar without harming the flower." CSR embodies this wisdom, fostering mutual growth for businesses and society.