Amazing Things About CSR You Need To Know

September 29, 2021


We live a dynamic life witnessing a race to win or achieve the best living standards. In this race, we often forget about the weak sections of the society which have the right too to live a good life but lacks resources.

Keeping this in mind in the Companies Act, 2013, a new law was added which emphasis the responsibilities of the companies towards the upliftment of the weaker sections of the society. Let’s explore it more in detail.

CSR (Corporate Social Responsibility)

Corporate Social Responsibility or CSR is the funding and grants made by the companies for the betterment of society. In this Non – Profit Organisations or better known as NGOs, get financial or other sorts of supports from the corporate world.

Under the law of the Companies Act, 2013 now mandatory for the companies and businesses to contribute a share of their average net profits for the social development of the deprived sections.

Earlier it was voluntary work by the companies that took a step forward to provide help to the poor people. But now it’s a concept where companies compulsorily have to contribute a share of their profits for the development of the weak sections of the society.

This act applies to every company and its holding, subsidiary company, and foreign companies on the native land. All the companies become eligible for this act if they have a net worth of more than Rs. 500 crores, or turnover more than Rs. 1000 crores or a net profit of Rs. 5 crores.

If the company and business become eligible, then it has to share 2% of the average net profits of the company and business.

CSR Committee

Every company and business that is eligible for CSR has to set up a Corporate Social Responsibility of the Board or that a CSR Committee. In this committee minimum of 3 or more directors should be from the board of directors too.

And among these directors who have formed a CSR committee, at least 1 director must be an independent director. But for any unlisted public company or a private company, an independent director is not required if there is no independent director.

If there is a case of a foreign company, then in the CSR Committee, at least 2 native persons should be there. And one of them should be nominated by the foreign company, and the other should be authorized to accept on behalf of the foreign company the services of notices and the other documents.

There are certain duties that a CSR Committee has to fulfill. They are as following,

Duties Of CSR Committee

  • The CSR Committee has to make a report and recommend a CSR policy to the Board. In this policy, the committee has to point out the activities which have to be executed by the company.
  • This committee also has to recommend the amount to be incurred on the CSR activities by the company.
  • The committee has to monitor the CSR policies of the company from time to time.
  • The committee has to start and maintain a transparent controlling mechanism for the implementation of the CSR activities by the company.

CSR Policy By The Company

In the CSR policy, all the activities are noted that have to be undertaken by the company and should be different from the normal course of business. And,

  • The ideas of CSR policy should be displayed on the company’s website by the board.
  • The activities which are mentioned in the policy have to be executed by the company.
  • Also, the company can collaborate with other companies for the undertaking of the projects and can present their individual reports on the project.
  • In the CSR policy, all the projects by the company shall be monitored.

Role Of Board Of Directors

There are some roles also that need to be fulfilled by the board of directors. They are,

  • After getting recommendations made by the CSR Committee, the board of directors has to approve the policy for the company.
  • It is the duty of the board to ensure that all the activities mentioned in the policy must be undertaken by the company.
  • The board of directors has to make sure that the company contributes its share of profit in every financial year, that is a minimum of 2% of the average net profits made during the 3 immediately preceding financial year.
  • And if the company hasn’t completed 3 financial years after its incorporation, the average net profits have to be calculated for the financial years after its incorporation.
  • A report has to be presented by the board of directors, which must disclose,
  1. Composition of the CSR Committee
  2. Ideas and content of the CSR policy
  3. If in case CSR is not spent as equal to the 2% as per the CSR policy, then the reasons for the unspent amount and details of the transfer of unspent amount have to be disclosed.

Benefits Of CSR

CSR or Corporate Social Responsibility is an idea that lays stress on the role of the companies and businesses for the empowerment of the weak section of the society. Every company must have an impact on the social, economic, and environmental spheres of life.

And to ensure that the impact is positive, this act was enacted. Here companies that have resources become liable for developing the conditions of the society.

But this has two-fold benefits for society and for the company as well. So let’s have a look at the advantages of the CSR policy for the companies,

  1. It improves the public image of the company and business.

 When a company makes efforts towards improving the environment and society, it becomes popular among the consumers. So, however, the company has to spend its share of profit, but it gets more in return than what it spent.

  1. It increases media visibility or coverage.

When the company spends its profit for the betterment of society, it gets pretty decent media coverage, which indirectly promotes the company in front of the consumers.

  1. Increases the brand value of the company

CSR indirectly builds a strong relationship between the consumers and the company, which in turn helps in the growth of the company.

In this time of COVID – 19 under CSR policy, there is also content of providing free vaccination to the people other than the employees of the company and their family members.

So free vaccination drives or camps for people other than the staff is also considered as a CSR activity.


Here in this article, we have discussed CSR and how it helps the weak sections of society as well as beneficial for the company. And we have also considered the scope of CSR activities in the time of the global pandemic.


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