"Friends, together, we can achieve a new phase of globalization - one that creates inclusive and sustainable markets, builds development and enhances international cooperation. We each have a responsibility in moving our agenda forward." Ban Ki-moon, Secretary General of the United Nations (At the UN Global Compact Leaders Summit, Geneva, 6 July, 2007)
These were the closing remark of the reputed Ban Ki Moon, at the Geneva Summit, however I chose to begin this piece with these words, which articulate a sense of achievement, into a phase that builds and sustains development in the womb of international cooperations giving birth to a responsibility, responsibility of inclusive movement towards globalization.
Definition and Legal Mould- The United Nations Industrial Development Organisation (UNIDO) defines CSR as "Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders." The definitions emits a to be balance of Economic, environmental and Social imperatives and meeting the expectation of stakeholders. It portrays a concept of Triple Bottom line approach depicting the collaboration and distribution of resources to these key areas.
The Companies Act 2013 has taken the initiatives to introduce and legalise this act of Corporate Social Responsibility through the infamous section 135 and the other provisions of the law. 135.
(1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board......
(3)The Corporate Social Responsibility Committee shall,-
(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;
(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); The Act embraces Public sector companies and private sector companies meeting the criteria, to formulate a committee, who will draw the policy, hence preparing a framework of functioning into the key areas of CSR mentioned by the Act in Schedule VII.
The act is demanding on its part, as it expects the corporations to cut a piece of its profit and contribute to its share of responsibility towards its fellow community. Section 135 of Companies Act 2013
(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:
In Addition to the above, the Act has made a provision which directs the efforts of the corporations to meet its local community first.
Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:-
From the above three extracts of the Companies Act it can be observed how well a global concept of CSR is carved in these few words of government paper. CSR being the responsibility of our fellow corporate to give a helping hand to its peripheral community. The act stresses on meeting the needs of the local area first, hence ensuring that the policy functions and upgrades at the grass root level and enhancing the policy’s effectiveness at a greater level or at a national level. Any major policy functioning, will be valuable, if its system of distribution works efficiently at the lowest level and building its way to spread branches and bear fruits for its stakeholders. Embracing the Human Index Now we reflect on the activities that are considered under the tag of CSR given in schedule VII:
SCHEDULE VII (See sections 135) Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to:-
(i) eradicating extreme hunger and poverty;
(ii) promotion of education;
(iii) promoting gender equality and empowering women;
(iv) reducing child mortality and improving maternal health;
(v) combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases;
(vi) ensuring environmental sustainability;
(vii) employment enhancing vocational skills;
(viii) social business projects;
(ix) contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women; and
(x) such other matters as may be prescribed. The activities chosen for CSR plays a prominent role to understand the current situation of our surrounding and responding to it in a creative way.
These issues have been of grave concern for our country and the government have been taking steps to meet these areas. Now it calls upon the veterans of corporate sector that has brought in industrial prosperity, to apply the skill and efficiency in the areas where in the country would be able to lift itself up on human grounds, i.e eradicate poverty, promoting education, gender equality etc.
Improving the Human Development Index. The Impact of CSR on local community would be better understood with the help of a case study: Tata Tea has been working hard since the 1980s to fulfill the needs of specially-abled people. It has set up the Srishti Welfare Centre at Munnar, Kerala; its various programs provide education, training and rehabilitation of children and young adults with special needs.
Srishti has four projects:
a. The DARE School
b. The DARE strawberry preserve unit
c. Athulya d. Aranya.
Tata Tea's welfare officers help identify and encourage relatives or children of employees who are handicapped to join the Welfare Centre for special education and rehabilitation.
a.The DARE It provides the students with training in basic academics, self-help skills and skills like gardening, cooking, weaving etc. Children are taught to paint and some of the paintings are printed and sold as greeting cards. The sales proceeds of which are used back into the units.
b.The DARE strawberry It preserves unit trains youngsters to make natural strawberry preserve. The trainees are paid for the work; they receive social cover, free medical aid and other benefits.
c. Athulya It has two units -
(i) A vocational training center that imparts training in stationery-making
(ii) A handmade paper-making unit which trains physically challenged persons in the art of making recycled paper d.Aranya This project was started to nurture the lives of the disabled and also to revive the ancient art of natural dye. Individuals are given training in various natural dyeing techniques including block printing, tie and dye, batik work, etc.
Their products are sold in and outside the country . Tata Tea's Jaago Re! Campaign exemplifies the Social-Cause Marketing Initiatives. A Way Forward As per an article in economics times dated Feb 02, 2015; According to Indian Institute of Corporate Affairs, at least 6,000 companies are required to undertake CSR projects under the provisions.
Some estimates indicate CSR commitments from companies can amount to as much as Rs 20,000 crore. Hence the spending of our corporate stands substantially in comparison to our Union Budget 2015-2016. How? As per the Revenue Accounts Disbursements, the amount allotted to Social Service sectors which includes the activities that are under the purview of CSR is Rs.71506.63 Crores.
The estimates of the CSR spending meet 28% of the amount allocated by the Union budget2015-2016 to social sector. Therefore corporate sector has a decent share in the grave task of upbringing of a nation. Several corporate have either foundations or trusts or departments within an organization for implementation of practices.
The activities taken up by the corporate in regard to CSR need to relate to its core business, it has to engage itself in something that takes advantage of the skills and competencies of the companies. It has to initiate a plan that will evolve into an efficient fund utilization and tactic that measures short term and long term impact on its business as a whole. CSR..
A blessing to its community!!!
-XAVIER ALBUQUERQUE
CAclubindia
