CORPORATE LAW PROJECT ON

CORPORATE SOCIAL RESPONSIBILITY AND ITS

NEW DIMENSIONS

PROJECT SUBMITTED TO:

DR. Y. PAPA RAO

(Assistant Professor)

PROJECT SUBMITTED BY:

MUSKAN KHATRI

Roll Number: 87; Section: B

Semester: VI, B.A L.L.B. (Hons.)

Date of Submission- 10th July 2020

HIDAYATULLAH NATIONAL LAW UNIVERSITY

ATAL NAGAR, RAIPUR, 492001
 DECLARATION

The researcher hereby declares that the project work titled ‘Corporate Social Responsibility’
submitted to Hidayatullah National Law University, Raipur, is a record of an original work done by
the researcher under the guidance of Dr. Y. Papa Rao, faculty member of Corporate Regulation,
Hidayatullah National Law University, Raipur. The research done by the researcher is her own
original work and wherever excerpts from the works of different authors have been taken, they have
been duly acknowledged.

Declared By:

MUSKAN KHATRI

Roll No. 87

Semester VI

B.A., L.L.B. (Hons.)

2
 ACKNOWLEDGEMENTS

At the outset, I would like to express my heartfelt gratitude and gratefulness to my teacher Dr. Y.
Papa Rao, for putting his trust in me and giving me a project topic such as this and for having the
faith in me to present my report in the best possible way. I would also like to thank him for the
guidance he provided during the tenure of my working in this project. Sir, thank you for providing
me with an opportunity that helped me to grow.

My gratitude also goes out to the staff and administration of Hidayatullah National Law University
for providing the infrastructural facilities in the form of our library and IT Lab that was a source of
great help for the completion of this project.

Last but not the least, a heartfelt thanks to my seniors and friends who were there to help me out
even in the oddest of hours. Without you all this project wouldn’t be what it is.

Thanking you all sincerely.

MUSKAN KHATRI

Semester- VI

Roll No.: 87

HNLU, Raipur.

3
 TABLE OF CONTENTS

DECLARATION ...............................................................................................................................02

ACKNOWLEDGEMENTS...............................................................................................................03

INTRODUCTION…..........................................................................................................................05

OBJECTIVE THE STUDY..............................................................................................................06

SCOPE OF THE STUDY ...............................................................................................................06

SOURCE OF DATA………............................................................................................................06

WHAT IS CSR?.................................................................................................................................07

MEANING AND CONCEPT OF CSR............................................................................................08

PROVISIONS IN THE COMPANIES ACT, 2013.........................................................................10

APPLICATION OF CSR IN CURRENT SOCIETY........................................................................11

FOUR RESPONSIBILITIES OF CSR.............................................................................................11

GOVERNANCE CLAUSE 135 OF THE ACT: THE CSR COMMITTEE....................................12

NEW DIMENSIONS OF CSR...........................................................................................................14

INSTITUTIONAL COVERAGE OF CSR......................................................................................15

DIFFERENT DIMENSIONS OF CSR............................................................................................17

NEWER DIMENSIONS..................................................................................................................19

DELETION OF SOCIAL BUSINESS PROJECT AS A CSR ACTIVITY.......................................20

CONCLUSION .................................................................................................................................21

REFERENCES ..................................................................................................................................22

4
 INTRODUCTION

A robust and thriving development sector is central to India’s quest for equitable, inclusive and
sustainable growth. India’s development sector has evolved substantially over the last few decades
and is now witnessing unprecedented interest and investments across the value chain. With the
passage of the Companies Act, 2013 the mandate for corporate social responsibility (CSR) has been
formally introduced to the dashboard of the Boards of Indian companies. The industry has
responded positively to the reform measure undertaken by the government with a wide interest
across the public and private sector, Indian and multinational companies.

Building a society which provides equal access to opportunities negates disparities and, is a
collective responsibility. This Act presents a unique opportunity to stand up to the challenge. It is a
call for action. The constitutional structure of the country was laid with an objective of one man
equals one vote, equals one value. However the socio-economic realities of the country still have a
long way to go to match this vision of independent India where today there are many first among
equals. The country presently is under intense debate of developmental growth versus welfare based
development. Our political realities and our economic senses are at cross-roads. The choices we
make today are going to influence our generations to come. Every single major policy initiative in
this country has been driven with a perspective that an overwhelming concern for the disadvantaged
and marginalised, a multidimensional view of poverty and human deprivation, the focus on our
fundamental rights and the need to expand opportunities while ensuring its equal distribution are
fundamental for achieving strong human development. But disparity, inequality and the growing
divide in our societies define our existence today. The inclusion of the CSR mandate under the
Companies Act, 2013 is an attempt to supplement the government’s efforts of equitably delivering
the benefits of growth and to engage the Corporate World with the country’s development agenda.

5
  OBJECTIVES OF THE STUDY:
The research has been carried out by the researcher with the aim of achieving the following
objectives:

1. To understand what Corporate Social responsibility is.

2. To study how important this concept has become in the present times.
3. To study the ways in which companies can practise CSR and suggest modifications in the
same.

 SCOPE OF THE STUDY

The scope of study includes the purview within which the project work lies. This topic has been
clearly enunciated with the help of articles from magazines, newspapers and other such e-article
databases that have been explored.

 RESEARCH METHODOLOGY

This project work is descriptive & analytical in approach. It is largely based on secondary &
electronic sources of data. Internet & other references as guided by faculty of Corporate Law are
primarily helpful for the completion of this project. My research methodology requires gathering
relevant data from the specified online sources.

 SOURCES OF DATA:

The data is of secondary source. A large number of data has been gathered from various books and
online resources.

6
 CORPORATE SOCIAL RESPONSIBILITY: AN
INTRODUCTION

Corporate social responsibility, often abbreviated "CSR," is a corporation’s initiative to assess and
take responsibility for the company's effects on environmental and social wellbeing. The term
generally applies to efforts that go beyond what may be required by regulators or environmental
protection groups1. CSR may also be referred to as "corporate citizenship" and can involve
incurring short-term costs that do not provide an immediate financial benefit to the company, but
instead promote positive social and environmental change. Large companies are immensely
powerful entities, to the point that they have frequently trumped the interests of sovereign nations.

CSR is generally understood as being the way through which a company achieves a balance of
economic, environmental and social imperatives (“Triple Bottom LineApproach”), while at the
same time addressing the expectations of shareholders and stakeholders.2 Through CSR, a Company
can also make a valuable contribution to poverty reduction, will directly enhance the reputation of a
company and strengthen its brand. A properly implemented CSR concept can bring along a variety
of competitive advantages, such as enhanced access to capital and markets, increased sales and
profits, operational cost savings, improved productivity and quality, efficient human resource base,
improved brand image and reputation, enhanced customer loyalty, better decision making and risk
management processes.

The concept of CSR originated in the 1950‘s in the USA but it became prevalent in early 1970s.
During the 1980‘s to 2000, corporations recognized and started accepting a responsibility towards
society. CSR has matured over the past decade. It has been driven by a combination of evolving
global guidelines, increments of stakeholder expectation, customer awareness, more demanding
corporate disclosure requirement and voluntary initiatives by thecorporate leaders towards CSR. 3
Corporate social responsibility focuses on the wealth creation for the optimal benefit of all
stakeholders – including shareholders, employees, customers, environment and society. CSR is a
platform whereby organization and society come together for supporting each other in many
different ways and they both can be beneficial through the CSR activities. One side the society get a
1
Baker, Mallen, (2010), Corporate Social Responsibility - What does it mean, available on
http://www.mallenbaker.net/csr/definition.php
2
Bhattacharyya, Som S., Sahay, Arunditya.,Arora, Ashok P., and Chaturvedi, Abha., (2008), A toolkit for designing
firm level strategic corporate social responsibility (CSR) initiativesî, Social Responsibility Journal, VOL. 4 NO. 3, pp
265-282
3

7
lot of benefit from organization like social welfare, financial assistance for poor people, green
environment, charity and donation provided by the organization for social upliftment, education
welfare, women empowerment, rural development etc, other side organization also get many
benefits in return like financial benefit, market growth, improve government relation, increase
customer trust, improve labour market, increase employee loyalty and pride etc.

MEANING AND CONCEPT OF CSR:

Corporate social responsibility also called corporate conscience, corporate citizenship or
sustainable responsible business. Responsible Business is a form of corporate self-regulation
integrated into a business model. CSR policy functions as a self-regulatory mechanism whereby a
business monitors and ensures its active compliance with the spirit of the law, ethical standards and
international norms. In some models, a firm's implementation of CSR goes beyond compliance and
engages in "actions that appear to further some social good, beyond the interests of the firm. CSR
aims to embrace responsibility for corporate actions and to encourage a positive impact on the
environment and stakeholders including consumers, employees, investors, communities, and others.

To illustrate how critical CSR has become, a 2017 study by Cone Communications found that more
than 60 percent of Americans hope businesses will drive social and environmental change in the
absence of government regulation. The majority of consumers surveyed (87 percent) said they
would purchase a product because a company supported an issue they care about. More importantly,
a whopping 76 percent will refuse to buy from a company if they learn it supports an issue contrary
to their own beliefs.4 Corporations can have enormously detrimental effects on the environment.
While their responsibility is hard to untangle from that of the consumers who demand electricity
and transportation, it is difficult to deny that many corporations have profited from the deterioration
of the global environment5. The same money and influence that enable large companies to inflict
damage on people and the environment allows them to effect positive change. At its simplest,
corporation can give money to charity. Companies can also use their influence to pressure
governments and other companies to treat people and resources more ethically. 6

4
Devinney, Timothy M., Richard, Pierre J., Yip, George S., and, Johnson, Gerry, (2005), ìMeasuring Organizational
Performance in Management Research: A Synthesis of Measurement Challenges andApproachesî, available on
http://zip.agsm.edu.au/agsm/web.nsf/AttachmentsByTitle/Orgperf/$FIL E/ORGPERF.pdf.
5
Gabriel, Juan., Navarro, Cegarra and Mart Aurora., (2009), Linking corporate social responsibility with admiration
through organizational outcomesî Social Responsibility Journal, VOL. 5 NO. 4, pp. 499-511.
6
Doran, M., (1994), investigating the dimensions of social responsibility and the consequences for corporate financial
performanceî, Journal of Managerial Issues, available on http://www.allbusiness.com/finance/450543-1.html
8
Promoting the uptake of CSR amongst SMEs requires approaches that fit the respective needs and
capacities of these businesses, and do not adversely affect their economic viability. Companies
based their CSR programme on the Triple Bottom Line (TBL) Approach, which has proven to be a
successful tool for SMEs in the developing countries to assist them in meeting social and
environmental standards without compromising their competitiveness. The TBL approach is used as
a framework for measuring and reporting corporate performance against economic, social and
environmental performance. It is an attempt to align private enterprises to the goal of sustainable
global development by providing them with a more comprehensive set of working objectives than
just profit alone. The perspective taken is that for an organization to be sustainable, it must be
financially secure, minimize (or ideally eliminate) its negative environmental impacts and act in
conformity with societal expectations. Today's consumers are looking for more than just high-
quality products and services when they make a purchase. They're prioritizing corporate social
responsibility (CSR), and holding corporations accountable for effecting social change with their
business beliefs, practices and profits. Some think corporate social responsibility is an oxymoron.
Others see corporate social responsibility as a distraction of a different sort, that is, from the lawful
pursuit of profits.7 However, it is true as ethical consumer culture gains wider acceptance8.

PROVISIONS IN THE COMPANIES ACT, 2013:

7
Gyves, Sharon, and OíHiggins, Eleanor, (2008), Corporate social responsibility: an avenue for sustainable benefit for
society and the firm Society and Business Review, Vol. 3 No. 3, pp. 207-223
8
‘CSR in new dimensions’ R K Pachauri , The Economic Times, 28 April 2006
9
In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013, which was
passed by both Houses of the Parliament, and had received the assent of the President of India on 29
August 2013. The CSR provisions within the Act are applicable to:

 Companies with an annual turnover of 1,000 Cr INR and more

 A net worth of 500 Cr INR and more, or a net profit of five Cr INR and more.9

The Act lists out a set of activities eligible under CSR. Companies may implement these activities
taking into account the local conditions after seeking board approval. The indicative activities
which can be undertaken by a company under CSR have been specified under Schedule VII of the
Act.10

The company can implement its CSR activities through the following methods: -

 Directly on its own:

- Through its own non-profit foundation set.

- up so as to facilitate this initiative.

-Through independently registered non-profit organisations that have a record of at least three
years in similar such related activities.

- Collaborating or pooling their resources with other companies.

 Only CSR activities undertaken in India will be taken into consideration

 Activities meant exclusively for employees and their families will not qualify.

APPLICATION OF CSR IN CURRENT SOCIETY

9
Ministry of Corporate Affairs on Corporate Social Responsibility, available at
http://www.mca.gov.in/SearchableActs/Section135.htm
10
Schedule VII of the Companies Act, 2013, available at www.mca.gov.in/SearchableActs/Schedule7.htm
10
Recognizing how important social responsibility is to their customers, many companies now focus
on and practice a few broad categories of CSR:

1. Environmental efforts: One primary focus of corporate social responsibility is the environment.
Businesses regardless of size have a large carbon footprint. Any steps they can take to reduce those
footprints are considered both good for the company and society as a whole.

2. Philanthropy: Businesses can also practice social responsibility by donating money, products or
services to social causes. Larger companies tend to have a lot of resources that can benefit charities
and local community programs.

3. Ethical labour practices: By treating employees fairly and ethically, companies can also
demonstrate their corporate social responsibility. This is especially true of businesses that operate in
international locations with labour laws that differ from those in the United States.

4. Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing good
deeds without expecting anything in return, companies are able to express their concern for specific
issues and support for certain organizations.

FOUR RESPONSIBILITIES IN CSR:

i. Economic Responsibility:

A corporation has to meet its economic responsibilities in terms of reasonable return to investors,
fair compensation to employees, goods at fair prices to customers, etc. Thus, meeting economic
responsibility is the first-layer of responsibility and also the basis for the subsequent
responsibilities. The fact remains that meeting economic responsibility is must for all corporations
to survive in the time.

ii. Legal Responsibility:

The legal responsibility of business corporations demands that businesses abide by the law of land
and play by the rule of the game. Laws are the codification of do’s and don’ts in the society.
Abiding by laws is the prerequisite for any corporation to be socially responsible. Corporate history
is replete with instances where violation of laws disallowed corporations to run any longer. Enron,
Union Carbide, Global Trust Bank, etc. are some of such illustrative corporate cases of social
rejection and boycott.
11
iii. Ethical Responsibility:

These responsibilities refer to obligations which are right, just, and fair to be met by corporations.
Just abiding by law, procedure, and rule and regulations does not make business conduct always as
ethical or good. The conduct of corporations that go beyond law and contribute to social well being
is called ethical. Hence, corporations have an ethical responsibility to do, even going beyond law
and rule and regulations, what proves good for the society. In other words, ethical responsibilities
consist of what is generally expected by society from corporations over and above economic and
legal expectations.

iv. Philanthropic Responsibility:

The Greek word ‘philanthropy’ means literally ‘the love of the fellow human.’ The use of this idea
in business context incorporates activities that are, of course, within the corporation’s discretion to
improve the quality of life of employees, local communities, and ultimately society at large. Making
donations to charitable institutions, building of recreational facilities for employees and their
families, support for educational institutions, supporting art and support activities, etc. are the
examples of philanthropic responsibilities discharged by the corporations. It is important to note
that the philanthropic activities are desires of corporations, not expected by the society.

GOVERNANCE CLAUSE 135 OF THE ACT: THE CSR COMMITTEE:

This section lays down the fiscal year 2014-15 onwards; also require companies to set-up a CSR
committee consisting of their board members, including at least one independent director. The Act
encourages companies to spend at least 2% of their average net profit in the previous three years on
CSR activities.11 Promotion of education, Gender equity and women empowerment, Eradication of
extreme hunger and poverty, Reducing child mortality and improving maternal health, Combating
HIV-AIDS, malaria and other diseases, Environmental sustainability, Employment enhancing
vocational skills, Contribution to Prime Minister’s relief fund and other such state and central funds
Social business projects and such other matters as may be prescribed List of activities under
Schedule VII in India. The CSR committee will be responsible for preparing a detailed plan on CSR
activities, including the expenditure, the type of activities, roles and responsibilities of various
stakeholders and a monitoring mechanism for such activities. The CSR committee can also ensure
that all the kinds of income accrued to the company by way of CSR activities should be credited
back to the community or CSR corpus.12
11
S. 135, Companies Act, 2013
12
Corporate Social Responsibility: Background and Perspective, John Samuel and Anil Saari
12
In the modern times, CSR has gone a sea change in its area and application. Today, CSR is not only
engaged in social work rather has added many new areas like health, education, child welfare,
women empowerment, poverty alleviation etc in its armoury. 13 The Company’s Bill 2013 has made
the CSR mandatory for all companies. CSR which used to be voluntary contribution by companies
has now been included in law & the Companies which are not taking CSR seriously have to focus
on CSR legally.14 These changes have given Indian society a new hope of expectation and they will
help the society in moving forward where the role of corporate will be clearly defined and the
corporate will be made accountable and responsible.15

NEW DIMENSIONS OF CORPORATE SOCIAL

RESPONSIBILITY (CSR)

13
Khurana N “Strategic corporate social responsibility: challenging sustainable actions in India”
http://www.indianmba.com/Faculty_Column/FC1397/fc1397.html
14
Vijayaraghavan A “Making CSR mandatory in India”http://www.triplepundit.com/2011/07/making-csr-mandatory-
India
15
The Times of India (2011) http://www.cefi.co/pulse/blog/csr-initiatives-in-india/
13
 In the old era CSR was based on three dimensions approach that is called on the triple bottom line
(TBL). According to TBL approach CSR only focus in three areas like People, profit and planet and
considered in the three dimensions of growth and maintaining relation with various shareholders on
the basis of transparency and dialogue16. But in the new era “The Ministry of Corporate Affairs” has
noticed section 135 and schedule VII of the Companies act 2013 as well the provisions of
companies (CSR policy) rules, 2014 to come in to affect from April 1, 2014. 17 Thus the 2013 Act
has introduced several provisions which would change the way Indian corporates do business.

INCLUSIVE DEFINITION OF THE TERM CSR

While the Companies Act used CSR as a nomenclature without actually defining it, the notified
rules have defined the term ‘CSR’ to mean and include but not limited to:

i. Projects or programs relating to activities specified in the Schedule; or

ii. Projects or programs relating to activities undertaken by the Board in pursuance of
recommendations of the CSR Committee as per the declared CSR policy subject to the
condition that such policy covers subjects enumerated in the Schedule.18

By providing the definition of CSR, the scope and application of CSR that can be undertaken by the
companies has been further clarified. The definition of CSR assumes significance as it allows
companies to engage in projects or programs relating to activities enlisted under the Schedule. It
also permits flexibility to companies by allowing them to choose their preferred CSR engagements
that are in conformity with the CSR policy.

INSTITUTIONAL COVERAGE OF CSR:

While Section 135 (1) of Companies Act brings under its purview every company which would
mean to include a company incorporated in India 19. The CSR Rules have made an attempt to

16
‘Triple Bottom Line’, available at, ‘The Economist’, https://www.economist.com/node/14301663
17
‘ Changing scenario of corporate social responsibility (CSR) in an era of globalization’ MS Khan, IJAR 2015; 1(10):
111-114, available at www.allresearchjournal.com
18
‘Corporate Social Responsibility - Indian Companies Act 2013’, Mansukhlal& Co, available at
http://www.mondaq.com/india/x/366528/Corporate+Governance/Corporate+Social+Responsibility+Indian+Companies
+Act+2013
19
Section 2(20) defines the term Company as a company incorporated under this Act or under any previous company
law
14
broaden the definition of the term 'company' to include a foreign company having a branch or
project office of a foreign company.20 This gives an expansionist scope under the CSR Rules to
regulate such companies which prima facie are not included under Section 135.

 APPOINTMENT OF INDEPENDENT DIRECTORS ON THE BOARD:

The CSR Rules have dispensed with the requirement of appointing an independent director on the
CSR Committee of the Board of an unlisted company as well as a private company. It has brought
in the much needed clarity, as under the boarder scheme of the Companies Act, there is no
requirement regarding appointment of independent director on the board of directors of the unlisted
or private company.21

 REPORTING:

It is mandatory for companies to disclose their CSR Policy, programs/projects undertaken and
amount spent in their report and the CSR Rules provide for a separate format. The report containing
details of such activities and CSR policies have to be made available on the company’s website for
informational purposes.

 SCOPE OF ACTIVITIES UNDER SCHEDULE VII:

Substantial changes have been made into the activities enlisted in the Schedule. In the present CSR
Rules, the scope of activities under the Schedule has been expanded to include preventive
healthcare, sanitation, providing safe drinking water, protection of national heritage, rural
development projects, measures to benefit armed forces veterans, rural development projects and
the like. Similarly, several new spectrum of activities such as promoting rural sports, nationally
recognized sports, setting up homes and hostels for women, orphans and senior citizens, reducing
inequalities in socially and economically backward groups and support to technology incubators in
academic institutions have also been included in the list of CSR activities under Schedule. As per as
evolution and dimensions of CSR it is very clearly defined CSR journey from start to till date in
India thus we can understand that how CSR became a legislation for corporates from a voluntary
basis initiatives. This can be understood phase-wise:

Phase I: In the old days CSR was in terms of charity and philanthropy. Charity refers to the relief
of suffering while philanthropy is the seeking out of the root causes of social problems and solving
them. That time the businessmen used to donate a part of their profit freedom reformation and
reinvested them in setting up new industries. In Phase 2, Mahatma Gandhi introduced a theory of
20
Section 2(42) of the Companies Act, 2013 defines a “foreign company”. A “foreign company” means any company or
body corporate incorporated outside India
21
http://pib.nic.in/newsite/PrintRelease.aspx?relid=104293
15
trusteeship. This theory put pressure on various industrialists to act towards building nation and its
socio economic development. In Phase 3, mixed economy introduced. This led to enactment of
legislation regarding corporate governance, labour, and environmental issues.In Phase 4,
globalization era has been started. Globalization transformed India in to an important destination in
terms of productions and manufacturing bases of transactional corporations (TNCs). 22

So Indian companies and stakeholders began abandoning traditional philanthropic engagement and,
to some extent, integrated CSR into a coherent and sustainable business strategy, partly adopting the
multi stakeholder approach. In this era organizations started to focus on CSR activities. The big
corporate leaders like Tata, Titan, Coca-Cola, Wipro, Nestle are spending a huge amount on CSR
activities in different sectors like environment protection, education sector, rural development,
women empowerment, health care etc. many other organizations are also doing CSR activities. 23
The organizations are also running their trust and foundations for implementing of CSR activities in
a proper manner. These all phases followed the old dimensions of CSR, because till last phases CSR
was not on compulsory basis. But new companies bill, 2013 replaced to the 1956 companies’ bill
and the companies act, 2013 has passed a provision spending on CSR activities. CSR which has
largely been voluntary contribution, by corporates has now been included in law. Now CSR is
compulsory and this act also has given new dimensions of CSR.24

DIFFERENT DIMENSIONS OF CORPORATE SOCIAL

RESPONSIBILITY
There are various initiatives being taken up by entrepreneurs in their endeavours to fulfil their roles
in society. Their CSR agenda can be broadly divided into its internal and external dimensions.

Internal Dimensions of CSR:

22
An overview of CSR rules under the companies Act. (2013), available at
http:/www.businessstandard.com/article/companies/anoverview-of-csr-rules-under companies-cat-2013-
114031000385_1.html
23

24

16
Human Resource Management:

How the company deals with its human resources is certainly part of its corporate social
responsibility. This will include all workplace-related issues such as levels of salaries, timely
disbursal of wages, administration of benefits, issues related to working hours, and quality of work.

Health and Safety at Work:

Amongst all issues relating to the company’s human resources, those dealing with health and safety
deserve special mention. There is increasing pressure to recognize corporate responsibility towards
workers’ health and safety. This is of particular importance when workers are exposed to hazardous
materials or when they have to work in potentially dangerous working conditions. An example is
the case of retired employees suffering from asbestosis, who were able to claim compensation from
their former employers-like in the case of employers of W.R. Grace and Co, National Gypsum,
Manville Corporation, and Several others.

Adaptation to Change:

We live in an ever-changing world and it is the responsibility of the employer to prepare the
employees to meet and deal with the changes. When the industry is going through a phase of rapid
automation and computerization, the employer may be expected to help train its employees to meet
the new challenges faced due to this onslaught of technology. It is also very important to ensure that
the employees leaving the organization are fully equipped to face the challenges in the outside
world.

External Dimensions of CSR:

External dimensions of CSR are related to the issues outside the company’s premises.

Local Community:

There is a very complex interrelationship between a corporate and the community around which its
activities are centred. At the least, the company may be expected to be part of the local economy by
providing jobs, consuming local products and services, and contributing to local taxes. In some
17
cases, the corporate may take on a much broader role by even providing basic civic amenities as in
the case of several industrial townships such as Tatanagar in Jharkhand.

Business Partners, Suppliers, and Consumers:

Dealings of a corporate with its business partners may come under scrutiny. The corporate is
expected to be fair and honest in its dealings with suppliers and consumer additionally, it is also
expected to promote an honourable code of conduct amongst its business partners and supplier of
particular note is the wave of negative sentiment Nike had to face when the exploitative labour
practices of its suppliers came to light.

Human Rights:

The company’s record on human rights is very important for its positive public image. Very few
entrepreneurs can afford to carry an image of direct abuse of human rights. Corporate world would
avoid supporting an administration that has a past history of human rights abuses. That is one of the
reasons why many large companies are wary of identifying themselves closely with the Chinese
Government.

Global Environmental Concerns:

Here, we are referring to the concern for the environment in general and not specifically about the
issues that may crop up due to the operations of the company in particular or due to the use of its
products.

NEWER DIMENSIONS
As per as evolution and dimensions of CSR it is very clearly defined CSR journey from start to till
date in India thus we can understand that how CSR became a legislation for corporates from a
voluntary basis initiatives. In the old days phase 1st CSR was in terms of charity and philanthropy.
Charity refers to the relief of suffering while philanthropy is the seeking out of the root causes of
social problems and solving them. That time the businessmen used to donate a part of their profit

18
freedom reformation and reinvested them in setting up new industries. In phase 2nd Mahatma
Gandhi introduced a theory of trusteeship. This theory put pressure on various industrialists to act
towards building nation and its socio economic development. In 3rd mixed economy introduced.
This led to enactment of legislation regarding corporate governance, labor, and environmental
issues. In phase 4th globalization era has been started. Globalization transformed India in to an
important destination in terms of productions and manufacturing bases of transactional corporations
(TNCs). So Indian companies and stakeholders began abandoning traditional philanthropic
engagement and, to some extent, integrated CSR into a coherent and sustainable business strategy,
partly adopting the multi stakeholder approach. In this era organizations started to focus on CSR
activities. The big corporate leaders like Tata, Titan, Cocacola, Wipro, Nestle Multinational, Oncg
are spending a huge amount on CSR activities in different sectors like environment protection,
education sector, rural development, women empowerment, health care etc. many other
organizations are also doing CSR activities. The organizations are also running their trust and
foundations for implementing of CSR activities in a proper manner. These all phases followed the
old dimensions of CSR. Because till last phases CSR was not on compulsory basis, But new
companies bill, 2013 replaced to the 1956 companies’ bill and the companies act, 2013 has passed a
provision spending on CSR activities. CSR which has largely been voluntary contribution, by
corporates has now been included in law now CSR is compulsory and this act also has given new
dimensions of CSR.Corporate sustainability practices and reporting will be radically transformed in
this era of rapid digital and technological change. Technological advances and increasing demand
for real-time updates are going to bring a number of transformations in the way sustainability is
monitored, implemented and reported.Companies currently spend a lot of time, effort and resources
to prepare Corporate Social Responsibility (CSR) reports, but how many are actually read? Without
integration of CSR into business processes, and without CSR reports bringing tangible value, this
annual exercise becomes a drain on company resources. Emerging technologies can help make
reporting easier. They can also address the main data challenges of reporting.

DELETION OF SOCIAL BUSINESS PROJECT AS A CSR ACTIVITY25

Social business projects forms the core philosophy of corporate social responsibility and Schedule
VII of the original Companies Act, 2013 contained ‘social business projects’ among the list of
various activities that a company could undertake. The Central Government vide notification dated
February 27, 2014 made amendments to the Schedule while deleting ‘social business projects’ from
‘New Rules for Corporate Social Responsibility announced’, available at
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http://www.nishithdesai.com/information/research-and-articles
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the list of activities enlisted under the Schedule. Although Section 467 empowers the government to
amend the Schedule through delegation, the power to amend under this section is meant to make
simple alterations without affecting the legislative policies enshrined in the Companies Act, 2013.
Deletion of ‘social business projects’ through the notification seems to override the CSR policy as
envisaged under the Companies Act. By deleting ‘social business projects’ through the notification,
the central government seems to have exceeded its legislative mandate and the same may be subject
to judicial review in future.

CONCLUSION

The study shows CSR has gone through the many phase of development from the old era to
globalization era. CSR has been started in the term of charity and philanthropy and after
globalization era organizations started to think about the betterment of society and CSR became a
concept whereby the organizations can do something better for the society without having any profit
making purpose on the voluntary basis of organizations But still there was a lot of confusion about
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CSR because CSR concept was not clearly defined, mostly companies were focusing around mainly
in education sector and the health sector with a little stress on, empowering women, sustainable
employment and infrastructure development. CSR was on the voluntary basis so some companies
were doing CSR, some companies were avoiding CSR activities, and even some are not very much
about CSR term. There was not any type of pressure of government on corporations regarding CSR.
But now Companies’ Act 2013 made CSR a rule for the Indian corporations. CSR became
legislation thus Corporations cannot avoid the CSR activities. They must have to spend at least 2%
of their net profit of each financial year. Thus everything about CSR almost defined in a proper
manner. Organizations should understand the main reason behind CSR that CSR is a duty of
everyone i.e. Business corporations, governments, individuals because of the reasons that income is
earned only from the society and therefore it should be given back.

While the introduction of CSR provision in the Companies Act is a welcome step, however the
current discourse of corporate philanthropy without giving any express autonomy to companies in
choosing their CSR activities may not yield the desired outcome. By allowing only selected list of
activities within the Schedule in a sectional manner may end up encouraging only a passive
participation by corporates towards CSR activities. In order to enable corporates to participate fully
in the philanthropy space, the participation must start with a more inclusive management of CSR
policies where government and industry work side by side, which does not assume that (social)
business and CSR are incompatible. Thus, the policy-makers should frame rules for social business
projects instead of eliminating it from the scheme of CSR regime altogether. Although Section 135
of the Companies Act did not contemplate enlarging the scope of companies to cover foreign
companies in the first place, the CSR Rules nonetheless included foreign companies within its
scope. It seems the central government is not opposed to the idea of allowing excessive delegated
powers to the executive to make such changes in the Companies Act which cannot be brought
unless an amendment to the original Act is proposed. The CSR Rules, in essence, exceeds its
legislative mandate; and this aspect needs to be considered by the policy makers.

REFERENCES

 BOOKS AND ARTICLES:

1. G.K Kapoor, Company Law & Practice, Taxmann.

2. A Ramaiya, Guide to Companies Act, 18th Edition.

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3. Dr.Avtar Singh, Company Law, 2016.
4. Bowen HR. Social Responsibilities of Businessman. Harper & Row, New York, 6. 1953.

 An overview of CSR rules under the companies Act. (2013).

http:/www.businessstandard.com/article/companies/anoverview-of-csr-rules-under
companies-cat-2013- 114031000385_1.html.
 Arora B, Puranik R. A Review of Corporate Social Responsibility in India. Development,
2004; 47(3):93- 100.

 WEBSITES:
1. http://absronline.org.
2. http://indiacsr.in
3. http://www.mca.gov.in
4. https://www.jstor.org
5. www.nishithdesai.com

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