BANARAS HINDU UNIVERSITY

FACULTY OF LAW

ASSIGNMENT ON CORPORATE GOVERNANCE

“CORPORATE SOCIAL RESPONSIBILITY”

SUBMITTED BY:- SUBMITTED TO:-

MAYANK RAJPOOT Dr. CHANDRA NATH

ROLL NO. :- 16225BLT033 SINGH
B.A.LL.B. (HONS.) IX SEM

SESSION- 2020-2021

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 TABLE OF CONTENT

Acknowledgement 03

Introduction 04

What is CSR 05

Need of CSR 07

CSR Laws in India 08

Examples of CSR in India 09

Conclusion 11

References 12

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 ACKNOWLEDGEMENT

The importance of research in Academics cannot be emphasized enough. While classroom

teaching helps a student with understanding the fundamental concepts of a subject, research

papers like this push one towards the detailed analysis of particular topics.

The fundamentals of my understanding of this topic were established with the classroom lectures

of Dr. Chandra Nath Singh Sir at this University. He has since guided me on this topic for which

I am very grateful. I am also grateful to Library Law School, BHU which provided me with the

required support both in the form of books and online database which has been of immense

value to this project.

Finally, I acknowledge the support of my peers, the blessings of my parents and the never ending

grace of the almighty which has been the driving force of everything good in my life including

this research paper.

MAYANK RAJPOOT
16225BLT033

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INTRODUCTION
In the corporate world before some amendments took place, one might think
that corporations reflect the light only on economic factor but it is not true the
performance of corporations reflect the light not only on economic factor but
also on social, cultural, legal, environmental factors, etc. So by the inclusion
of these factors in the corporate world the Corporate Social Responsibility
(CSR) arises.

CORPORATE SOCIAL RESPONSIBILITY in India is a result of the 2013,

Companies Act. India is one of the few countries in the world to have a
dedicated CORPORATE SOCIAL RESPONSIBILITY act. In fact, it is the first to
have brought about a legislation to implement CORPORATE SOCIAL
RESPONSIBILITY activities, followed by United Kingdom.

This article is an attempt at understanding Corporate Social Responsibility

(CORPORATE SOCIAL RESPONSIBILITY) laws in India with the help of the
following research questions-

• How do you define CORPORATE SOCIAL RESPONSIBILITY? What do

you mean by CORPORATE SOCIAL RESPONSIBILITY?
• What activities may be said to constitute CORPORATE SOCIAL
RESPONSIBILITY?
• What are the benefits of CORPORATE SOCIAL RESPONSIBILITY? Why
do we need CORPORATE SOCIAL RESPONSIBILITY?
• What are the laws related to CORPORATE SOCIAL RESPONSIBILITY
in India?
• What are the advantages and shortcomings of the Indian CORPORATE
SOCIAL RESPONSIBILITY laws?
• How can CORPORATE SOCIAL RESPONSIBILITY laws in India be made
better?

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WHAT IS CORPORATE SOCIAL
RESPONSIBILITY?
CORPORATE SOCIAL RESPONSIBILITY refers to the idea that companies need
to invest in socially and environmentally relevant causes in order to interact
and operate with concerned parties having a stake in the company’s work.
CORPORATE SOCIAL RESPONSIBILITY is termed as “Triple-Bottom-Line-
Approach”, which is meant to help the company promote its commercial
interests along with the responsibilities it holds towards the society at large.
CORPORATE SOCIAL RESPONSIBILITY is different and broader from acts of
charities like sponsoring or any other philanthropic activity as the latter is
meant to be a superficial or surface level action as part of business strategy,
but the former tries to go deep and address longstanding socio-economic and
environmental issues.

Small or Medium Enterprises (SMEs) should be asked to promote CORPORATE

SOCIAL RESPONSIBILITY by taking into account their respective fiscal capacity
and not over-stretching their rather limited resources. According to the United
Nations Industrial Development Organization (UNIDO), CORPORATE SOCIAL
RESPONSIBILITY based on Triple Bottom Line (TBL) Approach, can help
countries in the developing bracket to accelerate their socio-economic growth
and help them become more competitive. TBL approach encourages private
companies and institutions to align their activities in a socially, economically
and environmentally viable way. This will help countries achieve Sustainable
Development Goals (SDGs) in the long run. Companies should be encouraged
to take up cost-effective CORPORATE SOCIAL RESPONSIBILITY programmes
that help the society and the environment according to the UNIDO.

CORPORATE SOCIAL RESPONSIBILITY motivates companies to be ethically

right by contributing socially, economically and environmentally by engaging
in acts like-

• Engaging members of local community.

• By using “Socially Responsible Investment” (SRI).
• Develop an amicable relationship with employees and consumers

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 • Engage in actions which are protecting and sustaining the
environment.

NEED OF CORPORATE SOCIAL

RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY is responsible for generating a lot of
goodwill to companies either directly or indirectly. These include-

• Making employees more loyal and help companies retain them in the
long run.
• Make companies more legitimate and help them in accessing a
greater market share.
• Since companies act ethically, they face less legal hurdles.
• Bolster the goodwill of companies amongst the general public and
help in strengthening their “brand value”.
• Help in the stabilization of stock markets in both the short and long
run
• Help in limiting state’s involvement in corporate affairs as companies
self-regulate and act as most ethical.

CORPORATE SOCIAL RESPONSIBILITY helps companies and their components

like their shareholders to help in the development of a country’s economy on
a macro-level. They motivate companies to cooperate and communicate with
each other, their customers and the administrative machinery.

The various advantages granted to various stakeholders are explained below:

• The Standard of living gets better with the introduction of more

amenities.
• Companies engage in large-scale “capacity building” due to which the
society becomes more prosperous and wealthy.

• Creates a more balanced world and healthier environmental systems.

• Ecosystems become healthier due to balancing efforts of the
corporates.
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 • Management of waste is improved.
• Cleaner and greener environment is created.
• Advantages to corporates.
• Creates greater societal acceptance and respect.
• Helps the company to grow fiscally and makes it more competitive.
• Helps the company to interact with various stakeholders and helps
them understand their needs.
• Employees and their family feel proud to be associated with a
balanced corporate organization.

NEED OF CORPORATE SOCIAL

RESPONSIBILITY LAWS
CORPORATE SOCIAL RESPONSIBILITY laws are meant to help in transferring
excess capital from the haves to the have-nots via acts of charity. According
to available data, CORPORATE SOCIAL RESPONSIBILITY laws will help in
increasing amount of monetary contribution from $600 million to $2 billion
annually. This will help corporate undertakings to take up a lot more social,
economic and environmental activities in order to help the general populace.
This will also help corporates to have a direct stake in improving the society
and drastically change their role from perceived exploiters of commerce to
facilitators of development. They will be forced to contribute beyond the
surface level and help in changing the society in a much deeper way.

CORPORATE SOCIAL RESPONSIBILITY LAWS

IN INDIA
The Companies Act, 2013, a successor to The Companies Act, 1956, made
CORPORATE SOCIAL RESPONSIBILITY a compulsory act. Under the notification
dated 27.2.2014, under Section 135 of the new act, CORPORATE SOCIAL
RESPONSIBILITY is compulsory for all companies- government or private or
otherwise, provided they meet any one or more of the following fiscal
criterions:

• The net worth of the company should be Rupees 500 crores or more
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• The annual turnover of the company should be Rupees 1000 crores
or more

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 • Annual net profits of the company should be at least Rupees 5 crores.

If the company meets any one of the three fiscal conditions as stated above,
they are required to create a committee to enforce its CORPORATE SOCIAL
RESPONSIBILITY mandate, with at least 3 directors, one of whom should be
an independent director.

The responsibilities of the above-mentioned committee will be:

• Creation of an elaborate policy to implement its legally mandated

CORPORATE SOCIAL RESPONSIBILITY activities. CORPORATE
SOCIAL RESPONSIBILITY acts should conform to Schedule VII of the
Companies Act, 2013.
• The committee will allocate and audit the money for different
CORPORATE SOCIAL RESPONSIBILITY purposes.
• It will be responsible for overseeing the execution of different
CORPORATE SOCIAL RESPONSIBILITY activities.
• The committee will issue an annual report on the various CORPORATE
SOCIAL RESPONSIBILITY activities undertaken.
• CORPORATE SOCIAL RESPONSIBILITY policies should be placed on
the company’s official website, in the form and format approved by
the committee.
• The board of directors is bound to accept and follow any CORPORATE
SOCIAL RESPONSIBILITY related suggestion put up by the
aforementioned committee.
• The aforementioned committee must regularly assess the net profits
earned by the company and ensure that at least 2 percent of the same
is spent on CORPORATE SOCIAL RESPONSIBILITY related activities.
• The committee must ensure that local issues and regions are looked
into first as part of CORPORATE SOCIAL RESPONSIBILITY activities.

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Examples of CSR in India

Tata Group

The Tata Group conglomerate in India carries out various CSR projects, most of
which are community improvement and poverty alleviation programs. Through self-
help groups, it has engaged in women empowerment activities, income generation,
rural community development, and other social welfare programs. In the field of
education, the Tata Group provides scholarships and endowments for numerous
institutions.

The group also engages in healthcare projects, such as the facilitation of child
education, immunization, and creation of awareness of AIDS. Other areas include
economic empowerment through agriculture programs, environment protection,
providing sports scholarships, and infrastructure development, such as hospitals,
research centers, educational institutions, sports academy, and cultural centers.

Ultratech Cement

Ultratech Cement, India’s biggest cement company is involved in social work across
407 villages in the country aiming to create sustainability and self-reliance. Its CSR
activities focus on healthcare and family welfare programs, education, infrastructure,
environment, social welfare, and sustainable livelihood.

The company has organized medical camps, immunization programs, sanitization

programs, school enrollment, plantation drives, water conservation programs,
industrial training, and organic farming programs.

Mahindra & Mahindra

Indian automobile manufacturer Mahindra & Mahindra (M&M) established the K. C.

Mahindra Education Trust in 1954, followed by Mahindra Foundation in 1969 with the
purpose of promoting education. The company primarily focuses on education
programs to assist economically and socially disadvantaged communities.

Its CSR programs invest in scholarships and grants, livelihood training, healthcare
for remote areas, water conservation, and disaster relief programs. M&M runs
programs such as Nanhi Kali focusing on education for girls, Mahindra Pride Schools
for industrial training, and Lifeline Express for healthcare services in remote areas.

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ITC Group

ITC Group, a conglomerate with business interests across hotels, FMCG,

agriculture, IT, and packaging sectors has been focusing on creating sustainable
livelihood and environment protection programs. The company has been able to
generate sustainable livelihood opportunities for six million people through its CSR
activities.

Their e-Choupal program, which aims to connect rural farmers through the internet
for procuring agriculture products, covers 40,000 villages and over four million
farmers. It’s social and farm forestry program assists farmers in converting
wasteland to pulpwood plantations. Social empowerment programs through micro-
enterprises or loans have created sustainable livelihoods for over 40,000 rural
women.

CONCLUSION
CORPORATE SOCIAL RESPONSIBILITY in India was legislated with the hope
that it would bring about a change in the attitude of corporate institutions, who
would give back to the society in a big way as it was the society whose needs
helped them prosper in the first place. Similarly, it was also felt that the society
would also get help as the government has been found to be wanting in its
efforts to help local populace in several instances. The CORPORATE SOCIAL
RESPONSIBILITY act, in spite of all its good intentions, has failed to cover a
lot of ground. It has given an impetus to companies to give back to the society,
however, due to some policy and procedural inadequacies, it has failed to set
up a fool-proof method of imparting CORPORATE SOCIAL RESPONSIBILITY.
Faulty criterions to determine the extent of money spent, fudging of data,
selective and self-serving CORPORATE SOCIAL RESPONSIBILITY tasks or
short-term money spending are some of the core problems that India’s
CORPORATE SOCIAL RESPONSIBILITY laws and policy suffer from. Therefore,
the need of the hour is to change the CORPORATE SOCIAL RESPONSIBILITY
laws and amend it to become long-term, simple and easier to monitor.
CORPORATE SOCIAL RESPONSIBILITY laws, with some tweaks, will greatly
help the society in the near future.

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References:

• The Telegraph, The Corporate Social Responsibility law needs to be

rationalized, December 22, 2016, available
at https://www.telegraphindia.com/1161222/jsp/opinion/story_12598
7.jsp
• United Nations Industrial Development Organization, What is
CORPORATE SOCIAL RESPONSIBILITY, available
at https://www.unido.org/our-focus/advancing-economic-
competitiveness/competitive-trade-capacities-and-corporate-
responsibility/corporate-social-responsibility-market-integration/what-
Corporate Social Responsibility
• ed.ac.uk, What is a Corporate Social Responsibility?, July 3, 2017,
available at https://www.ed.ac.uk/careers/your-
future/options/occupations/Corporate Social Responsibility/what-is-
Corporate Social Responsibility
• Project Guru, Importance of Corporate Social Responsibility to
societies, May 18, 2012, available
at https://www.projectguru.in/publications/importance-of-corporate-
social-responsibility-to-societies/
• Business Today, The unintended consequences of India’s CORPORATE
SOCIAL RESPONSIBILITY law, January 13, 2015, available
at https://www.businesstoday.in/opinion/columns/corporate-social-
responsibility-tax-in-india-hidden-costs/story/214463.html
• Tax Guru, New Rules of Corporate Social Responsibility, March 10, 2014,
available at https://taxguru.in/company-law/rules-corporate-social-
responsibility.html
• Tax Guru, 32 FAQs on Corporate Social Responsibility (CORPORATE
SOCIAL RESPONSIBILITY), September 4, 2016, available at
https://taxguru.in/company-law/32-faqs-corporate-social- responsibility-
Corporate Social Responsibility.html
• INDIA CORPORATE SOCIAL RESPONSIBILITY, 20% increase in actual
CORPORATE SOCIAL RESPONSIBILITY spend in FY 2017, July 9, 2017,

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 available at http://indiaCorporate Social Responsibility.in/20-increase-
in-actual-Corporate Social Responsibility-spend-in-fy-2017/
• Live Mint, Why the CORPORATE SOCIAL RESPONSIBILITY law is not a
success, December 13, 2016, available
at http://www.livemint.com/Opinion/1wIQwFPRyRckBMg5IugW1K/Why
-the-CORPORATE SOCIAL RESPONSIBILITY-law-is-not-a-success.html

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