What is Corporate Social Responsibility?
Corporate Social Responsibility is an act of being socially accountable done by companies for self-regulation while meeting the business objectives. The motto behind conducting a CSR activity is to positively impact the public, the economy, and the environment.
Who should do Corporate Social Responsibility?
India introduced CSR Law under Section 135 in the Companies Act 2013. Companies with a net worth of Rs. 500 crore or more have to compulsorily invest in CSR activities.
Every company to which CSR criteria is applicable shall have a separate committee to take care of CSR operations
- There should be a minimum of 3 directors in a CSR Committee.
- 1 of the 3 directors must be an independent director.
- An unlisted public company or a private company shall have its CSR Committee without any independent director if an independent director is not required.
Types of Corporate Social Responsibility
CSR can be broadly classified into 4 different categories.
- Environmental Responsibility – CSR activities are taken up to save the environment. No matter how big or small, every company aims towards reducing the carbon footprint.
- Philanthropic Responsibility – It is another form of CSR that companies undertake. They donate money, products and services to the needy. Some companies even set up community centres to empower the poor. Even small businesses are taking up CSR initiatives these days. The donation doesn’t always have to be monetary. It can just be you investing your time.
- Ethical Responsibility – This is aimed towards ensuring fair practises for all. Ethically responsible organisations aim to achieve fair treatment of investors, employees, suppliers, and customers etc.
There is a lot an organization can do to be ethically responsible. A business can set minimum wage if it is not done by the government already. Alternatively, a business can also make sure that they don’t procure raw materials and products from slavery or child labor.
- Volunteering – Companies can also volunteer their time in community events and participate in local issues. It shows that a company really stands for something. Companies do this out of will and not out of compulsion. It is mainly done for issues they deeply care about.
Why should you do Corporate Social Responsibility?
Conducting CSR is becoming increasingly important in today’s day and age. There are a lot of reasons for that. Consumers are more likely to buy your product if you work towards the betterment of society. Consumers like to identify with a cause.
This is not just limited to consumers.
Companies do CSR to attract top talent as well. The next generation of employees is looking for companies that prioritize people and the planet.
Duties of the CSR Committee
- The CSR Committee formulates a policy which is undertaken by the company as mentioned in Section VII.
- CSR Committee recommends the budget for activities that companies can take up.
- The CSR Committee monitors the CSR policy of the Company from time to time.
Benefits
CSR is about capturing opportunities and avoiding risks. A lot of companies do this because of moral convictions. Participating in CSR activities can give you several results.
CSR can be a powerful marketing tool. There are several reasons for it.
- Helps companies position themselves positively in the eyes of their stakeholders.
- Help increase employee retention and employee engagement.
- Attracts talent that resonates with these values.
All of this can lead to solutions that make a company more socially responsible and help them increase their revenue.
For example, a manufacturing company reconceptualizes its process to consume less energy and produce less waste. This makes them cost-effective and environment friendly which benefits both suppliers and customers.
Corporate Social Responsibility can immensely help you in increasing your profits
- Increase revenue and market share due to better products and more customers
- Helps in reducing energy and waste expenses
- Helps in reducing material expenses
- Increased Productivity and reduced turnover
Some highly successful Corporate Social Responsibility initiatives
Hindustan Petroleum Corporation Limited has initiated multiple CSR projects to do their bit for society. They create value by effectively reaching out to stakeholders, community members who are involved in its business operations.
HPCL has identified health care, skill development, community development, and also childcare & education as its key improvement areas. They want to empower the underprivileged through these programs.
The focus of these programs is to identify and bridge the gaps in the system. Once that is done, their vision is to create a system that is sustainable and impacts the lives of these kids meaningfully.
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