Corporate Social Responsibility (CSR)

Subject: Schemes

Context:

Indian government is temporarily allowing investment towards efforts to find effective medicines and vaccines against Covid-19 to be considered as fulfilment of a company’s Corporate Social Responsibility (CSR) obligations.

Concept:

• Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public.
• India is one of the first countries in the world to make CSR mandatory for companies following an amendment to the Companies Act, 2013 (Companies Act) in 2014.
• Section 135(1) of the Act prescribes thresholds to identify companies which are required to constitute a CSR Committee : At present, companies with a net profit of Rs 5 crore or a net worth of Rs 500 crore or a turnover of Rs 1,000 crore have to spend 2% of their average net profits of the last three years as CSR. (Schedule VII)
• These CSR funds can be used for a wide range of activities, including helping alleviate poverty and hunger, promoting skill development and education and disaster relief.