What Is CSR?

Corporate Social Responsibility Explained

What Is CSR?
Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially
accountable to itself, its stakeholders, and the public.
By practicing corporate social responsibility, also called corporate citizenship, companies are aware of how
they impact aspects of society, including economic, social, and environmental. Engaging in CSR means a
company operates in ways that enhance society and the environment instead of contributing negatively to
them.
Understanding Corporate Social Responsibility (CSR)
Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting
their brands. A socially responsible company is accountable to itself and its shareholders. CSR is commonly
a strategy employed by large corporations. The more visible and successful a corporation is, the more
responsibility it has to set standards of ethical behavior for its peers, competition, and industry.
Small and midsize businesses also create social responsibility programs, although their initiatives are rarely
as well-publicized as those of larger corporations.
Types of CSR
Environmental responsibility: Corporate social responsibility is rooted in preserving the environment. A
company can pursue environmental stewardship by reducing pollution and emissions in manufacturing,
recycling materials, replenishing natural resources like trees, or creating product lines consistent with CSR.
Ethical responsibility: Corporate social responsibility includes acting fairly and ethically. Instances of ethical
responsibility include fair treatment of all customers regardless of age, race, culture, or sexual orientation,
favorable pay and benefits for employees, vendor use across demographics, full disclosures, and
transparency for investors.
Philanthropic responsibility: CSR requires a company to contribute to society, whether a company donates
profit to charities, enters into transactions only with suppliers or vendors that align with the company
philanthropically, supports employee philanthropic endeavors, or sponsors fundraising events.
Financial responsibility: A company might make plans to be more environmentally, ethically, and
philanthropically focused, however, it must back these plans through financial investments in programs,
donations, or product research including research and development for products that encourage
sustainability, creating a diverse workforce, or implementing DEI, social awareness, or environmental
initiatives.
Volunteering
Some corporate social responsibility models replace financial responsibility with a sense of volunteerism.
Otherwise, most models still include environmental, ethical, and philanthropic as types of CSR.
Benefits of CSR
According to a study published in the Journal of Consumer Psychology, consumers are more likely to act
favorably toward a company that has acted to benefit its customers. As a company engages in CSR, it is
more likely to receive favorable brand recognition. Additionally, workers are more likely to stay with a
company they believe in. This reduces employee turnover, disgruntled workers, and the total cost of a new
employee.
For companies looking to outperform the market, enacting CSR strategies may improve how investors view
the company's value.
CSR practices help companies mitigate risk by avoiding troubling situations. This includes preventing
adverse activities such as discrimination against employee groups, disregard for natural resources, unethical
use of company funds, and activity that leads to lawsuits, and litigation.
CSR programs can raise morale in the workplace.
Why Should a Company Implement CSR Strategies?
Many companies view CSR as an integral part of their brand image, believing customers will be more likely
to do business with brands they perceive to be more ethical. In this sense, CSR activities can be an important
component of corporate public relations. At the same time, some company founders are also motivated to
engage in CSR due to their convictions.
What Are the Benefits of CSR?
CRS initiatives strive to have a positive impact on the world through direct benefits to society, nature and
the community in which a business operations. In addition, a company may experience internal benefits
through the initiatives. Knowing their company is promoting good causes, employee satisfaction may
increase and retention of staff may be strengthened. In addition, members of society may be more likely to
choose to transact with companies that are attempting to make a more conscious positive impact beyond the
scope of its business.
Corporate Social Responsibility Under Section 135 of Companies Act 2013
Corporate Social Responsibility (CSR) implies a concept, whereby companies decide voluntarily to
contribute to a better society and a cleaner environment – a concept, whereby the companies integrate social
and other useful concerns in their business operations for the betterment of their stakeholders and society in
general in a voluntary way.
However, Section 135 of the Companies Act, 2013 ("Act") provides that certain companies must
mandatorily contribute a certain amount towards CSR activities. As per the Act, 'Corporate Social
Responsibility' means and includes but is not limited to:
Projects or programs relating to activities specified in Schedule VII to The Act.
Projects or programs relating to those activities which are undertaken by the Board of Directors of a
company in ensuring the recommendation of the CSR Committee of the Board as per declared CSR Policy
along with the conditions that such policy will cover subjects specified in Schedule VII of the Act.
CSR Applicability in India
The provisions of CSR applies to every company fulfiing any of the following conditions in the preceding
financial year:
Net worth of more than Rs.500 crore
Turnover of more than Rs.1000 crore
Net profit of more than Rs.5 crore
The Board of Directors of every company for which the CSR provisions apply must ensure that the company
spends in every financial year at least 2% of its average net profits made during the immediately preceding
three financial years as per its CSR policy. If the company has not completed three financial years since its
incorporation, it must spend 2% of its average net profits made during the immediately preceding financial
years as per its CSR policy.
Importance of Corporate Social Responsibility
CSR is an immense term that is used to explain the efforts of a company in order to improve society in a
significant manner. Below reasons reflect why CSR is important:
CSR improves the public image by publicising the efforts towards a better society and increasing their
chance of becoming favourable in the eyes of consumers.
CSR increases media coverage as media visibility throws a positive light on the organisation.
CSR enhances the company’s brand value by building a socially strong relationship with customers.
CSR helps companies to stand out from the competition when companies are involved in any kind of
community.
Role of Board of Directors
The role of the Board of Directors in implementing CSR is as follows:
After considering the recommendations made by the CSR Committee, approve the CSR policy for the
Company.
The Board must ensure only those activities must be undertaken which are mentioned in the policy.
The Board of Directors shall make sure that the company spends in every financial year, a minimum of 2%
of the average net profits made during the three immediately preceding financial years as per CSR policy.
In case a company has not completed three financial years since its incorporation, the average net profits
shall be calculated for the financial years since its incorporation.
The Board’s Report shall disclose:
CSR Committee’s composition
The contents of CSR Policy
In case CSR spending does not meet 2% as per CSR Policy, the reasons for the unspent amount, and details
of the transfer of unspent amount relating to an ongoing project to a specified fund (transfer within a period
of six months from the expiry of the financial year).
Net Profit for CSR Applicability
Every company which needs to comply with the CSR provisions have to spend 2% of the average net profits
made during the preceding three years as per the CSR policy. The computation of net profit for CSR is as per
Section 198 of the Companies Act, 2013.
Section 198 provides that while computing the net profits of a company a credit should be given for the
subsidies and bounties received from any government, or public authority constituted or authorised on this
behalf.
For computing net profits, credit cannot be given for the following sums:
Profits, by way of premium on shares, unless the company is an investment company.
Profits on sales of forfeited shares.
Profits of a capital nature, including profits from the sale of the undertaking or any part thereof.
Profits from the sale of any fixed assets or immovable property of a capital nature comprised in the
undertaking, unless the company business consists of buying and selling any assets or property.
Any change in the carrying amount of an asset or of a liability recognised in equity reserves, including
surplus in profit and loss accounts for the measurement of the asset or the liability at fair value.
Any amount representing notional gains, unrealised gains or revaluation of assets
In making the computation of net profits, the following sums should be deducted:
Every usual working charge.
Directors’ remuneration.
Bonus or commission payable or paid to any member of the company’s staff, technician, engineer or person
engaged or employed by the company, whether on a part-time or whole-time basis.
Any tax notified by the Central Government as a tax on abnormal or excess profits.
Any tax on business profits imposed for special reasons or special circumstances and notified by the Central
Government.
Interest on debenture issued by the company.
Interest on mortgages executed by the company and on advances and loans secured by a charge on its
floating or fixed assets.
Interest on unsecured advances and loans.
Expenses on repairs, whether to movable or immovable property, provided the repairs are not of a capital
nature.
Outgoings inclusive of contributions made under section 181.
Depreciation to the extent specified in section 123.
Excess of expenditure over income.
Damages or compensation to be paid for any legal liability and any sum paid by way of insurance against
the risk of meeting the such liability.
Debts considered bad and adjusted or written off during the year of account.
In making the computation of net profits, the following sums cannot be deducted:
Income-tax and super-tax payable by the company under the Income-tax Act, 1961.
Any damages, compensation or payments made voluntarily.
Loss of capital nature including loss on sale of the undertaking or of any part thereof not including any
excess of the written-down value of any asset which is discarded, sold, discarded, destroyed or demolished
over its sale proceeds or its scrap value.
Any change in carrying amount of an asset or of a liability recognised in equity reserves, including surplus
in profit and loss accounts for the measurement of the asset or the liability at fair value.
Transfer and Use of Unspent Amount
A company can transfer unspent CSR amount to the following specified funds:
A contribution made to the Prime Minister’s National Relief Fund.
Any other fund is initiated by the central government concerning socio-economic development, relief and
welfare of the scheduled caste, minorities, tribes, women and other backward classes. etc
A contribution made to an incubator is funded either by the central government, the state government, public
In case of the unspent amount relating to an ongoing project under the company’s CSR policy, the company
will transfer the unspent amount to an exclusive account to be opened by a company, known as ‘Unspent
Corporate Social Responsibility Account’, in any scheduled bank within 30 days from the end of the
financial year.
The company must use the funds in the ‘Unspent Corporate Social Responsibility Account’ towards its
obligations under the CSR policy within a period of three financial years from the date of the transfer.
In a case where the company fails to utilise the funds at the end of the three financial years, the funds should
be transferred to the specified fund mentioned above within a period of 30 days upon completion of the third
financial year.
CSR Committee Applicability
Every company to which CSR provision are applicable must constitute a Corporate Social Responsibility
(CSR) Committee.
The CSR Committee should consist of three or more directors, out of which at least one director 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.
A private company having only two directors on its Board shall constitute its CSR Committee with two
directors.
In the case of a foreign company, the CSR Committee shall comprise of at least two persons of which one
person shall be a person resident in India authorised to accept on behalf of the foreign company – the
services of notices and other documents. Also, the other person shall be nominated by the foreign company.
A company having any amount in its Unspent Corporate Social Responsibility Account shall constitute a
CSR Committee and comply with the CSR provisions.
Duties of the CSR Committee
The CSR Committee will formulate and recommend a CSR policy to the Board. CSR policy shall point out
the activities to be undertaken by the company as enumerated in Schedule VII of the Act.
CSR Committee will recommend the amount of expenditure to be incurred on the CSR activities to be
undertaken by the company.
CSR Committee will monitor the CSR policy of the Company from time to time.
The CSR Committee will establish a transparent controlling mechanism for the implementation of the CSR
projects or programs or activities undertaken by the company.
CSR Reporting
With respect to CSR Reporting, the provisions are as follows :
The Board’s Report referring to any financial year initiating on or after the 1st day of April 2014 shall
include an annual report on CSR.
In the case of a foreign company, the balance sheet filed shall contain an Annexure regarding a report on
CSR.
CSR Policy
CSR Policy elaborates the activities to be undertaken by the Company as named in Schedule VII to the Act.
The activities should not be the same which are done by the company in its normal course of business.
Additionally, the Act provides the follwoing in relation to CSR Policy:
Contents of CSR Policy should be placed on the company’s website by the Board.
The activities mentioned in the policy must be undertaken by the company.
The company can join hands with other companies for undertaking projects or programs or CSR activities
and report separately on such programs or projects.
The CSR policy shall monitor the projects or programs.
List of Permitted CSR Activities Under Schedule VII
The Board of Directors shall ensure that the activities included by a company in its CSR Policy fall within
the purview of the activities included is schedule VII of the Act. The activities specified in Schedule VII
which may be included by companies in their Corporate Social Responsibility Policies are as follows:

Sr.No CSR Activities

Eradicating poverty, hunger and malnutrition, promoting health care which includes
sanitation and preventinve health care, contribution to the Swach Bharat Kosh set-up by
1
the Central Government for the promotion of sanitation and making available safe
drinking water.

Improvement in education which includes special education and employment

2 strengthening vocation skills among children, women, elderly and the differently-abled
and livelihood enhancement projects.

Improving gender equality, setting up homes and hostels for women and orphans,
empowring women, setting up old age homes, day care centres and such other facilities
3
for senior citizens and measures for reducing inequalities faced by socially and
economically backward groups.

Safeguarding environmental sustainability, ecological balance, protection of flora and

fauna, animal welfare, agroforestry, conservation of natural resources and maintaining a
4
quality of soil, air and water which also includes a contribution for rejuvenation of river
Ganga.

Protection of national heritage, art and culture including restoration of buildings and
5 sites of historical importance and works of art; setting up public libraries; promotion
and development of traditional arts and handicrafts.

Measures for the benefit of armed forces veterans, war widows and their dependents,
6 Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF)
veterans, and their dependents including widows.

Training to stimulate rural sports, nationally recognized sports, Paralympic sports and
7
Olympic sports.

8 Contribution to the Prime Minister’s National Relief Fund, Prime Minister's Central
Assistance and Relief in Emergency Situations Fund (PM CARES Fund) or any other
fund set up by the Central Government for socio-economic development providing
 relief and welfare of the Scheduled Castes, the Scheduled and backward classes, other
backward classes, minorities and women.

Contribution to incubators or research and development projects in the field of science,

technology, engineering and medicine, funded by the Central Government, State
9
Government, Public Sector Undertaking or any agency of the Central Government or
State Government.

Contributions to public funded Universities, IITs, National Laboratories and

autonomous bodies established under DAE, DBT, DST, Department of Pharmaceuticals,
Ministry of AYUSH, Ministry of Electronics and Information Technology and other
10
bodies, namely DRDO, ICAR, ICMR and CSIR, engaged in conducting research in
science, technology, engineering and medicine aimed at promoting Sustainable
Development Goals (SDGs).

11 Rural development projects.

Slum area development. Slum area means any area declared as such by the Central
12 Government or any State Government or any other competent authority under any law
for the time being in force.

13 Disaster management, including relief, rehabilitation and reconstruction activities.

Fines and Penalties for Non-Compliance

In case a company fails to comply with the provisions relating to CSR spending, transferring and utilising
the unspent amount, the company will be punishable with a penalty of Rs.1 crore or twice the amount
required to be transferred by the company to the CSR fund specified in Schedule VII of the Act or the
Unspent Corporate Social Responsibility Account, whichever is less.
Further, every officer of such company who defaults in compliance will be liable to pay Rs.2 lakh or one-
tenth of the amount required to be transferred by the company to CSR fund specified in Schedule VII or the
Unspent Corporate Social Responsibility Account, whichever is less.
Reason for Introduction of CSR for Companies
We live a dynamic life in a world that is growing more and more complex. Global-scale environment, social,
cultural and economic issues have now become part of our everyday life. Boosting profits is no longer the
sole business performance indicator for the corporate and they have to play the role of responsible corporate
citizens as they owe a duty towards society.
The concept of Corporate Social Responsibility (CSR), introduced through Companies Act, 2013 puts a
greater responsibility on companies in India to set out a clear CSR framework.
Many corporate houses like TATA and Birla have been engaged in doing CSR voluntarily. The Act
introduces the culture of corporate social responsibility (CSR) in Indian corporate requiring companies to
formulate a CSR policy and spend on social upliftment activities.
CSR is all about corporate giving back to society. The Company Secretaries are expected to be known about
the legal and technical requirements with respect to CSR in order to guide the management and Board.
Frequently Asked Questions
Why CSR is mandatory?
The Companies Act, 2013 provides for CSR under section 135. Thus, it is mandatory for the companies
covered under section 135 to comply with the CSR provisions in India. Companies are required to spend a
minimum of 2% of their net profit over the preceding three years as CSR.
How much CSR is mandatory?
It is mandatory for the companies covered under section 135(1) of the Companies Act, 2013 to spend 2% of
their net profit over the proceeding three years as per the CSR policy.
Whether provisions of CSR apply to a section 8 Company?
Yes, the CSR provisions apply to a company registered for a charitable purpose under Section 8 of the
Companies Act, 2013. Section 135(1) of the Act states that every company having the specified net worth,
turnover, or net profits must establish a CSR committee. Thus, section 8 companies must also establish a
CSR committee and comply with CSR provisions when it meets the specified net worth, turnover, or net
profits.
Which activities do not qualify as eligible CSR activity?
Rule 2(1)(d) of the Companies (CSR Policy) Rules, 2014 defines CSR and excludes the following activities
from being considered as eligible CSR activity:
Activities undertaken in pursuance of the normal course of business of the company.
Activities undertaken outside India, except for training of Indian sports personnel representing any state/UT
at the national level or India at the international level
Contribution of any amount, indirectly or directly, to any political party under Section 182 of the Act
Activities benefiting employees of the company
Sponsorship activities for deriving marketing benefits for products/services
Activities for fulfilling statutory obligations under any law in force in India
What is the role of the Government in monitoring CSR provision compliance?
The government monitors the CSR provisions compliance through the disclosures made by the companies
on the MCA portal. The government can initiate action for any violation of CSR provisions against the non-
compliant companies after due examination of records.
How is the average net profit calculated for the purpose of Section 135 of the Act?
The average net profit to determine the spending on CSR activities is to be computed as per the provisions
of Section 198 of the Act and be exclusive of the items given under Rule 2(1)(h) of the Companies (CSR
Policy) Rules, 2014. Section 198 of the Act specifies certain additions/deletions (adjustments) to be made
while calculating a company’s net profit. It mainly excludes capital payments/receipts, income tax and set-
off of past losses.
Can the excess CSR spending be set off against the CSR expenditure of the succeeding financial years?
Yes, the excess CSR spending can be set off against the required 2% CSR expenditure up to the immediately
succeeding three financial years subject to compliance with the conditions mentioned under Rule 7(3) of the
Companies (CSR Policy) Rules, 2014. However, the excess amount spent on CSR activities can be set off
from 22 January 2021. Thus, no carry forward shall be allowed for the excess amount spent, if any, in
financial years before FY 2020-21.
What is the meaning of surplus arising from CSR activities?
Surplus refers to income generated from the spend on CSR activities, e.g., revenue received from the CSR
projects, interest income earned by the implementing agency on funds provided under CSR, disposal/sale of
materials used in CSR projects, and other similar income sources. The surplus arising out of CSR activities
shall be utilised only for CSR purposes.
Whether companies must carry out CSR only in their local areas?
Section 135(5) of the Act provides that the company should give preference to local areas around where it
operates. However, with the advent of IT and the emergence of new-age businesses like process-outsourcing
companies, e-commerce companies, and aggregator companies, it becomes difficult to determine the local
area for various activities. Thus, the preference to the local area mentioned in the Act is only directory and
not mandatory, and companies need to balance local area preference with national priorities.
CSR planning, monitoring, implementation and audit
CSR PLANNING
Provisions of section 135, read with Schedule VII of the Act and Companies (CSR Policy) Rules, 2014
provide the broad framework within which the eligible companies are required to formulate their CSR
policies including activities to be undertaken and implementation of the same. CSR is a board-driven
process, and the Board of the company is empowered to plan, approve, execute, and monitor the CSR
activities of the company based on the recommendation of its CSR Committee.
WHAT IS CSR PROGRAMME PLANNING?
• Before going into the details of CSR programme planning, let us look and understand the meaning of
some related terms in the context of development through CSR.
• Plan: Plan is schedule of development work outlining different CSR activities in a specific period.
• Programme Planning: Programme planning is the process of making decisions about the direction
and intensity of CSR efforts to bring about desirable change among community.
• CSR Programme: CSR programme is a statement of situation, objectives, problems, and solutions.
• Aim: Aim is generalized and broad statement of direction with respect to given CSR activity.
• Problem: Problem is an issue or obstacle which makes it difficult to achieve a desired goal, objective
or purpose.
• Solution: Solution is a course of proposed action to change an unsatisfactory condition to one that is
more satisfying.
• Calendar of Work: Calendar of work is a plan of CSR activities to be undertaken in a particular time
sequence.
• OBJECTIVES OF CSR PROGRAMME PLANNING
Important objectives of having a CSR programme planning are to:

1) A good CSR programme requires setting clear goals to achieve i.e careful consideration of what is to
be done and why?
2) Analysis the opinions of customers and employees on what CSR work is important to them.
3) Assess the internal capacity for implementing CSR initiatives which can be feasibly well-executed.
4) Assess the needs in partnership with relevant organizations and have a means of choosing the
important from less important problems and the permanent from the temporary changes.
 5) Establish objectives toward which progress can be measured and evaluated.
6) Develop a common understanding about the means and ends between various CSR functionaries and
partner organizations.
7) Ensure continuity, develop leadership and promote efficiency
8) Avoid wastage of resources, justify expenditure and ensure flow of funds.
9) Have available in written form a statement for public use / audit / accountability etc.
CSR PROGRAMME PLANNING PROCESS
It begins by looking at where the problems are (situation analysis), finds a solution to those problems (CSR
programme objective), moves the solution into actuality through the use of extension methods and
communication (programme execution/implementation), makes a continuous study of how successful the
methods have been (evaluation), and then uses the evaluation result as basis to readjust the CSR programme
(reconsideration).
Three main phases involved in CSR programme planning process are:
1) Programme formulation
2) Programme execution
3) Programme evaluation

SCOPE OF MONITORING IN CSR

CONCEPTS AND ELEMENTS IN MONITORING
a) Operational investment (Capability) (e.g., investment in CSR activity per beneficiary family)
b) Operational efficiency (e.g., the number of visits, meetings, demonstrations, and trials, per CSR worker)
c) Technical efficiency (e.g., the number of adopters, output, and value
added)
d) CSR induced changes (Impact) (e.g., production, productivity, income, and income distribution)
CFO Certification
Rule 4(5) of CSR Rules says that the Chief Financial Officer (CFO) or the person responsible for financial
management shall certify to the Board to the effect that the funds disbursed by the Board for CSR
implementation have been utilised for the purposes and in the manner as approved by the Board. It may be
noted that the CSR responsibilities of the Board and CSR committee cannot be assigned to Trust / Trustees.
Hence, even if the company has formed a Trust for undertaking CSR activities, the ultimate responsibility
for such CSR activities would always be on the company. Hence, CFO certificate would also be needed in
such cases
TYPES OF MONITORING
• Beneficiary Contact Monitoring
To maintain records for each activity and to analyse these periodically to monitor the penetration of the
services and the establishment of clients. To establish a regular schedule of surveys to measure the progress
of the activity and recording all informal interviews.
• Process Monitoring – Process, milestone, Activities, Output
TECHNIQUES OF MONITORING
Regular Progress Reports
Monitoring Staff Performance (Review)
Tour Reports / Site Visits
Participant Observation
Feedback from Visitors
Interviews
Participatory Monitoring
Key Informants
Complaints / Grievances Petitions
CSR IMPLEMENTATION
A well-designed CSR implementation framework integrates economic, social and environmental decision
making throughout a firm—from the board of directors to front-line officials and supply-chain partners—
and is therefore intimately connected with effective corporate governance. A properly governed firm can
reap optimal benefits for itself and its shareholders, and in turn for those who are affected by the firm’s
activities. At all levels of a firm, inadequate direction and control of its activities and assets can jeopardize
its very ability to operate.

Rule 4 of Corporate Social Responsibility Rules 2014

The Board shall ensure that the CSR activities are undertaken by the company itself or through –
• a company established under section 8 of the Act, or a registered public trust or a registered society,
registered under section 12A and 80 G of the Income Tax Act, 1961, established by the company,
either singly or along with any other company, or
• a company established under section 8 of the Act or a registered trust or a registered society,
established by the Central Government or State Government; or
• any entity established under an Act of Parliament or a State legislature; or
• a company established under section 8 of the Act, or a registered public trust or a registered society,
registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track
record of at least 3 years in undertaking similar activities.
• Every entity, covered under sub-rule (1), who intends to undertake any CSR activity, shall register
itself with the Central Government by filing the form CSR-1 electronically with the Registrar, with
effect from the 01st day of April 2021
• Form CSR-1 shall be signed and submitted electronically by the entity and shall be verified digitally
by a Chartered Accountant in practice or a Company Secretary in practice or a Cost Accountant in
practice.
• On the submission of the Form CSR-1 on the portal, a unique CSR Registration Number shall be
generated by the system automatically.
• A company may engage international organisations for designing, monitoring and evaluation of the
CSR projects or programmes as per its CSR policy as well as for capacity building of their own
personnel for CSR
• A company may also collaborate with other companies for undertaking projects or programmes or
CSR activities in such a manner that the CSR committees of respective companies are in a position
to report separately on such projects or programmes in accordance with these rules.
• The Board of a company shall satisfy itself that the funds so disbursed have been utilised for the
purposes and in the manner as approved by it and the Chief Financial Officer or the person
responsible for financial management shall certify to the effect.
IMPLEMENTATION FRAMEWORK
1.CONDUCT A CSR ASSESSMENT
• Assemble a CSR leadership team;
• Develop a working definition of CSR;
• Identify legal requirements;
• Review corporate documents, processes and
activities, and internal capacity; and
• Identify and engage key stakeholders.
2. DEVELOP A CSR STRATEGY
• Build support with CEO, senior management and employees;
• Research what others are doing, and assess the value of recognised CSR instruments;
• Prepare a matrix of proposed CSR actions;
• Develop ideas for proceeding and the business case for them; and
• Decide on direction, approach, boundaries and focus areas.
3. DEVELOP CSR COMMITMENTS
• Do a scan of CSR commitments;
• Hold discussions with major stakeholders;
• Create a working group to develop the commitments;
• Prepare a preliminary draft; and
• Consult with affected stakeholders
4. IMPLEMENT CSR COMMITMENTS
• Develop an integrated CSR decision-making structure;
• Prepare and implement a CSR business plan;
• Set measurable targets and identify performance measures;
• Engage employees and others to whom CSR commitments apply;
• Design and conduct CSR training;
• Establish mechanisms for addressing problematic behaviour;
• Create internal and external communications plans; and
• Make commitments public.
5. ASSURE AND REPORT ON PROGRESS
• Measure and assure performance;
 • Engage stakeholders; and
• Report on performance, internally and externally.
6. EVALUATE AND IMPROVE
• Evaluate performance;
• Identify opportunities for improvement; and
• Engage stakeholders.
CSR SPENDING
Minimum 2% spending requirement - As per section 135(5) of the Act, it is the responsibility of the Board to
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, or where the company has not
completed the period of three financial years since its incorporation, during such immediately preceding
financial years, in pursuance of its CSR Policy.
APPLICABILITY OF CSR PROVISIONS TO NEWLY INCORPORATED COMPANIES
Section 135(1) of the Act specifies eligibility for undertaking CSR activities as net worth of Rs. 500 crore, or
turnover of Rs. 1000 crore, or net profit of Rs. 5 crore for the preceding financial year. The criteria is
mutually exclusive. While, section 135(5) of the Act enunciates that the quantum of CSR amount to be spent
should be calculated as 2% of average net profit made during the immediately preceding three years, it also
says that for the companies which have not completed the period of three financial years since incorporation,
the quantum of CSR amount to be spent shall be 2% of the average net profits of the company made during
such immediately preceding financial years.
CSR AUDIT
According to the Companies (Company Social Responsibilities Policy) Rules 2014, monitoring CSR
activities and reporting on them are required. Additionally, it is the obligation of the Company (through the
CSR Committee) to oversee the use of company money in accordance with its CSR Policy. There is no
requirement to acquire a report of the contribution made when the company complies with its CSR
requirements by only contributing that is specifically permitted by Schedule VII of the Act.
• Transparency with financial and accounting practices
• Transparency with product defects or other issues
• Fair hiring practices and employee treatment,
• Participation in charitable giving
CSR: ACCOUNTING AND TAXATION ASPECTS
CSR Applicability: A company satisfying any of the following criteria during the immediately preceding
financial year is required to comply with CSR provisions specified under section 135(1) of the Companies
Act, 2013 read with the Companies (CSR Policy) Rules, 2014 made thereunder: (i) net worth of rupees five
hundred crore or more, or (ii) turnover of rupees one thousand crore or more, or (iii) net profit of rupees five
crore or more.
TATA GROUP’S CSR Policy
Tata Group, one of India's oldest and largest conglomerates, has a long-standing tradition of Corporate
Social Responsibility (CSR) initiatives across various sectors. Here's an overview of some of the key CSR
activities undertaken by Tata Group:
Tata Trusts:

 Foundation: The Tata Trusts, comprising various entities such as Sir Dorabji Tata Trust, Sir Ratan
Tata Trust, and others, are the philanthropic arms of the Tata Group. They have been instrumental in
several social development initiatives.
 Focus Areas: Education, healthcare, rural livelihoods, water and sanitation, arts and culture, and
disaster response.
 Projects:
 Education: Establishment and support of schools, scholarships, vocational training programs.
 Healthcare: Hospitals, medical research, mobile healthcare units, and programs targeting
malnutrition and disease eradication.
 Rural Livelihoods: Sustainable agriculture, skill development, and micro-entrepreneurship.
 Water and Sanitation: Clean water access, sanitation facilities, and awareness programs.
 Disaster Response: Quick response to natural disasters with relief and rehabilitation efforts.

Tata Steel:

 Community Development: Tata Steel has a significant presence in Jamshedpur, Jharkhand, where it
has implemented several community development programs.
 Tribal Welfare: Focus on the welfare of tribal communities, including education, healthcare, and skill
development.
 Skill Development: Training programs for youth in various trades to enhance employability.
 Green Initiatives: Environmental conservation, afforestation drives, and sustainable mining practices.

Tata Consultancy Services (TCS):

 Education: Initiatives like TCS Ignite, which aims to provide skills and job opportunities to
economically disadvantaged youth.
 Digital Literacy: Programs to promote digital literacy and bridge the digital divide.
 Employee Volunteering: TCS encourages its employees to participate in various CSR activities,
leveraging their skills and expertise.

Tata Motors:

 Road Safety: Initiatives like "Hamare Bus Ki Baat Hai" focused on creating awareness about road
safety.
 Skill Development: Training programs for automotive skills benefiting youth.
 Environment: Electric vehicle development and sustainable manufacturing practices.

Tata Power:
  Renewable Energy: Investments in renewable energy sources to reduce carbon footprint.
 Rural Electrification: Bringing electricity to remote and rural areas.
 Community Health: Healthcare programs and mobile medical units.

Tata Chemicals:

 Water Management: Projects for efficient water usage and conservation.

 Healthcare: Providing healthcare facilities and programs in rural areas.

Tata Communications:

 Digital Empowerment: Initiatives promoting digital education and inclusion.

 Disaster Response: Supporting communication infrastructure during disasters.

Other Initiatives:

 Employee Volunteering: Tata Group encourages its employees to participate in various social
initiatives through volunteering.
 Sports: Support for sports and athletes through programs like Tata Tea's "Jaago Re" initiative.
 Arts and Culture: Sponsorship and support for various cultural events and institutions.

Notable Projects:

 Tata Nano Project: Effort to create the world's most affordable car, contributing to affordable
mobility.
 Tata Water Mission: Aimed at providing safe drinking water to rural communities.
 Swachh Bharat Abhiyan: Tata Group has actively participated in the nationwide cleanliness drive.

Impact and Recognition:

 Awards: Tata Group and its companies have received numerous awards and recognitions for their
CSR efforts, including the prestigious Porter Prize for creating shared value.
 Economic Development: Through its various initiatives, Tata Group has contributed significantly to
economic development, employment generation, and poverty alleviation.

Governance:

 Transparent Reporting: Tata Group follows a robust reporting mechanism for its CSR activities,
ensuring transparency and accountability.
 Engagement with Stakeholders: Regular engagement with stakeholders to identify needs and align
CSR strategies.
These initiatives showcase Tata Group's commitment to sustainable development, social welfare, and
environmental conservation, aligning with its founder Jamsetji Tata's vision of improving the quality of life
of the communities it serves.