Envis Centre, Ministry of Environment & Forest, Govt. of India

Printed Date: Saturday, July 13, 2024

Corporate Social Responsibility (CSR)

Corporate social responsibility (CSR, 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. With 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 and that which is required by law." 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.


The term "corporate social responsibility" became popular in the 1960s and has remained a term used indiscriminately by many to cover legal and moral responsibility more narrowly construed.


Proponents argue that corporations increase long term profits by operating with a CSR perspective, while critics argue that CSR distracts from business' economic role. A 2000 study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes.


Corporate Social Responsibility is not a new concept in India, however, the Ministry of Corporate Affairs, Government of India has recently notified the Section 135 of the Companies Act, 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014 "hereinafter CSR Rules" and other notifications related thereto which makes it mandatory (with effect from 1st April, 2014) for certain companies who fulfill the criteria as mentioned under Sub Section 1 of Section 135 to comply with the provisions relevant to Corporate Social Responsibility. For More Details....


CSR Guidelines for Water:


Under the Guideline on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises, all CPSEs are supposed to be spending a certain earmarked fund each year in creating and sustaining socially beneficial projects. Para 1.4.9 of the said guidelines, provides freedom to the CPSEs to select their CSR and Sustainability projects from a vast range of available options including activities relating to water sector and restoration to environmental sustainability.


As per the guidelines on CSR, all profit making Central Public Sector Enterprises (CPSEs), including Maharatna CPSEs are required to select CSR activities and to undertake them in a project mode, and are required to allocate a budget mandatorily through a Board Resolution as a percentage of previous year’s net profit in the following manner (Para 1.5.1 of Guidelines on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises, 1st April 2013):


PAT (Profit Aftre Tax) of CPSE in the previous year Range of Budgetary allocation CSR and Sustainability activities (as % of PAT in previous year)
Less than Rs. 100 Crore 3% - 5%
Rs. 100 Crore to Rs. 500 Crore 2% - 3%
Rs. 500 Crore and above 1% - 2%


Loss making CPSEs are not required to earmark specific funding for CSR activities.


As per CSR guidelines, the CSR policy of the business entity should provide for an implementation strategy and include identification of projects/activities, setting measurable physical targets and timeframe, organizational mechanism and responsibilities, time schedules and monitoring. Companies may partner with local authorities, business associations and civil society/NGOs


As per Section 135 of Company Bill passed by Lok Sabha on 18th December 2012 (Bill No. 121-C of 2011) and Gazette of India 30th August 2013 (but yet to be notified ), every company having net worth of rupees five hundred Crore or more, or turnover of rupees one thousand Crore or more or a net profit of rupees five Crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. The Board of every company shall ensure that the company spends, in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy




CSR Guidelines for Sanitation Programme :


India has a massive problem of open defecation. The World Health Organization (WHO) and United Nations Children’s Fund (UNICEF) estimate that there are more than 620 million people practicing open defecation in the country, or nearly half the population of India. Open defecation is prevalent among all socio-economic groups in rural India though the bottom two wealth quintiles bear the heaviest burden. Children—already vulnerable and marginalized—pay the highest price in respect of their survival and development.


This well-established traditional behaviour is deeply ingrained through a practice which is transfered from parents to children. Other reasons cited for its persistence in India include poverty (the inability to afford toilets), landlessness and tenants in housing without toilets, and deep-rooted cultural and social norms that have established open defecation as an acceptable habit.


Poor sanitary measures set India back by Crores of rupees every year due to illnesses, and its cost, to rural families and to the economy, as a whole, in terms of productivity losses, and expenditure on medicines and public health care are enormous. As per World Bank statistics, India’s GDP (Gross Domestic Product) stands at 1.3 Trillion dollars and we are currently ranked 11th in the world on the basis of nominal GDP. If we could cut down expenses incurred due to illnesses and lack of productivity due to illnesses, our economy would get further impetus.


The Ministry of Drinking Water and Sanitation administers the Nirmal Bharat Abhiyan (NBA) in the rural areas of the country. The objective of NBA is to accelerate the sanitation coverage in the rural areas so as to comprehensively cover the rural community through renewed strategies and saturation approach. Nirmal Bharat Abhiyan (NBA) envisages covering the entire community for saturated outcomes with a view to create Nirmal Gram Panchayats. As per the Census 2011, the rural coverage of access to toilet facilities has reached 32.70%. The Ministry is committed to having India Open Defecation Free (ODF) by 2022, but to achieve this, requires combined fresh action and efforts/initiative from all quarters whether from Government, Corporate or from Non Government organizations.


Source: http://mdws.gov.in/sites/upload_files/ddws/files/pdfs/Guide_Line_Sanitation_CSR.pdf




Power, Coal, MNRE PSUs to Construct 50,000 Toilets in Schools; Work on 1001 Toilets 


As a part of the “Swachh Bharat Mission”, the Public Sector Undertakings (PSUs) under the Ministries of Power, Coal and New & Renewable Energy will construct 50,000 toilets in schools all over the country within next one year up to August 2015. The work of 1001 toilets will begin tomorrow, 2nd October 2014 in various states.


For the construction of these toilets, 50 % of the Corporate Social Responsibility Budget will be earmarked during the financial year 2014-15 and 2015-16. The PSU wise allocation is NTPC-240,PGCIL-90,NHPC-56,PFC-72,REC-90,NEEPCO-06,SJVNL-21,THDCIL-05,CoalIndia Ltd-400,NLC-25,1REDA-04.


The breakup of the states and the number of schools in which work will commence is as follows:


  Name of PSU States Number of Toilets to be constructed in the Schools
1 NTPC Bihar, Chhattisgarh, Jharkhand, MP, Odisha, Rajasthan,UP, &West Bengal 240
2 Power Finance Corporation (PFC) Rajasthan 72
3 SJVN Limited Himachal Pradesh 21
4 POWERGRID AP, Assam, Bihar, Chhattisgarh, MP, Odisha, & Telegana 90
5 National Hydroelectric Power Corporation (NHPC ) Assam, WB, J&K, HP, Uttrakhand, Arunachal Pradesh, Manipur & WB. 56
6 Rural Electrification Corporation Limited (REC) UP 90
7 Neyveli Lignite Corporation Ltd (NLC) Tamil Nadu 25
8 THDC India Limited ( THDCIL) Uttrakhand 05
9 Indian Renewable Energy Development Agency (IREDA) Chhattisgarh 04
10 North Eastern Electric Power Corporation (NEEPCO) Assam 06
11 Coal India Limited ( CIL) Jharkhand, WB, Odisha, MP, Chhattisgarh, UP, & Assam 400


Source: Ministry of Information & Broadcasting, Govt. of India


Union HRD Minister addresses the Conference on the use of CSR Funds for construction of school toilets


The Union HRD Minister Smt. Smriti Irani addressed the Conference on the use of Corporate Social Responsibility funds for construction of toilets in schools in New Delhi today (14.10.2014) as part of the Swachh Bharat Swachh Vidyalaya Campaign. The Minister indicated that the Prime Minister’s Mission of a Clean India by 2019 can only be achieved if we provide good clean environment in schools including functional toilets to every child so that she becomes a change agent for a larger goal that we have set for ourselves. She reiterated the Government’s resolve to provide toilets in every school with a separate toilet for girls within one year and invited the corporate sector to participate in this national endeavour by constructing toilets and also maintaining them for some time.


The Conference was attended by the Corporate Heads from all over India. Shri R. C. Bhargava, Chairman, Maruti Suzuki, Mrs. Sudha Murti, Chairperson, Infosys Foundation, Dr. Raghupati Singhania, Chairperson, J&K Tyres and Chairperson CII, CSR initiative and other Heads of private sector corporations attended the Conference. The Chairman NTPC and senior officials from other public sector corporations and members of industry associations participated in this Conference. The Conference opened with a short three minute film on difficulties faced by the girls students in schools without a toilet. Read more....