Corporate Social Responsibility
1. What is Corporate Social Responsibility (CSR)?
CSR refers to a company’s commitment to operate ethically, contribute to economic development, and improve the quality of life of employees, communities, and society at large.
It’s about businesses going beyond profit-making to take responsibility for their social, environmental, and economic impact.
2. Legal Framework for CSR in India
Section 135 of the Companies Act, 2013 mandates CSR for certain companies.
Companies meeting specified criteria (net worth, turnover, or profit thresholds) must spend at least 2% of their average net profits on CSR activities.
Companies must form a CSR Committee to oversee and report on CSR activities.
3. Key Components of CSR under the Law
CSR Activities include eradicating hunger, promoting education, gender equality, environmental sustainability, and more (listed in Schedule VII of Companies Act).
Companies must disclose CSR policies and expenditures in their annual reports.
4. Why is CSR Important?
Helps build a positive brand image and consumer trust.
Promotes sustainable development.
Enhances employee satisfaction and retention.
Aligns business goals with societal needs.
5. Case Law Insights on CSR
a) Tata Sons Ltd. v. Greenpeace International (Delhi HC, 2011)
Greenpeace challenged Tata Sons over environmental concerns.
Highlighted corporate responsibility towards the environment and society beyond profits.
b) Volkswagen India Pvt. Ltd. v. State of Haryana (Punjab & Haryana HC, 2015)
Case focused on corporate liability for environmental damage.
Reinforced that CSR includes environmental protection as a legal and ethical duty.
6. Challenges and Criticisms
Some companies treat CSR as a mere formality or marketing tool.
Need for greater transparency and accountability in CSR spending.
Balancing profit-making with genuine social commitment.
Quick summary:
| Aspect | Explanation |
|---|---|
| What is CSR? | Ethical business practices benefiting society |
| Legal Mandate (India) | Section 135, Companies Act 2013 |
| CSR Committee | Oversees implementation |
| CSR Activities | Education, health, environment, etc. |
| Importance | Builds trust, promotes sustainability |
| Case Law Examples | Tata Sons v. Greenpeace, Volkswagen India case |
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