CORPORATE SOCIAL RESPONSIBILITY- Is it necessary?
India is the first country in the world to preserve corporate giving into law. Section 135 of the Companies act, 2013 makes it mandatory for certain companies, private limited or public limited, listed or unlisted, which either has a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or net profit of Rs 5 crore, to spend at least 2% of its average net profit on corporate social responsibility (CSR) activities. Areas they can invest this money in include education, poverty, gender equality, hunger and such others. This law was effective 1st April, 2014 onwards.
Presenting the bill in Parliament, Corporate Affairs Minister Sachin Pilot termed the passage of the Bill as a new era for corporate law and regulation in Indian economy and said this is a 'historic moment for the country’. He said, "After 100 years, this is the second time that a new companies law has been legislated".
In the words of Mahatma Gandhi, business entrepreneurs are trustees and not the owners of the social wealth and they have to spend a part of it for social causes. To describe the principle of this trusteeship he quoted, “enjoy the wealth, and take the minimum which you need, leave the rest to the welfare of community.”
When the Companies Act of 2013 was passed, Corporate Social Responsibility (CSR) was for the first time formally introduced to the board of Indian Companies. CSR before that was often seen as a philanthropic activity in INDIA due to the old traditions and thoughts of “daan” and “seva” which exists in most people. It is all about the sustainability. Business needs the approval of society to prosper. We all live in this society. We all take things around us and consume for our own needs. How LONG? How long can we do that and not give back? What are we making of this world?
Corporations play a very important role in our society. They have huge political influence. They have large human resources together under one command. Thus, implementation of one wrong policy causes gigantic disorder and the inclusion of one correct policy causes huge positive effect. One step of the corporation towards a better society counts as not only one but thousands of steps. The amount of profit they earn is due to people. If they were to give back to society little bit out of that then not only will their value increase in share market, their brand loyalty and brand preference will also increase. Even if they don’t give back huge amount in monetary terms, their policies and methods should be such which should assist in making a better society. That is what CORPORATE SOCIAL RESPONSIBILITY is all about. With benefit comes duty. With privilege, there should be a Responsibility.
A corporation maybe a private body or a public sector, but it is in THIS society, OUR society. In a country such as India, where one-third of the population is illiterate, two-thirds lack access to proper sanitation, and 400 million people still live on less than 200 rupees a day, the passage of the Companies Act should have been hailed as a positive step forward in ensuring that business contributes to equitable and sustainable economic development. IT IS HIGHLY NECESSARY!
School of law & justice (3rd semester)