The participation of the company in social and environmental issues creates a positive impact on society. CSR activities and business activities are different. CSR projects are not part of business profit. Four types of CSR activities are: environmental, ethical, philanthropic and economical. CSR activities of a company are the branches of the CSR policy. Examples of CSR policies are: participating in Fairtrade, reduction of carbon footprints, improving labour policies, diversity, inclusion and equity, charitable activities, environmental policies, and social investments. As per the latest amendment, companies with a net worth of 500 crores, a net profit of 5 crores, and a turnover of 1000 crores must involve in CSR activities. Foreign companies with operations in India commit to following the CSR rules. MCA has made amendments to the CSR rules since 2014. The new set of rules is referred to as CSR rules, 2022. in this blog post, the discussion is about the latest amendment and their applicability.
CSR activities of popular companies:
The CSR policy of Johnson & Johnson is to reduce pollution and use renewable sources for electricity generation. The policy of using renewable energy continues till the year 2025. Google has a CSR policy that supports the environmental impact. The usage of Gmail reduces the usage of energy. Coca-Cola produces bottles from plant-based plastic. The message from Coca–Cola CSR policy is to create a world without waste. Ford Motor Company is focusing on carbon neutrality and pays equality. Carbon neutrality leads to the management of the emissions from operations, supply and vehicles. Pfizer has CSR policies to help through grants, product donations and accessibility improvement. During the covid-9 pandemic, Pfizer helped around $5 million.
CSR in 2022:
The following points explain the rules regarding CSR activities. CSR activities create a social impact and business morality.
• Companies with high net worth, turnover, and net profit should spend their money on CSR activities.
• The company’s act, 2013 states that even a company registered as a charitable trust is liable to form a CSR committee.
• The CSR project should spend an amount of two per cent or 50 lakhs whichever is higher. The impact assessment amount is as per the income and capacity. Impact assessment is to analyse the social impact of a CSR project. The CSR spending should be based on the impact assessment. This analysis encourages the CSR policy and values the social impact.
• The Annual report of the company involved in the CSR activity should include the following aspects: an explanation of CSR policy, details of the CSR committee, members of the committee, name of the director, designation, meeting details, website link of CSR committee, membership policy, board initiatives, impact assessment and executive summary of CSR projects.
• The unspent amount in the CSR bank account is transferred as per schedule VII of the act.
• The break-up of the CSR amount is as follows: active projects, additional projects, surplus amount, and unspent CSR amount accumulated from the past three financial years. Two per cent of the average net income should be spent on CSR activities. If CSR spending is not done that amount is taken forward through the CSR committee.
Applicability of CSR amendments:
• The recent changes in the CSR procedure are to improve transparency and social responsibility.
• The relationship between the implementation agency and the company is the principal-agent relationship.
• The implementation agency will work as an extended hand of the main company.
• Implementation agencies are not the beneficiaries. They are the responsible authorities. They analyse the CSR policy of the company and suggest the best implementation process.
• The amount spent on the implementation agency is recorded as the CSR expenses if the entity is exclusively for CSR activities.
• The unspent amount on the CSR project is with a bank account. The bank account is especially for the CSR amount.
• The CSR project is classified as ongoing, and otherwise in the company record. It is essential to understand the unspent amount on CSR activities.
• The implementation agency should be a registered company. If the agency is not an entity and is doing the beneficiary role, registration is not required.
• The committee on CSR from MCA states that the delay in the CSR project is due to the identification and implementation of CSR policy as per the local area of operation. The company should approach the NGOs to formulate and implement the CSR project on time.
• In many projects, the developers submit the impact on infrastructure and society. The impact of the project on the social, environmental and economic conditions is analysed through the impact analysis.
• The impact assessment analyses the elements such as social, biophysical, economical and institutional consequences.
• The impact assessment also mentions the follow-up procedure for a project.
• CSR projects build a positive relationship between the company and the customers.
• CSR policy promotes transparency and decision-making.
• Impact assessments are done based on evidence. Analysing the impact at the global level, policy level, plan level and project level analysis is the formal procedure.
Conclusion:
The CSR policy depends upon the law system in the country. In India and USA, there is a common law system. In Norway, CSR policies are in the civil law system. Around 150 countries have civil law systems, and 80 countries prefer to follow the common law system. The CSR official website is encouraging public and private partnerships of CSR projects in India. The goal is to enhance growth and promote the partnership between public and private. The approach to the CSR project is different as the business climate is different. CSR policies should improve social practices and smooth operations. CSR policies help improve world trade, investment, technological advancement and knowledge sharing. The CSR policies integrate growth and bring a global approach between countries.
