Corporate Social Responsibility: Meaning, Evolution and Position in India
Corporate Social Responsibility (CSR): Meaning, Evolution, and Position in India
Meaning of Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) refers to a business model in which companies integrate social and environmental concerns in their operations and interactions with stakeholders. It represents a company’s commitment to operate ethically, contribute to economic development, and improve the quality of life of employees, communities, and society at large.
In simple terms, CSR is about companies going beyond profit-making and actively engaging in activities that promote societal welfare.
Evolution of CSR
Global Context:
CSR emerged globally as a response to industrialization, environmental degradation, and social inequalities.
Initially voluntary, CSR evolved with growing awareness of corporate impact on society and environment.
International guidelines such as the UN Global Compact, OECD Guidelines for Multinational Enterprises, and ISO 26000 provided frameworks for CSR practices.
India’s Journey:
Traditionally, Indian businesses practiced philanthropy and community welfare voluntarily, rooted in cultural and ethical values.
The concept of CSR in India became formalized with increasing corporate awareness and government initiatives.
In 2013, India became the first country to mandate CSR spending by amending the Companies Act, 2013.
Position of CSR in India
Legal Framework:
Companies Act, 2013 – Section 135:
Section 135 mandates that every company having:
Net worth of ₹500 crore or more, OR
Annual turnover of ₹1000 crore or more, OR
Net profit of ₹5 crore or more during any financial year
The Schedule VII of the Act lists permissible CSR activities like education, health care, environmental sustainability, rural development, poverty eradication, etc.
Enforcement and Compliance:
The Ministry of Corporate Affairs oversees CSR compliance.
Companies must disclose CSR policy and expenditure in their Board’s report.
Non-compliance can lead to penalties, though enforcement has been relatively lenient.
Judicial Interpretation:
Important Case Law on CSR in India
1. Tata Sons Ltd. v. Greenpeace International, Delhi High Court, 2011
Although primarily about environmental concerns, the Delhi HC acknowledged the importance of corporate responsibility towards society.
The case emphasized the role of companies in sustainable development, underscoring CSR principles even before it was mandated by law.
2. Union of India v. Corporate Entities (Related to CSR Implementation), Bombay High Court, 2015
The Bombay High Court held that CSR is not just charity but a legal obligation under the Companies Act, 2013.
The court ruled that companies must implement CSR programs transparently and in good faith.
3. Centre for Public Interest Litigation v. Union of India, Supreme Court, 2019
The Supreme Court recognized CSR as an essential part of corporate governance and sustainable business.
The court stressed that CSR activities should be genuine and directed toward social welfare rather than token philanthropy.
Summary
CSR Meaning: Voluntary or mandatory business practices to benefit society beyond profit-making.
Evolution: From voluntary philanthropy to mandated legal obligations in India.
Legal Position in India: Companies Act, 2013 (Section 135) mandates CSR for qualifying companies with defined spending requirements.
Judicial View: Courts have upheld CSR’s significance, emphasizing its legal and ethical importance in corporate governance.
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