Corporate social responsibility herein after CSR is a term used to define a firm’s efforts to expand community in some possible means. These efforts can array from contributing money to non-profits by employing ecologically friendly strategies in the factory. The purpose is to develop the society along with the corporation growth. Earlier CSR was done as a charity by huge firms but now it is been made mandatory for all companies especially private firms under Section 132 of Companies Act, 2013. This article details on CSR during COVID -19 pandemic, regulatory changes made by the Government and how organisation augment CSR efforts during this pandemic.
2. ORIGIN AND DEVELOPMENT OF CSR IN INDIA:
India has the world’s ironic practice of Corporate Social Responsibility (CSR). The term CSR may be comparatively new to India, but the idea ages back to Mauryan history. CSR has been nonchalantly practiced in olden eras in the method of charity to the deprived and needy. Religion emphasized a key-part in promoting the idea of CSR. The antiquity of CSR in India goes along with historic progress of India. CSR has progressed in stages like communal arrangements, socially accountable manufacture, and socially accountable worker relationships. Therefore, the antiquity of Corporate Social responsibility in India can be roughly classified into four stages:
The first stage of CSR was motivated by principle actions of humanitarians and contributions. It was an impact of family principles, ethni cities, ethos and faith along with industrial development. For instance, in the times of scarcities, they unlocked their warehouses for the deprived and starving. The tactic to CSR transformed with the influx colonialization and the concept of setting up charitable trusts, educational and health care establishments, and foundations for communal growth.
The second stage was the period of independence struggle when the business persons were under pressure to express their commitment towards the advantage of the community. Mahatma Gandhi advised to the influential business persons to share their prosperity for the advantage of underprivileged section of the society. The concept of trusteeship helped in the socio-economic growth of India. He influenced the businesspersons and commercial houses to construct institutions for colleges, research and training institutes.
The third stage was characterised with the advent of Public Sector Undertakings to confirm improved circulation of means in the society. The policy on industrial licensing and duties, and limitations on the private sector resulted in corporate misconducts which prompted appropriate regulation on corporate domination, work force and ecological issues.
In the fourth stage, Indian corporations combined CSR into a sustainable commercial tactic. With the advent of liberalisation and Globalisation, the companies started to flourish in the country. As a result, what was done charity by companies was then undertaken as responsibility.
Currently we are in the fifth stage of the evolution. The companies act, 2013 as made it mandatory for companies especially private companies to contribute to CSR. All corporations with a net worth above Rs. 500 crores, net profit over Rs.5 crore or turnover over Rs.1000 crore under section 132 are required to contribute at least 2% of their annual profits averaged over 3 years. And it also requires to establish a CSR council to look over the expenditures.
3. IMPORTANCE OF CSR:
Corporate Social Responsibility is a self-regulatory arrangement of business morality encompassed into corporate representations whereby it is certain that the business is intensely obliging with the Law in force and moral values conferring to nationwide and global norms. The term is used since the 1960s and continued its usage widely to buffer legal and ethical accountability. Eternally its initiation in this sustainable approach has been picked by companies to replicate their competitiveness. Their overall purpose is to influence the society positively while getting the utmost out of the conception of collective worth for the stockholders, investors and also the work forces. Nevertheless, CSR is of two types – the foremost kind is holding the general description of the term CSR by the community in general. For instance, corporations providing funds for valuable communal causes. The next type is more led for resting down a actual strategy like creating employment opportunities and financial growth over ecological initiatives, industrial goods, using harmless resources, etc. To spot a lively case of this, we could bring in the spotlight the “cola battles” between Coke and Pepsi, one of the oldest competitions in business. Both have a strong tactic to the market stake yet their CSR stratagems areto some extent different, if not all alike, like introduction of workable packing as well as dogma of nil net water usage.
Even with CSR’s volume of eye-catching a lot to the commercial desk, a reasonable number of corporations express high disappointment towards this obligation with few unveiling to have espoused CSR in the primary place as publicising approach and few, considering CSR as a pressured load whose absence may have brought much more to the businesses in the long run.
4. COVID AND CSR:
COVID-19 will have an effect on the CSR efforts. The consequence will be directly proportionate to the duration of the pandemic. The current situation is putting the CSR to test. As the commercial activities are progressively recommencing in the upcoming days, businesses must try to use this catastrophe as a prospect to develop their CSR activities. As a replacement of easier possibilities of settling their CSR commitments, like donating to designated funds, the corporations must join hands with the NGOs and the local government administrations to use their CSR in a most effective possible way. Contribution to designated funds can be a better option for smaller companies while the huge corporations must follow the hybrid method of spending their CSR funds that is to contribute a part of their CSR fund to the relief/disaster management funds and the remaining part must be used by executing development plans on the ground.
Few Corporations are already following the hybrid method are setting a good example for others to follow. The companies are lending hands to Government in manufacturing ventilators, PPE kits and face covers. Defence Public Sector Units are building isolation wards and providing N95 masks, sanitizers etc. to our combat zone workers. Many private companies have already joined together with NGOs to offer daily food and provisions to the destitute throughout the lock-down and are undertaking excellent work to accompaniment the efforts of the state governments.
In times of emergency, people escalate the efforts of those who aid and will remember the firms which has lend their short-term gains in order to value their responsibility to society. Consequently, corporations should use this occasion to influence their CSR responsibilities in enhancing their communal obligation credentials and provide drive to the positive image to their brand.
5. REGULATORY CHANGES:
Today the whole world is fighting against the COVID 19 pandemic. Due to this dreadful corona virus spread every country’s economy has been shaken largely. Indian government has also declared it as a notified disaster. In the view of the spread of corona virus the Ministry of Corporate Affairs has recently notified all stake holders that all funds spent on COVID 19 is eligible for CSR activities. The Ministry has also clarified various related questions and eligibility of activities to qualify as CSR expenditure. The following activities will be eligible and qualified as CSR expenditure.
- All funds contributed to “PM Cares Fund” and State Disaster Management authority to combat COVID-19 under schedule VII of Companies Act, 2013 shall qualify as CSR expenditure whereas the funds contributed to the Chief Minister’s Relief Fund or State Relief Fund will not qualify as CSR expenditure.
- Similarly, the Ministry also qualifies any amount spent for activities relating to COVID-19 like health care, sanitation and disaster management.
- If the company pays any ex-gratia payment to temporary or casual or daily wage workers over the payment of wages for the purpose of fighting COVID-19 shall qualify as CSR expenditure.
6. HOW ORGANISATON CAN AUGMENT CSR EFFORTS:
Currently, we are facing COVID-19, a pandemic that is impacting the whole world. Everyone should follow all the precautionary steps to keep ourselves safe from being affected. Governments all over the world are striving hard to protect the lives of their citizens by implementing precautionary measures, lockdowns and other every possible way. Here comes the role of private corporations leading their hands to combat the pandemic situation. The contribution of CSR funds to this needy crisis can give a strong support pillar to the government. Below mentioned are some ways in which corporations can array their CSR funds to support in this pandemic situation.
- Offer Healthy Food to the Deprived: Migrant workers and daily wage workers are largely going back to their native villages due to loss of their work and they are lacking any source of income. Such a huge migration has shaken the government in its efforts. Organisations can come forward along with the NGOs to provide healthy nutritious food and shelter to these migrant workers, helping them to stay back in their work places than migrating to other places.
- Assist in the COVID-19 Testing Efforts: As the number of cases are increasing rapidly, the government needs more rapid testing kits along with more testing labs. Organisations can contribute more testing kits to the governments as well as set more testing labs. This can help government in increasing the testing rate every day. The CSR funds can also be used in providing health care centres and mobile intensive care units as many cities are facing lack of beds in the hospital.
- Leverage Technology to Facilitate COVID-19 Treatment: Today social distancing as become a new normal to fight corona virus. Here technology can assist the situation. IT companies can invest their CSR funds in developing apps for easy finding of patients and affected areas. An app can also be developed for the service of tele-medicine. Tele-medicine is nothing but a practice of treating patients remotely without no contact. Caring and providing medicine from a far way place. This helps us keep social distance as well as treat patients.
- Help small scale industries: Due to lockdown many cottage industries are facing difficulties. Organisations can come forward in lending a helping hand to these industries like investing, promoting and also help in giving assistance in crisis management.
Most of the government’s attention and focus is on metro cities and large urban areas, but we have failed to realise a considerable population largely live in the villages, small towns, and districts. The government has to take a look over these areas to combat the COVID-19 situation. Large corporations should come forward to help the government in taking of these areas to win the battle of this dreadful virus. At this moment there is an alarming need for improving healthcare infrastructure rather than investing in other sectors. More advancements and medical centres need to be developed to combat such a pandemic situation if to occur in the future.
Jana Foundation, Evolution CSR in India (July 7, 2020, 11:31 AM), https://www.janafoundation.org/wp-content/uploads/2015/10/evolution_of_csr_in_india.pdf
Vishal Tripathi, NITI Aayog (July 7, 2020, 11:37 AM), https://niti.gov.in/leveraging-csr-complement-indias-covid-19-mitigation-strategy
General Circular No.15/2020, Ministry of Corporate Affairs (July 7, 2020, 12:07 PM), http://www.mca.gov.in/Ministry/pdf/Notification_10042020.pdf