Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) is a form of business self-regulation by which companies hold themselves to a set of legal, ethical, social and ecological standards.

Updated: May 31, 2024

Corporate Social Responsibility (CSR)



Corporate Social Responsibility (CSR):

Corporate Social Responsibility (CSR) is a form of business self-regulation by which companies hold themselves to a set of legal, ethical, social and ecological standards.
Under the terms of Companies Act, 2013, it permits companies to engage in projects or programs related to activities related to social welfare and improvement. Companies has the flexibility to select their preferred CSR engagements that are in agreement with the overall CSR policy of the company.
Corporate Social Responsibility is required for all size of private limited company as well as limited company. Companies with a net worth of Rs.500 crores or greater, or a turnover of Rs.1000 crores or greater, or a net profit of Rs.5 crores or greater are necessary to constitute a CSR committee consisting of its directors which oversees the entire CSR activities of the Company. The Corporate Social Responsibility (CSR) provisions and related rules will be applicable to the companies whose financial strength criteria are met as mentioned above.

Role of Board of Directors in CSR:

The role of Board of Directors in CSR is as below:

  • Approving CSR policy and ensuring its implementation.
  • Disclosing the contents of CSR policies related to its report and placing the same on the website of the Company.
  • Make sure that statutory specified amount is spent by the company with reference to CSR activities.
  • There is no penalty if the particular amount is not spent on CSR activities. However, the reason for such short spending should be identified by the report generated by board of directors.

Activities permitted under Corporate Social Responsibility (CSR):

The activities those are permitted under Corporate Social Responsibility (CSR) which can be performed by a company to accomplish its CSR obligations are:

  • to promote education
  • eradicate extreme hunger and poverty
  • improve maternal health
  • reduce child mortality
  • promote gender equality and empower women
  • combat human immunodeficiency virus, acquired, immune deficiency syndrome, malaria and other diseases
  • social business projects, employment enhancing vocational skills
  • ensure environmental sustainability
  • contribute to the Prime Minister's National Relief Fund or any other fund that is set up by either the Central Government or the State Governments for socio-economic development
  • provide relief and funds for the welfare of the Scheduled Castes, Scheduled Tribes, other backward classes, minorities and women

CSR Committee and Policy:

  • At least two percent of the average net profit of the company is required to spend for the directly preceding three financial years on CSR activities who required to have a CSR committee.
  • Also it is required for the the qualifying company to form a CSR Committee of the Board of Directors comprising of three or more directors.
  • The CSR Committee will be responsible for preparing a policy which will specify the activities to be undertaken and will be recommended to the Board.
  • They are also involved in advocating the amount of expenditure to be incurred on the activities referred and monitor the CSR Policy related to the company.
  • The Board will support the CSR Policy of the company by taking the recommendations made by the CSR Committee into account.