In Corporate Social Responsibility (CSR), activities that are not allowed include those in the normal course of business, projects benefiting only employees, political donations, one-off events (marathons, awards, sponsorships), and activities fulfilling statutory obligations under law. These actions are disqualified because they do not represent true social impact.
One-time events are also not considered CSR. Events like marathons, awards, charitable contributions, advertisements, sponsorships of TV programmes etc or which are aimed at generating marketing benefits for the company's products/services. Contribution to political parties directly or indirectly.
7.CSR Expenditure. -
(i) the excess amount available for set off shall not include the surplus arising out of the CSR activities, if any, in pursuance of sub-rule (2) of this rule. (ii) the Board of the company shall pass a resolution to that effect.
Corporate Social Responsibility (CSR) refers to the responsibility of companies to contribute to social, environmental, and economic development while carrying out business activities. In India, CSR is not only a business ethic but also a statutory obligation for certain companies under the Companies Act, 2013.
Constitution of a CSR Committee by a company having any amount in its unspent CSR account: Rule 3(1) of the CSR Policy Rules requires every company, including its holding or subsidiary company, and a foreign company, fulfilling the prescribed criteria1, to comply with the provisions of Section 135 of the 2013 Act.
One of the primary limitations of CSR is its voluntary nature. Unlike legal regulations, CSR initiatives are typically self-imposed commitments by companies. This means there is no universal standard or legally binding framework that dictates what constitutes adequate CSR.
The International Organization for Standardization defines the 7 Principles of Corporate Social Responsibility as:
The four main types of Corporate Social Responsibility (CSR) are Environmental, Ethical, Philanthropic, and Economic responsibilities, forming a framework for businesses to operate sustainably and contribute positively to society by focusing on planet, people, and profit. These pillars guide companies in reducing their ecological footprint, acting fairly, giving back to the community, and ensuring profitability while maintaining social good.
However, taking care of labor and staff welfare activities is generally not a function of the CSR Committee. These activities usually fall under Human Resources or Welfare Committees, not CSR. Therefore, the correct answer is: To recommend and take care of labor and staff welfare activities.
Disadvantages of CSR. Though CSR has many advantages, it is not without drawbacks, including great costs, potential conflict with profitability, the threat of greenwashing, and rising expectations. CSR will only succeed as much as it is genuine, properly planned, and consistent with the objectives of the firm.
Until a fund is specified in Schedule VII for the purposes of subsection (5) and(6) of section 135 of the Act, the unspent CSR amount, if any, shall be transferred by the company to any fund included in schedule VII of the Act.
The pillar Social (working conditions, egality/diversity/inclusion...) The pillar Environmental (carbon footprint, waste reduction, sustainable mobility...) The pillar Societal (philanthropy, solidarity commitment...) And the pillar Governance (ethics, transparency, stakeholders...)
Is CSR legally required? CSR is not legally mandated, but it can help businesses comply with regulations and improve their public image.
Some of the most common examples of CSR include:
The Legal Framework of Corporate Social Responsibility (CSR)
The legal dimensions of CSR are broad, encompassing environmental regulations, labor laws, corporate governance, and consumer protection.
The requirement comes from section 135(5) that states that “The Board of every company shall ensure that it spends…” Therefore, CSR contribution cannot be in kind and monetized.
Generally, corporate social responsibility initiatives are categorized as follows:
Carroll's pyramid imposes a four-part definition of CSR, which is: To be socially responsible a business must meet economic, legal, ethical, and philanthropic expectations given by society at a given point in time. Carroll's pyramid rates the importance of each CSR dimension.
They're often referred to as the 3 pillars of corporate responsibility and encompass economic, environmental, and social factors. Together, they create a framework that helps us understand how sustainably a business operates - not just in terms of profit, but also its impact on people and the planet.
The pillars of CSR—philanthropy, sustainability, community engagement, and ethical practices—collectively forge a path towards a more responsible and profitable future for businesses that choose to prioritize the greater good alongside their financial objectives.
There are four types of corporate social responsibility: environmental, economic, philanthropic, and ethical. Together, they shape a company's commitment to making a positive impact on society and the world.
Key Challenges in CSR Impact Assessment for Large Corporations
They call on businesses to respect human rights, ensure non-complicity in human rights abuses, uphold freedom of association, eliminate forced labor and child labor, eliminate discrimination, support precautionary environmental practices, undertake environmental initiatives, encourage environmentally friendly ...
CSR Reporting: As per Rule 8(1) of the Companies (CSR Policy) Rules, 2014, the Board's Report for any financial year of a CSR-eligible company must include an annual CSR report with the details outlined in Annexure I or Annexure II of the Companies (CSR Policy) Rules, 2014, as applicable.
The basis of corporate social responsibility is a strategy that seeks a balance between the social, environmental and economic aspects. These three aspects provide the basis for the 3 Ps: People, Planet & Profit. It is an art to ensure that the 3 Ps in daily business activities are and remain in balance.