“We make a living by what we get, but we make a life by what we give” – Winston Churchill

The company has been able to generate sustainable livelihood opportunities for around 6 million people through its CSR initiatives. ITC has achieved the unique global distinction of being carbon positive for 9 successive years, water positive for 12 consecutive years and solid waste recycling positive for the last 7 years.

The biggest reason for ITC’s CSR success is the way almost all the major sustainability initiatives have been wedded to the company’s core business, either providing an input source for a business or backward integration. As a result, divisional chief executives and their teams lead each of the initiatives, making them something more than just another CSR program.

What is CSR?

The United Nations Industrial Development Organisation (UNIDO) has defined corporate social responsibility (CSR) as –

a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is a way in which companies achieve a balance of economic, environmental and social imperatives.

Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. CSR is a very broad concept that addresses many and various topics such as human rights, corporate governance, health and safety, environmental effects, working conditions and contribution to economic development.  Whatever the definition is, the purpose of CSR is to drive change towards sustainability.

Why CSR made Mandatory?

In order to streamline the philanthropic activities and ensure more accountability and transparency, the government of India made it mandatory for companies to undertake CSR activities under the Companies Act, 2013

The law is very significant, because India is at the threshold of demographic dividend, and there is an urgent need for the creation of human and physical capital to reap its rewards. Investment in education, health, skill development and social infrastructure will enhance capabilities of the youth by improving their nutritional, skill and educational level, which in turn will better their employment prospects

CSR under Companies Act, 2013

Every company having

  • Net worth >= 500 crores
  • Turnover >= 1000 crores
  • Net profit >= 5 crores

During any financial year shall constitute CSR committee consisting of >= directors out of atleast 1 shall be independent director.

The Board of every company shall ensure that the company spends, in every FY, atleast 2% of average NP of the company made during 3 immediately preceding FY. Company shall give preference to local area and area around it and where it operates.

CSR committee shall –

  1. formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII.
  2. recommend the amount of expenditure to be incurred on the activities referred to in clause (a)
  3. monitor the Corporate Social Responsibility Policy of the company from time to time

CSR expenditure cannot be claimed as business expenditure. No specific tax exemptions  has been extended to expenditure incurred on CSR, spending on several activities like contribution to Prime Minister’s Relief Fund, scientific research, rural development projects, skill development projects

MCA has clarified that the statutory provision and provisions of the CSR Rules, 2014 is to ensure that activities undertaken in pursuance CSR policy must be relatable to Schedule VII of the Companies Act, 2013. General circular also provides an illustrative list of activities that can be covered under CSR.

Schedule VII of Companies Act, 2013

  1. eradicatinghunger, poverty and malnutrition and preventive health health care and sanitation including contribution to Swach Bharat kosh
  2. promotingeducation including special education and employment-enhancing vocational skills, especially among children, women, elderly, and the differently-abled and livelihood enhancement projects
  3. promotinggender equality, empowering women, setting up homes and hostels for women and orphans, setting up old-age homes, day-care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups
  4. ensuringenvironmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water; including contribution to the Clean Ganga Fund set-up by the Central Government for the rejuvenation of river Ganga.
  5. protectionof national heritage, art and culture, including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts
  6. measures for the benefitof armed-forces veterans, war-widows and their dependents
  7. training to promoterural sports, nationally-recognized sports, Paralympic sports and Olympic sports
  8. contribution tothe Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women
  9. contributions or funds provided totechnology incubators located within academic institutions, which are approved by the Central Government
  10. rural development projects.
  11. Slum area development.