Legal Framework for Corporate Social Responsibility
With the introduction of companies’ act 2013, India has become first country to mandate CSR. The fact that CSR initiatives are taken voluntarily, has been ignored and the act has provided for compulsory spending on CSR.
As per section 135 of the new act, Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a CSR committee of the board consisting of three or more directors (at least one shall be independent director). The committee shall
1. Formulate and recommend to the board a CSR policy
2. Recommend the amount of expenditure, and
3. Monitor the CSR policy.
The Companies Act 2013 encourages companies to spend at least 2% of their average net profit in the previous three years on CSR activities. The ministry’s draft rules, that have been put up for public comment, define net profit as the profit before tax as per the books of accounts, excluding profits arising from branches outside India
Applicability: Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.
•The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.
The Corporate Social Responsibility Committee shall,—
•Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;
•Recommend the amount of expenditure to be incurred on the activities referred to in clause (a)
•Monitor the Corporate Social Responsibility Policy of the company from time to time.
SOCIAL RESPONSIBILITY AND RELATED DISCLOSURE:
1) Means of Communication
2) Various Social Responsibilities fulfilled by Company
3) Customer care Grievance
4) Financial Risk Management
5) Business Environmental Responsibility
Economic growth is possible only through consumption of inputs available in the environment and society. The harnessing of natural resources has a direct impact on the economy, the environment and society at large. Corporate Social Responsibility (CSR) is a concept whereby organizations serve the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. Corporate social responsibility is not about just giving randomly but about bringing benefits to all the stakeholders, including customers, employees and community at large.
•Respect for Worker’s Right and Welfare: The companies should provide the workplace environment that is safe, hygienic and humane to work. They should be taken care of the heath issues arising out of the work of the organization. It should conduct the training and development program within the organization for the people of the organization.
•Woman Empowerment: Empowering women and achieving gender equality – the goals of the Women’s Empowerment Principles - requires intentional actions and deliberate policies. The WEPs are based on concrete business practices and have inspired companies around the world to tailor existing policies and programmes – or establish needed new ones – to realize women’s empowerment.
Corporate Social Responsibility Dimensions
•Sport Promotion: These include CSR initiatives and investments in the sector by leading corporate houses, and non-profit foundations. These foundations are chiefly involved in providing opportunities to children from the under-privileged sections to take up sports, supporting promising sportspersons in accessing world class training facilities and developing sporting infrastructure.
•Employment Generated: Jobs continue to be created, needing an educated workforce and many in sunrise sub-sectors. We need to recognize new opportunities and prepare the supply side.
•Educational Employee Training: Employee training and development is a broad term covering multiple kinds of employee learning. Training is a program that helps employees learn specific knowledge or skills to improve performance in their current roles.
•Employee Grievance: refers to the dissatisfaction of an employee with what he expects from the company and its management. A company has to provide an employee with a safe working environment, realistic job preview, adequate compensation, respect etc.
•Benefits of Employee Welfare: They provide better physical and mental health to workers and thus promote a healthy work environment. Facilities like housing schemes, medical benefits, and education and recreation facilities for worker's families help in raising their standards of living. This makes workers to pay more attention towards work and thus increases their productivity. Employers get stable labor force by providing welfare facilities. Workers take active interest in their jobs and work with a feeling of involvement and participation.
•Increased Sales and Customer Loyalty: The customers also recognize those companies which are socially responsible. This results in increased sales and content customers.
•Complaint Received During the year: A customer complaint highlights problems with employees or internal processes and you can fix them before further problems arise and cause a bad customer experience. One of the advantages of CRM is that you can keep a record of customer feedback, both positive and negative.
•Complaint Resolved: The complaint is closed as Resolved because the provider has met the member's request for resolution to the complaint (as outlined on the Complaint Resolution Process complaint form).
•Complaint Pending: The complaint is currently in process. No final outcome has been determined.
•Investor Education and Protection Fund (IEPF): is for promotion of investors’ awareness and protection of the interests of investors. This website is an information providing platform to promote awareness, and it does not offer any investment advice or evaluation.
•Financial Risk Management
Financial Risk Management is the practice of economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange risk, Shape risk, Volatility risk, Sector risk, Liquidity risk, Inflation risk, etc. Similar to general risk management, financial risk management requires identifying its sources, measuring it, and plans to address them. Profit Risk is a risk management tool that focuses on understanding concentrations within the income statement and assessing the risk associated with those concentrations from a net income perspective.
•Legal Risk Management
Legal Risk Management refers to the process of evaluating alternative regulatory and non-regulatory responses to risk and selecting among them. Even with the legal realm, this process requires knowledge of the legal, economic and social factors, as well as knowledge of the business world in which legal teams operate. In an organizational setting, risk management refers to the process, by which an organization sets the risk tolerance, identifies potential risks and prioritizes the tolerance for risk based on the organization’s business objectives, and manages and mitigates risks throughout the organization.
•Risk Management
Risk Management and Internal Control help organizations understand the risks they are exposed to, put controls in place to counter threats, and effectively pursue their objectives. They are therefore an important aspect of an organization’s governance, management, and operations. Professional accountants can and should play a leading role in helping their organizations achieve an integrated, organization-wide approach to risk management and internal control—which ultimately helps create, enhance, and protect stakeholder value.
Business Environmental Responsibility
The companies are required to utilize the Planet i.e., Natural Capital in a well manner so that it cannot be wasted, excess utilized which is also required for the other states or countries and also requires to be preserve for the future generation.
Environmental management system that offers a framework that companies and organizations can follow in order to set up an effective environmental management program. Its certificate means that the company or organization is measuring and reducing its environmental impacts. Sustainability Report is used by companies to communicate their economic, environmental and social activities to depict transparency and compliance to rules and regulations.
•Audit of Environment: There are three main types of audits which are environmental compliance audits, environmental management audits to verify whether an organization meets its stated objectives, and, functional environmental audits such as for water and electricity.
•Pollution Control: Pollution prevention is a major global concern because of the harmful effects of pollution on a person’s health and on the environment. Environmental pollution comes in various forms, such as: air pollution, water pollution, soil pollution, etc.
•Project Location and Development: Project management is the discipline of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria.
•Forest and Plantation of Tress: Industrial plantations are actively managed for the commercial production of forest products. Industrial plantations are usually large-scale. Individual blocks are usually even-aged and often consist of just one or two species. These species can be exotic or indigenous. The plants used for the plantation are often genetically altered for desired traits such as growth and resistance to pests and diseases in general and specific traits.
•Plants having Child Labour: The social scenario, however, changed radically with the advent of industrialization and urbanization under the impact of the newly generated centrifugal and centripetal forces; there was an unbroken stream of the rural poor migrating to urban center in search of livelihood. The child had to work as an individual person either under an employer or independently. His work environment endangered his physical health and mental growth and led to his exploitation. The protection and welfare of these children, therefore, become an issue of paramount social significance.
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