A study on implications of Corporate Social Responsibility under Companies Act, 2013

Abstract

Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. The way it is understood and implemented differs greatly for each company and country. Moreover, 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. The purpose of CSR is to drive change towards sustainability. CSR or citizenship aims at invoking the corporate conscience whereby companies incur short-term costs that do not provide an immediate financial benefit to them, but instead promote positive social and environmental change. The New Companies Act 2013 has come up with the concept of mandatory CSR and this Act replaces the archaic, almost 60 yrs old Companies Act, 1956. This paper is focused on Companies Act, 2013 & its provision on mandatory spending and disclosure of Corporate Social Reasonability activities. The paper also discusses the major loopholes in the provision that can prove as a hindrance in its practical applicability.