Corporate Social Responsibility (CSR) refers to a corporate initiative that involves assessing and taking responsibility for a company's impact on the environment and social welfare. This term generally applies to the efforts made by companies that go beyond regulatory requirements or those set by environmental protection groups.
CSR can also be called "corporate citizenship" and may involve incurring short-term costs that do not provide immediate financial benefits but promote positive social and environmental change.
CSR is the process by which an organization thinks about and evolves its relationships with stakeholders for the common good. This commitment is demonstrated through the adoption of appropriate business processes and strategies. CSR is not just charity or donations. It is a way of conducting business that visibly contributes to the social good. Socially responsible companies integrate economic, environmental, and social objectives with their operations and growth.
Overall, CSR involves more than just profit-making activities. Instead, it is a strategic approach to doing business that aligns corporate objectives with social and environmental responsibility, which can lead to long-term benefits for companies, stakeholders, and the planet.
"Many corporates have a formal Corporate Social Responsibility (CSR) policy in place, which outlines recommended CSR activities to fund, sets a budget, describes the implementation plan for the project, and establishes a transparent monitoring system to track progress. This CSR policy helps the company to contribute to society and the environment in a structured and sustainable way."
Under the Companies Act of 2013 in India, certain classes of companies are required to allocate funds for annual CSR (Corporate Social Responsibility) activities. This allocation must be equal to 2% of the average net profits of the company from the three immediately preceding financial years.
To ensure effective implementation of Corporate Social Responsibility (CSR) initiatives, it is recommended that investments be made in project-based activities with periodic milestones established at the outset.
To execute these projects, it is suggested that specialized agencies be employed instead of in-house staff. Examples of specialized agencies could include community-based organizations (formal or informal), voluntary agencies (NGOs), trusts, self-help groups, and government or semi-government autonomous organizations. Additionally, contracted agencies for civil works, professional consultancy organizations, and similar groups could also be employed.
By utilizing specialized agencies, companies can ensure the efficient and effective execution of their CSR projects. It is important to establish periodic milestones at the outset to track progress and ensure that the project is on track to meet its goals.