The Companies Act 2013 mandates the corporate houses to spend 2% of their net profits on CSR. It has now been over six years since the law has been implemented. However, there is a lack of clarity as to what qualifies as CSR in India among the corporates as well as people in general.
Dr Bhaskar Chatterjee, the father of CSR in India in an interview with The CSR Journal helped us bring clarity to this question. According to Dr Chatterjee, in India, the following actions do not qualify as CSR.
Anything that is done for your own employees
CSR has to be for society. Activities that are done for the benefit of one’s own employees do not qualify for CSR. Even if the beneficiaries are deserving of the said project, it does not qualify as CSR if the beneficiaries are employees of the firm.
Those which are not in a project form
Employees of a company participating in volunteer work, or a CEO of a company attending an event and making a one-time donation cannot be qualified as CSR. It could be recognised as CSR if it is adopted by the said company in the form of a project which has specific targets, and there is a proper monitoring system in place.
Actions that are not approved by the CSR committee of the enterprise
Any project that is not approved by the CSR committee of a company cannot qualify as a CSR project, even if all the other criteria are met.
Actions that are listed to the board but not approved by it
A CSR project needs to be referred to not only the CSR committee but also to the board of the company. In addition to this, the board also needs to approve the project for it to be qualified as the company’s CSR initiative officially.
Any activity which is not for the poor is not CSR
Any activity which is not for the benefit of the poor cannot be recognised as CSR. CSR is for the benefit of the poor and poor only.