Corporate Social Responsibility (Csr)

In most jurisdictions corporate social responsibility is voluntary: a company decides what it will do about its social and environmental impact, and reports on it if it chooses.

India made it a statutory obligation. Companies meeting prescribed thresholds under the Companies Act, 2013, expressed in terms of net worth, turnover or net profit, are required to spend a prescribed proportion of profits on qualifying activities, to constitute a committee, and to report on the spending, including on any shortfall.

That structure changes the nature of the activity completely. It is a compliance obligation with a defined amount, a defined scope of permitted activity, and a reporting requirement, rather than a discretionary programme sized by appetite.

This entry does not state the thresholds, the percentage or the list of qualifying activities. Those are prescribed in the Companies Act, 2013 and the rules under it, which were not verified for this entry, and the figures have been amended more than once. Take them from the current provision rather than from a summary.

Because it is a statutory spending and reporting obligation, ownership sits with the board and finance. The committee, the policy, the spend and the disclosure are governance matters.

HR is usually involved in delivery rather than decision, and the distinction is worth being clear about internally, because HR teams are frequently asked to run activity without control over what qualifies.

The third row is the one that causes reporting problems. Employee volunteering is valuable and is not automatically qualifying expenditure, and treating volunteer hours as if they were spend produces a shortfall discovered at reporting.

Volunteering is worth running for its own reasons rather than as a contribution to a statutory figure.

• It is consistently among the activities employees rate most positively, particularly where they choose the cause.
• It works better where the organisation provides time rather than asking people to give their own, since unpaid volunteering excludes anyone with commitments.
• Skills-based volunteering, where people contribute what they are actually good at, is more useful to the recipient and more engaging for the volunteer than generic activity.
• Participation should be genuinely optional, since mandatory volunteering is a contradiction employees identify immediately.

The second point determines who takes part. A programme run on personal time is available to people without caring responsibilities, second jobs or long commutes, which reproduces the same distributional problem that affects development.

It is also worth measuring participation by team and site rather than in aggregate, for the same reason.

CSR affects hiring and retention, and the effect is asymmetric: a credible programme helps modestly, and an unconvincing one damages more than its absence would.

Candidates, particularly earlier in their careers, do ask about it, and they discount marketing heavily. What reads as credible is specificity: what the organisation actually does, over what period, with what result. What reads as hollow is a page of photographs and a statement about commitment.

The sharpest version of the problem is a mismatch between the external programme and the internal experience. An organisation with a prominent community programme and poor treatment of its own workforce invites an obvious comparison, and employees make it out loud.

The honest position is that CSR is not a substitute for being a decent employer, and it is read as an attempt at one where the internal conditions are poor.

• Be clear internally about what is statutory compliance and what is voluntary activity, since they have different owners, constraints and reporting.
• Do not book employee time as CSR spend without confirming it qualifies.
• Take thresholds, percentages and qualifying activities from the current statutory provision, not from an internal document written when the policy was set up.
• Run volunteering because it is worth running, and measure participation by team and site.
• Keep the external claims consistent with the internal experience, since the gap is the thing candidates and employees actually notice.

The third is the one that dates. CSR provisions have been amended more than once, including on how unspent amounts are treated, and a policy written at introduction may describe a regime that has since changed.