Section 135 of the recently passed Companies Act (2013), has changed the way companies now view Corporate Social Responsibility (CSR). Earlier, CSR was merely philanthropy or ad-hoc projects that were taken up by individuals in the organization who understood the need or believed in such work. It was, typically, considered as an ‘additional responsibility’ for either the marketing or HR team/s.  However, with the new law in place, corporate organizations have been able to recognize CSR as a ‘core’ activity and for the first time discussions about CSR and its activities are now a part of the CEOs agenda in the board room!

Companies that qualify under the ambit of Section 135 must mandatorily conduct CSR activities. The companies included are- those with -  a net worth of rupees 500 croreor more; or a turnover of rupees 1000 crore or more; or a net profit of rupees 5 crore or more during any fiscal year.  These companies are expected to spend the prescribed 2% of their net profit on CSR activities for the applicable year based on the indicative sectors as provided under Schedule VII of the Act.

This mandate clearly indicates the need for the above-mentioned companies to  create a CSR committee  to - define the company’s CSR policy and strategy; identify  variety of projects and programs to implement ; develop transparent monitoring mechanisms to  track the flow of funds  as well as measure the impact the  CSR program/s. The law holds the Board and the CSR Committee liable and responsible for the same, making such a mechanism all the more essential.

As the new law rolls-out, it is apparent that companies that were  either already carrying out CSR activities / programs or those that will now be required to start this activity, would need extensive professional assistance  from experts in the CSR domain. This is where ‘Social Equity Advisory Services’ can be of assistance.