Question

The philosophy of Corporate Social Responsibility (“CSR”) has had a long-standing history in India. India is one of the first countries in the world to create a legal framework on CSR and statutorily mandate companies to report on the same. It emanates from the Gandhian principles of trusteeship and giving back to the society. The intent of the law is to mainstream the practice of business involvement in CSR and make it socially, economically and environmentally responsible.
The Companies Act, 2013 (the ‘Act’) mandates companies meeting a certain minimum threshold in terms of turnover/net worth/net profit to undertake CSR activities as per Schedule VII of the Act. Schedule VII specifies the areas or subjects to be undertaken by the company as CSR activities. These areas broadly align with national priorities and relate to sustainable and inclusive development. The Act does not recognise any expenditure on areas/activities outside of Schedule VII as CSR expenditure. Companies (CSR Policy) Rules, 2014 prescribes the operational framework and manner in which companies should comply with CSR provisions under the Act. The mode of implementation of CSR activities, content of CSR policy, impact assessment, reporting requirements and disclosure for CSR are covered under these Rules. The CSR architecture is disclosure-based and CSR-mandated companies are required to file details of CSR activities annually in the MCA-21 registry in e-form AOC-4.
A High-Level Committee set up in 2018 to review the CSR framework recommended that Schedule VII of the Act be mapped with Sustainable Development Goals (‘SDGs’). The Committee noted that companies need to balance CSR spending between local area/areas around where it operates, and less developed regions such as aspirational districts.
The Government of India launched the ‘Transformation of Aspirational Districts’ programme (‘ADP’) in January 2018 with the aim to improve [the] socio-economic status of the least developed regions across India. The programme is based on five socio-economic themes such as – Health & Nutrition, Education, Agriculture and Water Resources, Financial Inclusion and Skill Development and improvement of basic infrastructure… As on date, 112 aspirational districts are recognised by the Government wherein Jharkhand has the highest number of aspirational districts i.e., 19 followed by Bihar (13), Odisha and Chhattisgarh (10 each). The Government has been taking various initiatives to encourage CSR in aspirational districts and to remove regional disparities.
[Source: Ministry of Corporate Affairs, Government of India “Compendium on Corporate Social Responsibility in India” (2021)]