🌱 Corporate Social Responsibility (CSR)

Responsible Business | Sustainable Growth | Social Impact

Corporate Social Responsibility (CSR) refers to a company’s ethical obligation to contribute positively to society and the environment, beyond just making profits. CSR involves voluntary and mandatory initiatives aimed at improving the well-being of employees, communities, and the planet while conducting business responsibly and sustainably.

In India, CSR is also a legal requirement for certain companies, governed by the Companies Act, 2013.

⚖️ Legal Framework of CSR in India

CSR in India is governed by:

• Section 135 of the Companies Act, 2013
• Companies (Corporate Social Responsibility Policy) Rules, 2014
• Various amendments including the Companies (Amendment) Act, 2019 and 2021

✅ Applicability

CSR provisions apply to companies that meet any of the following thresholds during the immediately preceding financial year:

Such companies must:

• Spend at least 2% of their average net profits (past 3 years) on CSR activities
• Form a CSR Committee (exceptions exist for some private companies)
• Adopt and disclose a CSR Policy in their Board Report and on their website
• File annual CSR disclosures in Form CSR-2

📚 CSR Focus Areas (Schedule VII)

Eligible CSR activities must fall within the areas listed in Schedule VII of the Companies Act. These include:

✅ Eradicating hunger, poverty, and malnutrition ✅ Promoting education and skill development ✅ Promoting gender equality and women empowerment ✅ Environmental sustainability and conservation of natural resources ✅ Rural development projects ✅ Health care and sanitation ✅ Contribution to PM CARES or approved relief funds ✅ Sports, heritage, and art promotion ✅ Support for armed forces veterans and war widows ✅ R&D in science, tech, and sustainable development

Note: Activities must be in India and not part of normal business operations (with some exceptions for COVID-19 and R&D in pharma).

🧭 CSR Implementation Modes

CSR can be implemented through:

1. Direct Implementation The company executes the CSR projects on its own.
2. Through Eligible Implementing Agencies
   • Section 8 Companies
   • Registered Trusts or Societies
   • Must be registered with MCA and have CSR Registration Number (Form CSR-1)
3. Collaboration with Other Companies Pooling of resources is allowed for larger impact, but each company must track its individual obligations and reporting.

🧠 Strategic Importance of CSR

📈 CSR Reporting & Disclosure

Companies must:

• Include an annual CSR report as part of the Board’s Report (Annexure format)
• Disclose project-wise expenditure, impact assessment (if applicable), and any unspent CSR amounts
• Transfer unspent CSR funds:
  • To a Schedule VII Fund within 6 months (if not tied to an ongoing project)
  • To a CSR Unspent Account within 30 days and utilize within 3 years (if part of an ongoing project)

📌 Impact Assessment (Mandatory for Certain Companies)

If CSR obligation is ₹10 crore or more in the last 3 financial years, the company must:

• Conduct an impact assessment of CSR projects costing ₹1 crore or more
• Get it done by an independent agency
• Disclose the findings in the Annual Report and on the website

🛠️ How KLS Advisors Can Help

At KLS Advisors, we offer end-to-end CSR advisory and implementation support:

✅ CSR Policy drafting and Board alignment ✅ Identification of eligible projects and partners ✅ Budgeting, planning, and impact-focused implementation ✅ Registration support for implementing agencies (Form CSR-1) ✅ Independent CSR audit and impact assessment ✅ CSR-2 filing and annual report disclosures

📧 Email: info@klsadvisors.in 🌐 Website: www.klsadvisors.in

✅ Conclusion

CSR is no longer just about philanthropy — it’s about creating shared value and contributing to sustainable development. For companies, a well-structured CSR strategy not only meets compliance but strengthens brand equity, stakeholder trust, and long-term profitability.

Let KLS Advisors help you create CSR programs that are compliant, impactful, and aligned with your business values.