Corporate Social Responsibility (CSR) and Covid-19 CSR
Introduction of Corporate Social Responsibility (CSR) and COVID -19
Corporate Social Responsibility (CSR) is the social responsibility entrusted on the corporates pursuant to their availing the benefits of the society and it is the duty of the corporates to give back and protect the society through CSR activities. COVID-19 also known as corona virus disease, is pandemic declared by the World Health Organization and this virus has affected the whole world. To combat with the situation and to manage the whole country, many schemes and facilitation has been introduced by the Indian Government. However, the Government is also seeking help from corporates and individual to contribute to the extent they can to overcome this difficult situation. To promote and motivate contribution from corporate sectors government has considered their contribution as CSR Activities. Earlier CSR activities included the following:
- Projects or programs relating to activities areas or subjects specified in Schedule VII to the Act; or
- Projects or programs relating to activities undertaken by the Board of Directors of a company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will include activities, areas or subjects specified in Schedule VII of the Act.
The following activities are considered as CSR activities per Schedule VII:
- Eradicating poverty and malnutrition, hunger, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water.
- Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.
- Promoting gender equality, empowering women, setting up old age homes, day care centres and such other facilities for senior citizens, setting up homes and hostels for women and orphans and measures for reducing inequalities faced by socially and economically backward groups.
- Ensuring ecological balance, environmental sustainability, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga.
- Protection of art, culture and national heritage including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;
- Measures for the benefit of war widow, armed forces veterans and their dependents;
- Training to promote nationally recognised sports, rural sports, paralympic sports and olympic sports
- Contribution to the prime minister’s national relief fund or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women;
- Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Science and Technology (DST), Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).
- Rural development projects
- Slum area development (any area declared as Slum by the Central Government or any State Government or any other competent authority under any law for the time being in force
- Disaster management, including rehabilitation, relief and reconstruction activities.
Ministry of Corporate Affairs (MCA) on 28.03.2020 has published office memorandum F. No. CSR-05/1/2020-CSR-MCA in clarification to contribution made to PM Cares funds. The memorandum provides that such contribution shall be eligible for CSR activity under the item no. (viii) of the schedule VII of the Companies Act, 2013.
For clarification of the above, Government has provided the following CSR contribution to different funds or CSR Spending will qualify as CSR expenditure:
a) Contribution made to the following funds shall qualify as CSR Activities
– PM CARES Fund
– State Disaster Management Authority to combat COVID-19
b) Spending CSR funds for COVID-19 related activities
c) Spending of funds for various activities related to COVID-19 under items nos. (i) and (xii) of Schedule VII
d) any ex-gratia payment is made to temporary / casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19
Provided that there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor.
The following CSR contribution or Spending will not qualify as CSR expenditure:
- Contribution made to ‘Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’
- Payment of salary/ wages to employees and workers during the lockdown period
- Payment of wages to temporary or casual or daily wage workers during the lockdown period
The sole purpose to cover contribution made to PM cares fund and state disaster management authority to combat COVID-19 is to seek instant monetary help from corporates and distribute them to the needy at this point of time.
In these hard times where the country is fighting for its survival, corporate sector will play a major role in sustaining the future of the Country. This can be in the form of making payment of salary/ wages to employees and workers even during the lockdown period, as they have no alternative source of employment or livelihood during this period. Further, the corporates should also not layoff their employees during the period of lockdown as these employees are the source of success of the corporates. Further, monetary contribution towards PM cares fund and other allowed funds and activities will surely help the daily wage earners to cope up with their daily expenses.