Corporate Social Responsibility Being Put to Test by Coronavirus
CORPORATE SOCIAL RESPONSIBILITY BEING PUT TO TEST BY CORONAVIRUS
- Vanshika Gupta, Symbiosis Law School, Pune
Today, the Coronavirus has spread to almost every country in the world, taking thousands of lives and posed as an unprecedented challenge to the global economy. The World Health Organization had already declared COVID-19 as pandemic, thereby India declaring it to be treated as a disaster. The number in India has been growing since and there is no sign of any fall in the number with total cases being more than 16800. Therefore, as society deals with the devastating effect of coronavirus, it is incumbent on businesses to step up and help promote policy action. As the department within corporations which has direct partnerships with non-profit organizations and the communities of which they are involved, Corporate Social Responsibility (CSR) professionals should be on the front lines assisting with any kind of funding and solutions. Upon declaration by the Finance and Corporate Affair Minister NirmalaSitharama, on 23 March 2020, that any spending towards COVID-19 will be an eligible CSR activity [1], it has opened new doors for both, the government as well as the companies amid the COVID-19 outbreak.The change came as opposition parties requested a financial package from the government to deal with the crisis. The pandemic has impacted industries and has caused shutdowns at factories. The threat to business activity comes as India\'s economy has struggled to prevail over a growth deceleration. The decision was taken keeping in view that Indian companies spend around 15,000 Crore a year on charitable activities as mandated by law and same could be used to fight the pandemic.
The Founder of consultancy firm Corporate Professionals Group, Pavan Kumar Vijay said,
“I am sure corporates will come forward in large numbers to make
contributions for the cause.”[2]
LAW UNDER COMPANIES ACT, 2013
Corporate Social Responsibility (CSR) is now a common measure of how well a company communicates with both the local and global stakeholders and communities. Supporting the collective social good has become almost as critical an goal as providing shareholder value and productivity to companies at all sizes, right up to the level of the company, in any vertical sector imaginable. India is the world\'s first nation to make Corporate Social Responsibility (CSR) compulsory, following an April 2014 amendment to the Companies Act, 2013. It entails a concept wherein every company with Net Worth more than Rs. 500 Crore or Turnover more than Rs. 1000 Crore or Net Profit more than Rs. 5 Crore, has to compulsorily spend atleast 2% of the average net profits made during three immediately preceding financialyears failure to which lead to fines and penalties [3]. A company can even take up CSR activity voluntarily. CSR has always played an important role in the development of the nation especially the backwards classes.
MAJOR ACTIVITES TO BE CONSIDERED ELIGIBLE AS CSR SPENDING
• Contribution of PM Cares Fund;
• Contribution to State Disaster Management Authority;
• Spending of CSR funds for COVID-19 related activities under items no. (i) to (xii) of the Schedule VII of theAct;
• Ex-gratia payment to temporary/casual workers/daily wage workers that are over and above the disbursement of actual wages.
CONTRIBUTION MADE BY THE BUSINESS GROUPS
With the rising number of cases of COVID-19 in India, the corporates have now step forward and started contributing to fight the pandemic specially after the government notification regarding CSR spending. By making huge donations in the form of money, supplying of medical equipment and opening hospitals, the business tycoons made their huge contributions. Some of the examples are listed below: [4]
1. GautamAdani: Billionaire GautamAdani on Sunday, i.e., March 29, 2020 revealed his group\'s philanthropy arm\'s Rs. 100 Crore donation to the Prime Minister\'s Fund to combat coronavirus outbreak.
2. Hyundai India: The Hyundai Motor India Foundation, the CSR arm of Hyundai Motor India Limited, had placed an immediate order from South Korea for COVID-19 Advanced Diagnostic Test Kits to cater to 25,000 people
3. Tata Sons and Tata Trusts: They pledged to contribute Rs. 15,000 Crore for the cause.
4. Hindustan Unilever Limited: Hindustan Unilever Limited has had Rs 100 Crore devoted. In the next few months the company will donate 20 million pieces of Lifebuoy soaps to those parts of society most in need of them. Rs 10 Crore will be donated by the organization to upgrade the health care services in research centers and hospitals.
5. Axis Bank: The bank shall donate Rs, 100 Crore to support and for the betterment of customers, employees, vendors, government agencies and the community at large.
6. Mahindra & Mahindra: Mahindra & Mahindra has agreed to make ventilators using its manufacturing systems. The Group\'s resorts will be used as facility for temporary treatment. Anand Mahindra, chairman of the Mahindra Group, shall contribute 100 per cent of his salary to the project.
7. Bajaj Group: The Bajaj Group has promised to use Rs 100 crore to fund healthcare infrastructure development, food and shelter provision initiatives, and rural economic assistance programs.
8. Micron Tech: The corporation donated PPEs and ventilators to help India fight the virus. Also it would ensure near the areas of Greater Hyderabad that the hospital receives masks, sanitizers, hazmat suits and other critical infrastructure. It even announced a donation of Rs. 7.5 Crore to fight the battle.
With all the efforts being put up by the Indian Companies, the burden of the government to arrange the resources have somehow lowered and simultaneously, the companies will be benefited as such spending would help to create a positive image in the eyes of its customers and society. Also, such expenses on CSR by the companies will later be eligible for deduction in the computation of taxable income.
In addition to above, it has also been clarified by the Corporate Affair Minister NirmalaSitharaman that since, the PM-CARE Fund was created to provide support to those affected by any disaster or circumstance of distress, any contribution to PM-CARE Fund would equally qualify to be considered as a social welfare spending and hence will be eligible for to be considered as a spending by the corporations towards Corporate Social Spending and many corporations have been making contribution towards the same. But simultaneously, on April 11, 2020, it was clarified by the Ministry of Commerce that any spending towards Chief Minister’s Relief Fund or State Relief Fund would not qualify as CSR expenditure.
CONCLUSION
Coronavirus, which is considered to take birth from bats, has spread its roots worldwide with no cure as of now. The Corporates, apart from the government, have now started putting their efforts to combat the virus and fight against it through their Corporate Social Responsibility spending. From giving PM CARES Fund a day\'s salary to mobilizing critical production; corporate houses are doing their bit to help the nation\'s efforts to curb the outbreak. Still, it is a long road ahead and no less than a battle which the government, citizens and the society altogether has to travel and fight in order to kill this virus and again have a normal life which is put on hold due the pandemic.
REFERENCES
[1]‘Covid-19 battle: Companies’ expenditure to tackle virus to be considered as CSR activity’ The Economic Times (India, 24 March 2020)
[2] Gireesh Chandra Prasad, ‘Companies can Utilize CSR funds to deal with outbreak’ (livemint 24 March 2020) <https://www.livemint.com/politics/policy/companies-can-utilize-csr-funds-to-deal-with-outbreak-11584991501810.html> accessed on 22 April 2020
[3] Companies Act, 2013, Section 135
[4] ‘How Indian Companies are contributing to the war against coronavirus’ Business Standard (India, April 3, 2020)
