The Act mandates that companies with a profit of more than INR 5 crore (US $700,675),

turnover of INR 100 crore (US $14 million), and net worth of more than INR 500 crore (US
$70 million) have to spend at least two percent of their three years’ annual average net profit
towards CSR activities.

In case of any violation of the CSR provisions, the company is liable to a minimum penalty
fee of INR 50,000 (US$700), which may extend to INR 25 lakh (US$35,034). Further, every
defaulting officer of the company may be liable to imprisonment for up to three years, or a
fine up to INR 5 lakh (US $7,023), or both.

Company’s sense of responsibility towards the community and environment (both ecological
and social) in which it operates. Companies can fulfil this responsibility through waste and
pollution reduction processes, by contributing educational and social programs, by being
environmentally friendly and by undertaking activities of similar nature. CSR is not charity or
mere donations. CSR is a way of conducting business, by which corporate entities visibly
contribute to the social good. Socially responsible companies do not limit themselves to
using resources to engage in activities that increase only their profits. They use CSR to
integrate economic, environmental and social objectives with the company’s operations and
growth. CSR is said to increase reputation of a company’s brand among its customers and
society.
1. Better Public Image:
Each firm must enhance its public image to secure more customers, better employees and higher
profit. Acceptance of social responsibility goals lead to improve public image.

2. Conversion of Resistances Into Resources:

If the innovative ability of business is turned to social problems, many resistances can be
transformed into resources and the functional capacity of resources can be increased many times.

3. Long Term Business Interest:

A better society would produce a better environment in which the business may gain long term
maximization of profit. A firm which is sensitive to community needs would in its own self interest
like to have a better community to conduct its business. To achieve this it would implement social
programmes for social welfare.

4. Avoiding Government Intervention:

Regulation and control are costly to business both in terms of money and energy and restrict its
flexibility of decision making. Failure of businessmen to assume social responsibilities invites
government to intervene and regulate or control their activities. The prudent course for business is
to understand the limit of its power and how to use that power carefully and responsibly thereby
avoiding government intervention.

Internal Dimensions of CSR:

Internal dimensions of CSR involve the activities related to internal
environment of the firm. These are discussed here.

Human Resource Management:

How the company deals with its human resources is certainly part
of its corporate social responsibility. This will include all workplace-
related issues such as levels of salaries, timely disbursal of wages,
administration of benefits, issues related to working hours, and
quality of work.

Health and Safety at Work:

Amongst all issues relating to the company’s human resources,
those dealing with health and safety deserve special mention. There
is increasing pressure to recognize corporate responsibility towards
workers’ health and safety. This is of particular importance when
workers are exposed to hazardous materials or when they have to
work in potentially dangerous working conditions.

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The responsibility of the employer does not come to an end at the
end of the employee’s employment, but if it can be proved that any
subsequent malady is related to conditions previously prevailing at
the employee’s former place of employment, then the erstwhile
employer can be held responsible.

An example is the case of retired employees suffering from

asbestosis, who were able to claim compensation from their former
employers-like in the case of employers of W.R. Grace and Co,
National Gypsum, Manville Corporation, and Several others.

Adaptation to Change:
We live in an ever-changing world and it is the responsibility of the
employer to prepare the employees to meet and deal with the
changes. When the industry is going through a phase of rapid
automation and computerization, the employer may be expected to
help train its employees to meet the new challenges faced due to
this onslaught of technology. It is also very important to ensure that
the employees leaving the organization are fully equipped to face
the challenges in the outside world.

Management of Environmental Impact and Natural

Resources:
Companies have to be exceedingly careful while utilizing natural
resources. Even when they have a licence or mandate to use a
particular resource, society does expect them to be judicious and
restrained while using them. Entrepreneurs have to be particularly
careful while using shared resources. For example, many factories
may be using water from a river that is also the source of water for a
nearby village or town. The factory might even be disposing its
industrial waste into the very same river, which is compounding the
problem.

External Dimensions of CSR:

External dimensions of CSR are related to the issues outside the
company’s premises.

Local Community:
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There is a very complex interrelationship between a corporate and

the community around which its activities are centred. At the least,
the company may be expected to be part of the local economy by
providing jobs, consuming local products and services, and
contributing to local taxes. In some cases, the corporate may take on
a much broader role by even providing basic civic amenities as in
the case of several industrial townships such as Tatanagar in
Jharkhand.

Business Partners, Suppliers, and Consumers:

Dealings of a corporate with its business partners may come under
scrutiny. The corporate is expected to be fair and honest in its
dealings with suppliers and consumer additionally, it is also
expected to promote an honourable code of conduct amongst its
business partners and supplier of particular note is the wave of
negative sentiment Nike had to face when the exploitative labour
practices of its suppliers came to light.

Human Rights:
The company’s record on human rights is very important for its
positive public image. Very few entrepreneurs can afford to carry an
image of direct abuse of human rights. Corporate world would avoid
supporting an administration that has a past history of human
rights abuses. That is one of the reasons why many large companies
are wary of identifying themselves closely with the Chinese
Government.

Global Environmental Concerns:

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Here, we are referring to the concern for the environment in general

and not specifically about the issues that may crop up due to the
operations of the company in particular or due to the use of its
products.

Many companies, mostly large companies in industries notorious

for their adverse impact on the environment, are going out of their
way to prove their environmental credentials. Chevron, British
Petroleum, and other fossil- fuel companies constantly advertise
their efforts to encourage the use of alternative clean fuels and
sustainable technologies.