In a potentially influential development, experts are appealing to the Indian government to modify Corporate Social Responsibility (CSR) regulations. The suggested alterations would enable corporations to classify expenditure on employee vaccinations and Covid-19 treatments as part of their compulsory CSR spending.
What is Corporate Social Responsibility?
Corporate Social Responsibility refers to the business practice where companies consider their societal impact by looking at their effects on the environment and social welfare. This widespread initiative encourages businesses to address potential negative influences while maximising their positive contributions.
In India, clause 135 of the Companies Act, 2013 regulates CSR. Notably, India is the first country globally to enforce obligatory CSR spending and has set up an architectural framework to aid the identification of feasible CSR initiatives. According to the Act, firms boasting an annual turnover exceeding 1,000 crore, a net worth above Rs. 500 crore, or a minimum net profit of Rs. 5 crore are required to establish a CSR committee. This body is responsible for recommending a CSR policy to the board of directors and monitoring its continual implementation.
The Act also motivates corporations to devote 2% of their average three-year net profit to CSR activities.
CSR Activities and Indicative Actions
Under Schedule VII of the Act, companies are guided towards undertaking activities such as eradicating hunger and poverty, promoting education and gender equality, combating diseases like HIV/AIDS, ensuring environmental sustainability, and contributing to governmental relief funds. Pursuits aimed at improving the welfare of minority classes, including Scheduled Castes/Scheduled Tribes and women, are also encouraged.
Recent Developments in CSR Policy
A High-Level Committee on CSR, chaired by Injeti Srinivas, was established in 2018. It recommended tax-deductible CSR expenditure, a carry-forward period of 3-5 years for unspent balances, and alignment of Schedule VII of the Companies Act with the United Nations Sustainable Development Goals.
In 2020, the Ministry of Corporate Affairs extended CSR funds applicability to Covid-19 relief, including preventative healthcare and sanitation. It also included research and development activities related to Covid drugs, vaccines, and medical devices. The scope was broadened further in 2021 to encompass public outreach programs on Covid-19 vaccination and establishing temporary Covid-19 care facilities.
Potential Benefits of Easing CSR Norms
Modification of CSR rules could serve multiple benefits. For one, it could significantly bolster the national vaccination drive. Annually, listed companies have approximately Rs. 10,000 crore available for spending on CSR activities. This sum could be higher considering unlisted eligible companies. This considerable amount could supplement the Centre and States’ expenditure on vaccinations.
Furthermore, many of these companies operate in rural regions. Including vaccination drives in CSR activities could ensure even distribution of resources beyond major cities, reaching the most remote locations.
Advantages of Approving Corporate Expenditure on Vaccinations for Employees under CSR
Allowing corporations to classify employee vaccination expenses under CSR could potentially stimulate vaccinations among unorganised labour within the manufacturing sector. This initiative promises to ease the healthcare system’s current burden.
