CSR and Corporate Governance
Good Governance ensures that CSR is not just the CEO's whim ("Let's sponsor my favorite golf tournament"). It must be institutionalized.
The CSR Committee (Section 135)
The Companies Act 2013 mandates a CSR Committee for large companies.
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Governance Mechanisms
- Policy Approval: The Board must approve a detailed CSR policy (e.g., "We will focus on Education and Water").
- Budgeting: Ensuring the 2% is actually allocated.
- Impact Assessment: Hiring third parties to check if the money actually built the school or if it vanished.
Convergence
Governance rules require diversity and stakeholder protection. CSR allows the board to demonstrate they care about the "Community Outcome" stakeholder.
Note
Board Responsibility: If the CSR money is unspent, the Board must explain "Why" in the Annual Report. If they fail to explain or transfer it to a government fund, they can be penalized.
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