Question

What are the existing statutory legal responsibilities of directors with respect to CSR activities

Answer 1

Ans. Corporate social responsibility can be defined as company's sense of responsibility towards the community and environment (both ecological and social) in which it operates.Companies can fulfill this responsibility through waste and pollution reduction processes, by contributing educational and social programmes by being environmentally friendly and by undertaking activities of similar nature.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.

The board of directors has a core role to play in any serious efforts to integrate issues of social responsibility (CSR) into the business of the company. The board is in any jurisdiction as a matter of law the highest permanent organ of the company with the responsibilities of policy making, strategy setting and supervision. The core duty of the board is to protect and promote the interests of the company. This core duty is expressed differently across the jurisdictions. Two basic duties imposed on directors. The basic duty of care and the duty of loyalty. The duty of care address the managerial agency problem and ensure that directors and managers devote sufficient time, care and diligence to manage the company, establish information and monitoring systems, supervise business operations and possess the necessary skills and experience to discharge their functions effectively.

The duty of loyalty has by many been seen as mainly a requirement imposed on directors to subordinate their personal interests to those of the company and applies in particular when the director has a material (financial) interest in a transaction at odds with the interests with the company.The fiduciary duty of loyalty is also, and in this context all the more important, a duty for the directors to act in good faith in what they believe to be the best interests of the company.

Activities which may be included by companies in their corporate social responsibility policies relating to :

• eradicating hunger, poverty and malnutrition, promoting healthcare including preventive healthcare and sanitation.
• 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 homes and hostels for women and orphans, setting up old age homes, day care centres, and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.
• ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water.