CSR Guidelines for Empowering Ports

• 28 Jun 2023

For Prelims: Corporate Social Responsibility , Sagar Samajik Sahayyog, Ports, Major Port Authorities Act, 2021.

For Mains: Significance of Corporate Social Responsibility

Why in News?

Recently, the Ministry of Ports, Shipping & Waterways has launched 'Sagar Samajik Sahayyog,' its new guidelines for Corporate Social Responsibility (CSR), aiming to empower ports to address local community issues in a more cooperative and swift manner.

What are the Key Highlights of the Guidelines?

• CSR Funding:
  • Ports in India will allocate a specific percentage of their net annual profit towards CSR activities. The CSR budget for ports will be based on their respective turnover for the year, the division will be as follows:
    • Ports with an annual turnover of less than Rs 100 crores will spend 3-5% on CSR.
    • Ports with a turnover between Rs 100 to 500 crores will spend 2-3%.
    • Ports with a turnover exceeding Rs 500 crores will spend 0.5-2%.
    • 2% of the total CSR expenses will be dedicated to project monitoring by the ports to ensure effective implementation and monitoring of the respective CSR projects.
• CSR Committee:
  • Each Major Port will establish a corporate social responsibility committee, headed by a deputy chairperson of major port to plan and implement CSR initiatives.
  • The committee will consist of two other members. CSR projects must be implemented into the business plans of major ports, addressing social and environmental concerns related to their operations.
  • A CSR plan will also need to be prepared for each financial year.
• Allocation and Focus Areas:
  • The CSR projects and programmes will focus on activities specified in Section 70 of the Major Port Authorities Act, 2021.
    • According to Section 70 of the Act, the organization may use its funds for providing social benefits including development of infrastructure in areas of education, health, housing, skill development, training and recreational activities for its own employees, customers etc.
  • 20% of the CSR expenses must be earmarked for the Sainik Kalyan Board at the district level, the National Maritime Heritage Complex, and the National Youth Development Fund.
  • Additionally, 78% of the funds should be directed towards social and environmental welfare initiatives benefiting the community.
    • These include projects related to drinking water, education, vocational training, non-conventional and renewable energy sources for electricity, health and family welfare, livelihood promotion for Economically Weaker Sections (EWS), community centers, and hostels.
  • 2 % of the total CSR expense is allocated for project monitoring under the CSR programs by the ports.

What is the Significance of the Guidelines?

• The guidelines enable ports to directly undertake CSR activities, fostering community welfare and development.
• By embracing a framework that includes local communities as partners, CSR has the potential to drive positive change and become a significant catalyst for progress.
• The guidelines aim to make CSR a potent force for positive transformation. This initiative reflects the government's commitment to maximum governance and community-centric development.

What is Corporate Social Responsibility (CSR)?

• About:
  • The concept of CSR is the idea that companies should assess and take responsibility for their effects on the environment and on social welfare, and to promote positive social and environmental change.
  • The four main types of corporate social responsibility are:
    • Environmental Responsibility
    • Ethical Responsibility
    • Philanthropic Responsibility
    • Economic Responsibility
  • The Corporate Social Responsibility provisions within Companies Act 2013 is applicable to companies with an annual turnover of 1,000 crore and more, or a net worth of Rs. 500 crore and more, or a net profit of Rs. 5 crore and more.
    • The Act requires companies to set up a CSR committee which shall recommend a Corporate Social Responsibility Policy to the Board of Directors and also monitor the same from time to time.
• Activities under CSR:
  • Specified under Schedule VII of the Companies Act 2013, some major activities include:
    • Eradicating hunger, poverty and malnutrition and promotion of education, gender equality.
    • Fighting Acquired Immune Deficiency Syndrome(AIDS), Human Immunodeficiency Virus, and other disorders
    • Ensuring Environmental Sustainability
    • Protection of National Heritage, Art and Culture including restoration of buildings and sites of historical importance and works of art.
    • Measures for the benefit of armed forces veterans, war widows and their dependents.
    • Training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports
    • Contribution to the PM's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief.

UPSC Civil Services Examination, Previous Year Question

Q. Corporate social responsibility makes companies more profitable and sustainable. Analyse. (2017)

Source: PIB