PSHRC recommends Punjab govt to establish dedicated state CSR authority

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Chandigarh, August 12

The Punjab State and Chandigarh (UT) Human Rights Commission (PSHRC) has recommended that the Punjab Government establish a dedicated state CSR Authority to systematically channel corporate social responsibility (CSR) funds towards local welfare activities and disaster relief.

The recommendations were issued by Commission Chairperson Justice Sant Parkash and Member Justice Gurbir Singh, following consideration of the utilisation of CSR funds to assist victims of natural calamities, particularly in the backdrop of the devastating floods witnessed in Punjab last year.

The Commission observed that CSR should be approached as a means of facilitation rather than compulsion. It said corporate participation could supplement government efforts during disasters and contribute to sustainable social development.

The Commission noted that Section 135 of the Companies Act, 2013 requires eligible companies to spend at least 2 percent of their average net profits for the preceding three financial years on CSR activities. The statutory framework also provides for preference to local areas and areas around which companies operate while undertaking CSR expenditure.

It further pointed out that disaster management, including relief, rehabilitation and reconstruction, is specifically included among permissible CSR activities under Schedule VII of the Companies Act, 2013. However, the law does not mandate companies to contribute CSR funds to any particular State relief fund.

The Commission said Punjab has witnessed severe natural calamities in recent years, including extensive flooding and drought, resulting in loss of human and livestock lives and substantial property damage. It observed that greater participation by eligible companies operating in Punjab could significantly supplement relief efforts.

The PSHRC also noted the dedicated CSR mechanisms established by Gujarat and Assam, observing that a similar institutional arrangement could help Punjab systematically channel CSR resources towards welfare and disaster management requirements within the State.

Key Recommendations

The Commission recommended that the Punjab Government:

• Create awareness among companies operating in Punjab about using CSR funds for activities covered under Schedule VII of the Companies Act, with emphasis on local welfare needs.
• Establish a formal state CSR Authority in Punjab to systematically channel corporate CSR spending towards welfare and disaster-relief requirements.
• Issue a formal advisory to all registered companies in Punjab, urging them to allocate a portion of their CSR funds to natural calamities such as floods, earthquakes, and other disasters.
• Request the Central Government to allocate its share towards such funds to strengthen resources available for disaster response and relief.

The Commission said a dedicated institutional mechanism for CSR in Punjab could improve coordination between the corporate sector and the State Government and help ensure that CSR resources are effectively utilised for communities, particularly during emergencies and natural disasters.

The PSHRC has forwarded its order to the Chief Secretary, Punjab, for information and necessary action.