The Companies Bill, 2012 mandates that companies above a certain threshold spend at least 2 percent of average net profits made during the three preceding years on Corporate Social Responsibility (CSR). We will shortlist the initiatives your company can undertake, identify local people and non-governmental organisations (NGOs) who can assist in your CSR efforts, advise you on how to handle government-related issues and monitor the implementation of the programme.
India Inc seems to be still deciphering what corporate social responsibility (CSR) means. Most of the CSR activities are philanthropic in nature. The CSR canvas of Corporate India covers a wide range of activities such as education, healthcare, microcredit, rural development, sanitation and women empowerment. The companies need to integrate CSR as part of corporate culture instead of adopting piecemeal approaches. Sustainable development and improving the lot of workers, society and environment is good for the company’s bottom line too.
The Union Budget for 2013-14 provided a booster for budding social enterprises. It allowed funds provided to technology incubators located within academic institutions and approved by the ministry of science and technology or ministry of medium and small enterprises to qualify as CSR expenditure.
Every company needs a tailor-made CSR strategy based on among other things its history and relations with the various stakeholders. This would help ensure that the objectives of CSR activities are met.
According to a study, more than two-thirds of Indian consumers would switch to brands which support a cause. Also, 94 percent Indian consumers say they would tell their friends and family about a company’s CSR efforts, thus increasing their presence and recognition as a brand. Citizens in emerging markets, such as India embrace CSR enthusiastically and are associating themselves with companies that address social and environmental issues.
The Companies Bill 2012 mandates a CSR annual spending. The CSR spending rule would apply to companies registered in India with a net worth in excess of Rs 500 crore, a turnover of Rs 1,000 crore or more per year or a net profit of Rs 5 crore or more per year. These companies will have to spend at least 2 percent of their net profit on CSR activities. The company board must designate a 3-member CSR committee, including an independent director, to ratify decisions on spending. If the CSR amount is not spent in a particular year, the CSR committee would have to submit an explanation for why that has happened so that the company is not penalised. The CSR activities covered by the Bill include those promoting education, eradicating poverty and hunger, imparting vocational skills, social business projects, and socio-economic development of schedules castes, scheduled tribes, other backward classes, minorities and women. Some estimates put CSR spending by India Inc to touch Rs 10,000 crore. There are nearly 35 lakh NGOs in India and many do not have a website. They can be harnessed for helping in CSR activities.
The central government undertakings are adapting to changing times. The CSR guidelines for Central Public Sector Enterprises (CPSEs) were revised. Earlier the focus was on how social and environmental concerns could be addressed through CPSE-funded CSR projects. The new guidelines include internal stakeholders of the CPSE, especially the employees, in the list of beneficiaries. Also, CSR is must cover even routine business operations and activities of the CPSE. CSR policies must give equal importance to internal operations, activities and processes, and external stakeholders. CSR and sustainable development have been clubbed under the same head.
The revised rules lay emphasis on capacity building, empowerment of communities, inclusive socio-economic growth, environment protection, promotion of green and energy efficient technologies, development of backward regions, and upliftment of the marginalised and under-privileged sections of the society. It has become mandatory for CPSEs to take up at least one major project for development of a backward district.
(Disclaimer: The information has been aggregated through secondary research. IFIE is not responsible for errors if any)