2018 proved to be an active year in Corporate Social Responsibility in India. CSR in India tackles with issues related to sustainability, globalization, advocacy on social issues and multiple natural disasters in the forefront. Some of these issues and CSR trends will continue into 2019, but leaders across industries must now move on from- fewer stands, more dialogue. India needs more work on prevention, than relief.
The Companies Act of 2013 mandates publicly traded companies with Rs 100 crore in annual profit or Rs 500 crore in annual turnover to set aside 2 percent of their profits for affirmative/inclusive social action. Only half of the 1,708 companies listed on NSE have a CSR committee in place despite the CSR Act mandating the same. The Act mandates publicly traded companies with Rs 100 crore in annual profit or 500 crores in annual turnover to set aside 2% of their profits for affirmative/inclusive social action. Under the 2% mandatory CSR spends category, NSE-listed companies spent Rs 10,030 crore in fiscal 2018 in the country. The unspent component of CSR funds rose to Rs 1,717 crore in 2018, as against Rs 1,574 crore in 2017.
Communities, most look for a ‘business benefit’. While they do not seek profits from their CSR work, they do look for benefits such as ‘community license to operate’ (critical for manufacturing companies who focus on communities and the environment around their plants to mitigate the negative impacts inherent in manufacturing), and deepening employee engagement (which enables them to attract and retain talent as increasingly, employees want to work with companies that care).
The compliance with the provisions of the clause has been steadily improving. Various reports state that 95-99% of companies comply with procedures such as forming a CSR committee with at least one independent director and three board members; and formulating a CSR policy and making it available on the company website. But where there is CSR, there is non- compliance too.
Though there is no information on the reasons for this non-compliance, three principal areas of non-compliance are:
Disclosure of direct and overhead expenditure on projects,
Details of overhead expenses, and
Keeping these overhead expenses below 5% of total CSR spends.
Achieving credibility as a socially responsible organisation requires companies to plan their CSR framework effectively and strategically. Identifying best-fit execution or implementing partners is a vital key in CSR to achieve measurable long term impact on society, in India.
This article has been contributed by SUBAH, an enabler of CSR in India.
SUBAH is an enabler of CSR rendering advisory and consultative services on CSR in India to industry, businesses and non-profit organizations. They enable alliances between organizations with corresponding social purposes. With a mission to build enduring and sustainable communities for a better tomorrow, Subah is continually assembling an ever-growing diverse community of conscious stakeholders, groups, & citizens. Connect with them at SubahTeam@gmail.com.