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NEW DELHI: Indian Express reported
that India Inc today reiterated its concern on the mandatory spending of at
least 2 per cent on the corporate social responsibility activities.
Rahul Bajaj, chairman of Bajaj
Group, told that the government “succumbed” to the pressure exerted by the
standing committee on finance and members of Parliament, who were keen on
making it mandatory in the Bill.
“The Companies Bill that has been
passed by the Lok Sabha has many important features including those relating
to independent directors, auditors. However, the most noteworthy and new
feature of the Bill makes every corporate meeting certain criteria liable to
spend 2 per cent of the average net profit of the last 3 years on CSR
activities or explain why it has not been done so. Such a provision probably
does not exist in Companies Act of any major economy of the world. It appears
that the standing committee and most Parliament members were very keen on the
provision and hence the government succumbed to the pressure,” Bajaj said.
He said that most of corporates
spend amount for CSR activities and “I can’t agree that philanthropy, CSR
activities and our generosity should be mandatory.”
After getting delayed for several
years, the Bill was finally passed yesterday through voice vote by the lower
House.
The Bill brings the management of
the corporate sector in line with global norms.
It introduces concepts like
responsible self-regulation with adequate disclosure and accountability,
ushers in enhanced shareholders’ participation and provides for a single
forum to approve mergers and acquisitions.
Venu Srinivasan, chairman of TVS
Motor, also said making the CSR spend mandatory is akin to levying another
tax.
“The new Bill has tried to strike
balance between the autonomy of the board. (On the CSR) If it is made
mandatory, it becomes another tax in a sense. I am not comfortable with that
position. But in a country like India, if companies don’t undertake CSR
activities, we will have serious issues in the long term. It is not a great
deal of money (2 per cent of net profit) but on a principle basis I am not
comfortable with it, even though I am not against CSR,” he said.
“The emphasis has been on
improving the corporate governance. The most welcoming step is the inclusion
of one woman director on board… I was hoping that the government would
incentivise the CSR activities,” Kiran Mazumdar Shaw, CMD, Biocon, said.
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Sunday, December 30, 2012
Business Leaders Question Mandatory CSR
India Approves Company Bill 2011, making CSR mandatory
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Posted: 19 Dec 2012 09:04 AM PST
INDIACSR Bureau
NEW DELHI: On 18 December, finally
the Lok Sabha passed the Companies Act 2011, paving the way for a new
modern company law. The new act will replace the existing Companies Act 1956,
which was enacted 56 years ago. More importantly, the bill gives more muscle
to shareholders. Now, shareholders can take legal action against frauds. It
is to be noted that Company Bill closes a window for independent directors as
they won’t get any stock options. Besides making independent directors more
accountable and improving the corporate governance practices, the Bill seeks
to make corporate social responsibility mandatory for certain companies.
More Power to Serious Fraud
Investigation Office
 Replying to
the discussions on the Bill, Corporate Affairs Minister Sachin Pilot said
that more powers are being conferred upon Serious Fraud Investigation Office
(SFIO) to tackle the issue of corporate frauds. SFIO will be given more
statutory powers in the new Bill. Moreover, there will be better
co-ordination between investigative agencies at the State and Centre, I-T
Department and the Information Technology Ministry with SFIO. The Minister
also sought more cooperation from the state investigative agencies in this
regard.
According to Sachin Pilot, when
the current Companies Act of 1956 was made, there were only 30,000 registered
companies in India. In 2012, there are over 8,50,000 companies.
The Companies Bill, 2011, which
was passed by the Lok Sabha yesterday (18 December 2012), on its enactment
will allow the country to have a modern legislation for growth and regulation
of corporate sector in India. The existing statute for regulation of companies
in the country, viz. the Companies Act, 1956 had been under consideration for
quite long for comprehensive revision in view of the changing economic and
commercial environment nationally as well as internationally. In view of
various reformatory and contemporary provisions proposed in the Companies
Bill, 2011, together with omission of existing unwanted and obsolete
compliance requirements, the companies in the country will be able to comply
with the requirements of the proposed Companies Act in a better and more
effective manner.
The Companies Bill proposes that
profit-making companies that meet certain conditions will be required to set
aside 2 per cent of the net profit towards CSR.
The Salient features of the
Companies Bill 2011 are as follows:
1. (Amendment in Clause 135): In
the Section on Corporate Social Responsibility (Section135), which is being
introduced as a statutory provision for the first time, the words ‘make every
endeavour to’ have been omitted from its Sub-clause (5). So that the first
para of Sub-clause (5) of Clause 135 now reads as follows: “The Board of
every company referred to in sub-section (1), shall ensure that the company
spends in every financial year, at least two per cent of the average net
profits of the company made during the three immediately preceding financial
years, in pursuance of its Corporate Social Responsibility Policy.”
Such clause is also amended to
provide that the company shall give preference to local areas where it
operates, for spending amount earmarked for Corporate Social Responsibility
(CSR) activities. The approach to ‘implement or cite reasons for non
implementation’ retained.
2. (Amendment in Clause 36): To
help in curbing a major source of corporate delinquency, Clause 36 (c)
amended, to also include punishment for falsely inducing a person to enter
into any agreement with bank or financial institution, with a view to
obtaining credit facilities.
3. (Amendment in Clause 143):
Provisions relating to audit of Government Companies by Comptroller and Auditor
General of India (C&AG) modified to enable C&AG to perform such audit
more effectively.
4. (Amendment in Clause 186):
Clause 186 amended to provide that the rate of interest on inter corporate
loans will be the prevailing rate of interest on dated Government Securities.
5. (Amendment in Clause 144):
Provisions relating to restrictions on non audit services modified to provide
that such restrictions shall not apply to associate companies and further to
provide for transitional period for complying with such provisions.
6. (Amendment in Clause 203):
Provisions relating to separation of office of Chairman and Managing Director
(MD) modified to allow, in certain cases, a class of companies having
multiple business and separate divisional MDs to appoint same person as
chairman as well as MD.
7. (Amendments in Clause 147 and
245): Provisions relating to extent of criminal liability of auditors –
particularly in case of partners of an audit firm – reviewed to bring
clarity. Further, to ensure that the liability in respect of damages paid by
auditor, as per the order of the Court, (in case of conviction under Clause
147) is promptly used for payment to affected parties including tax
authorities, Central Government has been empowered to specify any statutory body/authority
for such purpose.
8. (Amendment in Clause 141): The
limit in respect of maximum number of companies in which a person may be
appointed as auditor has been proposed as twenty companies.
9. (Amendment in Clause 139):
Appointment of auditors for five years shall be subject to ratification by
members at every Annual General Meeting.
10. (Amendment in Clause 139):
Provisions relating to voluntary rotation of auditing partner (in case of an
audit firm) modified to provide that members may rotate the partner ‘at such
interval as may be resolved by members’ instead of ‘every year’ proposed in
the clause earlier.
11. (Amendment in Clause 2):
‘Whole-time director’ has been included in the definition of the term ‘key
managerial personnel’.
12. (Amendment in Clause 42): The
term ‘private placement’ has been defined to bring clarity.
13. (Amendment in Clause 61):
Approval of the Tribunal shall be required for consolidation and division of
share capital only if the voting percentage of shareholders changes consequent
on such consolidation.
14. (Amendment in Clause 152):
Clarification included in the Bill to provide that ‘Independent Directors’
shall be excluded for the purpose of computing ‘one third of retiring
Directors’. This would bring harmonisation between provisions of Clause
149(12) and rotational norms provided in Clause 152.
15. (Amendment in Clause 470):
Provisions in respect of removal of difficulty modified to provide that the
power to remove difficulties may be exercised by the Central Government up to
‘five years’ (after enactment of the legislation) instead of earlier up to
‘three years’. This is considered necessary to avoid serious hardship and
dislocation since many provisions of the Bill involve transition from
pre-existing arrangements to new systems.
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Companies Bill 2011: CSR Mandatory for Profit-Making Companies
|
NEW DELHI: The Lok Sabha on
Tuesday approved the much-awaited Companies Bill, 2011, making it mandatory
for profit-making companies to spend on activities related to corporate
social responsibility.
If a company does not do so, it
will have to explain the reasons for it.
The
Bill, aimed at improving corporate governance, also contains provisions to
strengthen regulations for companies and auditing firms.
Moving the Bill for consideration,
Sachin Pilot, minister of state (independent charge) for corporate affairs,
said private companies, while maximising their growth, also had some
responsibility towards society and in the country’s equitable and sustainable
growth.
The changes in the Bill include
provisions that make it mandatory for firms – those that have reported
profits of Rs 5 crore (Rs 50 million) or more in last three years- to spend
at least two per cent of their average net profit on CSR activities.
Companies failing to meet the
obligation and not disclosing reasons for it in their books of account would
face action, including penalty.
The Bill to amend the Companies
Act, in force since 1956, had been hanging fire since August 2008, when it
was first introduced.
It was withdrawn as the Lok Sabha
was dissolved.
Pilot emphasised the Bill aimed to
encourage firms to undertake social welfare voluntarily, instead of that
being imposed through “inspector raj”.
Safeguarding workmen in the
legislation, the new law mandates that firms winding up operations have to
pay their employees two years’ salary.
This liability would be
overriding, Pilot said.
The amended legislation, with 470
clauses, caps at 20 the number of companies an auditor can serve.
It also brings in more clarity on
auditors’ criminal liability, besides including annual ratification of their
appointment for five years.
Also, a clause related to offence
of falsely inducing banks for obtaining credit has been introduced.
The changed law gives more
statutory powers to the Serious Fraud Investigation Office to better tackle
corporate fraud.
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Govt to Double CSR Contribution of Top Earning PSUs
Thursday, July 1, 2010
About Corporate Social Responsibility
Corporate social responsibility is not a new concept in India. However, what is new is the shift in focus from making profits to meeting societal challenges. Now-a-days, employees are actively participating in the social activities even on holidays. This is mainly because employees feel a sense of pride when they are involved in such activities. Moreover, companies are having dedicated departments for CSR.
Giving a universal definition of Corporate Social Responsibility is bit difficult as there is no common definition as such. However, there are few common threads that connect all the perspectives of CSR with each other; the dedication to serve the society being most important of them. Most ideal definition of Corporate Social Responsibility (CSR) has been given by World Business Council
for Sustained Development which says, “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.
Thus, the meaning of CSR is two fold. On one hand, it exhibits the ethical behavior that an organization exhibits towards its internal and external stakeholders (customers as well as employees). On the other hand, it denotes the responsibility of an organization towards the environment and society in which it operates.
Firms can no longer continue to exploit environmental resources and escape from their responsibility by acting as separate entities regardless of the interest of the society. Organizations, now, are realizing the need to shift their focus on the interest of society. The sense of being socially responsible has to come from within. CSR involves various voluntary efforts in which companies engage themselves in order to give something back to the society. It involves providing innovative solutions to societal and environmental challenges. Organizations generally believe that acting in a socially responsible manner will create value for them. The fact that an organization is committed to social causes, also gives employees a sense that the company would also be committed to the welfare of its employees as well.
In India, CSR has evolved to encompass employees, customers, stakeholders and sustainable development or corporate citizenship. The spectrum of CSR includes a number of areas as human rights, safety at work, consumer protection, climate protection and caring for the environment, and sustainable management of natural resources. From the perspective of employees, CSR activities include providing health and safety measures, preserving employee rights and discouraging discrimination at workplace. This helps in fostering a healthy environment within the company. From the perspectives of customers, CRS activities may include commitment to product quality, fair pricing policies, and so.
CSR taken up by various genres of companies primarily focuses on poverty alleviation, environmental protection and sustained development. Companies are taking initiatives for developing infrastructure in rural areas,
Corporate social responsibility offers manifold benefits both internally and externally to the companies involved in various projects. Externally, it creates a positive image amongst the people for its company and earns a special respect amongst its peers. It creates short term employment opportunities by taking various projects like construction of parks, schools, etc. Working with keeping in view the interests of local community bring a wide range of business benefits. For example, for many businesses, local customers are an important source of sales. By improving the reputation, one may find it easier to recruit employees and retain them. Businesses have a wider impact on the environment also. Plantation and cultivation activities taken up by Intel India are a step towards the same. Recycling used products also acts as a step towards minimizing wastes.
Internally, it cultivates a sense of loyalty and trust amongst the employees in the organizational ethics. It improves operational efficiency of the company and is often accompanied by increases in quality and productivity. More importantly, it serves as a soothing diversion from the routine workplace practices and gives a feeling of satisfaction and a meaning to their lives. Employees feel more motivated and thus, are more productive. Apart from this, CSR helps ensure that the organization comply with regulatory requirements.
Conclusion
Even though companies are taking serious efforts for the sustained development, some critics still are questioning the concept of CSR. There are people who claim that Corporate Social Responsibility underlies some ulterior motives while others consider it as a myth. Is CSR really a stalking horse for an anti-corporate agenda? The reality is that CSR is not a tactic for brand building; however, it creates an internal brand among its employees. Indulging into activities that help society in one way or the other only adds to the goodwill of a company.
Giving a universal definition of Corporate Social Responsibility is bit difficult as there is no common definition as such. However, there are few common threads that connect all the perspectives of CSR with each other; the dedication to serve the society being most important of them. Most ideal definition of Corporate Social Responsibility (CSR) has been given by World Business Council
for Sustained Development which says, “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.
Thus, the meaning of CSR is two fold. On one hand, it exhibits the ethical behavior that an organization exhibits towards its internal and external stakeholders (customers as well as employees). On the other hand, it denotes the responsibility of an organization towards the environment and society in which it operates.
Firms can no longer continue to exploit environmental resources and escape from their responsibility by acting as separate entities regardless of the interest of the society. Organizations, now, are realizing the need to shift their focus on the interest of society. The sense of being socially responsible has to come from within. CSR involves various voluntary efforts in which companies engage themselves in order to give something back to the society. It involves providing innovative solutions to societal and environmental challenges. Organizations generally believe that acting in a socially responsible manner will create value for them. The fact that an organization is committed to social causes, also gives employees a sense that the company would also be committed to the welfare of its employees as well.
In India, CSR has evolved to encompass employees, customers, stakeholders and sustainable development or corporate citizenship. The spectrum of CSR includes a number of areas as human rights, safety at work, consumer protection, climate protection and caring for the environment, and sustainable management of natural resources. From the perspective of employees, CSR activities include providing health and safety measures, preserving employee rights and discouraging discrimination at workplace. This helps in fostering a healthy environment within the company. From the perspectives of customers, CRS activities may include commitment to product quality, fair pricing policies, and so.
CSR taken up by various genres of companies primarily focuses on poverty alleviation, environmental protection and sustained development. Companies are taking initiatives for developing infrastructure in rural areas,
Corporate social responsibility offers manifold benefits both internally and externally to the companies involved in various projects. Externally, it creates a positive image amongst the people for its company and earns a special respect amongst its peers. It creates short term employment opportunities by taking various projects like construction of parks, schools, etc. Working with keeping in view the interests of local community bring a wide range of business benefits. For example, for many businesses, local customers are an important source of sales. By improving the reputation, one may find it easier to recruit employees and retain them. Businesses have a wider impact on the environment also. Plantation and cultivation activities taken up by Intel India are a step towards the same. Recycling used products also acts as a step towards minimizing wastes.
Internally, it cultivates a sense of loyalty and trust amongst the employees in the organizational ethics. It improves operational efficiency of the company and is often accompanied by increases in quality and productivity. More importantly, it serves as a soothing diversion from the routine workplace practices and gives a feeling of satisfaction and a meaning to their lives. Employees feel more motivated and thus, are more productive. Apart from this, CSR helps ensure that the organization comply with regulatory requirements.
Conclusion
Even though companies are taking serious efforts for the sustained development, some critics still are questioning the concept of CSR. There are people who claim that Corporate Social Responsibility underlies some ulterior motives while others consider it as a myth. Is CSR really a stalking horse for an anti-corporate agenda? The reality is that CSR is not a tactic for brand building; however, it creates an internal brand among its employees. Indulging into activities that help society in one way or the other only adds to the goodwill of a company.
Friday, March 19, 2010
HR needs make sure the company practises what it preaches on CSR
HR needs make sure the company practises what it preaches on CSR
by Jan Levy (Jan Levy is managing director of Three Hands)
'Build it in, don't bolt it on.' That's the oft used but absolutely legitimate advice regularly doled out to companies about CSR. No one department should own CSR; it should be initiated by everybody in the business. Indeed, a CSR manager's aim should be to do himself/ herself (actually, usually 'herself' in this world) out of a job, because CSR is 'part of the DNA' (another good cliché) of the organisation.
Many organisations find this pretty hard to achieve. Why? I think it's because you can have as many approaches and policies as you like, but good CSR hinges around the behaviour of individuals in the business. And influencing individuals' behaviour - something that is closely linked to their values - in an organisation of any decent size is a difficult thing to do.
Take a couple of examples I've recently come across. A friend of mine went for an interview at a publishing company. It is one of the big players, with a fairly well established community engagement policy that stresses its commitment to people in the community through a schools programme, a charity partnership and investment in the regeneration of the local area.
But this responsible approach to local stakeholders does not seem to extend to job applicants, at least in my friend's experience. She was not told the salary of the job she was applying for and yet was asked to put together a major presentation of her creative ideas for the magazine she was applying to work on. Her ideas were well received and she was asked back for another interview, but when she was finally told the salary, it was a figure way below her value. Her suspicion was that the recruiter wanted her ideas knowing that, based on her experience, she would have valuable creativity to impart but would never be in a position to take the job.
This approach - whether an accepted recruitment method or down to the behaviour of the individual manager recruiting - was completely inconsistent with general CSR values such as transparency and fairness as well as with the type of commitment they show to the local community through its CSR programmes.
The other mismatch between principle and practice that I stumbled upon recently was at a multinational manufacturing business that takes pride in its environmental credentials and that openly strives to be carbon-neutral. So when a senior team had to travel from its office at one end of the country to take part in a community event 400 miles away, how did they travel? Surprisingly, on the company's private jet. (Just one principled team member refused.) Enough said; gulf between talking the talk and walking the walk duly illustrated.
So what can HR do? I wouldn't purport to tell HR directors how to do their jobs, but here are a few ideas:
Engage in ongoing dialogue with the head of CSR to find out how HR can support CSR, and vice versa;
Appeal to your people's values. Too often employees leave their personal values at the door when they come to work; enable them to express their values;
Include ‘doing the right thing' in behavioural frameworks and PDPs;
Shout about it, then shout about it some more. Companies that are good at this are constantly reinforcing the message with internal comms
A handy comparison is this: 25 or so years ago the health and safety movement was in its infancy; nowadays it is second nature for many managers to think health and safety when making decisions and implementing plans. CSR needs to get to the same place - and it's HR's job to take it there.
by Jan Levy (Jan Levy is managing director of Three Hands)
'Build it in, don't bolt it on.' That's the oft used but absolutely legitimate advice regularly doled out to companies about CSR. No one department should own CSR; it should be initiated by everybody in the business. Indeed, a CSR manager's aim should be to do himself/ herself (actually, usually 'herself' in this world) out of a job, because CSR is 'part of the DNA' (another good cliché) of the organisation.
Many organisations find this pretty hard to achieve. Why? I think it's because you can have as many approaches and policies as you like, but good CSR hinges around the behaviour of individuals in the business. And influencing individuals' behaviour - something that is closely linked to their values - in an organisation of any decent size is a difficult thing to do.
Take a couple of examples I've recently come across. A friend of mine went for an interview at a publishing company. It is one of the big players, with a fairly well established community engagement policy that stresses its commitment to people in the community through a schools programme, a charity partnership and investment in the regeneration of the local area.
But this responsible approach to local stakeholders does not seem to extend to job applicants, at least in my friend's experience. She was not told the salary of the job she was applying for and yet was asked to put together a major presentation of her creative ideas for the magazine she was applying to work on. Her ideas were well received and she was asked back for another interview, but when she was finally told the salary, it was a figure way below her value. Her suspicion was that the recruiter wanted her ideas knowing that, based on her experience, she would have valuable creativity to impart but would never be in a position to take the job.
This approach - whether an accepted recruitment method or down to the behaviour of the individual manager recruiting - was completely inconsistent with general CSR values such as transparency and fairness as well as with the type of commitment they show to the local community through its CSR programmes.
The other mismatch between principle and practice that I stumbled upon recently was at a multinational manufacturing business that takes pride in its environmental credentials and that openly strives to be carbon-neutral. So when a senior team had to travel from its office at one end of the country to take part in a community event 400 miles away, how did they travel? Surprisingly, on the company's private jet. (Just one principled team member refused.) Enough said; gulf between talking the talk and walking the walk duly illustrated.
So what can HR do? I wouldn't purport to tell HR directors how to do their jobs, but here are a few ideas:
Engage in ongoing dialogue with the head of CSR to find out how HR can support CSR, and vice versa;
Appeal to your people's values. Too often employees leave their personal values at the door when they come to work; enable them to express their values;
Include ‘doing the right thing' in behavioural frameworks and PDPs;
Shout about it, then shout about it some more. Companies that are good at this are constantly reinforcing the message with internal comms
A handy comparison is this: 25 or so years ago the health and safety movement was in its infancy; nowadays it is second nature for many managers to think health and safety when making decisions and implementing plans. CSR needs to get to the same place - and it's HR's job to take it there.
Saturday, January 9, 2010
How socially responsible are Indian corporates?
Forty nine per cent companies were not doing any Corporate Social Responsibility (CSR) activities
Forty nine per cent companies were not doing any Corporate Social Responsibility (CSR) activities
1,000 Indian companies have been rated for CSR by Karmayog, a group of Mumbai-based citizens, non-profits and corporate houses
CSR activities undertaken by 51 per cent of the companies mainly included education, healthcare and rural development
49 per cent received the lowest score of zero, none scored the highest level
57 per cent of the 40 banking companies scored the highest. Software and paper industries also showed high levels of CSR activities
Entertainment and media, retail, mining, trading and construction industries scored low
63 per cent of the 57 construction companies did not have any CSR activity. Only two of them-DLF and GMR Infrastructure-scored level three
The rating was based on two parameters--steps taken by the companies to reduce negative effects of their products and processes on the environment and the steps taken by them to use their resources and core competence to benefit society
--------------------------------------------------------------------------------
Source: Down to Earth Vol: 18 Issue: 20090531 pp: 1
Forty nine per cent companies were not doing any Corporate Social Responsibility (CSR) activities
1,000 Indian companies have been rated for CSR by Karmayog, a group of Mumbai-based citizens, non-profits and corporate houses
CSR activities undertaken by 51 per cent of the companies mainly included education, healthcare and rural development
49 per cent received the lowest score of zero, none scored the highest level
57 per cent of the 40 banking companies scored the highest. Software and paper industries also showed high levels of CSR activities
Entertainment and media, retail, mining, trading and construction industries scored low
63 per cent of the 57 construction companies did not have any CSR activity. Only two of them-DLF and GMR Infrastructure-scored level three
The rating was based on two parameters--steps taken by the companies to reduce negative effects of their products and processes on the environment and the steps taken by them to use their resources and core competence to benefit society
--------------------------------------------------------------------------------
Source: Down to Earth Vol: 18 Issue: 20090531 pp: 1
India ranks 4th in CSR practice
India ranks 4th in CSR practice
India has been named among the top 10 Asian countries that are paying an increasing importance towards corporate social responsibility (CSR) disclosure norms, a survey says.
According to social enterprise CSR Asia’s Asian Sustainability Ranking (ASR), India was ranked fourth in the list, which was topped by Australia.
The other countries in the list include China (second), Hong Kong (third), Japan (fifth), Malaysia (sixth), Pakistan (seventh), Philippines (eighth), Singapore (ninth) and Thailand (tenth).
The 2009 ASR list was dominated by Australian companies, with eight out of the top ten companies analysed coming from there, followed by India, the survey said.
After Australia, the companies in India have the second highest rating for disclosure overall. — PTI
India has been named among the top 10 Asian countries that are paying an increasing importance towards corporate social responsibility (CSR) disclosure norms, a survey says.
According to social enterprise CSR Asia’s Asian Sustainability Ranking (ASR), India was ranked fourth in the list, which was topped by Australia.
The other countries in the list include China (second), Hong Kong (third), Japan (fifth), Malaysia (sixth), Pakistan (seventh), Philippines (eighth), Singapore (ninth) and Thailand (tenth).
The 2009 ASR list was dominated by Australian companies, with eight out of the top ten companies analysed coming from there, followed by India, the survey said.
After Australia, the companies in India have the second highest rating for disclosure overall. — PTI
67% companies chose NGOs for CSR implementation
67% companies chose NGOs for CSR implementation
BS Reporter / Chennai January 02, 2010, 0:27 IST
Sixty seven per cent of domestic companies have chosen non-government organisations (NGOs) as partners to undertake their Corporate Social Responsibility (CSR) projects, while 58 per cent prefer government departments for the spread of CSR obligations, Associated Chambers of Commerce and Industry of India (Assocham) says. The chamber, in its assessment, ‘CSR: Quantitative Analysis’, said 21 domestic companies were working with multilateral or bilateral organisations for CSR activities. The study added 37 per cent of the firms had a well-structured foundation for implementing their CSR, while 58 per cent domestic companies had formed a separate department to implement CSR. The importance of building strong public-private partnership as well as working closely with NGOs as implementation partners is being realised by companies, Assocham President Swati Piramal said. The assessment highlights that 21 per cent of companies have come up with a separate CSR report, while only 8 per cent have reported their CSR activities in its annual report. Among international firms, the umber reporting for CSR in its annual reports rate are much higher. In 1977, the figure was 50 per cent, which rose 90 per cent in 2000.
“It was also found that some companies chose to narrow their focus on a few thematic areas, other companies took a broader view and undertook a large scope of areas to focus on. Of the 24 cases analysed, it was found that there were as many as 16 companies focusing on 3-5 thematic areas, whereas four companies catered to 1-2 thematic areas of work and remaining four stuck to six or more thematic areas.”
BS Reporter / Chennai January 02, 2010, 0:27 IST
Sixty seven per cent of domestic companies have chosen non-government organisations (NGOs) as partners to undertake their Corporate Social Responsibility (CSR) projects, while 58 per cent prefer government departments for the spread of CSR obligations, Associated Chambers of Commerce and Industry of India (Assocham) says. The chamber, in its assessment, ‘CSR: Quantitative Analysis’, said 21 domestic companies were working with multilateral or bilateral organisations for CSR activities. The study added 37 per cent of the firms had a well-structured foundation for implementing their CSR, while 58 per cent domestic companies had formed a separate department to implement CSR. The importance of building strong public-private partnership as well as working closely with NGOs as implementation partners is being realised by companies, Assocham President Swati Piramal said. The assessment highlights that 21 per cent of companies have come up with a separate CSR report, while only 8 per cent have reported their CSR activities in its annual report. Among international firms, the umber reporting for CSR in its annual reports rate are much higher. In 1977, the figure was 50 per cent, which rose 90 per cent in 2000.
“It was also found that some companies chose to narrow their focus on a few thematic areas, other companies took a broader view and undertook a large scope of areas to focus on. Of the 24 cases analysed, it was found that there were as many as 16 companies focusing on 3-5 thematic areas, whereas four companies catered to 1-2 thematic areas of work and remaining four stuck to six or more thematic areas.”
Monday, January 4, 2010
Should cos get incentives for CSR efforts?
More benefits will spur voluntary Activity
The ministry of corporate affairs, under the leadership of Salman Khurshid, has become proactive on corporate social responsibility (CSR), in addition to its charge on corporate governance. Obviously, the two are different from each other and must not be put in the same basket. Corporate governance involves regulating a corporate that has chosen to list on the stock market and, thus, has major responsibilities towards its shareholders. Therefore, mandatory laws, statutes and accounting norms are invoked to bring transparency and accountability. On the other had, CSR is a voluntary activity by a company, listed or privately-owned, to serve bigger goals of society, beyond its routine market functions. In fact, India Inc is taking several initiatives in the space of CSR for the welfare of society. FICCI, for the last 10 years, has been recognizing industry’s CSR initiatives through an annual CSR award. The question here is whether the voluntary activity of CSR can be spurred through fiscal incentives.
Interestingly, many fiscal measures already exist in our Income-Tax Act. If a corporate donates funds to an approved NGO for social projects, it is eligible for 50% deduction of that amount, and 100% if it funds a not-for-profit organization (registered under Section 25 of the Companies Act). A stellar example of this nature is the creation of the FICCI Aditya Birla Centre for Excellence in CSR, paid for by companies of the Aditya Birla group. Similarly, if a company contributes to an approved scientific research association, it can get up to 125% deduction.
The moot point is: should we have more of such exemptions to attract larger number of corporates into the CSR net? Certainly. We may have to provide weighted deduction of 150% or 125% to motivate enough for encouraging corporates to make such voluntary CSR contributions.
This could possibly be done by inserting a new clause in either section 35(2AA) or section 35(2AB), to provide for 150% deduction of the amount paid to the approved institution/NGOs involved in CSR. With such bold measures to promote CSR, the UPA government will truly live up to its pledge for inclusion of the underprivileged and usher in a new paradigm of private-public partnership (PPP).
The ministry of corporate affairs, under the leadership of Salman Khurshid, has become proactive on corporate social responsibility (CSR), in addition to its charge on corporate governance. Obviously, the two are different from each other and must not be put in the same basket. Corporate governance involves regulating a corporate that has chosen to list on the stock market and, thus, has major responsibilities towards its shareholders. Therefore, mandatory laws, statutes and accounting norms are invoked to bring transparency and accountability. On the other had, CSR is a voluntary activity by a company, listed or privately-owned, to serve bigger goals of society, beyond its routine market functions. In fact, India Inc is taking several initiatives in the space of CSR for the welfare of society. FICCI, for the last 10 years, has been recognizing industry’s CSR initiatives through an annual CSR award. The question here is whether the voluntary activity of CSR can be spurred through fiscal incentives.
Interestingly, many fiscal measures already exist in our Income-Tax Act. If a corporate donates funds to an approved NGO for social projects, it is eligible for 50% deduction of that amount, and 100% if it funds a not-for-profit organization (registered under Section 25 of the Companies Act). A stellar example of this nature is the creation of the FICCI Aditya Birla Centre for Excellence in CSR, paid for by companies of the Aditya Birla group. Similarly, if a company contributes to an approved scientific research association, it can get up to 125% deduction.
The moot point is: should we have more of such exemptions to attract larger number of corporates into the CSR net? Certainly. We may have to provide weighted deduction of 150% or 125% to motivate enough for encouraging corporates to make such voluntary CSR contributions.
This could possibly be done by inserting a new clause in either section 35(2AA) or section 35(2AB), to provide for 150% deduction of the amount paid to the approved institution/NGOs involved in CSR. With such bold measures to promote CSR, the UPA government will truly live up to its pledge for inclusion of the underprivileged and usher in a new paradigm of private-public partnership (PPP).
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