It has been over four years since spending on Corporate Social Responsibility (CSR) was made mandatory. The government, by amending the Companies Act, made it compulsory for firms, having a net worth of Rs 500 crore, or a turnover of Rs 100 crore, or a net profit of Rs 5 crore, to spend 2 percent of their net profits on CSR programmes.
India was the first and is the only country that has mandatory CSR spend. In the initial days, there was much debate as to whether such a law that compels corporates to spend on social causes was preferable or not, the progress made so far seems to validate the efficacy of the Act.
There's another simple and straightforward way to evaluate the effectiveness of CSR in India. That is to do the data crunching. Fortunately, the CSR law has been ingrained with a lot of measures that mandate the sharing of data.
Companies are required to publish their CSR policy in the public domain, constitute a CSR committee with an independent director, and scores of other disclosures around spending and also what has not been spent. An analysis of this data can be a good guide to measure how corporate India is faring on the CSR front.
And this is what accounting company KPMG has been doing for the past four years. Bringing out a report card on CSR in India in a form of an annual report. This year also KPMG has examined the CSR spend in their study titled, ‘India’s CSR reporting Survey 2018’, using data from public filings of top 100 (N100) listed companies as per market capital.
Here are some key takeaways from the report:
Going by the report, the trends seem to be largely positive. Not only Indian companies are now spending sums on CSR, but they are also doing it in a transparent manner. The number of companies sharing details of projects and spends increasing over the years is a welcome sign. Given the fact that education and healthcare are the top spends area, it aligns well with the social scenario.
Also, the fact that MDs and CEOs are becoming part of the CSR committee, it shows active participation by the top management, and that too is a good side. Finally, as companies are becoming conscious of global practices like Sustainable Development Goals (SDG), it shows a maturity of approach. It is no more ad hoc, making cheques, but companies are becoming concerned about their play in the overall system and doing their bit. On the downside, the spend continues to be concentrated on the top industrial states of India garnering the major chunk. The CSR spend is not spread wide and far.
Earlier this year, the government had taken a stern note by sending out notices to a number of companies asking them to detail their CSR spend. With the constant pushes and nudges, the CSR space in India is coming of age. So much so, that other nations might now be encouraged to enact a similar act.
Shashwat DC is Features Editor at CNBC-TV18. He is closet-activist for sustainability and CSR, when not pondering over the future of humanity or contemplating the launch of the new Android phone.
First Published: Dec 21, 2018 4:49 PM IST
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