Here's our topical round up of the most important CSR stories in India throughout June and July.
Two-thirds of companies miss the CSR spend targets
Apparently two-thirds of companies have failed to meet the two percent spending mandate including some surprises such as HSBC and Axis Bank. Reasons for failing to comply aren’t yet clear but here we elucidate on how issues with the legislation itself may have contributed.
But it’s not all bleak news for CSR initiatives
Even though the corporate sector on the whole failed to spend the required amount on CSR, the IT sector did quite well. The cumulative spend on CSR by TCS, Infosys, Wipro and Mahindra was almost five times its previous year’s value. Thus, not all is gloomy and we’re hopeful that as companies build their understanding of the act and recognise the needs of the social sector better in the coming years, channelising of funds in social programmes will grow as will the impact created.
Government launches ‘Skill India’ initiative, plans to use CSR funds
With talent shortage being identified as a concern across all sectors, the Government seems to be working towards a resolution. It recently launched the Skill India initiative on the World Youth Skills day (15 July). The National Skill Development Corporation plans to work with corporates on utilising CSR funds to fulfil this objective. Considering NSDC’s standardised curriculum and certification, youth trained through NSDC’s programmes stand a higher chance of gaining employment and, if implemented well, this initiative could provide companies with a talented workforce and gainful employment to possibly millions of youth across India. However, the impact of NSDC’s work on the ground and its ability to work effectively with CSR funders, still remains to be seen. We for one have tried and failed to engage with them more than once.
Ratan Tata calls for a robust monitoring mechanism for CSR spending
Tata Group’s Chairman Emeritus, Ratan Tata, called for strong need to monitor companies’ CSR spend fearing it may be wasteful or siphoned off for other purposes. We agree that compliance with the mandatory CSR spending is in its nascent stage and a robust monitoring mechanism is needed to ensure optimal utilisation of funds. Perhaps the government’s proposed platform for monitoring CSR projects will do what’s required. The six member panel in the MCA headed by Anil Baijal is expected to come out with its initial recommendations on the monitoring and evaluation of CSR programmes sometime in August as mentioned in this Economic Times article.
Regulations around FCRA may be hurting the CSR ecosystem
The Government has mandated that companies with over 50% foreign shareholding have to carry out their CSR initiatives through NGOs, trusts, or foundations that have FCRA clearance. As examined here, both the corporate and the social sector feels this limits the social good that can be brought through CSR funding. With the govt. tightening the regulations around FCRA clearance and the complexities involved in getting the clearance in the first place, this move is proving to be prohibitive than encouraging for companies to do CSR.
Gujrat to set-up CSR authority to channel CSR funds for state development
The Gujarat govt. has set up a CSR authority which will ask companies for their CSR funds so the same can be used for development across sectors where the need is highest. This could be a good thing, provided there is transparency and accountability around the use of funds and the impact created which, as we know, can be a big ask from government departments! Even though the govt. is giving corporates the option of contributing CSR funds directly to NGOs instead, could this move instil fear in companies of antagonizing the govt. if they don’t channel funds through the new authority? If that happens, there is a chance that some smaller but interesting social projects that could have benefited from CSR funding might lose out to large-scale development initiatives favoured by the government.