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Content Hub

CSR NEWS: DECEMBER 2015 / JANUARY 2016

Laura Quinn

By Anant Shrivastava

BSE’s Samman platform launched

BSE’s much talked about platform to connect companies with credible NGOs for CSR initiatives finally went live on 9th December. Although the site specifies that it’s a Beta version, and it feels the same way, this is certainly a step forward in helping companies pick the right partner for implementing their CSR initiatives. The actual usefulness of the platform for both companies and NGOs will become clearer as feedback starts to come in next year. But as we’ve said before, we hope this list of “govt. vetted NGOs” as a quick solution to CSR needs doesn’t kill the much needed innovation and game changing approach practiced by a handful of NGOs, lest they miss out registering on the platform.

 

MCA FAQs on CSR

These FAQs released by the MCA answer some important questions around the CSR legislation. As companies gain maturity and understanding of the Companies Act, 2013, such periodical communication serves as a useful tool to help them build their expertise on the subject. Important areas such as tax benefit from CSR, monetization of employee time, CSR obligation for Section 8 companies etc. have been covered. A useful read, indeed!

 

PSUs to focus on CSR for the poor?

The Committee on Public Undertakings (CoPU) has urged the govt. to amend the Companies Act so that benefit from CSR initiatives reaches the poor. An analysis of the CSR expenditure pattern of companies in 2014-15 revealed that the largest spend was done by companies in Maharashtra, which is already India’s wealthiest state and is not exactly “backward”. Therefore, if such an initiative by PSUs ensures CSR funds reach more backward states in India, it can potentially deliver benefits to areas with a greater need. The private sector may also follow PSUs in modifying their CSR to benefit the poorest. What’s important is that the Act is amended to avoid any ambiguity around what those poor and backward areas are. All that comes with a big IF, that is if the recommendation is ever heeded.

 

Has the CSR legislation killed employee volunteering?

With the Companies Act clearly specifying that employee volunteering cannot be monetized to count towards the CSR spend, has this negatively impacted volunteering in the corporate sector? This Livemint article talks about the volunteering and its contribution to CSR and employee engagement within a company. What’s clear is that volunteering is certainly useful to keep up employee satisfaction while also making them more effective at their jobs. Smarter companies have managed to continue with structured employee engagement programmes outside of the CSR legislation for the benefits it offers.

  

Why businesses that are good at CSR are bad at paying taxes?

It’s fairly easy to think that tax avoidance goes against the spirit of CSR. After all, paying due taxes is responsible behaviour! But opinions in the business world vary. This Economist article explores some of the reasons why firms that are good at CSR are also keen to avoid taxes. Reasons suggested vary from hypocrisy to different objectives of the various people and departments in a company to how CSR and tax avoidance are tools for maximising profits – the ultimate goal of a business to high rate of corporate taxes. Even though individual reasons for tax avoidance vary, an important takeaway is that firms are responsible to pay their fair share of taxes and must differentiate between moves that promote business while reducing tax burden and dodgy manoeuvres carried out to avoid paying taxes anywhere.

 

More data on CSR performance in FY 2014-15

With the disclosures for FY 2014-15 finally out, it’s clear how companies in India are reacting to the CSR legislation in the Companies Act. According to this article that references a CII study, 87% of the 1181 listed companies on BSE complied with the legislation and spent around Rs 6400 crore on CSR in the financial year. 52% of the companies that spent money on CSR failed to spend the required amount. Another study by Crisil indicates that large companies fared worse than SMEs with only 31% (with turnover greater than Rs. 10,000 crore or more) spending the required amount. There is clearly a lot of room for improvement. Hopefully, things should get better in the second year of the legislation. If they don’t, it would mean that corporate India and the govt. need to introspect on what’s not working out – the CSR law or the companies’ understanding and acceptance of it. Changes in either the legislation or the approach companies take to CSR may be required.

 

Maharashtra govt. asks companies to address development priorities through CSR funds

In a meeting with representatives from the corporate sector, the state govt. requested companies to use their CSR funds for addressing states development priorities and announced availability of a dedicated resource in the Chief Minister’s office to allow facilitation of government-corporate partnerships for the same. While this step can surely be an effective way to address challenges in the state, CSR funds are not meant to fill resource gaps in govt. schemes and this move has a potential to become just that. Further, the present rules on CSR in the Companies Act are already inhibitive for innovation in the CSR space so it’s essential that this move doesn’t add to limiting the ways companies do CSR.

 

Inclusion – beyond CSR and as a business strategy

Companies in India have been at work for some time now to be seen as “inclusive” workplaces. While inclusion is certainly a must for any progressive company and adds to the social responsibility values of a business, firms are beginning to realise its benefit for business growth and are incorporating it in their business strategies. This article by Navi Radjou, co-author of Frugal Innovation, talks about some of the leading players to embrace inclusivity and the business advantages it offers.