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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. 

CSR NEWS: OCTOBER/NOVEMBER 2015

Laura Quinn

By Anant Shrivastava

Created by Diego Naïve, from the Noun Project

Created by Diego Naïve, from the Noun Project

BSE CSR platform ‘Samman’ to launch finally?

According to this Hindu article, the platform which has been talked about since April 2015 and aims to connect companies with NGOs to facilitate both parties in undertaking social activities using CSR funding will go live before the end of this year. It will certainly be useful for companies to find credible, transparent organizations and programmes of interest to be funded. However, NGOs that cannot/do not get themselves listed on the platform stand at a risk of not being funded. We hope companies are open-minded while looking for programmes to fund and don’t limit themselves to just the thousand or so organisations that will be listed on Samman.

Companies Act may be amended for clarity on CSR norms

Based on the recommendations submitted by the Government appointed Baijal Committee in September, certain rules as well as the Act could be changed to allow greater transparency around CSR spending. The panel is expected to submit the final report to the MCA in December. Changes are expected to provide greater clarity on many ambiguous areas of the CSR rules including the differential tax treatment of various forms of CSR expenditure as mentioned in this Business-Standard article. In the present scenario where the rules are vague in places and left open to interpretation, such an amendment should prove to be beneficial for all stakeholders in the game.

India ranks no.1 on CSR reporting (but there’s more to it in the fine print..)

India tops the world in CSR reporting with 100% of its top 100 companies reporting on their CSR initiatives. While this is good news, it is hardly surprising given that the government mandates companies above a certain size to report on CSR activities. What is worrying though is the quality of reporting – something where India lags behind many countries. According to this Livemint article, it’s clear that corporate India still has a long way to go before it starts to produce high quality responsibility reporting especially issues such as carbon emissions. Perhaps decisions taken in the ongoing CoP 21 in Paris will distill down to corporate India and make them realize the importance of accurate and high quality sustainability reporting. Only time will tell.

State govt. requests CSR funds for tribal development

Maharashtra CM Devendra Fadnavis requested corporates to utilize CSR funds for the benefit of the tribal population of Maharashtra. This is a good example of government identifying the challenges that can then be addressed by corporate India through CSR funding. However we’ve stressed this before and would like to say this again – participation in such govt. led initiatives should be voluntary and unwillingness on companies’ part to contribute for such initiatives should not come at a cost or penalization in any way.

Transparency for CSR funds should be a two way street

Companies often go to great lengths to ensure that the NGO partners they work with are transparent, ethical, and corruption free organisations. This involves a rigorous due diligence process and rightly so as there are many NGOs that are corrupt and end up utilising CSR funds for vested interests. But shouldn’t the companies be transparent as well when it comes to their expectations from NGOs, processes for grant giving etc. to help NGOs apply for funding? This article written by the development director of a hospital describes the tedious and unnecessary process NGOs often have to go through to just gather information about available corporate funding. We feel that just as NGOs need to step up their game and become professional in order to secure funding, companies also need to structure their grant giving mechanisms efficiently to benefit the NGOs and ultimately the society in the most efficient way. 

Mark Kramer on why a philanthropic model of CSR has limited benefits

Mark Kramer, co-founder and Managing Director of consultancy FSG, stressed in an interview the limitations of a purely philanthropic model and talks about the need for a profit-driven business model for addressing social issues. We agree entirely that, although the traditional CSR model can help to address social problems, there is a critical need to look at social issues from a business perspective. A commercial angle brings greater accountability, professionalism, and often, better resources to tackle challenges than a purely charity-based approach.

Social mission and profit are not mutually exclusive, even for startups

India is on its way to becoming a startup hub (if it’s not there already). But not many startups have a clear social mission or ‘purpose’. The reason is often that they are too busy focusing on other vital aspects of business like, well, starting up! But social consciousness can and should be a part of business strategy for start-ups from day one. Plenty of studies exist to show that a social agenda adds to long term profitability of a company. The same applies to start-ups as well. This article tells the story of how Warby Parker, an online glasses retailer, was able to derive success by being a socially responsible company from the beginning.

Tying CSR with climate change

The climate change conference in Paris in November and December, aimed at helping around 196 nations make decisions on mitigating climate change, is expected to be followed by significant policy changes at national and global levels. Implementation of such policies will come at an added cost that will be borne by multiple stakeholders including governments and the corporate sector. How can the government and companies work together to utilise the mandatory CSR spending to ensure maximum positive environmental impact? A Didar Singh, the secretary general of FICCI, provides insights in this article.

PSUs fare better than private sector in Oxfam’s IRBF 2015 index

Oxfam Foundation released the India Responsible Business Index in October that measures the BSE top 100 companies’ on voluntary disclosures and policy commitments against the National Voluntary Guidelines (NVGs). According to this index, PSUs are doing better than private sector on criteria such as non-discrimination at workplace, community development, respecting human rights and employee dignity, and involving the community as stakeholders in business. The only area where private companies fare better is instituting sustainable policies in their supply chain. We think that initiatives like this that put out such information in the public domain have an effect of motivating companies to do more on sustainability and reporting front. For complete information on IRBF, visit http://www.responsiblebiz.org/