Corporate Engagement in India: 2% CSR Allocation

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Namrata Rana, Director, Futurescape

Namrata Rana, Director, Futurescape

Namrata Rana will speak about the new CSR law that requires Indian compa- nies to donate 2% of their profits to nonprofits.

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Corporate Engagement in India: 2% CSR Allocation Corporate Engagement in India: 2% CSR Allocation Presentation Transcript

  • India Implications of the 2% CSR allocation Namrata Rana Twitter - @namratarana 2014 Summit on Social Media & Online Giving
  • By 2020 India will be the 3rd largest economy in the world
  • Can the move towards higher value, volume and profit be made while giving back to society and the environment?
  • India is home to the largest number of poor and illiterate
  • 3 out of 10 people need to be taught how to read
  • 4 out of 10 people need to be given food
  • Every year a million children need to be saved before they are a month old and another million before they are 5 years old.
  • Every year 15000 farmers need to be given hope
  • A quarter of the population needs to be taken out of the dark
  • Over 49% of urban areas and 65% of rural areas need to be given toilets
  • The need for growth will put extraordinary pressure on our natural resources and our infrastructure. Water.Waste. Energy. Urbanization. Livelihood....are just some of the several challenges India faces
  • The new Companies Bill has mandated that organisations of a certain financial strength spend 2% of their net profit on corporate social responsibility (CSR), What are its implications?
  • Going by the government’s 2% norm Rs 63 billion is expected to flow in from India’s top 500 listed companies. If we expand this list to the top 1,000 corporations, add MNCs, co-operative banks and SMEs, then we are talking about at least Rs 120 billion. ! Each of India’s 660 districts could get over Rs 18 crore of this investment.
  • 10 areas where the CSR Budget can be spent i) Eradicating hunger, poverty and malnutrition, promoting preventative health care and sanitation and making available safe drinking water; ! ii) Promoting education including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects. ! iii) Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and other such facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
  • iv) Ensuring environmental sustainability, ecological balance, protections of flora and fauna, animal welfare, agroforestry, conversation of natural resources and maintaining quality of soil, air and water; ! v) Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts’ ! vi) Measures for the benefit of armed forces veterans, war widows and their dependents ! vii) Training to promote rural sports, regionally recognised sports, Paralympics sports 10 areas where the CSR Budget can be spent
  • 10 areas where the CSR Budget can be spent viii) Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women; ! ix) Contributions or funds provided by technology incubators located within academic institutions which are approved by the Central Government; ! x) Rural development projects
  • A quick look at some of some research on what companies are doing…. Research : Collaboration between Prof Utkarsh Majmudar and Namrata Rana Supported by IIM Udaipur
  • AUTOMOTIVE India has the highest accident rate in the world. ! Reports of 19 auto companies reveal a high focus on employees and community (around manufacturing plants) ! SAFE DRIVING - a missed opportunity Research http:// blogs.economictimes.indiatimes.com/ ResponsibleFuture/entry/strategic- approach-towards-automotive-csr-part-2
  • STEEL India has 18 percent of the world’s population and 4 percent of the globe’s water resources. ! We studied the annual reports and websites of steel companies and found that 9 out of 22 companies do not have any information on water related initiatives. Research http://blogs.economictimes.indiatimes.com/ ResponsibleFuture/entry/water-scarcity-and- steel-companies
  • TOYS We found that over 56 International toy brands are sold in India. Parents are increasingly concerned about responsible - safe - non toxic - non plastic toys. ! Of these 56 companies only 11 company websites mention CSR activities of which only 4 - LEGO, Mattel, Walt Disney and Wild Republic Toys talk of socially responsible activities being conducted in India. Research http://blogs.economictimes.indiatimes.com/ ResponsibleFuture/entry/to-play-or-not-to- play
  • Plastic Plastics are one of worst products to dispose, taking hundreds of years to degrade. ! Out of the 12 companies studied only one, produces a sustainability report. The remaining companies provide information through their annual reports and websites. ! Almost no focus on reuse - recycle aspects of plastic. Research http://blogs.economictimes.indiatimes.com/ ResponsibleFuture/entry/csr-sustainability- and-the-plastic-industry
  • FMCG Mostly market to women and children - large TV and Print budgets. ! Out of the total sample of 32 companies we find that only 18 companies have initiatives that focus on Women and Children. 5 companies are doing health & hygiene related activities. 4 companies have activities that focus on Child Malnutrition. 5 companies are doing activities that support education and related activities. 5 companies focus on empowering women through skill upgradation and capacity building programs. Research http://blogs.economictimes.indiatimes.com/ResponsibleFuture/entry/women-and-children-are-they- strategic-to-fmcg-companies1
  • Implementing the 2% mandate is not easy Corporates face many challenges……
  • NEED Challenges ! CSR in many companies is either part of HR or Corporate Communications. Need for a separate department with specific deliverables.
  • NEED Challenges ! CSR budgets are expected to double, this will also lead to increased scrutiny by stakeholders. Need for re-skilling of existing teams and establishment of processes.
  • NEED Challenges ! Many CSR initiatives have been ad hoc and not necessarily linked to requirements. Need for a strategic focus + Study of stakeholders needs and aspirations, + an action plan that can run for several years
  • NEED Challenges ! CSR initiatives in the past may not have formed part of standard corporate reporting Need to assess, monitor and report initiatives and judge efficacy
  • What should be spent, where and on whom? Can you help companies achieve their strategic goals? Are you ready for the challenge?
  • Namrata Rana Twitter - @namratarana Level 4, Rectangle 1 Commercial Complex D4, Saket New Delhi - 110017, INDIA +91 (11) 6654 4196 Twitter - @futurescape www.futurescape.in