DPE sustainability and csr guidelines 2012

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DPE sustainability and csr guidelines 2012

  1. 1. Page 1 of 17 Guidelines on Sustainability and CSR for CPSEs (Last revision: 12.07 AM, 2.Nov.2012) Department of Public Enterprises Ministry of Heavy Industries & Public Enterprises Government of India November 2012
  2. 2. Page 2 of 17 Contents 1. Concept, Philosophy & Indian Context.................................................................................... 3 2. Expectations ............................................................................................................................ 4 3. Brief history of CSR in India ..................................................................................................... 5 4. Benchmarks on Sustainability and CSR guidelines.................................................................. 6 5. Sustainability & CSR Structure within CPSEs ........................................................................... 7 6. Sustainability & CSR – Scope ................................................................................................... 8 7. Planning and Implementation............................................................................................... 10 8. Project Approach: 5 components.......................................................................................... 12 9. Documentation and Communication.................................................................................... 14 10. Funding and Expenditure ...................................................................................................... 15 11. MoU Evaluation..................................................................................................................... 16
  3. 3. Page 3 of 17 1.Concept,Philosophy& Indian Context World has come a long way from the American Economist Milton Friedman’s famous quote “the business of business is business” to rediscover Mahatma Gandhi’s philosophy “the capitalist should regard himself/herself as a trustee for those, on whom he depends for generating, retaining and the growing his/her capital.” Scottish Economist Adam Smith has, from shareholder-point of view, argued that that “businessmen should solely focus on the economic purpose of business”. In contrast, JRD Tata’s famous stakeholder-orientedprovides the perfect rationale for the very existence of business - “In a free enterprise, the community is not just another stakeholder in business, but is, in fact, the very purpose of its existence.” Brundtland Commission of the United Nations, in 1987, defined Sustainability as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.In 1995, John Elkington coined the phrase “Triple Bottom Line” (People, Planet, Profit) and opined that this should be the goal of sustainability. In many developed countries, where societal developmental challenges are negligible, the concept of ‘CSR’ has been subsumed by the concept of ‘Sustainability’ (CSR as a subset of Sustainability) and CSR is focused more on fair and healthy business practices, environmental concerns, and taking care of their own supply chain, which includes both external and internal stakeholders. Moreover, the word ‘Society’ from the acronym CSR has been deliberately taken off in favor of all-inclusive concepts of ‘CR’ (Corporate Responsibility) or ‘BR’ (Business Responsibility) or ‘ER’ (Enterprise Responsibility), which embraces the broader responsibility of the Corporate/ Business/ Enterprise. In India, where 72% of the populace lives in villages, the societal developmental challenges are enormous and western world’s hidden ‘society’ pillar becomes the most crucial pillar in this part of the world. Therefore, though ‘Sustainability’ and ‘CSR’ have overlapping connotations, they have been deliberately juxtaposed, right from the title of this document, in order to underscore the critical importance of ‘society’ within the ambit of ‘Sustainability’, especially in the Indian context.While fully endorsing the broader view of Sustainability & CSR, DPE also recognizes the need for ‘inclusive growth’ that India so badly needs and the ‘baseline’ situation in India, which is so different from the developed world. Theseguidelines intend to eliminate ambiguity, bring process uniformity by articulating the expectations, mandate and scope of activities, define key variables viz. projects/project approach, budget allocation, documentation, monitoring, impact assessment, etc.and set broad norms for evaluation of Sustainabilityand CSR initiatives of CPSEs.
  4. 4. Page 4 of 17 2.Expectations The all-encompassing canvass of Corporate Responsibility or Business Responsibility or Enterprise Responsibilityincludes enterprise’s responsibility towards the entire society and environment. etc.DPE endorses this broader view that Sustainability and CSR philosophies & guidelines, instead of just being normative, should be a way of doing business and should be in the DNA of each business entity and its stakeholders including the employees. However, DPE also appreciates that, in India, the we are in the early phase towards that cherished goal and it would be crucial to appropriately articulate the principles, set broader enabling guidelines and provide an uniform structure for CPSEs to work efficiently and optimally to reach that goal. Business entities, ultimately, have to redefine their business philosophies to align with ‘Socially Responsible ways of doing business’, principles of which have already been enumerated in various guidelines viz. National Voluntary Guidelines (9 set of guidelines), United Nation’s Global Compact (10 principles), Millennium Development Goals (8 goals), etc. The key set of expectations, which all business entities including CPSESs need to fulfill in the long term, are to conduct businesses in a transparent & ethical manner, to adhere to the principles of corporate governance, to create systems to foster innovation for development of low-natural- resource-intensive and environment friendly products, to reduce the impact of businesses on environment/habitat, to preserve natural resources, to care for the marginalized and underprivileged society/population, to ensure safe and healthy working environment foremployees/workers at the work place, to respect human rights & labor laws, etc. The key thrust areas, which would continue to remain in the forefront of all Sustainabilityand CSR initiatives, would be ‘Inclusive Growth of society’, ‘Environmental Sustainability’, ‘Capacity building’, ‘Mainstreaming of marginalized and underprivileged population’, empowering women, etc.
  5. 5. Page 5 of 17 3.Brief history of CSR in India In the 19th Century, the philanthropic engagement in India was seen through temple donations and other charity-based activities. Through the Gandhian model of trusteeship in the 20th Century, Indian face of CSR emerged through the social reform initiatives viz. removing untouchability, empowering women and developing rural areas. This was followed by the ‘mixed economy’ paradigm and during the80s, traditional philanthropic engagement of businesses started to be seen as a part of the broader sustainable business strategy. Indian business entities were engaged mainly in education, vocational training and health related areas. For long-established industrial houses of India, concepts of nation-building and trusteeship were exemplified through their contribution towards society, primarily for education & healthcare activities. In 1954, Pandit Jawaharlal Nehru described CPSEs as ‘Temples of Modern India’. The mandate of CPSEs was to achieve the objectives of self reliance, socio-economic transformation, infrastructure development, technology absorption, employment, etc., and through them achieve many social objectives. The CSR initiatives of Indian companies are largely focused on the following domains:  Community development:Most large companies either have their own foundations or contribute to other initiatives that directly support the community upliftment, notably in health, education, and agriculture.  Environmental management:Environmental policies and programs are now standard, and many companies have implemented the ISO 14001 system throughout their businesses.  Workplace:Growing out of long-standing commitments to training and safety is a more recent emphasis on knowledge and employee well-being.1 CSR has come a long way from the charity mode to contributing towards healthier communities and the focus has gradually shifted from providing mere doles to enabling people to earn their livelihood. The expectations of stakeholders have also grown manifold with demands to contribute to improvement in broad social indicators and living conditions with focus on poverty alleviation, tackling unemployment, fighting inequality or taking affirmative action. 1 ‘The State of CSR in India 2004: Acknowledging Progress , Prioritizing Action’. Ritu Kumar. Background paper as part of National Seminar on CSR by The Energy and Resources Institute (TERI), November 2004.
  6. 6. Page 6 of 17 4.Benchmarks on Sustainability and CSR guidelines 4.1. United Nation’s Global Compact (UNGC) (1999) The UNGC is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in 4 areas viz. human rights, labor, environment and anti-corruption. 4.2. Millennium Development Goals (2000) United Nations have set 8 ambitious goals for the year 2015, all of which could be embraced as CSR objectives of Corporate entities. They are: Eradicate extreme poverty & hunger, Achieve Universal primary education, Promote gender equality and empower women, Reduce child mortality, Improve maternal health, Combat HIV/AIDS, malaria and other diseases, Ensure environmental sustainability and develop a global partnership for development. 4.3. ISO 26000 (2010) It is a set of guidance rather than requirements, i.e. it cannot be certified unlike other ISO standards. It helps clarify what social responsibility is, helps businesses and organizations translate principles into effective actions and shares best practices relating to social responsibility, globally. It is aimed at all types of organizations regardless of their activity, size or location. 4.4. DPE Guidelines on CSR for CPSEs (2010) Introduction of the ‘Guidelines on Corporate Social responsibility for Central Public Sector Enterprises’ in March 2010 by the Department of Public Enterprises (DPE) is an important landmark in the evolution of CSR in India. The Guidelines are a mandatory requirement for the Central Public Sector Enterprises (CPSEs) in India and are aimed at bringing about a paradigm shift in not only the way CSR is looked at but also the way CSR projects areimplemented. 4.5. National Voluntary Guidelines on Social, Environmental and Economical Responsibilities of Business (2011) These guidelines emphasize the need for businesses to be responsible actors in society for sustainable growth and economic development. Instead of Corporate Social Responsibility (CSR), the guidelines use the phrase 'Responsible Business', as it encompasses the broader objectives of Sustainability. 4.6. Social Accountability 8000 (2008) by Social Accountability International It is a voluntary requirement to be met by employers in the workplace, including workers’ rights, workplace conditions, and management systems. The normative elements of this standard are based on national law, international human rights norms and the conventions of the ILO. 4.7. Sustainability Reporting based on the GRI Reporting Framework (V3.1; 2011) This reporting discloses outcomes and results with respect to the organization’s commitments, strategy, and management approach in economic, environmental, and social performances. Brief details of each of the above guidelines are given in the Annexure…..
  7. 7. Page 7 of 17 5. Sustainability & CSR Structure within CPSEs Each CPSE shall create specific structures within the organization to formulate broader goals, milestones, oversee and implement Sustainability and CSR initiatives. 5.1. Board Sub-Committee for Sustainability & CSR Each CPSE shall constitute one Board-level Sub Committee for both Sustainability & CSR. In order to synergize resources of CPSEs, it would be ideal to have one Sub Committee for both Sustainability & CSR. This Sub-Committee will be headed by an Independent Director. In case there are no Independent Director(s) on the Board of any CPSE, the senior-most Director will head this Sub- Committee. 5.2. Chief Sustainability Officer (CSO) in each CPSE Each CPSE will create a position of Chief Sustainability Officer (CSO), which will be held by a senior official with position just below that of a Board-level position. The responsibilities of CSO may include Sustainability, CSR and HSE. CSO will directly report to Chairman/CMD/MD, (in line with Head of Internal Audit and Co. Secretary), as CSO has to address various issues across different functions under various Directors. If this is not feasible, CSO should report to Director (HR). This is because the key long term goals of Sustainability and CSR can only be achieved through ‘change of mindset’ of all stakeholders and developing each employee as ‘Change Agent’. Director (HR) is uniquely positioned to bring about this change across organization through ‘awareness development’ and bringing in suitable changes in employees’ ‘Key Result Areas’ and ‘Key Performance Indicators’. To start with, these interventions would be essential and may be continued till Sustainability and CSR become intrinsic to the culture of the organization. 5.3. Board level position in Sustainability & CSR in due course For India to take a quantum leap towards Sustainability, it has to be embedded within the DNA of every business entity and each employee in that entity. Given that today’s business decisions are driven mostly by Board of Directors, the best way to start making ‘Sustainability and CSR’ ways of life amongst business entities is to create a Board level position on ‘Sustainability and CSR’. This will help drive the Sustainability/CSR culture ‘top-down’ (Board room to shop floor). Moreover, sustainability, having implications across all functions, it will be easier for other Board members to appreciate and allow permeation of the culture of Sustainability/CSR within respective functional verticals with help from Sustainability/CSR team. Therefore, for Sustainability/CSR to be reality across CPSEs, sooner rather than later, a Board level position with befitting designation [e.g. Director (Sustainability, CSR and HSE)] would be appropriate, for which specific approval may be obtained by competent authority. 5.4. Sustainability & CSR cadre in all CPSEs Each CPSE will create a cadre of officials in ‘Sustainability and CSR’ and all efforts should be made to nurture and retain these competencies. CPSEs, which do not have such competencies, to start with, may consider taking assistance from other CPSEs. This will also help to quickly spread the culture of Sustainability and best practices across the fraternity of CPSEs.
  8. 8. Page 8 of 17 6.Sustainability & CSR – Scope 6.1. Coverage of ‘Society’ and ‘Environment’ pillars under these guidelines Out of 3 pillars of Sustainability (i.e. Planet, People & Profit), the Profit pillar has been the fulcrum and defining paradigm of enterprise success, measured through the statements of accounts. However, impact of businesses on the other 2 pillars of Sustainability (i.e. ‘People’ or ‘Society’ and ‘Planet’ or ‘Environment’) is yet to find its way into the contemporary balance sheets. This document aims to cover the latter 2 pillars of Sustainability, i.e. ‘Society’ and ‘Environment’ in CPSEs under these guidelines. 6.2. Development of sustainable and replicable implementation models Since Sustainability & CSR budgets of CPSEs would be a fraction of the environment / rural development budget of Government of India, it would be too optimistic for CPSEs to aim for macro level improvement in social/living indicators. Instead, CPSEs, to the extent feasible, should aim to clearly define boundaries, geographic as well as functional, for their Sustainability & CSR initiatives. It would be ideal for CPSEs to aim for development of implementation models, which are sustainable, replicable and can stand on their own feet with involvement from local stakeholders. 6.3. Over and above the applicable legal requirements Projects/activities selected for Sustainability and CSR shall be over and above the applicable legal requirements to which CPSEs have to comply. CSR activities of CPSEs should extend beyond casual/philanthropic approach to project based accountability approach and should aim to integrate social and business goals. 6.4. Synergy with long term business strategy CPSEs may define their Sustainability and CSR thrust areas and ongoing schemes, as per their vision/mission/business goals and appropriately allocate budget for various areas. The Sustainability and CSR policy/strategies/thrust areas should preferably be articulated in such a way so as to address the social and environment concerns and should complement and synergize with the long term business strategy of the CPSE.Moreover, these activities need to be seen as those, which would, in the long term, help secure a sustainable competitive advantage of the CPSE. 6.5. Environmental sustainability projects For Sustainability, CPSEs may preferably define activities from the following list of projects: Carbon neutrality Water neutrality waste neutrality Biodiversity Conservation Natural Resources Management Sustainability Reporting 6.5.1. Long term environment sustainability targets and timelines While CPSEs are free to choose any number of Sustainability projects, efforts should be made to provide directional long term targets and timelines on the following:
  9. 9. Page 9 of 17 Carbon, Water and Waste foot-printing for the entire organization covering all work centers/installations/establishments (E.g. Smaller CPSEs may be able to complete this exercise in a year; Large multi-location CPSEs may consider smaller no. of work centers every year and plan to cover the entire organization in about 5-6 years). This will help CPSEs to get closer towards international practices of environmental disclosure and enhance their reputation internationally. 6.5.2. Work center-wise annual targets for reduction in carbon, water and waste foot-print. CPSEs may choose to select smaller no. of work centers to start with, implement specific measures to reduce footprint of carbon, water and waste and then add more number of work centers every year so that entire organization is covered in a targeted manner. 6.6. Geographic boundaries Whereas CPSEs are free to choose any area of their choice within India to undertake Sustainability & CSR initiatives, it would be ideal to consider undertaking such initiatives in the vicinity of their work stations/establishments. Wherever it is not feasible or applicable, CPSEs may choose to locate their Sustainability and CSR projects anywhere in the country.
  10. 10. Page 10 of 17 7. Planning and Implementation 7.1. Sustainability and CSR Policy Each CPSE should articulate its Sustainability & CSR policy, which should be approved by its Board. It should include CPSE specific Sustainability & CSR strategies that mandate the design of Sustainability & CSR Action Plan (Long-term, medium-term and short-term), with focus on project based accountability approach. 7.2. Considerations for identification/implementation of projects The following points should be considered for identification/implementation of Sustainability/CSR projects: CSR activities may be selected in such a manner so as to ensure that the benefits reach the smallest unit i.e. village, panchayat, block or district depending upon the operations and resource capability of a CPSE. Investment should be project-based. Mere donations to philanthropic/ charity or other organizations would not count as Sustainability/CSR. For every project, the time-frame and periodic milestones should be finalized at the outset. Sustainability/CSR activities should also involve the suppliers in order to ensure that the supply- chain also follows the CSR principles. Sustainability/CSR activities should generate community goodwill, create social impact, visibility and a positive image of the CPSE. Sustainability/CSR activities may be related to United Nations Global Compact Program. Care may be taken to ensure that CPSEs work towards fulfillment of the National Plan goals and objectives, as well as the Millennium Development Goals adopted by the Nation, ensure gender sensitivity, skill enhancement, entrepreneurship development and employment generation by co-creating value with local institutions/people. CPSEs should redefine their business continuity plan to factor in hazards, risks and vulnerabilities. They should also create value in innovative Sustainability/CSR investments in the community and may focus on the areas of "Preparedness and Capacity Building" in Disaster Management (DM). Public-Private Partnership between the Government and the CPSEs could also be encouraged to leverage the strengths of the latter in Disaster Management. CPSEs need to network with the Ministries in Government of India /NDMA at the National level and State Governments / SDMAs at the State level to strengthen and formalize their role in the DM process for ensuring preparedness of the communities towards disaster resilience. Project Management and Monitoring skills available with the CPSEs could be shared as far as possible, with the local administration by training and setting up required structures and systems. CPSEs should make efforts to dovetail/synergize their Sustainability/CSR Initiatives with those of State Governments, District Administration, Local Administration as well as Central Government Departments/ Agencies, etc.Every care should be taken to ensure that there is no duplication of activities undertaken by the CPSEs with that of Central, State and Local Governments. However, CPSEs may collaborate to make a bigger and sustainable impact.
  11. 11. Page 11 of 17 7.3. Other general clarifications 7.3.1. What will qualify as a Sustainability/CSR activity For a project to qualify as a Sustainability and/or CSR activity, It must be implemented in ‘project mode’. It must have well defined timelines for expected outcomes. It must have a specifically allocated annual budget. It must have measurable and monitorable performance indicators, which have to be clearly identified before commencement of project. 7.3.2. What will not qualify as a Sustainability/CSR activity Any DIRECT commercial objective of CPSE. Compliance with legal/statutory requirements. Any activity that primarily benefits the staff of the CPSE. Any un-coordinated voluntary effort by members of the staff of the CPSE. Any grants/assistance to organizations/institutions. Any donation for religious activities. 7.3.3. DPE’s sole authority to amend Sustainability/CSR guidelines These Guidelines will supersede/override any other Guidelines/ Circulars/ instructions, etc. that may have been issued by any Ministry/ Department on any prior date. These Guidelines may be amended by the Department of Public Enterprises from time to time with the approval of the competent authority.Guidelines on Sustainability/CSR for CPSEs will henceforth issue only from the Department of Public Enterprises.
  12. 12. Page 12 of 17 8. Project Approach: 5 components 8.1. Project Approach ‘Project Approach’ to Sustainability and CSR initiatives will have 5 distinct components viz. Need assessment & Baseline survey, Implementation, Monitoring, Impact Assessment and Documentation. 8.1.1. Need Assessment and Baseline Survey Need Assessment and Baseline Survey will be conducted in the target areas before a project gets kick-started. Need Assessment:Irrespective of the size of project, Need Assessment may be carried out by an in- house committee to determine whether the intervention is required or not. It may be ascertained through secondary data research,discussion with local stakeholders, etc. Baseline Survey:Baseline Survey will find out the ‘as-is’ situationthrough qualitatively or quantitative indicators. These would be the same indicators, against which ‘Impact Assessment’ would be carried out after project is implemented, showing improvement in the same indicators. 8.1.2. Project Implementation For project implementation, involvement of the stakeholders should be ensured for long term sustainability. Irrespective of size of project, in situations, where CPSE has the expertise in undertaking the job by itself/through its contractors (e.g. civil, mechanical, electrical, medical, procurement, etc.), Sustainability &CSR initiatives may be implemented by CPSEs/their contractors, wherever feasible. 8.1.3. Monitoring Sustainability &CSR project monitoring may be done by CPSEs themselves. However CPSEs are encouraged to take assistance of external specialized agencies for monitoring.All records including visit reports, progress reports, etc. should be meticulously maintained. The Boards/CSR Committee of the Board of CPSEs should also monitor the progress of implementation of Sustainability and CSRactivities in their meetings. 8.1.4. Impact Assessment Impact Assessment shall be carried out after completion of the project or after completion of specific milestones/ financial year. Depending on the size of the project, it may be carried out by a specialized external agency, other than the one(s) involved in implementation. The agency engaged to conduct Baseline Survey can also be engaged for Impact Assessment. The parameters for assessing impact & gauging improvement should ideally be the same as those for baseline survey. 8.1.5. Documentation Details of documentation and communication are given in the next chapter. 8.2. Cases, where help of specialized external agencies have to be taken To conduct need assessment/baseline survey, implement projects and carry out impact assessment study, help of specialized external agencies have to be taken for all projects involving annual
  13. 13. Page 13 of 17 expenditure of Rs.20 lakh or more. However, CPSEs are encouraged to take help of specialized external agencies for all projects. 8.2.1. Specialized external agencies Specialized external agencies for Baseline Survey, implementation, Monitoring, Documentation and Impact Assessmentwould include following type of organizations: Voluntary Agencies (NGOs) Institutes/ Academic Organizations Trusts, Missions, etc. Government, Semi-Government and autonomous Organizations Professional Consultancy Organizations Para-governmental, Para-private institutions Specialized Vendors or contractors Standing Conference of Public Enterprises (SCOPE) Community based organizations whether formal or informal Elected Representatives/Local bodies/Panchayats Self-help Groups, Mahila Mandals/ Samitis and the like While assigning CSR projects to specialized external agencies, every possible effort must be made to verify the reliability and clean track record of such agencies. CPSEs may make efforts to prepare suitable panels of such agencies or they may select from panels maintained by Government, Semi-Government, Autonomous Organization, National CSR Hub, etc.
  14. 14. Page 14 of 17 9. Documentation and Communication The following documentation shall be carried out for each project, cost of which would form a part of the entire project cost, which will be construed as CSR expenditure. 9.1. Need Assessment & Baseline Survey Report These will, inter alia, include need assessment of the target society, baseline values (quantitative or qualitative), project timelines/duration, anticipated project cost, anticipated number of beneficiaries (with break-up of SC, ST, OBC, Persons with disabilities, women, etc.), area of coverage of project, photographs depicting present situation at project site, etc. 9.2. Implementation Report It will, inter alia, include the methods used to involve stakeholders, feedback of stakeholders, specialized agencies/contractors (if any) engaged for implementation, financial implications of the project, hurdles faced during implementation, measures used to overcome them, etc. 9.3. Impact Assessment Report It will, inter alia, include actual number of beneficiaries (with break-up of SC, ST, OBC, Persons with disabilities, women, etc), no. of villages covered, area of coverage of project, details of how project has benefitted the local community, photographs of the project (post implementation), beneficiaries’ feedback, mileage derived, etc. 9.4. Photo album For every project, photographic evidence of the situation before, during and after implementation of project shall be captured and record maintained. 9.5. Film/Documentary Small films / documentaries may be made depicting success stories/best practices for dissemination / popularization of such successful models across other organizations/villages, etc. 9.6. Report on information to designate Hubs In addition to the above documentation, all project details have to be informed to designate Hubs as per specific DPE templates. 9.7. Internal/External communication and training CPSEs may make endeavors to communicate its CSR philosophies, policies, guidelines, activities, etc. to all its stakeholders including employees, customers, shareholders, societies in which it operates, etc. through use of communication channels viz. websites, Annual Reports, Sustainability Reports, etc. Each CPSE should include a separate chapter/paragraph in the Annual Report on implementation of Sustainability/CSR activities/projects including the facts relating to physical and financial progress.Those involved in undertaking of CSR activities should be provided with adequate training and re-orientation.
  15. 15. Page 15 of 17 10. Funding and Expenditure 10.1. Budget Allocation 10.1.1. Board Approval Every year, Sustainability and CSR budget of each CPSE will be mandatorily created through a BoardResolution as a percentage of net profit, as per following criteria. 10.1.2. Profitable CPSEs Based on the net profit of CPSE in the previous year, its CSR budget will be as follows: Size of CPSE Expenditure range in a financial yr. (Average Net Profit in previous year) (% of Net Profit in previous yr.) CSR Sustainability % Minimum % < Rs.100 crore 3%-5% 0.5% Rs.100 crore to Rs.1000 crore 2%-3% Rs.3 crore 0.5% > Rs.1000 crore 0.5%-2% Rs.20 crore 0.5% 10.1.3. Sick/loss-making CPSEs Sick/Loss-making CPSEs are not mandated to earmark specificfunding for Sustainability/CSR activities.They should achieve CSR objectives by integrating businessprocesses with social processes wherever possible. They should attain Sustainability objectives through saving or conservation activities. They may also take up initiatives, which do not involve cash outgo, e.g., by collaborating/synergising their Sustainability/CSRactivities with those ofprofit-making CPSEs. 10.2. Non-Lapsable Budget The Sustainability and CSR Budgets should be fixed for each financial year, which will not lapse. CPSEs will develop mechanisms to transfer the unutilized budget to the subsequent year. Endeavor should be made to spend the unutilized budget of any year during 2 subsequent financial years. 10.3. Minimum 80% of Annual CSR budget on project based initiatives CPSEs should spend at least 80% of their annual Sustainability/CSR budget in project mode, i.e. maximum 20% of their annual Sustainability/CSR budget can be spent on non-project based activities. Contribution to Prime Minister’s/Chief Ministers’ Relief Funds and National/State-level Disaster Management Authorities will be considered as Project Based CSR expenditure. 10.4. CSR budget for projects, where partial benefit accrues to employees For continuing projects of CPSEs viz. Schools and hospitals, which benefit both employees and society, CPSEs would be allowed to consider prorated expenditure (for the non-employee part) under CSR for such projects, provided minimum 20%of the beneficiaries are non-employees.
  16. 16. Page 16 of 17 11. MoU Evaluation CPSEs will be evaluated on Sustainability/CSR based on the following parameters/criteria. 11.1. 10 marks In MoU Guidelines, 5 marks shall be earmarked for CSR activities and 5marks for Sustainability initiativesout of the non-financial parameters. 11.2. At least 1 Project in backward districts Planning Commission, Government of India has identified 82 backward districts across the country (Annexure….). Each CPSE has to ensure that at least 1 Sustainability/CSR project is undertaken every year in any of the backward districts identified by Planning Commission. 11.3. Details of 1 project to be submitted Each CPSE will submit details of any 1 project of its choice for evaluation. 11.4. Total budget utilization Total Sustainability/CSR budget utilization will be a parameter for evaluation. 11.5. One Board Sub-Committee for both Sustainability and CSR Each CPSE shall constitute one Board-level Sub Committee for both Sustainability & CSR, which will be headed by an Independent Director. In case there are no Independent Director(s) on the Board of any CPSE, the senior-most Director will head this Sub-Committee. 11.6. Chief Sustainability Officer (CSO) in each CPSE Each CPSE will create a position of Chief Sustainability Officer (CSO), which will be held by a senior official with position just below that of a Board-level position. The responsibilities of CSO may include Sustainability, CSR and HSE. 11.7. Long term environment sustainability targets and timelines Each CPSE will develop plans for Carbon, Water and Waste foot-printing for the entire organization. This will help CPSEs to get closer towards international practices of environmental disclosure and enhance their reputation internationally. Each CPSE will also develop plans to reduce Carbon, Water and Waste foot-prints of the organization. CPSEs may choose to select smaller no. of work centers to start with, implement specific measures to reduce footprint of carbon, water and waste and then add more number of work centers every year so that entire organization is covered in a targeted manner. 11.8. Sustainability and CSR Policy Each CPSE shall articulate its Sustainability & CSR policy, which should be approved by its Board. 11.9. Budget Allocationwith Board approval Every year, Sustainability and CSR budget of each CPSE will be mandatorily created through a BoardResolution. 11.10. Minimum 80% of Annual CSR budget on project based initiatives
  17. 17. Page 17 of 17 CPSEs should spend at least 80% of their annual Sustainability/CSR budget in project mode, i.e. maximum 20% of their annual Sustainability/CSR budget can be spent on non-project based activities. 11.11. Submission of data to National Hub Each CPSE will submit details of all projects in prescribed formats to National Sustainability/CSR hubs.

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