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CSR Mandate in India
- 1. CSR Mandate India “Era of Command and Control"
- 2. PRESENTATION FLOW CSR- EVOLUTION AND UNDERSTANDING CSR MANDATE CSR FRAMEWORK
- 4. CSR EVOLUTION IN INDIA First Phase Till 1850s Culture, religion, family values and tradition Second Phase 1900s to 1980s Industrialization had an influential effect on CSR “Era of Command and Control" Third Phase Present Integrated CSR into a sustainable business strategy CSR is a way of conducting business, by which corporate entities visibly contribute to the social good.
- 5. CSR - UNDERSTANDING Three Different Understanding of CSR Innovation, Sustainable business models CSR AS VALUE CREATION Fundamental strategic and operational impact Compliance with legislations CSR AS RISK MANAGEMENT Medium to High Operational Cost Contribute with money and knowledge CSR AS PHILANTROPY Little Strategic or Operational Effect
- 7. CSR MANDATE – COMPANY BILL 2013 Clause 135 of the Companies Bill (the “CSR Clause”) requires a qualifying corporation to spend on CSR at least 2 percent of its average net profits made in the preceding three financial years.. Bill is applicable to any company with... A net worth of rupees A turnover of rupees A net profit of rupees 500 crore 1000 crore 5 crore (about U.S. $90 million) or more (about U.S. $180 million) or more (about U.S. $900,000) or more in any fiscal year
- 8. WHAT ACCOUNTS AS CSR? Eradicating Hunger Ensuring Environmental Sustainability Promotion of Education Employment Enhancing Vocational Skills Gender Equality and Empowering Women Social Business Projects Reducing child mortality and improving maternal health Contribution to the Prime Ministers National Relief Fund Combating human immunodeficiency virus, other diseases Such other Matters as may be prescribed
- 9. CSR MANDATE – POSITIVE IMPACT Business can contribute to equitable and sustainable economic development.. ONE-THIRD of the population is illiterate TWO-THIRD lack access to proper sanitation 400 MILLION PEOPLE still live on less than US$2 a day.
- 10. CSR MANDATE – NEGATIVE IMPACT Indian companies still equate CSR with Companies may treat it as a CORPORATE PHILANTHROPY exercise rather than looking at ways to doing social and environmental good. “CHECK THE BOX” Companies will comply by CHANNELING FUNDS to community organizations. Effort to meet the spending obligations, companies may not do the right
- 11. WHERE INDIAN COMPANY STANDS? Comparative Analysis on how much Indian firms are spending on CSR currently. Company Revenue Avg PAT Actual Spent CSR 2% of PAT Indian Oil 442,459 7,783 83 156 Reliance Industries 368,571 21,138 288 423 Tata Steel 135,978 3,895 146 78 TCS 48,894 8,935 51 179 Grasim Industries 27,899 3,395 16 68 Cairn India 11,861 5,108 NA 102 HDFC Bank 27,606 4,108 NA 82 Oil India 17,215 2,988 50 60 Infosys 33,734 7,128 26 143 Source: Forbes India magazine of 22 March, 2013
- 12. INDIA’S TOP 100 COMPANIES 5611 Crores Actual Spent – 1765 Crores 2% of PAT –
- 14. FRAMEWORK – CSR Aligned with Business Objectives Sustainable Compliance with Company Bill Act Result Oriented Scalable Business Opportunities Nation Building Effective CSR Brand Visibility Social Capital Partnerships & Relationships
- 15. PROCEDURE TO COMPANY Create “CSR Committee” Allocate “Two percent of net profit” Develop “ “Corporate Social Responsibility Policy” Report “CSR Initiatives to be Reported” *The two percent CSR spending needs to be computed as two percent of the average net profits made by the company during every block of three years.