CSR expenditure is on the rise across India's business environment

Five years after corporate social responsibility (CSR) was mandated by the government, Big Four accounting and advisory firm KPMG has found that India’s largest companies are almost entirely compliant with the new regulations. 98 % of companies surveyed by the firm had their policies available in the public domain.

CSR was mandated by the government in 2013 under Section 135 of the Companies Act, a legislation that cam with a number of stipulations for businesses that fall under the label of ‘large companies.’ KPMG defines these as the 100 listed companies in India with the largest market capitalisation, or the N100.

A major stipulation, and one that has received a considerable amount of attention, is that large companies must earmark 2% of their annual profits towards CSR activity. The legislation comes with some leeqay, in that companies that haven’t devoted the necessary funds have space to justify their actions.

Other stipulations include setting up a CSR committee at the board level that will devise a CSR policy, making the policy available in the public domain, enumerating the areas of intervention that come within this policy, disclosing the mode of implementation, and revealing the methods to monitor CSR activity, among a wide range of others.

Since CSR was mandated, KPMG has checked in regularly with the N100 to gauge the state of compliance vis-à-vis the relatively new regulatory framework. This year, the firm’s evaluation produced promising results, showing an overall improvement in compliance across the board.

For instance, KPMG reports that there has been a 325% increase in the number of companies that have revealed details of their outreach effort in their annual financial statements. The amount of companies meeting their 2% per year quota is also on the rise, currently up to 76%.

This scenario is reflected in stories emerging throughout the year of social and developmental projects undertaken by large firms. The consulting sector is an integral part of this landscape. PwC, for instance, supports a number of social initiatives through its PwC India Foundation, including rehabilitation efforts in the wake of natural disasters.

Global management consultancy Accenture, meanwhile, has been involved in education efforts across the country. KPMG itself earmarked as much as Rs.2 crore towards helping those affected in the Kerala floods in 2018, in addition to deploying employee hours towards pro bono relief efforts.

Overall, KPMG reports that the N100 have spent more than Rs.35,000 on CSR-related projects in the last five years, accompanied by a 150% increase over the same period in the number of companies that carry the unspent portion of the annual 2% forwards into the next year.

With a long-term perspective, many large companies are looking to align their CSR activities with priorities within India and across the globe. As many as 41% of the N100 have now focused their CSR projects within the Sustainable Development Goals (SDGs) framework laid out by the United Nations.

Within the Indian context, a large share of the focus has been on projects to reduce inequality. Strikingly, KPGM reports that companies where women are chairpersons of the CSR committee have had the most dramatic increase in spending on reducing social inequality.

Article is taken from - https://www.consultancy.in/news/2838/csr-expenditure-is-on-the-rise-across-indias-business-environment

Innovative Financial Advisors Pvt. Ltd. (Fiinovation) is a global consulting firm operating in multiple disciplines of the social development sector with emphasis on Corporate Social Responsibility (CSR) and Sustainability. Fiinovation offers end to end CSR consulting services and simplified solutions that has helped various corporations channelize their resources for the upliftment of community on societal, economic and ecological aspects in accordance to their CSR charter. Since 2008, Fiinovation has grown phenomenally and has made a benchmark in the sector through its service quality. It has been able to bridge the gap between businesses and communities through value-based CSR programmes in association with credible civil society organizations on pan India basis in the field of health, environment, education, and livelihood

Fiinovation CEO : Dr Soumitro Chakraborty, Chief Executive Officer of Innovative Financial Advisors Pvt. Ltd. (Fiinovation), was conferred with ‘CEO of the year’ award at the 8th World CSR Congress held in Mumbai on February 18.

The World CSR Congress this year focused on the integration of Sustainable Development Goals (SDGs) in corporate strategies, innovation, and strategic alliances. The award recognizes fiinovation projects exemplary work in the social development sector and noteworthy CSR and sustainability programmes.

Fiinovation Delhi NGO address - 24/30, Ground Floor, Okhla Industrial Estate Phase 3 Rd, New Delhi, Delhi 110020

5 Easy Ways Companies Can Boost Their CSR in 2020

A new year, a new decade. In 2020, involved consumers are focused on reaching their personal, health, and professional goals. Similarly, while they do so, more and more of them are aligning with companies or brands that prioritize corporate social responsibility (CSR).

Nearly 90 percent of Americans will purchase from a company because it advocated for an issue they care about, according to a study. In addition, 76 percent will refuse to buy a company’s products or services if they learn the company supported an issue contrary to their beliefs.

As your business does some first-of-the-year reflecting, it’s important to ensure that its brand model reflects issues important to you and your audience. Company goals must consider more than economic metrics, they must also benefit stakeholders and the public.

Here are five ways to do so.

Volunteer

Companies are seeing benefits in offering volunteer days to their employees. This not only builds camaraderie within the company, it also spreads your company’s visibility among the supporters of the charity. TransUnion, for example, provides employees with a Volunteer Time Off day each year and matches donations up to $2,000 each for a cause close to their associates.

Invest in Social and Environmental Initiatives

Companies can support local and national organizations by donating directly or holding events in honor of a cause. You can also use your voice to help educate your audience on the issue and ways they can help. Some organizations encourage employees to donate a portion of their paycheck to particular causes in education, income, and health.

Practice Ethical Labor

The job market change constantly. Potential job applicants and current employees are looking for companies that practice what they preach in and out of the office. To ensure that your company attracts the best talent and maintains high morale, find opportunities to improve brand confidence. Offer competitive perks, provide a comfortable workspace, and look for ways to engage employees. Netflix provides employees with 52 weeks of paid parental leave. In addition, team members are able to take advantage of this perk at any point during their new child’s life.

Promote Philanthropy

Establish an in-house mission to create change. Form a social responsibility team and encourage it to lead your company in giving back to the community. For instance, Patagonia works in multiple ways to inspire its team members to give back. In addition, it partners with companies to bolster economic and environmental change.

Be Environmentally Conscious

Increasingly consumers are looking for ways to lessen their environmental impact. In many cases, they are supporting brands and businesses that are doing the same. With 30+ years of working to reduce its environmental impact on the planet, Johnson & Johnson looks to produce 35 percent of its energy from renewable sources through the purchase of private energy suppliers and other initiatives.

Carbon Footprint Tips

Businesses can make seamless changes within their structures to reduce their carbon footprint. A slew of companies are doing so. The airlines and Microsoft, for example. Ways your business can make a difference include: increasing recycling, decreasing energy and water use, enhancing waste management practices by going paperless, composting, eliminating bottled water, reducing plastic, and embracing eco-friendly travel policies. These policies include flying nonstop to reduce emissions, taking public transportation, carpooling, offering benefits for hybrid cars and staying at green hotels.

(Source: https://www.prnewsonline.com/csr-2020-examples/ )

https://indiacsr.in/5-easy-ways-companies-can-boost-their-csr-in-2020/

Innovative Financial Advisors Pvt. Ltd. (Fiinovation) is a global consulting firm operating in multiple disciplines of the social development sector with emphasis on Corporate Social Responsibility (CSR) and Sustainability. Fiinovation offers end to end CSR consulting services and simplified solutions that has helped various corporations channelize their resources for the upliftment of community on societal, economic and ecological aspects in accordance to their CSR charter. Since 2008, Fiinovation has grown phenomenally and has made a benchmark in the sector through its service quality. It has been able to bridge the gap between businesses and communities through value-based CSR programmes in association with credible civil society organizations on pan India basis in the field of health, environment, education, and livelihood

Fiinovation CEO : Dr Soumitro Chakraborty, Chief Executive Officer of Innovative Financial Advisors Pvt. Ltd. (Fiinovation), was conferred with ‘CEO of the year’ award at the 8th World CSR Congress held in Mumbai on February 18.

The World CSR Congress this year focused on the integration of Sustainable Development Goals (SDGs) in corporate strategies, innovation, and strategic alliances. The award recognizes fiinovation projects exemplary work in the social development sector and noteworthy CSR and sustainability programmes.

Fiinovation Delhi NGO address - 24/30, Ground Floor, Okhla Industrial Estate Phase 3 Rd, New Delhi, Delhi 110020

How mandated "Corporate Social Responsibility" can be wasteful

Suppose you habitually change from your staid normal self into a rollicking Kishore Kumar when you get into the shower, and change back to stodgy you once you emerge from it. Suppose, further, the family makes it a rule that unless you sing in the shower, you would not be served any food at home. You might rebel and leave home altogether or croak like a crow: you would no more sing for joy.

With its new laws on Corporate Social Responsibility (CSR), the government has put companies into your musical shoes. Any company that has a net worth of at least Rs 500 crore, a turnover of Rs 1,000 crore or a net profit of Rs 5 crore is obliged to spend 2% — thankfully not 5% — of its average profits over the last three years on CSR.

This was a change brought to the Companies Act by the previous UPA government, which turned what many companies had been doing voluntarily into a legal obligation. But the UPA-era legal change still lacked coercion: if a company did not comply with the CSR directive, all it needed to do was give an official explanation as to why it was being a heel.

Now, failure to perform CSR duty can invite a fine ranging from Rs 50,0000 to Rs 25 lakh, and the officials held responsible for the company’s CSR deficit can go to jail for three years. Nobody spoke about it but perhaps the slogan, ‘Minimum government, maximum governance’ was part of the payload when Chandrayaan 2 was despatched to the far side of the moon.

What exactly is CSR? Economists such as Milton Friedman were clear that just by doing its business well, a company discharges its duty to society in full. A company converts ordinary folks’ savings into capital and generates returns for them, whether as interest or dividends. It creates jobs, incomes for its employees and investors, pays taxes directly on its profits and indirectly on the goods and services it produces. It meets, through its output, social needs or wants. Often, companies perform research, creating new advances in science and technology. Just by being a successful and profit-making company, it meets its social responsibility.

Yet, many companies have been consciously going beyond their core, corporate mandate and doing things that impact society in a gainful manner. ET Awards for corporate excellence have had a category, Corporate Citizen of the Year, long before CSR entered the Company Law in 2013. The motivation for companies to enter CSR has been varied.

A cigarette/liquor/sugary drink manufacturer could develop an angelic concern for the environment and the underprivileged to mellow public perceptions of their profiteering from sin goods. Public sector enterprises have been doing CSR without ever realising what they were doing, much like lexicographer Samuel Johnson’s friend who never realised that prose was what he spoke.

SAIL would build towns in the middle of nowhere, complete with schools and hospitals that were open to neighbouring communities, whose land it had taken over to open mines and build factories, give scholarships to tribal youth and employ them on the shopfloor. This won SAIL goodwill and freedom from protests and attacks of the kind that companies that were focused solely on their core operations have had to contend with.

The best kind of CSR takes a form that both gives an extra benefit to society and adds to the company’s bottomline. Unilever promotes hand-washing in Africa and Asia. It reduces infections, improves nutrition and sells more soap. But India’s CSR rules prohibit labelling any activity that adds to the company’s bottomline as CSR.

Mandated CSR can be wasteful. Of the amount a company spends on CSR, some would go on publicity, training of staff or searching for the right NGO, travel and staff accommodation at remote sites, besides funding, say education. Put all such expenditure by all companies and the CSR spend on peripheral activity can be huge.

It would be better to take this money as tax and for the government to spend that money in a centralised and coordinated fashion.

But that would boost India’s corporate tax rate to more than double the rate in Singapore. What should we do?

There are benefits to being known as a corporate do-gooder. Ethical investors prefer ethical companies and have trillions of dollars at their disposal to demonstrate their preference (the Norwegian Pension Fund alone is worth $1 trillion). Consumer groups campaign to punish companies that exploit labour or destroy forests, and favour companies that are water-positive, for example. Being sustainable as a company can give a sheen to your soup and snacks, as former CEO Paul Polman showed sceptics at Unilever.

If a company has the imagination to divine a strategy that converges its own profits with saving humanity, let it go ahead. If another company just wants to create lots of jobs and pay taxes and dividends, don’t burden it with do-goodery. This would ideal. In India now, we have Gandhian trusteeship being marshalled to coerce companies to do good. Indian companies now have to make profits, pay taxes, repay loans and do good. Four legs, after all, are better than two, right?

This article is taken - https://economictimes.indiatimes.com/news/company/corporate-trends/view-how-mandated-corporate-social-responsibility-can-be-wasteful/articleshow/70515680.cms?from=mdr

Innovative Financial Advisors Pvt. Ltd. (Fiinovation) is a global consulting firm operating in multiple disciplines of the social development sector with emphasis on Corporate Social Responsibility (CSR) and Sustainability. Fiinovation offers end to end CSR consulting services and simplified solutions that has helped various corporations channelize their resources for the upliftment of community on societal, economic and ecological aspects in accordance to their CSR charter. Since 2008, Fiinovation has grown phenomenally and has made a benchmark in the sector through its service quality. It has been able to bridge the gap between businesses and communities through value-based CSR programmes in association with credible civil society organizations on pan India basis in the field of health, environment, education, and livelihood

Fiinovation CEO : Dr Soumitro Chakraborty, Chief Executive Officer of Innovative Financial Advisors Pvt. Ltd. (Fiinovation), was conferred with ‘CEO of the year’ award at the 8th World CSR Congress held in Mumbai on February 18.

The World CSR Congress this year focused on the integration of Sustainable Development Goals (SDGs) in corporate strategies, innovation, and strategic alliances. The award recognizes fiinovation projects exemplary work in the social development sector and noteworthy CSR and sustainability programmes.

Fiinovation Delhi NGO address - 24/30, Ground Floor, Okhla Industrial Estate Phase 3 Rd, New Delhi, Delhi 110020

India Inc’s CSR spending grew 17.5% in FY19

India Inc. is doing much more than just lip service towards Corporate Social Responsibility (CSR) and it is evident from the fact that 1,132 companies listed on the NSE witnessed an annual increase of 17.5% in CSR spends at ₹11,961 crore in FY19. According to nseinfobase.com -- a joint initiative of National Stock Exchange (NSE) and PRIME Database, the average net profit of these companies was over ₹6 lakh crore in FY19, up from ₹5.23 lakh crore in FY18. The CSR spend stood at about 1.99% of the total average net profit in FY19, while the average spend per company was ₹10.57 crore.

Back in FY15, these companies spent ₹6,556 crore or 1.57% of their total net profit on CSR; it was nearly 30% lower than FY19 at ₹7.45 crore on an average per company. “CSR expenditure by companies listed at NSE has grown at a healthy compounded annual growth rate (CAGR) of 17% over the last five years,” says Mukesh Agarwal, CEO, NSE Data & Analytics. As per CSR requirements, the amount required to be spent for FY19 was ₹12,018 crore, but the companies decided to spend a bit more at ₹12,461 crore, but ₹1,343 crore eventually remained unspent. While the CSR law mandates spending across 12 prescribed schedules, few companies deployed CSR spends towards community development, infrastructure, social welfare, child welfare, and other activities.

“In line with the previous year, education received the maximum spend (₹4,440 crore) followed by healthcare (₹3,242 crore),” says Pranav Haldea, managing director, PRIME Database Group which has developed and powers nseinfobase.com. “Areas such as armed force veterans, technology incubators, slum development and disaster management saw negligible spends,” Haldea adds. In terms of company-wise CSR spends, the number of companies which spent on CSR went up to 1,055 (93% of the 1,132 companies) in FY19 compared to 1,024 (94%) in FY18. The balance 77 companies, despite being mandated, did not spend anything, according to nseinfobase.com.

Overall, 653 companies, or 64%, increased their spending as compared to FY18, while there were 488 companies (43%) which exceeded their prescribed spending in FY19. There were also 37 companies, which despite reporting a loss, spent on CSR. On the other hand, there were 332 companies which missed the mandatory spending of 2% of net profit in FY19, compared to 353 in FY18. On the other hand, there were 332 companies which missed the mandatory spending of 2% of net profit in FY19, compared to 353 in FY18. The CSR spends from PSUs touched ₹3,198 crore from 57 PSUs in FY19, as compared to ₹2,710 crore spent by 54 PSUs in FY18.

Link: https://www.fortuneindia.com/investing/india-incs-csr-spending-grew-over-175-in-fy19/104026

(Innovative Financial Advisors Pvt. Ltd. (Fiinovation) is a global consulting firm operating in multiple disciplines of the social development sector with emphasis on Corporate Social Responsibility (CSR) and Sustainability. Fiinovation offers end to end CSR consulting services and simplified solutions that has helped various corporations channelize their resources for the upliftment of community on societal, economic and ecological aspects in accordance to their CSR charter. Since 2008, Fiinovation has grown phenomenally and has made a benchmark in the sector through its service quality. It has been able to bridge the gap between businesses and communities through value-based CSR programmes in association with credible civil society organizations on pan India basis in the field of health, environment, education, and livelihood

Fiinovation CEO : Dr Soumitro Chakraborty, Chief Executive Officer of Innovative Financial Advisors Pvt. Ltd. (Fiinovation), was conferred with ‘CEO of the year’ award at the 8th World CSR Congress held in Mumbai on February 18.

The World CSR Congress this year focused on the integration of Sustainable Development Goals (SDGs) in corporate strategies, innovation, and strategic alliances. The award recognizes fiinovation projects exemplary work in the social development sector and noteworthy CSR and sustainability programmes. 

Fiinovation Delhi NGO address - 24/30, Ground Floor, Okhla Industrial Estate Phase 3 Rd, New Delhi, Delhi 110020

How will changes in the law affect companies CSR?

Parliament has passed amendments to the Companies Act to strengthen laws governing corporate social responsibility (CSR). Mint delves into the changes that have left Indian companies unamused as they face higher compliance and management costs.

What are the laws governing CSR?

The laws governing CSR come under the Companies Act, 2013, and became effective on 1 April 2014. These laws state that companies with a net worth of ₹500 crore or revenue of ₹1,000 crore or net profit of ₹5 crore during the immediately preceding fiscal should spend 2% of their average net profit in the last three years on activities related to social development such as sanitation, education, eradication of hunger, poverty and malnutrition, conservation of heritage, art and culture, and vocational training such as setting up grooming outlets or training centres for sewing.

What are the changes in the law?

Till now, if a company was unable to fully incur the CSR expenditure in a given year, it could carry this amount forward and spend it in the next 12 months, in addition to the money for that year. Under the new laws, any unspent amount will have to be deposited into an escrow account within 30 days of the end of that fiscal. This amount will have to be spent within three years from the date of its transfer, failing which it

will be put into a fund, which could even be the Prime Minister’s Relief Fund. The government also plans to include a specific penal provision in the Companies Act in case of non-compliance with CSR.

What are the penalties?

Companies violating CSR norms will attract fines ranging from ₹50,000 to ₹25 lakh, with the officers concerned liable for imprisonment of up to three years, according to the Companies (Amendment) Bill, 2019.

What are the objections to the proposed amendments?

The proposed changes come in an environment where profit has become a dirty word. Starting from the budget, which increased taxes on the rich, this is seen as another move aimed at penalizing the private sector. There’s a sense that the government is unloading its responsibilities on the private sector. The new provisions are also tantamount to raising taxes on companies as they would be penalized for not spending the full CSR amount. The move will also increase costs for companies.

What paraphernalia do companies need to ensure CSR compliance?

Listed firms need to disclose their CSR activities, amount spent and framework created to ensure adherence to norms. They have a CSR team that provides a regular progress report and updates to the CSR committee of the board. The committee is also given a report of the activities undertaken each quarter, along with targets and reasons for variance, if any. All this needs to be submitted to the corporate affairs ministry. The list of activities constituting CSR and what does not is subjective.

This article is taken from https://www.livemint.com/companies/news/how-will-changes-in-the-law-affect-companies-csr-1564592308806.html

(Innovative Financial Advisors Pvt. Ltd. (Fiinovation) is a global consulting firm operating in multiple disciplines of the social development sector with emphasis on Corporate Social Responsibility (CSR) and Sustainability. Fiinovation offers end to end CSR consulting services and simplified solutions that has helped various corporations channelize their resources for the upliftment of community on societal, economic and ecological aspects in accordance to their CSR charter. Since 2008, Fiinovation has grown phenomenally and has made a benchmark in the sector through its service quality. It has been able to bridge the gap between businesses and communities through value-based CSR programmes in association with credible civil society organizations on pan India basis in the field of health, environment, education, and livelihood.

Fiinovation Delhi NGO address - 24/30, Ground Floor, Okhla Industrial Estate Phase 3 Rd, New Delhi, Delhi 110020