Corporate Social Responsibility - A Snapshot

1. Pankaj Jain
Founder and CEO
IRE CFO Services LLP
(A Jain Ventures Initiative)
📞 9312213765
📞 pjainonline@gmail.com
irecfo.comIPEM Program 24.3.18IPEM Program 24.3.18
National Seminar on Managing Business withNational Seminar on Managing Business with
Human Values: Challenges and MeasuresHuman Values: Challenges and Measures
Corporate Social Responsibility: A Snapshot

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Discussion Points
 India – Key Socio Economic Facts
 Corporate Social Responsibility (CSR) Pyramid
 CSR in India - Some Ground Realties
 Relevance of CSR for Companies
 National Voluntary Guidelines for CSR
 SEBI Guidelines for Business Responsibility Reporting
 Duties of Board of Directors
 Functioning Mechanism of CSR Committee
 CSR Spending and Emerging Trends in Responsible
Business

4.  India was 7th largest economy worldwide in 2017. India's economy is
expected to overtake that of Britain and France to become the fifth
largest in the world in dollar terms in next few years, and third largest by
2032. Therefore, India is important player as emerging global leader in
terms of economic growth.
 However, on social front India is legging behind as nearly 27.5 % of
India’s population still lives below the poverty line and 38.4% of children
under five in India are undernourished, while 51.4% of women in
reproductive ages are anemic.
=> What emerges from above two perspectives is a picture of uneven
distribution of the benefits of growth which many believe, is the root
cause of social unrest in our country. In this context, Social
Responsibility becomes utmost important for every citizen and more
so for Corporate Citizens.
India – Key Socio Economic Facts
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6.  CSR in India has traditionally been seen as a philanthropic activity.
 The practice of CSR in India still remains within the philanthropic
space, but now it has moved from institutional building like
educational, research and cultural to community development
related areas and activities through various projects.
 It is now getting more strategic in nature (that is, getting linked
with business) than philanthropic, and a large number of
companies are reporting the activities they are undertaking in this
space in their official websites, annual reports, sustainability
reports and even publishing CSR reports.
CSR In India – Some Ground Realties.1
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7.  The Companies Act, 2013 has introduced the idea of CSR to the
forefront and through its disclose-or-explain mandate, is promoting
greater emphasis, transparency and disclosure.
 The CSR is applicable to companies with an annual turnover of 1,000
crore INR and more, or a net worth of 500 crore INR and more, or a
net profit of five crore INR and more. The new rules, which are
applicable from the fiscal year 2014-15 onwards also require
companies to set-up a CSR committee consisting of their board
members, including at least one independent director.
CSR In India – Some Ground Realties.2
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8.  Companies to spend at least 2% of their average net profit in the
previous three years on CSR activities
 India is the first country in the world to enshrine corporate sector
for social responsibility through enforcement of law.
 If the company did not spend CSR, it has to explain the reasons for
not spending in its annual report.
=> Non-disclosure or absence of the details will lead to penalty
from Rs. 50,000 to Rs. 25 lakh or even imprisonment of up to 3
years
CSR In India – Some Ground Realties.3
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9. CSR is not only relevant because of a changing policy environment but
also due to its ability to meet business objectives and being socially
responsible can have host of benefits for the companies such as:
Strengthening relationship with all stakeholders
Enabling continuous improvement and encouraging innovation
Attracting the best industry talent as a socially responsible company
Risk mitigation due to effective corporate governance framework
Enhanced ability to manage stakeholder expectations
These benefits are important and most companies that are engaged in
CSR, are revisiting their strategies and expanding their operations to reap
enhanced benefits for contributing towards inclusive growth.
Relevance of CSR for Companies
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10. National Voluntary Guidelines (NVGs) on Social, Environmental and
Economic Responsibilities of Business, have been laid down by the
Ministry of Corporate Affairs. These are applicable to all businesses
irrespective of size, sector or location. The nine principles of National
Voluntary Guidelines are:
Principle 1: Businesses should conduct and govern themselves with
ethics, transparency and accountability.
Principle 2: Businesses should provide goods and services that are safe
and contribute to sustainability throughout their life cycle.
Principle 3: Businesses should promote the wellbeing of all employees.
National Voluntary Guidelines.1
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11. Principle 4: Businesses should respect the interests of, and be
responsive toward all stakeholders, especially those who are
disadvantaged, vulnerable and marginalized.
Principle 5: Businesses should respect and promote human rights.
Principle 6: Business should respect, protect, and make efforts to
restore the environment.
Principle 7: Business when engaged in influencing public and
regulatory policy, should do in responsible manner.
National Voluntary Guidelines.2
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12. Principle 8: Businesses should support inclusive growth and
equitable development.
Principle 9: Businesses should engage with and provide value to
their customers and consumers in a responsible manner.
=> These guidelines are based on 3P Model i.e. the business
should engage itself for the interests of People, Planet and
Profits.
National Voluntary Guidelines.3
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13.  SEBI has issued a circular on 13 August 2012 mandating top 100 listed
companies to report their ESG initiatives in their annual report by way
of Business Responsibility Report (BRR) describing initiatives taken
by the listed entity from an Environmental, Social and Governance
perspective, in the format as specified by the Board.
 The BRR requires companies to report their performance on the nine
NVG principles.
 Other listed companies have also been encouraged by SEBI to
voluntarily disclose information on their ESG performance in the BRR
format.
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SEBI Guidelines for Business Responsibility Reporting

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Format of Business Responsibility Report

15.  Board of Directors will
 Approve CSR Policy
 Ensure implementation of CSR policy
 Disclose the contents of CSR policy in the Board report
 Place the same on company’s website, if any
 Ensure CSR spending amounting to at least 2% of the average
net profit of the preceding three financial years
 Board’s Report shall specify the reasons for not spending the
specified amount
=>There is no penalty for failure to spend 2% of net profit on CSR
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Duties of Board of Directors for CSR

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Functioning Mechanism of CSR Committee

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20.  Regular discussions on ‘Responsible Business’ in business forums
 CSR embedded in organizational structure
 Incorporating best global practices
 Proactive government – Guidelines & directives
 Partnerships between government, corporate and civil society
 CSR and Sustainability are becoming criteria for performance
evaluation for public sector companies
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Emerging Trends in Responsible Business

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Thanks
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Pankaj Jain
Founder and CEO
IRE CFO Services LLP
(A Jain Ventures Initiative)
📞 9312213765
📞 pjainonline@gmail.com
irecfo.com
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