Read what Dr Prashanat Nellikal has to say on CSR Goals
Inputs by Dr Prashant Nellikal Text: Shalet James Illustration: Jithin Mohan
With an aim to wake up corporate India to its wider social responbilities, CSR came into force in 2014. The provisions of Corporate Social Responsibility (CSR) under Section 135 of the Companies Act 2013 mandated for companies with a net worth of INR 500 crore or with annual turnover of INR 1,000 crore to spend under CSR 2% of their average net profits earned during three immediately preceding financial years on CSR activities.Both Indian and non-Indian companies in India which has a turnover of INR 10 billion or more or a net profit of INR 50 million or more is accountable to have a CSR Wing and conduct activities. Corporate Social Responsibility (CSR) is catching momentum in every company, and moving towards creating sustainable growth models. According to KPMG report, in 2016, the total CSR reporting of India was the highest among 45 countries surveyed by the firm. The total CSR spent by companies in India for the year 2015- 16 had been INR 5,115 crore. Out of which Indian origin companies spent INR 4,708 crore and the foreign-based companies spent only INR 406.17 crore. Thus treading alongside with a populist Union Budget this year, our CSR expert recommends companies to follow the below trends this 2017.
Promote a Healthy and Safe Environment
With the launch of Swachh Bharat Abhiyan, the importance of cleanliness has been brought to the mainstream. According to studies, about 39% of companies have allocated funds to this campaign and have built toilets or helped in cleaning up of public spaces. It is expected that 2017 will see companies launching customer-facing initiatives, products and services that fulfill the promise of a clean environment. At the same time companies needs to ensure that their CSR funds do not act as fillers for Government projects as mentioned in the Companies Act. Corporates are suggested to come up with their contribution through constructing public toilets wherever necessary, conducting awareness programmes and trainings as and how they would like to support; unlike complimentary philanthropy to Government budget.
Strategize CSR
CSR investments need appropriate disclosure to be done every year. But as per a recent study, many companies held back CSR funds in 2016 as they did not find appropriate projects. The Economic Times study shows that, less than 4% of CSR funds spent by top Indian corporates were spent on charity. Now, companies are looking at methods to add strategic brand value through these investments. The concept of philanthropic supports and conventional modes of charity are on a shift towards the new age CSR investments. In 2017, our expert envisagestowards seeing companies not only incorporating stringent reporting on existing projects but the entire project monitoring & review to be strengthened to build greater impact. For corporates time is now critical to have clarity on the beneficiary communities, selecting right criteria for the deserving, structuring the mode of service delivery, results and impacts etc. It is mandatory for the CSR Committee constituted at the Company and led by an independent Director to review the developments quarterly and give directions thereof.
Growth without impacting the environment
Most companies are moving towards creating sustainable growth models in various ways. Today, the expected goal of the companies is to have growth plans without adversely impacting the environment. This is well understood on the contributions towards the triple bottom-line, people-planet-profit, which determines the social, environmental and financial performance of an organisation. Thus in 2017 companies should focus to build stronger sustainability strategies.
Focusing on Water Management
Water shortages, Drought and extreme floods were the most discussed topics in 2016 and companies should be increasingly gearing up to cater to this challenge. Corporate sustainability reports are focusing on the importance to address the water shortage issues. In 2017, companies must plan to launch more projects and initiatives around water management and water valuation. Industries should also bring in internal practices for effective water management and community projects and spearhead these projects through the CorporateNGO consortiums.
Realising the Importance of Renewables
Call it renewable energy or alternate energy, companies worldwide are now seen focusing more on solar, biofuels and wind. Corporations will soon enter into a public-partnership on renewables by engaging with the government in policy making. Expert suggestions for 2017 is to give prime importance to renewable energy.
Agreeing to Health is truly Wealth
Health Sector is one of the major focus areas for Corporates. In India almost 20% of the CSR funding is health based and the majority of large scale Corporates contribute towards rural health especially to make services accessible for rural masses. Further Private-PublicPartnership projects are yet to happen in this segment too, opportunities are at galore with the Government systems at grassroots.