The Alignment of Indian Companies in Meeting Their CSR Commitment
On April 1, 2014, India became the first country to legally mandate corporate social responsibility. The rules in Section 135 of India’s Companies Act make it mandatory for companies of a certain turnover and profitability to spend 2% of their average net profit for the past three years, on CSR.
Businesses could now invest their profits in areas such as poverty alleviation, education, gender equality and hunger, as part of their CSR compliance.
A number of significant developments have taken place since then. Let’s take a look at a few early (& great) examples of companies that have diligently implemented CSR since the implementation of the policy.
1. THE TATA GROUP
The Tata Group conglomerate in India has been a torch bearer of giving back to society & has carried out multiple, different CSR projects & implementations. A large portion of which were network improvement and poverty alleviation programs. Through self-help gatherings, it engaged in women empowerment activities, income generation, country network development, and other social welfare programs. In the field of education, the Tata Group provided scholarships and endowments for numerous establishments.
2. ULTRATECH CEMENT
Ultratech Cement involved itself in social work across over 407 villages in the nation, planning to create supportability and self-reliance. Its CSR activities are centred around healthcare and family welfare programs, education, infrastructure, environment, social welfare, and sustainable livelihood.
The company organized medical camps, vaccination programs, purification programs, school enrollment, ranch drives, water conservation programs, modern preparing, and natural cultivating programs.
3. MAHINDRA & MAHINDRA
Indian automobile manufacturer, Mahindra and Mahindra’s (M&M) CSR programs invested in scholarships and awards, livelihood preparation, healthcare for remote areas, water conservation, and disaster relief programs. M&M runs projects, for example, "Nanhi Kali" concentrating on young lady education, Mahindra Pride Schools for modern preparation, and Lifeline Express for healthcare services in remote areas.
There have been several companies that not only meet their CSR commitments but also surpass them.
4. RELIANCE INDUSTRIES has been consistently maintaining its top position with CSR spending, according to MCA data, with spending a total of Rs. 849 Crore, in the previous year, against a prescribed budget of Rs. 811 Crore, in the year 2020.
However, for the year 2021, contributions towards CSR plunged sharply by 64%, as a result of, yes, you guessed it right, COVID, making it the lowest spending in all its years.
The nations and the corporate world were completely caught unawares by the extent and the scale of the pandemic. As a result, corporate worlds didn't know how to respond, which led to a standstill in many of the regular programs in order to gather funds for Covid. This indecision and lack of immediate action caused a lot of scattering in the process of CSR spending.
To re-establish and strengthen the CSR the Ministry has notified the amendments in Section 135 of the Act as well in the CSR Rules on 22nd January 2021 by improving disclosures and by simplifying compliances. In response to such amendments, the Ministry has received several references and representations from stakeholders seeking clarifications on the various issues related to CSR.
While the new framework is expected to increase corporate contributions, analysis reveals that a more significant issue pertains to rechanneling of investments.
The investments by companies are skewed towards three sectors, and contributions to these sectors have been increasing.
Education, healthcare and rural development accounted for 59.9 % of total spending on CSR in 2020-21; in 2014-15, their share in total CSR spending was just 54.6%.
While education's share has declined, health care has assumed importance in CSR spending. Education spending accounted for 25.7% of total CSR spending in 2014-15, which increased to 33.7% in 2017-18. It has since fallen to 24.8% in 2020-21. In contrast, health care spending has increased from 16.2% in 2017-18 to 26.9% in 2020-21.
Moreover, most of the funds are flowing to the developed states rather than states that require funding for development. Maharashtra, for instance, accounts for 13 per cent of the total spending. Six states—Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra and Tamil Nadu—accounted for over one-third of total CSR spending in 2020-21.
The share of 6 states has declined from 42.4% in 2016-17. But the share of more populous and poor states like UP, Bihar, Chhattisgarh and Jharkhand have remained negligible. These four states accounted for just 6% of total CSR spending in 2020-21.
Thus, for CSRs to be truly impactful, companies need to keep an active check on where they decide to invest their resources. This is where Job Booster comes into play. Job Booster has planned & assisted in the execution of several CSR projects, each time with a new vision, and a fresh outlook, to bring out the best out of corporates for the best of the community/sector involved.
Our recent CSR projects involve projects with the less popular states such as Jharkhand and the north-eastern states, to enhance career opportunities and encourage entrepreneurship. Furthermore, we have been consultants to many companies such as HDFC, Wells Fargo, and Adani, each front lining a different social cause. With each CSR project, Job Booster spends ample time in research and with the communities to be impacted, to better understand the need, the lack, and their priority, to bring out the desired social impact.
