Ir­re­spon­si­ble gaps

Over 6,000 com­pa­nies are re­quired to spend on cor­po­rate so­cial re­spon­si­bil­ity. But two-thirds have de­faulted and there is no penalty

Down to Earth - - GOVERNANCE - SAVITA VERMA |

Fcor­po­rate world, it is a unique OR IN­DIA'S sea­son. Chief ex­ec­u­tives have been ner­vous about their an­nual re­ports, but for a com­pletely new rea­son. As a se­nior vice pres­i­dent of an in­sur­ance firm says,com­pa­nies are not just mon­i­tor­ing the net profit,but an­other key as­pect: the spend­ing un­der cor­po­rate so­cial re­spon­si­bil­ity (csr). For the first time com­pa­nies are fil­ing their an­nual re­ports that will show their legally man­dated ex­pen­di­ture on csr.

On April 1, 2014, In­dia be­came the world’s first coun­try to legally man­date csr.The Com­pa­nies Act, 2013, made it manda­tory for com­pa­nies with a net profit be­fore tax of at least crore, or a net worth of at least crore, or a turnover of at least crore to spend two per cent of its av­er­age net profit be­fore tax of the pre­ced­ing three years on csr. Some 6,000 com­pa­nies are re­quired to in­vest in csr un­der this pro­vi­sion. But ac­cord­ing to the pre­lim­i­nary data with the Min­istry of Cor­po­rate Af­fairs (mca), two-thirds of the com­pa­nies have failed to meet the two per cent spend­ing man­date.

All el­i­gi­ble com­pa­nies are re­quired to con­sti­tute com­mit­tees to set csr ob­jec­tives and mon­i­tor their ac­tiv­i­ties. They are also re­quired to men­tion csr de­tails in their an­nual re­ports.The in­vest­ment can be made in ar­eas like ed­u­ca­tion, health, san­i­ta­tion and en­vi­ron­ment. The csr ac­tiv­i­ties can be chan­nelised through a foun­da­tion formed by the com­pany.

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