FMCG firms' CSR spend up by 57pc
As more and more companies publish their annual reports, the gradual swelling of the Corporate Social Responsibility (CSR) kitty is evident from the numbers. Consumer goods companies' share to CSR rose by 57% in 2014-15, in its first year of implementation as under Companies Act 2013.
Six major companies ITC Ltd, Hindustan Unilever Ltd, Nestle India Ltd, Godrej Consumer Products Ltd, Dabur Ltd, Emami Ltd spent Rs.343.2 crore during the year, mostly in health, nutrition, livelihoods and sanitation initiatives.
Leading the pack, the largest company by revenue, ITC Ltd had to double its CSR spending to Rs.214 crore to comply with the law. ITC's CSR itself accounted for 60% of the sector's total spending.
The cigarette maker spent largely on soil conservation (Rs.31.45 crore) and livelihood initiatives (Rs.28.53 crore) where it trains dairy farmers and help set up of modern milk collection networks, which lead to increase in income of farmers through enhanced productivity. The CSR rules, came into force on 1 April last year under the Companies Act 2013 and companies with a net worth of Rs.500 crore or more or revenue of at least Rs.1,000 crore or a net profit of Rs.5 crore in a given fiscal year should spend 2% of the profit of the last three years on CSR activities.
While most of the six firms were able to meet the 2% mandate and in fact spent a few lakhs more than needed, Swiss multinational, Nestle which is in eye of the Maggi-ban storm, not only missed meeting the 2% CSR spend by a wide margin, but also saw its CSR spend fall in 2014. (The company follows a calendar year of reporting).
According to its annual report, Nestle India had to spend Rs.30.7 crore in 2014, but it spent only Rs.8.5 crore in the year ended 31 December 2014. Its CSR spend fell by 64% from Rs.23.9 crore in 2013.
Of the Rs.8.5 crore it spent, Rs.5 crore went to the Swach Bharat Kosh set up by the Central Government for the promotion of sanitation and making available safe drinking water. It spent Rs.1.5 crore on raising nutritional awareness among government school children around its eight manufacturing units in Haryana, Tamil Nadu, Goa among others.
"Nestle would do well to focus on good nutrition practices for CSR especially given the controversy they are facing and the fact that 60% of Indian children are wasted, stunted, underweight or a combination of the above," says Priya Naik , founder of Samhita Social Ventures, a CSR consulting firm. Initially, they may face backlash for it because of the Maggi controversy, but given their core competencies, they could make a very valuable contribution to the malnutrition challenges that we are facing as a country, adds Naik.
As a way of explanation of why Nestle did not meet the mandate, in its annual report it said: "The company has been implementing societal activities since many decades. As per the strict interpretation of the new CSR rules, some of these initiatives may not be eligible under the 2% CSR spend."
It also said it has ensured that the cumulative spend on societal activities is over 2% "Over the years in accordance with Nestlé's way of doing business, the Company has spent on the welfare of society in activities including 'Water',' Nutrition', and 'Rural Development'. Cumulative spend on welfare of society and CSR during 2014 was above that prescribed under Companies Act 2013.
With the applicability of the Companies Act 2013 from April, 2014, the spends during the year 2014 which qualify as CSR together with commitments already made during 2014 was around 1%. It is planned to step up this spend in a staggered manner in the coming years.," said a Nestle spokesperson adding that the details are disclosed Director's Report annexed in the Annual Report 2014.