FMCG firms' CSR spend up by 57pc

The Pak Banker - - COMPANIES/BOSS -

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.

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