New Delhi: Indian Express reported that in a move that aims to guide or direct India Inc’s resources towards affirmative action, the ministry of corporate affairs has suggested that funds spent on training and skills enhancement can be counted as corporate social responsibility.
The new Companies Bill, to be tabled in Lok Sabha, proposes that companies voluntarily spend 2 per cent of their profits in CSR activities and report these to their shareholders in annual reports.
With an increasing feeling among a section of the political class that the industry is doing precious little for the scheduled castes and the scheduled tribes, the government has been impressing upon India Inc to improve their employability prospects through skilling.
Even as the Prime Minister’s Office periodically reviews the progress on affirmative action by the industry, the MCA’s new plan will also prompt India Inc to put its money where it is needed most today.
“We are looking at a structured regime where India Inc may execute certain measures and be considered compliant with CSR activities,” said an official in the MCA. These activities have to be reported in a particular format by companies in their annual reports.
“The information they need to provide include money spent on CSR, details on vocational training provided, institutions and NGOs engaged for extending training, number of people trained and/ or absorbed, or self employed,” the official added.
The MCA has sought to blend the demands of affirmative action and CSR such that companies are better guided in their social responsibility spending. Both these aspects have come under intense scrutiny by both the shareholding community and political class.
In the long run, it is expected that such expenditure will not only enhance a company’s value and economic performance, it also adds tremendously to its goodwill, brand and reputation.
Recently, at a conference organised by the Bombay Chamber of Commerce and Industry, Chief Election Commissioner SY Qureshi had said, “CSR is not charity but a question of your very survival …We need a Warren Buffet and Bill and Melinda Gates to teach our corporates the need for CSR. What you do is not CSR but corporate social compulsion.”
In December 2009, the ministry had announced voluntary CSR norms on how firms can deal with the expectations of stakeholders and society. A Parliamentary standing committee had proposed later that the new Companies Bill must require companies with a networth of Rs 500 crore and above or turnover of Rs 1,000 crore or above mandatorily spend 2 per cent of their profits towards CSR activities. The ministry, however, plans to make such CSR spend voluntary.