MUMBAI: Godrej Group chairman and veteran industrialist Adi Godrej today said the government move to make companies spend money towards corporate social responsibility is a ploy to “divert money for political purposes.” “I am very worried that this is a political move to divert money for political purposes.
I would be very careful of such mandatory recommendations,” Godrej told a CII function here. When asked if the industry was consulted before the Corporate Affairs Ministry made its intention of making companies spend two per cent of their net profit under corporate social responsibility and make them compulsorily disclose this in the annual reports, Godrej said there was “not much of dialogue.”
Speaking at a panel discussion, Godrej said newer “business movements” are making it possible for better valuations for companies with better ethics and values. “Now, institutional investors are asking companies to perform on issues like environment protection, sustainability etc.
That movement is getting around. I think such movements could help,” he said as an alternative that can act as an incentive to companies to do better for the society. Tata Steel vice-chairman B Muthuraman, however, had a different take on the issue and said CSR is “fundamental to business”.
He said there is a pressing need to change the matrix of measurement for corporations from the present system of profits and margins to the benefit that they give to the society at large. Though there is no clarity on the CSR, the current government position is that companies will have to set aside two percent of their three years’ average profit for CSR, but in case they don’t, they will have to give the reason to shareholders in the annual report. However, the government will not penalise them for not setting aside the money.
(PTI)
