Guidlines on Corporate Social Responsibility for Central Public Sector Enterprises in India

CHANGE IN APPROACH
With the rapidly changing corporate environment, more functional autonomy, operational freedom etc., CPSEs today are required to adopt CSR as a strategic tool for sustainable growth.

CSR, in the present context, means not only investment of funds for social activities but also integration of business processes with social processes.

NEED FOR LINKAGE WITH COMMUNITY
An Enterprise needs to address the concerns of the society in which the enterprise is operating. There should be free interaction between enterprises and community leaders.

In order to address the social needs of the community, viable projects need to be identified to meet its requirements.

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OVERARCHING CONCEPT
CPSEs may approach Corporate Social Responsibility as a professional management process, with a long-term strategy, integrating it with corporate strategies.

CSR activities may be planned in parallel to the business plan, looking at every possible opportunity to link and integrate business plans with the social and environmental concerns available.

PLANNING THE CSR INITIATIVE
1 .A long-term Corporate Social Responsibility Plan needs to be prepared matching with the long-term business plan;
2.This may be broken down into short-term and medium term plans, specifying activities to be undertaken, budgets allocated, responsibilities and authorities defined, and measurable results expected.

IMPLEMENTATION
The Plan must clarify implementation guidelines involving:
1. Participation of Voluntary Organizations, Specialist Organizations and Community Based Organizations;
2. Base-line Surveys;
3. Documentation of the experience;
4. Setting up a CSR Hub with participation of Deptt of PE, SCOPE and CPSEs;
5. Monitoring and Evaluation;
6. Lessons learnt for future use.

THRUST AREAS
1. Areas related to the business of the PSE as a natural corollary to the business;
2. Assistance to be mostly project based rather than donation, so as to generate community goodwill, create social impact and visibility;
3. Finalizing of time-frames and various milestones before commencement of a project;
4. Involving of suppliers in order to ensure that the supply-chain also follows the CSR principles;
5. Emphasis on principles of Sustainable Development, based on the immediate and long-term social and environmental consequences of the activities undertaken;
6. Improvement of the existing ecological conditions;
7. Ensuring skill enhancement and employment generation by co-creating value with local institutions and people.

ACTIVITIES THAT WILL NOT COUNT AS CSR
1. BENEFITS TO STAFF
2. GRANTS TO ORGANIZATIONS/INSTITUTIONS

IMPLEMENTATION MODALITIES
1.  CSR Activities to be carried out by Specialist Agencies;
2.  Such activities generally not to be conducted by CPSE employees / staff;
3.  Specialist Agencies to include NGOs, Institutes, Academic Organizations, Civil Society / Community-based Organizations, Trusts, Missions etc., who have requisite expertise;
4. Utmost efforts to be made to find out the reliability, and track record of the NGOs / Organizations entrusted with CSR activities;
5.  Initiatives of State Governments as well as Central Government Departments / Agencies could be dovetailed/ synergized with CSR activities;
6.  Avoidance of any duplication of CSR activities by the CPSEs, the State Governments and local level Programmes.

FUNDING
The CSR budget to be mandatorily created through a Board Resolution as a percentage of net profit in the following manner:

TYPE OF CPSES EXPENDITURE RANGE FOR CSR
Net Profit in a Financial Year (Previous Year)       (% of profit)
(i) Less than Rs. 100 crore                                              3% – 5%
(ii) 100 crore to Rs. 500 crore                                      2% – 3% (Subject to a Min. of 3 cr)
(iii) 500 crore and above                                                 0.5% – 2%

1. The CSR Budget to be fixed for each financial year. This funding not to lapse
2. must be transferred to a CSR Fund, which will accumulate
3. as in the case of non-lapsable pool for North East.
4. In case CPSEs have different Profit Centers like Factories / Plant locations, they may be allocated separate CSR budgets to be spent by them under the Annual CSR Budget allocations.

MONITORING
1. Monitoring of the CSR projects is very crucial and needs to be a periodic activity of the Enterprise;
2. The Board of CPSEs should discuss the implementation of CSR activities in their Board meetings;
3. The CPSE should bring a separate paragraph / chapter in the Annual Report on the implementation of CSR activities / projects including the facts relating to physical and financial progress;
4. The implementation of CSR guidelines to form a part of the Memorandum of Understanding to be signed between CPSE and the Government;
5.  The performance of CSR should be monitored by the Ministry / Department on regular basis;
6.  In MoU Guidelines from 2010-11 onwards, 20% has been earmarked out of the non-financial parameters for performance under CSR.
7. For proper monitoring of CSR activities, companies may appoint a CSR committee or a Social Audit Committee or a suitable, credible agency to critically assess fulfillment of social obligations.
8.  CSR projects should also be evaluated by an independent external agency. This evaluation should be both concurrent and final.

MONITORING & EVALUATION BASELINE SURVEYS AND DOCUMENTATION
1. Impacts made may be quantified to the best possible extent with reference to base line data, which need to be created by the CPSEs before the start of any project. Hence, Base-line Surveys mandatory.
2. The documentation relating to CSR approaches, policies, programmes, expenditures, procurement, etc. to be put in the public domain, particularly through the internet.

CSR HUB
The Department of Public Enterprises, in conjunction with SCOPE and the CPSEs will create a CSR Hub which will undertake / facilitate the following activities:
1. Nation-wide compilation, documentation, and creation of database;
2. Advocacy;
3. Research;
4. Preparation of Panels of Implementing Organizations;
5. Promotional activities, including production of short films, printing of brochures, pamphlets etc.;
6. Conferences, Seminars, Workshops – both national and international;
7. Act as a Think Tank;
8. Any other matter as entrusted to it from time to time by the DPE;
9. The Hub will begin operations with funding provided by DPE;
10. It will, however, be free to receive funds from;

(i) SCOPE and both Central as well as State CPSEs;
(ii) UN Agencies, reputed international agencies such as World Bank, EU and other multilateral bodies and         organizations;
(iii) Reputed National and State Bodies;
(iv) Govt. Departments, Autonomous Organizations, Planning Commission, Attached and Subordinate Offices,          Corporations etc.;
(v) Philanthropic Missions, Trusts, etc. of national and international repute.
(vi) Decisions relating to the location and functioning of the HUB will be taken by DPE. SCOPE will be kept informed of          such decisions and will be free to offer suggestions, inputs etc.