Restricting spend methods to make complying with CSR difficult

CII today said corporates would find it difficult to comply with new CSR norms if methods of expenditure are restricted.

NEW DELHI: Pitching for broadening the areas for social welfare spending, CII today (5 November 2013) said corporates would find it difficult to comply with new CSR norms if methods of expenditure are restricted.

As per the new Companies Act, activities that would fall under CSR net include reducing child mortality and improving maternal health, combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases, ensuring environmental sustainability, employment enhancing vocational skills and social business projects.

Certain class of companies are required to shell out at least two per cent of their three-year annual average profit towards social welfare activities.

Companies will face difficulty in spending 2 per cent of their profits towards CSR activities if areas and methods of this expenditure will be restricted, a CII survey today said.

As per the new Companies Bill, which was approved by Parliament after a long wait on August 8, requires companies to shell out two per cent of three-year average annual profit towards Corporate Social Responsibility (CSR) activities.

The survey said that strengthening or creation of new institutions, research, debate and on ground action should be qualified as CSR spends.

“…companies find it difficult to exhaust this (2 per cent) budget if areas and methods of spends are restricted,” it said.

On making it mandatory for the companies to spend on CSR activities, it said that it was too early to tell whether making sustainability a core aspect of businesses would happen through mandatory regulatory frameworks or voluntary efforts.

“Perhaps, a middle path is the most pragmatic and effective solution,” it suggested.

The Business Responsibility India Survey 2013′ found that about 75 per cent of the 200 companies surveyed have already incorporated business responsibility (BR) into purchasing policy or supplier code of conduct.

It said that about 25 per cent of the companies are spending at least 2 per cent of PAT on CSR activities.

“Women are under-represented at the workplace. Women employees account for less than 10 per cent for more than half of the top 200 companies,” it added.

(PTI, 5 Nov 2013)