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Corporate Social Responsibility (CSR) and Sustainability

Corporate Social Responsibility forced by Government?

The government has asked all companies to provide details of their investments made as part of their corporate social responsibility (CSR) initiative during the last fiscal year, a move that could lead to mandatory social obligation on companies.

“We have asked companies to file their CSR reports,” said an official of ministry of corporate affairs, adding that the data will form basis of a review of its policy in the next couple of months.

The ministry of corporate affairs, which introduced voluntary CSR norms in December last year, has not received a favourable response from India Inc at large.

“Many corporates have misused the liberty that has been given to them,” the official said, requesting anonymity.

While large corporate conglomerates in India have taken up commendable CSR activities, most of lesser known companies have not done any major work on their CSR front.

The voluntary guidelines had said that companies should allocate money towards CSR in proportion to their profits after tax.

However, the parameters on how to determine the sum that a company should spend was left for companies to decide themselves.

Recently, secretary in the ministry of corporate affairs R Bandyopadhyay took a dig at companies for their lack lustre effort in promotion of CSR.

In a veiled suggestion that the government is looking to impose mandatory rules for companies to spend on their CSR, he said that in case companies failed to take voluntary initiatives, the government in consultation with the Planning Commission will consider making CSR spending a ‘mandatory exercise’.

However, industry itself is not in support of an idea of making CSR spending a mandatory exercise.

Says Jyoti Vij, Assistant Secretary General at industry body FICCI: “Making CSR spending mandatory will be more of a window dressing for companies,” adding that such a step will not help the government achieve its real objective through CSR activities.

The government has also recently clarified that India Inc is unlikely to get any tax sops for spending more as part of their corporate social responsibility (CSR) initiatives.

The ministry would like corporates to adopt CSR as a part of their corporate culture and that such a culture could not be developed with reward of incentives, Mr Bandyopadhyay had said.

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Comment by Brad Ewing on August 11, 2010 at 4:12pm
A noble thought but I think it misses the point when it comes to CSR to be honest. It will only encourage companies to make random charitable contributions, rather than actually change the way they do business. Will be interesting to follow...


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