Findings of CSR Study & Role of CSR in UP

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1 Presentation at E&H Conference, Sahranpur, UP 25 October 2013 Findings of CSR Study & Role of CSR in UP By Subhash Mittal, FCA Secretary, Socio-Research & Reform Foundation

2 Background to the Report Desire to learn about CSR, before talking about it. Huge interest one saw in CSR - from civil sector, from industrialists, from academicians. Very little hard facts available on CSR in the country A desire to promote CSR in a manner that it becomes a sustainable and effective instrument by creating a win-win situation.

3 Scope Arrive at scope of CSR Interventions in terms of funding Identify popular sectors for CSR intervention Identify methodology of implementation Additional scope Assess transparency in the sector and develop measurement tools for the same

4 Methodology Discussing ToR with various stakeholders Understand the sector by discussing it with Industry & Sector representatives Participate in discussion groups on CSR to develop better understanding Prepare list of top 100 corporates (List as per SEBI) Undertake study of individual company s Annual Reports, Business Responsibility Report and CSR Reports Develop matrix tables for capturing critical information, which is comparable Data captured is properly documented for subsequent verification Ensure sufficient checks for all data captured Summarise and analyse the results Prepare a report Disseminate the results through public platforms

5 Evolution of CSR Traditionally CSR undertaken by city seths through dharmshala, pios, etc. ~ based more on religious sentiments Gandhiji s call for Trusteeship was an important part of evolution of CSR in country. Several industrialists of this era have contributed to welfare (GD Birla, Jamanalal Bajaj, Sarabhai, Murugappa Group, to name a few) Institutions like BITS Pilani, IIM Ahemdabad, Physical Research Lab, Shri Ram College, etc are all result of initiatives of industrialists 50s -70s was lull period for CRS Huge growth in CRS since the industrial growth has picked up

6 Legal basis of CSR Private sector Presently no legal requirements though corporates try to provide 0.5% -1.5% of their PAT for CSR. Even lossmaking companies contributing. Clause 135: CSR mandatory for organisation satisfying any of three conditions: Minimum Turnover Rs 1000 crore, or Networth Rs 500 crore, or Net profit in any financial year Rs 5 crore or more. Mandatory 2% CSR, CSR Committee (3), Board accountable for ensuring mandatory spending otherwise explain through Directors Report

7 Legal basis of CSR.cont d Board to formulate policy to indicate activities to be undertaken. Presently permitted activities covered under Sch VII. Eradication of extreme Hunger & Poverty Education Women Empowerment Child Mortality & Maternal Health HIV, Malaria & other diseases Environment Sustainability Skill Enhancement Social Enterprise projects PM / CM or similar other Relief funds Give preference within vicinity of the operational area Board to monitor

8 Legal basis of CSR.cont d PUBLIC SECTOR: Central Public Sector Enterprises need to provide for as follows: Less than Rs 100 cr Profit : 3%-5% Rs 100 cr Rs 500 cr : 2% -3% Above Rs 500 cr : 1% - 2% CSR amount once allocated would not lapse

9 Major Findings - Spending CSR Contribution of top 100 corporates comes to around 0.82% of PAT, which comes to Rs 2650 crores. Biggest CSR spending (in absolute terms) by Reliance Industries Rs 357 crores Coal India Rs 151 crores Tata Steel Rs 146 crores SBI Rs 123 crores ONGC Rs 121 crores

10 No. of Companies Major Findings - Spending CSR Spending as % of PAT > =2% 2% - 1% 1% - 0.5% 0.5% - 0.1% Loss-making entities Categories - % of PAT CSR Not Available

11 No. of Compnaies Sector wise Spending Sector-wise CSR Interventions Education Health Skill Enhancement Livelihood & Financial Inclusion Environment Women Empowerment Disaster Relief Sports Others

12 Anticipated CSR Contribution (in crores) CSR Projection Anticipated CSR Contribution as per new Companies Act % % 199 6% 4% 2% 1 to to to to to 500 Category of Companies as per ET-500

13 Implementation Strategies Larger CSR programmes are undertaking wider approach Infosys works in education in large number of areas Reliance is undertaking large number of programmes through different parts of the countries Banks work for financial inclusion through their branches A large number of CSR programmes interventions are around factories / units (Hero) Nasscom aligns with its core strength IT NIIT has evolved a novel method low cost IT education

14 Partnering with NGOs Implementation Methodology No Information, 9 Foundation only, 11 Foundation plus NGOs, 47 NGOs only, 33

15 Model developed to measure Transparency in CSR Has company disclosed CSR contribution for the year? (3) Has company distinctly disclosed activities undertaken during the year? (3) Does it prepare Business Responsibility Report? (2) Does it disclose a CSR strategy? (1) Are CSR activities disclosed on web? (1)

16 Transparency relating to CSR 47 cases CSR amount has not been disclosed No distinct information about 32 cases what CSR activities undertaken during the year Even among 68 cases where we have taken CSR information for the year as available, one would need to put in great effort to decipher this. Study has developed a CSR Transparency Index. We hope this will help in improving disclosure of CSR. 10 out of companies 5 or less out of out of out of out of 10 4

17 Scenario within UP Huge need considering 33% of population falls within 6-18 age group Another 13% fall in 0-5. Large funds available with the Govt for Education sector. FY allocations - State education allocation Rs cr - SSA allocation almost Rs 9000 cr - per capita allocation of Govt funds vis-à-vis population segment of 6-18 is around Rs 6339

18 Main Issues to be considered CSR has potential to evolve into a major source of development intervention. Education & Health are two major areas of intervention of CSR. Need to develop an integrated approach involving Govt, CSOs and CSRs. There is a need to develop mechanism to support CSRs in identification of credible CSOs. Developing a genuine Partnership Framework between a corporate & CSO.

19 Thank You.