Sunday, July 27, 2014

Briefing on Corporate Social Responsibility

The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled Corporate Social Responsibility Under Companies Act, 2013 authored by Prof. Subrata Sarkar. The executive summary is as follows:

The newly enacted Companies Act, 2013 and the Rules notified thereunder makes it statutory for all companies above a certain size to spend 2 percent of their profits towards meeting Corporate Social Responsibility. India is the first country in the world to have mandatory CSR spending (with provisions for exemption) along with mandatory reporting. According to some quick estimates, Indian companies have to spend upwards of Rs. 10,000 crores on CSR in FY 15 and more in subsequent years as the corporate profits grow. While the new CSR regulations will not be a game changer in terms of enhancing overall social spending, the Briefing--after assessing their pros and cons--argues that the CSR regulations are a step in the right direction. The implementation of the new CSR regulations, however, entails certain challenges, which would require measures such as improved regulatory oversight, further clarity on what constitutes CSR spending and coordination among companies. The success of the CSR regulations would depend mainly on how well these challenges are addressed.

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