Post on 30-Jan-2018
Corporate social responsibility
(CSR) advisory 8 January 2013
Corporate social responsibility (CSR) advisory Page 2
The context Companies Bill 2012 (section 135)
Board level CSR Committee:
► Comprising of 3 or more directors with at least
one independent director,
► Composition to be disclosed in the annual
Board of Directors’ report
•Responsibilities of the CSR Committee:
► Formulate and recommend a CSR Policy and
amount of CSR expenditure
► Regular monitoring of the CSR initiatives
Responsibilities of the
company’s Board:
► Approve and disclose
CSR Policy in the annual
Directors’ Report and on
company website
► Ensure implementation
of CSR activities as per
the Policy
► Directors’ Report to
specify reasons in case
the specified amount is
not spent
Annual spending on
CSR by companies:
► Every financial year, at
least 2% of the average
net profits made during
the 3 preceding
financial years
► Schedule VII indicates
activities that can be
undertaken by a
company.
Applicable to all companies that have either of the following in any financial year:
► Net worth of INR 500 crore or more
► Turnover of INR 1000 crore or more
► Net profit of INR 5 crore or more The bill will impact 2500+ companies including
the Top 100 companies across sectors
CSR spending is already mandatory for PSUs
Corporate social responsibility (CSR) advisory Page 3
Changes envisaged
Current scenario Key changes envisaged
• Appropriate CSR Governance structure.
• Integration of business objectives with CSR
initiatives.
• Transparent approach to CSR spending.
• Spending CSR funds as per the schedule
VII.
• Independent audit of CSR investment.
Absence of CSR Governance structure
Lack of structured approach to CSR
Lack of comprehensive and uniform reporting of
CSR initiatives
Inadequate experience and expertise of implementing
CSR initiatives
Need for the integration of CSR initiatives with
business objectives.
Sub-optimal use of available funds and inadequate
monitoring
Charitable or Philanthropic approach to using funds.
Ernst & Young is poised to provide hand holding support to implement adequate CSR programmes,
frame structures, develop processes and assess the social impact of the implemented programmes.
Corporate social responsibility (CSR) advisory Page 4
CSR advisory
Brief solution description
► Help effectively manage CSR
initiatives
► Align the social initiatives with
the business objectives
► Helps to comply with provision
of Companies Bill 2012 (clause
135)
► Evaluating alternate forms of
legal presence, deductibility
and obtaining Tax exemptions
Value proposition offered Typical buyer
► CFO/CS
► MD/Chairman
► CSR/Sustainability Head
► Large sized cos- Rs. 25-50 Lacs
► Mid sized cos.- Rs. 15- 25 Lacs
Typical Fee size
Solution champions :
Parul Soni:
Executive Director & Practice Leader,
Development Advisory Services
Chaitanya Kalia:
Partner,
Climate Change & Sustainability Services
Rajiv Chugh:
Partner - Tax &
Regulatory Services
Corporate social responsibility (CSR) advisory Page 5
EY differentiators
Differentiators
Our competitors offering similar services
► PwC
► Other specialized/boutique firms
► End to end service provider- our ‘One Advisory’ framework combining tax, audit and CSR expertise
inclusive of thematic expertise in line with schedule VII of the CSR clause of Companies bill, 2012.
► Vast experience of working with large Indian and Multinational clientele on their CSR agenda
► Largest dedicated team in India specializing in sustainability solutions (CCaSS) and development
advisory services (DAS).
► Deloitte
► KPMG
Corporate social responsibility (CSR) advisory Page 6
Case study snapshot (1)
Business
driver/need
► An auto sector leader with 45 foundations and charity outfits already spends
excess of 25 Cr per year on CSR, still only 50% of clause 153 requirement.
► Key question – Where and how to spend additional 25 – 30 Cr per year every year
What we did ► EY has reviewed the effectiveness of CSR programs implemented by the
charitable foundation and recommended a roadmap for the future.
► EY has conducted stakeholder engagement with diverse stakeholders to capture
holistic feedback to CSR initiatives
► EY is helping the Company develop a business responsibility report (BRR).
Outcome
delivered
► KPIs for monitoring CSR program effectiveness
► Suggestions to improve impact on ground
Corporate social responsibility (CSR) advisory Page 7
Case study snapshot (2)
Business
driver/need
► A large FMCG company in India committed to water conservation aimed at
conserving 100 billion litres of water in 5 years.
► Total CSR spending committed is INR 20 crore.
► They needed support in Planning the entire project, developing sustainable
partnerships, and Grant Management Support
What we did ► Assisted the client in project development through identifying locations and
partners for implementation and assisted the client and Grantees (NGOs) in
project management and monitoring.
► Developed project reporting and monitoring templates and provided
training to the project management team.
► Provided grant management support.
► Validated the most significant change stories reported by the grantees.
Outcome
delivered
► Assisted in generating INR 12 Cr. additional funds from Government.
► Provided valuable insights to strengthen the project design, results framework
which created better visibility and impact for the company
► Enabled a lean team structure, thus reducing the overall administrative cost
of the project.
Corporate social responsibility (CSR) advisory Page 8
Target list for next 90 days
IIC TCE Financial services
[List from select priority accounts at firm level]
► M&M
► Vedanta
► ADAG
► Godrej
► Hero Motocorp
► JSPL
► TVS
► Daimler
► General Electric
► Volkswagen
► Adani
► Avantha Group
► A V Birla Group
► Essar
► Reliance
► Cisco
► Huawei
► IBM
► Sony
► Vodafone
► NCC (Nagarjuna)
► Times Group
► Goldman Sachs
► Axis Bank
► HDFC Group
► ICICI Bank Limited
► Kotak Group
► Metlife, Inc.
► Yes Bank
► State Bank of India
► Other nationalized banks
Action points:
► Support in taking this solution to other priority clients
► A good solution to penetrate other/compete accounts
► Take a lead and align with Tax, Audit to provide comprehensive solutions to clients
Corporate social responsibility (CSR) advisory Page 9
Key questions to ask clients
Our ask of you
Have you evaluated the impact of
the New Companies Bill 2012 on
your CSR spend?
1
Is your CSR program/strategy in
line with your business strategy ?
2
Are you measuring the efficiency
and effectiveness of your
CSR spend?
3
► The new Companies Bill 2012 requires companies
to spend 2% of their net profits on CSR and report
their CSR spend.
► Since this could be a substantial amount it would
require proper planning for effective utilization.
► The EY team with its experience of managing CSR
funds worth more than INR 100 Crores can design
and operationalize your CSR programmes in a
way that will help meet the reporting requirements
and develop a structured approach to CSR
initiatives.
Elevator pitch
Annexes
Corporate social responsibility (CSR) advisory Page 11
EY detailed solution description
Mapping of priority concerns with the
suggested issues in the New
Companies Bill, 2012
Stakeholder identification and
mapping
Designing a stakeholder engagement
framework for the client
Designing a CSR strategy linked to
business objectives to ensure high
impact CSR spend (2%)
Developing a governance structure
at the manufacturing unit and
corporate level to deliver the CSR
action plan effectively at the ground
level.
A 3-5 year roadmap for effective
implementation of CSR programs
and integration of a review
mechanism .
Linking CSR to the sustainability
strategy of the client.
Creating a Sustainability strategy
Sustainability Reporting and/or
assurance.
Enhancement of capacities of
staff and partner NGOs to
implement CSR and other
community engagement
initiatives through
partnerships if required
Partner identification and
selection of suitable modes of
collaboration
Sustainability
disclosure/reporting
Framework to assess the
effectiveness of the program/s,
evaluate impact and redesign
the CSR initiatives through
feed forward.
Provide reliable reports to the
Board on CSR initiatives.
Business
linked
CSR
Strategy
Stakeholder
Engagement
Capacity
building
CSR Roadmap
Monitoring and
evaluation
framework
Social
Management
Plan Conducting a social impact assessment,
creating a social baseline report and
identifying key impacts and their
significance
Recommendations on mitigation and
management strategies for each of the
identified impacts
Corporate social responsibility (CSR) advisory Page 12
Schedule VII
► Activities which may be included by companies in their Corporate Social Responsibility Policies
should be relating to:—
► Eradicating extreme hunger and poverty;
► Promotion of education;
► Promoting gender equality and empowering women;
► 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;
► Social business projects;
► Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central
Government or the State Governments for socioeconomic development and relief and funds for the
welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and
women; and
► Such other matters as may be prescribed
Corporate social responsibility (CSR) advisory Page 13
Key corporate social responsibility provisions in the Companies Bill, 2012: - In numbers
The value of the CSR advisory opportunity is INR 2,620 million*
*This figure and the industry categorization is for the top (by PAT) 250 Indian Companies according to the Dow Jones index
► CSR Budget: 2% profit after tax of the top 250
companies is: 87,380 million
► Consulting Opportunity: Based on industry
average 3% of the Total CSR spending:
INR 2,620 million .
► 95% of the available opportunity is in the
following sectors
► Professional, Scientific and Technical Services
► Information,
► Utilities,
► Mining, Quarrying, and Oil and Gas Extraction
► Finance and Insurance
► Manufacturing
4% 6%
7%
22%
24%
33%
4%
Professional, Scientific, and Technical ServicesInformationUtilitiesMining, Quarrying, and Oil and Gas ExtractionFinance and InsuranceManufacturingOthers
Opportunity: Share across industries
Corporate social responsibility (CSR) advisory Page 14
Microsoft India
Managed project Shiksha, targeted at increasing computer
literacy in India.
Katha
Support on implementing the
programme on increasing the reading habits of students in
Public schools in Delhi.
Groupe Carrefour
Sustainability sourcing risks and strategies
with respect to Indian markets.
ICICI Bank Ltd
Global practices related to formation of foundations by
corporate companies.
Vodafone Essar Limited (India)
Strategy to initiate, inform and guide their
flagship CR programme in India.
.
Jankidevi Bajaj Gram Vikas Sanstha
Social programme assessment.
Select credentials
Excel Industries
Carbon, water and waste baseline
assessment and impact assessment of CSR
activities
`
GHCL
Need assessment for CSR interventions
Corporate social responsibility (CSR) advisory Page 15
Select credentials
DLF Foundation
Scoping Study for Skill Development Initiative
Tata Motors Ltd.
Scoping Study for Professional Drivers
Skill development Initiative
Monsanto Holdings Pvt. Ltd.
Documentation of Social Initiatives and
Development of Social Investment Approach
Hindustan Unilever Ltd
Project management support for Water
Conservation Projects
Jubiliant Bhartia Foundation
Social Needs Assessment for
Community Development Activities.
Landmark Group
Feasibility Study for setting up vocational
skills development academy focused on retail and hospitality
sector
Lanco Infratech Ltd
Developing CSR investment plan for
Udupi region in Karnataka
Tata Chemicals Limited
Scoping study for skill development initiatives
in Agriculture
Corporate social responsibility (CSR) advisory Page 16
Select credentials
Hindustan Unilever Limited
Project development and monitoring support for Water Conservation
and Management Projects
AIRCEL
Grant Expenditure Evaluation of CSR
Projects
Balmer Lawrie & Co. Ltd.
Development of CSR policy and a long term
perspective plan
Tata Steel Limited
Business model for establishing vocational
training center
Tata Motors Ltd.
Assistance in developing scholarship scheme for children of
truck drivers
Bharti Foundation
Internal Audit Services
Modern India Ltd.
Assistance in developing business
plan for skill development in Gems and Jewellery sector
Cognizant Foundation
Review of CSR policy