Presentation at E&H Conference, Sahranpur, UP25 October 2013

Findings of CSR Study & Role of CSR in UP

By Subhash Mittal, FCASecretary, Socio-Research & Reform Foundation

E-mail: socio-research@sma.net.in

Findings of CSR Study & Role of CSR in UP by Subhash MittalE&H Foundation, Saharanpur, 25 Oct 2013

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.

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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

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, MurugappaGroup, 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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

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 loss-making 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

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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

Major Findings - Spending

0

5

10

15

20

25

30

35

> =2% 2% - 1% 1% - 0.5% 0.5% - 0.1% Loss-making

entities

CSR Not

Available

6

11

17

31

8

27

No.

of

Co

mp

an

ies

Categories - % of PAT

CSR Spending as % of PAT

Sector – wise Spending

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

8678

4453

47

29

167

60

0

10

20

30

40

50

60

70

80

90

100

Education Health Skill Enhancement Livelihood & Financial Inclusion

Environment Women Empowerment Disaster Relief Sports Others

No

. o

f C

om

pn

aie

s

Sector-wise CSR Interventions

CSR Projection

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

6279

939512

302 199

76%

11%6% 4% 2%

0

1000

2000

3000

4000

5000

6000

7000

1 to 100 101 to 200 201 to 300 301 to 400 401 to 500

An

ticip

ate

d C

SR

Con

trib

uti

on

(in

cro

res)

Category of Companies as per ET-500

Anticipated CSR Contribution as per new Companies Act

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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

Partnering with NGOs

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

Foundation

only, 11

NGOs only, 33Foundation plus

NGOs, 47

No Information, 9

Implementation Methodology

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)

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

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.

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

10 out of 10 22 companies

5 or less out of 10 53

2 out of 10 5

1 out of 10 7

0 out of 10 4

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 Govtfor Education sector.

FY 2013-14 allocations

- State education allocation Rs 32886 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

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

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.

Findings of CSR Study & Role of CSR in UP by Subhash Mittal E&H Foundation, Saharanpur, 25 Oct 2013

Thank You.