The session presented the industry and government expectations from Clause 135 of the newly introduced Company Act, 2013. The session briefly elaborated on how this clause was developed and also provided insights on the ongoing process of drafting the rules. The industry members also requested the Minister for Corporate Affairs to review the thought process involving tax-exemption on CSR expenditure, and the qualifying criterion for NGOs and Corporate Foundation who can act as implementation partners in CSR activities.
• India’s performance on Human Development Index.
• Transparency of NGOs
• Delivery systems for CSR
• Eligibility Criteria for NGOs and Foundations
• Alignment of legislation with corporate intent
• Execution of projects
• Definition of CSR
• CSR can become an innovation in business governance.
• Companies can contribute to CSR draft rules by MCA.
CSR is not a new idea. The tough challenge is how to define CSR.
• In schedule VII we have tried to cover the CSR activities of most companies. We now have to make the rules.
• We were in dire need of a new law to replace 60 year old law and fortunately all parties agreed.
• No matter what laws we make, unless we get cooperation of companies we will never reach the desired intent.
• The rule making body is a 70-member body.
• The tougher challenge is to make sure that money is well spent and people are not just writing cheques.
• We went ahead with GoI guidelines that any NGO recipient of contribution / grants must be in 3-yrs of existence.
• Money spent whether it was 18k or 25k Crores will depend on the compliance we get.
• Let’s not go with the attitude of plugging all the loop holes in the law and get draconian about it.
• Government cannot be judge and jury of what is CSR, but the CSR committee will be.
• We are currently making a template for reporting CSR (on our website). BSE wants to create an index for CSR. These small things will build compliance over time.
• In India we spend less that 1% on healthcare, clearly it is one of the areas to work on CSR.
• It is not about money. Clearly what the government spends on these issues is huge compared to what the corporates can spend.
• The legislation is not set in stone. We will learn from our successes and failures and will adapt accordingly.
• For the tax exemption issue - I am happy to discuss it with Finance Minister.
• We are fine with company trying to add any other activity to Schedule VII that is fine with the Board as CSR.
• CSR will become a reality only when we take it upon ourselves to deliver on it.
• Why 2%?? - The figure was generally acceptable after a prolonged debate within the industry.
• Pooling of resources is great idea.
• MCA is trying to make an additional list of projects that can be included to Schedule VII.
· Mr Sachin Pilot, Minister of State for Corporate Affairs (I/C), Government of India said “Government will not be the judge and jury of what constitutes CSR. An activity will be considered CSR - if the CSR committee considers an activity as that meant for welfare and is willing to present it as such to its board, AGM and other stakeholders.”
· Mr M J Joseph, Additional Secretary, Ministry of Corporate Affairs, Government of India said “When it came to embedding CSR into business strategy, the execution and mainstreaming of strategy was of paramount importance. CSR can be seen as an innovation in business governance. MCA sees drafting of rules as a participative exercise and invites comments on rules on MCA website.”
· Ms Pushpa Aman Singh, CEO, Guide Star India said “Corporates should ideally partner with non-profits for implementation as (a) they have lot of passion and persistence (b) they operate at comparatively lower costs as they build on the spirit of voluntarism c) non-profits enjoy certain amount of trust of the community that can be leveraged for greater social impact.”
· Mr S Sivakumar, Chief Executive- Agri Business, ITC said “Scale and innovation are imperative for any CSR initiative.”
· Mr Subodh Bhargava, Past president, CII and Chairman, Tata Communications said “Board involvement is great but we need to give a clear agenda for the boards to follow on CSR as they are burdened by too many rules”.
· Mr Vijay Thadani, CEO, NIIT Ltd said “CSR will have two positive impacts (a) Measurement will be attached to such exercises (b) Corporates will have a skin in the game. The scrutiny will cause it to become a game changer.”
· Mr S Sandilya, Chairman, Eicher Motors said “There are a few challenges: (a) The list of schedule VII activities is restrictive. (b) States should not be allowed to interfere (c) Government should lead by example in reporting.”
· Mr Rakesh Bharti Mittal, Chairman, CII National Council on Development Initiatives said The norm mandating three-year track record required for an NGO or foundation to receive funding be relaxed in the event that a foundation belongs to a reputed company.
· Dr Bhaskar Chatterjee, Director General & CEO, IICA said “The Act has been introduced to create a truly Indian model of CSR. It is the 1st truly national model ever created to leverage the strength of corporate genius into social domain and make the buck count”.
· Mr Bharat Wakhlu, Resident Director, Tata Services said “We should be socially just, spiritually uplifting, environmentally sustainable and responsible towards our stakeholders. Only this will lead to inclusive growth, otherwise we are just washing our sins”.
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