Indian firms to adopt broader vision of CSR: Ficci-Accenture report

The report says CSR activities can provide a path to implement innovations and collaborations that can create businesses with socially responsible profits

As Indian companies prepare to meet the new requirements of the Companies Act 2013 on Corporate Social Responsibility (CSR), they have an opportunity to adopt a broader vision of corporate responsibility (CR) that can combine commercial, social and environmental goals while improving their competitiveness, says a new report from Accenture and the Federation of Indian Chambers and Commerce Industries (Ficci).

The report, titled “Organizing for Success on Corporate Responsibility: The Path to High Performance”, says the Companies Act encompasses a range of CSR activities that, in fact, provide a path for companies to implement innovations and new forms of collaboration that allow them to create environmentally friendly, people-sensitive, safe and ethical businesses that are competitive and capable of generating socially responsible profits.

While the report acknowledges that in the short run, most businesses in India will continue to focus on building their CSR capabilities, it predicts that many will gradually embrace the broader opportunities of CR as they bridge capability gaps and gain experience on the way. 

The report outlines a framework to help companies implement CSR activities and seamlessly transition from CSR to CR.

The research is based on a survey with senior executives from 20 companies across the consumer products, resources and financial services sectors, as well as civil society organizations.

Recently, the government has allowed companies to enter into collaboration with each other to engage in CSR.

The Companies Act had earlier prescribed companies can do CSR work only on their own or through a holding, subsidiary or associate company.

According to the Companies Act, 2013, any company with a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or net profit of Rs 5 crore needs to spend at least 2% of its average net profit in the preceding three financial years on CSR activities. Failing that, the company needs to explain the reasons to shareholders in its report to the Board of Directors. 

CSR activities include not-for-profit spending on social, cultural, environmental, health, education, sports, and gender issues, among others. 

Contribution to political parties is not a part of CSR and only activities in India are considered for computing such expenditure.