CSR targets for companies aspirational, for now: MCA

The Ministry of Corporate Affairs (MCA) today said the proposed corporate social responsibility (CSR) spending target under the Companies Bill is "aspirational" and not "directional", at least for the time being.

However, companies will still be required to give an explanation to shareholders if the CSR target is not met, Corporate Affairs Minister Salman Khurshid told reporters here on the sidelines of the Petrotech-2010 oil and gas conference.

"What we are doing is not a directive. We are working on a target. It will have to be explained to the board of directors, shareholders why the target has not been met. It's an aspirational target... 2 per cent, 3 per cent, whatever it is, it's not directional," Khurshid said.

His comments came in reaction to reports that the MCA plans to fix a minimum target for 2 per cent spending of profits by private companies on CSR activities under the new Companies Bill.

Khurshid clarified, however, that while at this stage, companies will only have to explain non-compliance with the CSR spending target, some rules could be framed later on.

"First, it was purely voluntary. Now, it is going to be subject to non-compliance. Next it could be something more. Right now, explanations will have to be given in the directors' report (about) why the CSR target was not met," he said.

The MCA is also awaiting expert comments on the feasibility of setting up a CSR credit exchange, on the same lines as commodity and stock exchanges.

"We are holding consultations with ministries and different sectors on how this (CSR credit exchange) can be worked out. We are still to receive report from economists, industry, Planning Commission and others. Once they give their report, we will hold further consultations," he said.