CSR now part of strategic decision-making: Ficci survey

Corporate social responsibility (CSR) is fast becoming a part of strategic decision-making for companies, reveals a survey by the Federation of Indian Chambers of Commerce & Industry (Ficci). As firms comply with the Companies Act, 2013, which mandates them to spend a part of their profits on CSR activities, companies are integrating CSR reporting into their main business practices, the survey says.

According to Clause 135 of the Companies Act, 2013, a company is expected to appoint a CSR committee of three or more directors, with at least one independent director (ID) on board. As many as 79 per cent of the companies that participated in the survey indicated they have an ID on board. A little less than half (49 per cent) said they had one ID, while 26 per cent cited having two.

The survey was conducted between January and February  among 150 companies across sectors, including public sector undertakings and multinational companies. The survey tried to gauge the involvement of management in CSR implementation, the strategy adopted by companies, how firms are identifying and implementing the projects and  the broad trend in budgeting for CSR activities. A majority (77 per cent) of the companies in the survey reported an increase in their CSR budget in 2014-15, compared to 2013-14. While 12 per cent reported a decline, six per cent cited no change. Five per cent said they had made a CSR allocation in their budget for the first time.

Rajashree Birla, chairperson, Ficci-Aditya Birla CSR Centre for Excellence & Ficci CSR and Community Development Committee, said, “Indian industry has and continues to be actively engaged in meaningful CSR. It is encouraging to note that companies have continued to base their CSR programmes according to community needs aligning with the national development agenda, especially those impacting women and children.”

Earlier, Ficci had undertaken data analysis of the top 100 companies listed on the National Stock Exchange in collaboration with NextGen, a CSR and sustainability management company. India became the first country to strictly formalise CSR spending by making reporting of such activities obligatory.

A majority of the respondents indicated ethical considerations as the primary motivation factor behind adoption of CSR. Companies are increasingly looking at integrating their businesses with the community to create shared value. Forty-nine per cent stated creation of shared value as a motivator, followed by social good compliance.

Schedule VII of the Companies Act, 2013, lists down the key focus areas where firms can undertake CSR activities. On this, 21 per cent of the participating companies indicated their efforts aligned towards promoting education, special education and vocation skills. This was followed by eradicating hunger, poverty and malnutrition, promoting health care, sanitation and safe drinking water; ensuring environmental sustainability and rural development projects as the other primary work areas for companies.

Interestingly, 95 per cent reported that their CSR projects were aligned with the government’s development initiatives and the top three initiatives that the companies have aligned their activities to include Swachh Bharat Abhiyan, Skill India and National Health Mission. The respondents pointed out they undertake project implementation through their company foundation or directly and the focus is clearly on community representation in implementation of the project.

About 40 per cent indicated they implement projects through their company foundation and another 36 per cent said they do it directly. Also, about 65 per cent respondents reported partnering the government or another corporate for execution of projects.

The respondents were also asked to indicate some details on the impact assessment of their projects. Thirty-one per cent of the companies said children were the main beneficiaries of their projects, followed by women (22 per cent) and environment (17 per cent).

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FICCI CSR SURVEY: KEY FINDINGS
Making a case for a corporate conscience

77% reported a hike in the

 

 

ir CSR budget in 2014-15 vis-a-vis 2013-14

Half the companies indicated having one independent director on board

79% have an independent director as a part of their CSR committee

40% implement projects through company foundation; 36% do it directly

65% partner with government or another firm for execution of projects

83% companies expect an increase in their CSR spend in 2016-17

Children main beneficiaries, followed by women and environment

Problems in getting local clearances, among others, cause delays