Overall CSR spends by corporates saw a significant 22 per cent rise in 2015-16, with bulk of the money going into education, skills development, healthcare and sanitation initiatives, a research report said.
“In absolute terms, total money spent on CSR rose by Rs 2,500 crore to Rs 8,300 crore in fiscal 2016. However, another Rs 1,835 crore needed to be spent for the average to achieve the mandated 2 per cent,” Crisil Foundation said in a note today.
Of this, as much as Rs 5,300 crore or Rs 1,175 crore more than fiscal 2015 were spent on CSR linked to education, skills development, healthcare and sanitation, which are also the government’s priority areas, the report added.
The Companies Act of 2013 has made it mandatory on the corporates to spend 2 per cent of their average net profit of the past three years on corporate social responsibility-driven activities. In fiscal 2016, the second year of the CSR mandate, 1,505 companies, or 30 per cent of those 4,887 listed on the BSE, met the CSR criteria, the report said.
Of these, 77 per cent, or 1,158 companies, reported on their CSR activity, compared with 1,024 companies, or 75 per cent of around 1,300 eligible in fiscal 2015. As per the report, these 1,158 companies also spent a lot more money compared with fiscal 2015, which led to a 29 basis points improvement in average spending to 1.64 per cent compared with 1.35 per cent in fiscal 2015, moving closer to the 2 per cent mandate.
“A standout feature last fiscal was about focus shifting to CSR outcomes,” Crisil managing director and chief executive Ashu Suyash said in a statement.
“This is indeed the way to go, as underlined by the ‘effective altruism’ movement worldwide where, instead of doing what feels right, find the best causes to work on by using empirical evidence and analysis,” she added.
The survey reveals that a majority of the companies said they are open to collaboration for CSR activity, but finding the right partner, and structuring and reporting on such partnerships, have been challenging.
“This public-private complementarity is great to see because, as a percentage of total government expenditure, the country spends significantly less than what other BRICS nations do,” Crisil Foundation president Ramraj Pai said. “So the private sector ramping up where government spending is low is truly synergistic CSR,” he added.
There were 133 companies that either didn’t spend a dime, or were still freezing their CSR agenda. But even that is an improvement given that 200 companies were in the same boat in fiscal 2015. Of the 1,024 companies that figured in Crisil analysis last year, 917 continued to meet the CSR criteria in 2016.
Nearly two-thirds of them increased their CSR spends, while one-third spent less. Encouragingly, 56 per cent of them spent 2 per cent or more compared with 50 per cent in fiscal 2015.
In fiscal 2015, smaller companies had spent relatively more, but in fiscal 2016, the larger ones have done well with more than half of them adhering to the 2 per cent mandate versus around a third previously.
There were two reasons, the report goes on, for the 22 percentage point jump in adherence by the larger companies. One, they are overcoming the challenge of large-scale interventions, which takes more time and effort. And two, they are using implementing agencies, mainly non-governmental organisations, for execution.
Somewhat counter-intuitively, many smaller ones preferred going solo, the report said.
This article was taken from here.