Only half of the private companies are fulfilling corporate social responsibility obligations. The government-run public sector undertakings fare even worse.
They might be making big bucks but when it comes to shelling out money for social causes, their actions don’t match the earnings.
Only half of the private companies are fulfilling corporate social responsibility obligations. The government-run public sector undertakings fare even worse.
The failure to adhere to spending two per cent of net profit on social activities by corporate houses is hitting many government schemes suffering from fund crunch.
Many members of Parliament raised the issue of lack of money to execute work under schemes like Adarsh Gram Yojana.
As per the current provisions of Companies Law, certain categories of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards CSR initiatives.
A study by Crisil said that compliance with two percent CSR spending is low even among government companies as only 43 per cent of PSUs adhered to the rule. While 40 per cent of PSUs spent less than 1.5 per cent, 30 per cent could not spend even 1 per cent of their profits.
The study revealed that small listed companies outpaced their bigger counterparts in spendings on corporate social responsibility in current fiscal so far taking the total amount spent to Rs 6,800 crore as against Rs 12,000 crore that they could have spent.
As per the study, 53 per cent of companies with an annual sales turnover between Rs 100-500 crore spent two per cent or more on CSR as compared to 50 per cent of those with a turnover between Rs 500-10,000 crore spending the same amount on CSR. Whereas only 31 per cent companies with turnover of more than Rs 10,000 crore spent 2 per cent or more on CSR.
This article was taken from here.