A data-led analysis of how companies responded to new rules for disbursing their corporate social responsibility funds
It has been over a year since the new rules for corporate social responsibility (CSR) have come into force as per the Companies Act, 2013. The CSR rules now mandate that companies with a net worth of Rs.500 crore or revenue of Rs.1,000 crore or net profit of Rs.5 crore should spend 2% of their average profit in the last three years on social development-related activities.
In order to find out what were the monies spent and how they were utilized, NextGen, a Bengaluru-based CSR management company, culled reported data from the top 100 companies by market capitalisation on the National Stock Exchange of India (NSE). The Section 135 reports (in line with the ministry of corporate affairs’ requirements) were released by the companies as part of the board of directors’ report in their annual reports. These form the source for this analysis. Out of the 100 companies, 85 companies released their Section 135 reports by 14 September, the cut-off date for data collection. The remaining 15 companies have either not released their annual reports or follow a financial year starting before 1 April 2014.
We spoke to CEOs and CSR heads of various companies to find out how their companies have fared in the first year of the implementation of the new CSR rules.
Also, the CSR projects reported by each company in their Section 135 reports were analysed to understand the trends of CSR capital spent across Schedule VII activities, states and sectors.
Schedule VII includes 11 broad activities some of which include more than one key area: hunger, poverty, sanitation, drinking water and healthcare are clubbed as one; education, projects for differently-abled people and vocational skills as another; reducing inequalities includes empowering women, senior citizens, and socially and economically backward groups; environmental sustainability; national heritage; armed forces and veterans; sports; PM’s relief fund; technology incubators; rural development projects and slum development. In the charticles, we examine which Schedule VII activity attracted maximum funding.
The total spending for these 85 companies is Rs.4,993.14 crore, out of which Rs.3,117.49 crore (about 66%) was divided up almost equally between activities that include sanitation, health care, skill development, education, etc., all of which have received a special push by the government in the year gone by.
Slum development and armed forces or veterans hardly found any CSR-related funding with the total amount of CSR spend in these two areas getting capped at less than Rs.1crore.
This article was taken from here.