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CSR in IndiaFrom voluntary to mandatory?
February 25, 2011David Karlsson
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Outline
Background
CSR in the CompaniesBill 2009
Whats next?
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Background
CSR traditionally practiced mainly as
philanthropy
Changing conditions call for a more holistic
approach?
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CSR in the private sectorVoluntary Guidelines, December 2009
Core elements;
1. Care for all Stakeholders
2. Ethical Functioning
3. Respect for Workers Rights and Welfare
4. Respect for Human Rights
5. Respect for Environment
6. Activities for Social and Inclusive Development
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business practices that ensures the
distribution of wealth and well-being of
communities in which the business
operates. Salman Khursheed
[ ] large section of the population
remaining as un-included from the
mainstream R. Bandyopadhyay
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CSR in the public sectorGuidelines, March 2010
CSR spending already mandatory for CPSEs
(CSR) is a concept whereby organisations serve
the interests of society by taking responsibility forthe impact of their activities on customers,
employees, shareholders, communities, and the
environment in all aspects of their operations.
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Companies Bill 2009
Revision of Companies Bill from 1956
Some suggestions:
Rotation of auditor/audit firms every five years Restrictions on Layers of Subsidiaries
Capping the number of maximum directorships
Managerial remuneration limits
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Companies Bill 2009
Proposal by the Parliamentary Standing
Committee on Finance (August 2010) Every company having a net worth of70 million or
more, turnover of140 million or more, or a net profit
of0,7 million or more, during a year, shall be
required to spend every year at least 2% of the
companys average net profit during the three
immediately preceding financial years, on CSRactivities of the companys choosing
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Compar ison of Guidelines fo r
Pr ivate/Publ ic secto r CSR spend ing
Profit CSR Spend
70 million 0,5-2%
Criteria CSR Spend
Net worth of>70 million
At least 2%
Turnover of
>140 million
At least 2%
Net profit of>0,7 million
At least 2%
Private companies CPSEs
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Stakeholder consultationsReactions of India Inc.
CSR is about conscience
The issue is on the practical side
No definition of CSRhow to implementand monitor? Consequences for non-
compliance?
Law will be counterproductive
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What does CSR spending mean?
According to voluntary guidelines;
Identification of projects/activities Physichal targets with time frame
Implementation and monitoring
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Whats next?
Revised Companies Bill ready in April?
Clause on mandatory CSR spending likelyto be included
But what will the exact formulation be?