What Qualifies As CSR and What Does Not?
Wednesday, March 25, 2015
Trees in your company campus, jobs for people with disabilities and fuel-efficient office cars may be good for the society and the environment. Continue the good work, but none of that counts as corporate social responsibility (CSR) under the law.
With the first full fiscal year in which companies must report CSR compliance drawing to a close, there is still widespread confusion about what exactly counts as CSR.
Not surprisingly, institutions with expertise on the matter such as Samhita Social Ventures and Centre for Advancement of Philanthropy (CAP) are receiving inquiries.
The 2013 companies law directs firms to spend at least 2% of their average three-year net profit on CSR activities every year.
Noshir Dadrawala, chief executive officer (CEO) of CAP, which provides advisory services to companies on CSR compliance, points to the part of law that says, “CSR activities should exclude activities undertaken in normal course of business.” According to Dadrawala, the statement means you cannot take up an activity that profits your business directly, and name it CSR.
This does not mean that you cannot use CSR to garner goodwill. For instance, Maruti Suzuki India Ltd, as part of its CSR, partners Industrial Training Institutes (ITIs) to train skilled workers, some of whom it hires.