Corporate Social Responsibility: New CSR Mandate for Corporate India

 

Corporate Social Responsibility: Relevance

• GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

 

Corporate Social Responsibility: Context

• Recently, Government of India has mandated corporate India to furnish a comprehensive report on their corporate social responsibility (CSR) activities.

 

New CSR Mandate: Key points

• The CSR-2 form will have to be submitted to the Registrar of Companies for the preceding financial year (2020-21) and onwards.
• For the information related to FY 2020-21, the CSR-2 has to be submitted by the end of March 2022.

 

Reason for CSR-2

• India Inc’s, which comprise of 1619 companies, CSR spend for FY 2020-21 fell sharply than those spent in FY19 and in FY20.

 

Provisions under CSR-2

• Form CSR-2 requires certain companies to report on matters such as the constitution of its CSR committee, its meetings, whether or not the company has disclosed on its website details about its CSR committee, CSR policy, and approved CSR projects.
• Also, the company is required to confirm whether an impact assessment of CSR projects has been carried out in pursuance of the Companies (CSR Policy) Rules, 2014.
• Under the report, the company is also required to submit detailed information around its investment in CSR Projects and the quantum of funds that has remained unspent.

 

CSR 2 benefits

• The move is expected to give the government a comprehensive picture of the CSR funds spent and activities carried out.
• It would also help the Ministry of Corporate Affairs (MCA) to undertake data mining and analytics so that improved policies could be rolled out on this front.

 

CSR 2 issues

• Some experts have commended that it would end up increasing compliance burden of corporates.
• Some of the disclosures now mandated under CSR-2 are already being disclosed under the main directors’ report forming part of the annual report.

 

About CSR in India

• According to The Companies Act 2013, companies with any of the following three condition (during the immediately preceding three years) has to spend 2 per cent of the average net profit on CSR activities.
  • net worth of ₹500 crore of more, or
  • turnover of ₹1,000 crore or more or
  • a net profit of ₹5 crore or more

 

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