Compliance by Govt. Companies Vs. Non- Govt. Companies Part-II (Corporate Social Responsibility of CPSEs in India Para -III)

Standard

 

COMPLIANCE BY GOVT. COMPANIES

Vs

NON- GOVT. COMPANIES

PART-II

 

 

CORPORATE SOCIAL RESPONSIBILITY

AND

SUSTAINABILITY GUIDELINES 2013

FOR OF CPSES IN INDIA

 

PARA -III

 

CSR 2010, CSRS 2013

vis a vis

Company Bill on CSR

 

 

 

This post is in continuation of my earlier post on the same topic today.

Mandatory Compliance
Non-Mandatory Compliance  
Other Provision
S. NO.
PARTICULARS
CSR -2010
(PAST)
CSRS 2013
(PRESENT)
THE COMPANY BILL 2012 (FUTURE)
1.
HEADING
Guidelines on Corporate Social Responsibility for CPSEs
Guidelines on Corporate Social Responsibility and Sustainability for CPSEs
The Company Bill 2012
2.
PLANNING
The planning for Corporate Social Responsibility should start with the identification of the activities/projects to be undertaken.CSR projects/activities MAY BE UNDERTAKEN IN THE PERIPHERY  where a company carries out its commercial activities as far as possible. Where this is not possible or applicable, a Company may choose to locate CSR projects anywhere in the country.(Clause 2.1)
1.From amongst the beneficiaries of CSRS spend (Financial component) of a company, the stakeholders directly impacted by its operations and activities can rightfully stake a claim for attention before others. Such stakeholders are generally located in the periphery of commercial operations of a company. The CSR of a company towards these stakeholders extends beyond its legal obligation to compensate for, and ameliorate the impact of its commercial activities. For this reason, CPSEs MUST ACCORD PRIORITY -to these stakeholders and undertake CSRS projects in the periphery of its commercial operations on priority. (Clause 1.4.4) 2.However, the companies MAY LOCATE-their CSRS projects in any backward area (BRGF) of the country.
-Also, some companies by the very nature of their business have no specific geographical area of commercial operations, like companies in the financial and consultancy services. Such companies can take up CSRS projects at any location of their choice within the country, including the backward regions. (Clause 1.4.6)
(Remark- First preference has been given to the periphery of the operation of particular CPSEs.
 Second to the backward district as identified by Planning Commission for Backward Regions Grant Fund
 Third to any other location within the country
 Further CSR in backward districts has been introduced for the first time in CSR guidelines.)
Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:
(Proviso of Sub Clause 5, Clause 135)
(Remark- It is just like the provision of CSR Guideline 2010,
– No provision for those companies which do not have any particular geographical area,
– no provision for backward area (BRGF))
Company specific Corporate Social Responsibility strategies should be developed that mandate the design of Corporate Social Responsibility Action Plan (Long-term, medium-term and short-term), with a shift from the casual approach to the project based accountability approach. The business plan under CSR should be integrated with the social and environment concerns related to the business of the company.
(Clause 2.1)
1.TAKE UP -at least one major project
-for development of a backward district has the potential of contributing significantly in the long run
-to socio-economic growth in all the backward regions of the country. (Clause 1.2.3)
 
2.CPSEs are required to SUBMIT
-details of only 2 projects for scrutiny for the purpose of annual MoU evaluation.
-Only the Maharatna companies which have larger resources for CSR & Sustainability activities will have to submit details of one additional project for evaluation. (Clause 1.2.8)
 
3.it will be mandatory for all CPSEs to SELECT
-one project in each of the two categories of CSR and Sustainability activities mentioned above. (Clause 1.4.9)
 
4.AT LEAST 80% of the annual budget earmarked for CSRS activities shall have to be SPENT
on implementation of activities IN THE PROJECT MODE as explained in para 1.6.5. The activities not implemented in project mode also have to be in conformity with these guidelines. (Clause 1.5.4)
 
 
Selection of activities under CSR may be made to ensure that the benefits reach the smallest unit i.e. village, panchayat, block or district depending upon the operations and resource capability of the company. The approach to CSR planning needs to be shifted from an ad-hoc charity to a long-term sustainable approach. The Project. Management and Monitoring skills available with the companies could be shared as far as possible, with the local administration by training and setting up required structures and systems.
(Clause 2.2)
1.In the selection or choice of CSRS projects, companies SHOULD AVOID
taking up ad hoc, one time, philanthropic activity, which does not contribute in any way to social value creation, environment protection or sustainable development.
-MERE CONTRIBUTIONS TO PHILANTHROPIC, CHARITABLE OR OTHER ORGANISATIONS WOULD NOT BE CONSIDERED A VALID CSR ACTIVITY.
-The ONLY EXCEPTION being contributions made for natural calamities / disasters and for meeting the emergency needs of employees of sick and loss making CPSEs in distress, not provided for under existing pay revision / wage settlement arrangements. (Clause 1.4.8)
(Remark- ad hoc, one time, philanthropic activities have been debarred from qualifying as CSR and ONLY EXCEPTION TO THIS has been recognised as contributions made for natural calamities / disasters and for meeting the emergency needs of employees of sick and loss making CPSEs.)
The long-term Corporate Social Responsibility Plan should match with the long term Business Plan. This should be broken down into medium term and short term plans. Each of these plans should clearly specify:
i) Requirements relating to baseline survey;
ii) Activities to be undertaken;
iii) Budgets allocated;
iv) Time-lines prescribed;
v) Responsibilities and authorities defined;
vi) Major results expected.
(Clause 2.3)
1.CPSEs SHOULD
-integrate and align their CSRS policies and activities with their business goals, plans and strategies. (Clause 1.3.5)
 
Such plans should also clearly specify the implementation guidelines and the involvement of the implementing agency. The procedures and methodologies prescribed for monitoring should be highlighted as well as the modalities of the concurrent and final evaluation. Finally, there should be a clear specification regarding mandatory documentation of the experience.
(Clause 2.4)
  1. 1.      (i) CPSEs must ADOPT
–          a Corporate Social Responsibility and Sustainability policy and CSR communication strategy specific to their company with the approval of the BOD.
 
(ii) The philosophy and spirit of CSRS MUST BE
– firmly ingrained in the policy of the company.
 
(iii) The policy MUST BE
– consistent with the guidelines on CSRS enunciated by the DPE, and the policy directions on the subject issued by the Government from time-to-time.
(Clause 1.4.1)
3.
IMPLEMENTATION
CSR initiatives of Central Public Sector Enterprises (CPSEs) should consider the following parameters for identification/ selection of schemes/ projects:
(i)   Thrust should be given wherever possible to areas related to the business of the CPSEs as a natural corollary to the business.
(ii) Investment in CSR should be project-based. Mere donations to philanthropic/ charity or other organizations would not come under the category of CSR.
(iii)    CSR activities should generate community goodwill, create social impact and visibility.
(iv)    For every project, the time-frame and periodic milestones should be finalized at the outset.
(v) CSR activities should also involve the suppliers in order to ensure that the supply-chain also follows the CSR principles.
(vi)    CSR activities should help in building a positive image of the company in the public perception.
(vii)  CSR activities MAY BE related to United Nations Global Compact Programme on Environment.
1.CPSEs are EXPECTED
-to adhere to the global standards in this regard and keep in mind the UN Global Compact and the UN Millennium Development Goals. (Clause 1.3.6)
(Remark – No change)
(viii)                        CSR projects may be closely linked with the principles of Sustainable Development, based on the immediate and long term social and environmental consequences of their activities.
it will be mandatory for all CPSEs to SELECT –          one project in each of the two categories of CSR and Sustainability activities mentioned above. (Clause 1.4.9)
(ix)    Every CPSE should shoulder responsibility for restoring /compensating for any ecological damage that is taking place as a result of its operations.(x) Care may be taken to ensure that CPSEs work towards fulfilment of the National Plan goals and objectives, as well as the Millennium Development Goals adopted by our country, ensure gender sensitivity, skill enhancement, entrepreneurship development and employment generation by co-creating value with local institutions/people.(xi)    Central Public Sector Enterprises should redefine their business continuity plan to factor in hazards, risks and vulnerabilities. They should also create value in innovative social investments in the community and may focus on the areas of “Preparedness and Capacity Building” in Disaster Management (OM).(xii)  Public-Private Partnership between the Government and the Central Public Sector could also be encouraged to leverage the strengths of the latter in Disaster Management. CPSEs need to network with the Ministries in Government of India /NOMA at the National level and State Governments / SOMAs at the State level to strengthen and formalize their role in the OM process for ensuring preparedness of the communities towards disaster resilience.(Clause 3.1)
Project activities identified under CSR are to be implemented by Specialized Agencies and generally NOT by staff of the CPSE concerned. Specialized Agencies could be made to work singly or in tandem with other agencies.
(Clause 3.2)
1.At times, implementation of CSRS projects requires specialised knowledge and skills. Public Sector companies normally do not have such in-house expertise, the wherewithal, and dedicated staff to carry out this task. Therefore, in such cases CPSEs SHOULD SEEK
the services of external specialised agencies for the implementation of such CSRS projects. (Clause 1.6.6)
 
2.HOWEVER, where the planned CSRS activity is closely aligned with the business strategy and the company possesses core competence to do it, a Public Sector company MAY TAKE UP
-the implementation of CSR activity with its manpower and resources if it feels confident of its organisational capability to execute such projects.
-In such a case IT IS ADVISABLE
-that MONITORING is done by an external agency even though the staff of the CPSE may be associated with it.
IN ANY CASE, EVALUATION MUST
-always be assigned to an independent external agency for the sake of objectivity and transparency. (Clause 1.6.7)
(Remark- For implementation there is no change however monitoring and evaluation requirements have been inducted in new guideline)
Such specialized agencies would include:-
i) Community based organizations whether formal or informal;
ii) Elected local bodies such as Panchayats;
iii) Voluntary Agencies (NGOs);
iv) Institutes! Academic Organizations;
v) Trusts, Missions, etc.;
vi) Self-help Groups;
vii) Government, Semi-Government and autonomous Organizations;
viii) Standing Conference of Public Enterprises (SCOPE);
ix) Mahila Mandals! Samitis and the like;
x)  Contracted agencies for civil works;
xi) Professional Consultancy Organizations, etc.
(Clause 3.3)
Specialised agencies may include
-Government departments,
-semi government, or
-non-government organisations (NGOs),
-autonomous organisations,
-professional consultancy organisations,
-registered Trusts / Missions,
-community based organisations,
-self-help groups,
-not-for-profit organisations,
-local bodies such as Panchayati Raj institutions,
-academic institutes, etc.
-ENGAGEMENT OF EXTERNAL SPECIALISED AGENCIES / NGOS IS THE DISCRETION OF THE PUBLIC SECTOR COMPANIES,
-but they are ADVISED to engage them from the available panels of such agencies maintained by the Government Ministries / Departments, Planning Commission, autonomous organisations, or the National / Regional CSR Hub. (Clause 1.6.8)
(Remark- Agencies like SCOPE, Mahila Mandals Samitis and the like and contracted agencies for civil work have been deleted however not-for-profit organisations have been introduced which may include the above said deleted agencies and other agencies of the similar nature)
 
CPSEs should generate awareness among all levels of their staff about CSR activities and the integration of social processes with business processes. Those INVOLVED with the undertaking of CSR activities should be provided with adequate training and re-orientation.
(Clause 3.4)
1.As regards promotion of CSR agenda within the organisation, the CPSEs would have to PROVIDE EVIDENCE-that initiatives were taken to sensitise the staff regarding the CSRS policies of the organisation, and the need to adopt ethical business practices. The efforts made to impart training to the employees for the desired attitudinal change and their conversion to new production methods and commercial practices by leveraging appropriate technology aligned with social and environmental sustainability. CPSEs would have to give evidence through documents, photographs, reports etc. of their efforts and achievements in internalising socially responsible and sustainable policies in the organisation. (Clause 1.10.4) (Remark- Not only awareness among all level of employees has been confirmed but documentary evidence has also become necessary. Further training not only to the staff involved in CSR activities has been ensured but among all the employees of the Company)
Initiatives of State Governments, District Administration, Local Administration as well as Central Government Departments! Agencies, Self-Help Groups, etc., would be dovetailed! synergized with the initiatives taken by the CPSEs.(Clause 3.5)
Every care should be taken to ensure that there is no duplication of CSR activities undertaken by the CPSEs with that of programmes run by Central, State and Local Governments. (Clause 3.6)
1.CPSEs SHOULD REFRAIN FROM
-taking up activities which are clearly mandated to be performed by the Government and / or for which Central / State Government’s schemes have been sanctioned, as it could result in unnecessary duplication.
-However, the CPSEs can supplement the efforts of the Government in crossing the `last mile’ for achieving the targets / goals, if it is accurately assessed that the resource gap and inadequate capacities are critical constraints in achieving the targets / goals of a particular government scheme / initiative / welfare project. Here also, duplication in allocation of funds must be strictly avoided. (Clause 1.3.14)
(Remark- Almost similar)
While assigning CSR projects to specialized agencies, every possible effort must be made to verify the reliability and clean track record of such agencies. CPSEs may make efforts to prepare suitable panels of such agencies or they may select from panels maintained by Government, Semi-Government, Autonomous Organization or the National CSR Hub, etc.
(Clause 3.7)
Activities related to Sustainable Development will form a significant element of the total initiatives of CSR.
(Clause 3.8)
Such activities should come under the 3 UN Global Compact Principles pertaining to the Environment. Businesses are asked to:
i)Support a precautionary approach to environmental challenges;
ii) Undertake initiatives to promote greater environmental responsibility; and
iii) Encourage the development and diffusion of environmentally friendly technologies.
(Clause 3.9)
CPSEs are EXPECTED
to adhere to the global standards in this regard and keep in mind the UN Global Compact and the UN Millennium Development Goals. (Clause 1.3.6)
 
(Remark- No Change)
Companies may also keep in mind the Environmental Management System as per ISO 14001.
(Clause 3.10)
This requirement has been dispensed with.
4.
RESEARCH, DOCUMENTATION, ADVOCACY,PROMOTION & DEVELOPMENT
The Department Of Public Enterprises, in conjunction with SCOPE and the CPSEs will create a National CSR Hub which will undertake/facilitate the following activities:
i) Nation-wide compilation, documentation, and creation of data base;
ii) Advocacy;
iii) Research;
iv) Preparation of Panels of Implementing organisations/ monitoring and valuation Agencies;
v) Promotional activities, including production of short films, printing of brochures, pamphlets etc.;
vi) Conferences, Seminars, Workshops – both national and international;
vii)  Act as a Think Tank;
viii) Any other matter as entrusted to it from time to time by the Department of Public Enterprises (DPE)
(Clause 4.1)
Academic interface is essential for successful socially responsible businesses.
–          Therefore, CPSEs should have collaboration with academic institutions such as TISS, IITs, IIMs and similarly placed other such institutions on a perpetual basis.
–          Till such time CPSEs develop such linkages locally, the National CSR Hub presently located at TISS, Mumbai would continue to act its designated role in this regard. (Clause 1.9.1)
 2.The tasks presently assigned to the National CSR Hub are as follows:
 i) Nation-wide compilation, documentation and creation of database;
 ii) Advocacy of the concepts;
iii) Research on the subject including publishing of research papers / articles and concept papers on specific issues;
 iv) Preparation of panels of implementing organisations, monitoring and valuation agencies;
v) Promotional activities, including production of short films, printing of brochures, pamphlets promotional materials etc.;
vi) Organizing Conferences, Seminars, Workshops – both national and international;
vii) Act as a Think Tank;
viii) Setting up a National Data Base;
ix) Any other matter or activity pertaining to CSR and Sustainability entrusted to it by the Department of Public Enterprises; (Clause 1.9.2)
(Remark- National CSR Hub has already been created and activities thereof have been assigned.)
  1. 1.     
The National CSR Hub will begin operations with funding provided by Department of Public Enterprises. It will, however, be free to receive funds from:i) SCOPE and both Central as well as State PSEs;
ii) UN Agencies, reputed international agencies such as World Bank, EU and other multilateral bodies and organisations;
iii) Reputed National and State Bodies;
iv) Government Departments, Autonomous Organisations, Planning Commission, Attached and Subordinate Offices, Corporations etc.
v) Philanthropic Missions, Trusts, etc. of national and international repute.
(Clause 4.2)
Decisions relating to the location and functioning of the HUB will be taken by DPE. SCOPE will be kept informed of such decisions and will be free to offer suggestions, inputs etc.
(Clause 4.3)
5.
FUNDING
The CSR budget. will be mandatorily created through a Board Resolution as a percentage of net profit in the following manner:-
Type of CPSEsNet Profit (Previous Year)
Expenditure range for CSR in a Financial Year (% of profit)
(i) Less than Rs. 100 Crore
3% – 5%
(ii) Rs. 100 Crore to Rs. 500 Crore
2% – 3%(Subject to a Minimum of 3 crores)
(iii) Rs. 500 Crore and above
 0.5% – 2%
(Clause 5.1)
1.Every year, each CPSE shall with the approval of its BOD MAKE -a budgetary allocation for CSRS activities / projects for the year. The budgetary allocation will be based on the profitability of the company. More specifically, it will be determined by the Profit After Tax (PAT) of the company in the previous year as shown here under:
PAT of CPSEin the previous year
Range of Budgetary allocation forCSR and Sustainability activities(as % of PAT in previous year)
(i) Less than Rs. 100 Crore
3% – 5%
(ii) Rs. 100 Crore to Rs. 500 Crore
2% – 3%
(iii) Rs. 500 Crore and above
1% – 2%
For all CPSEs having PAT above Rs. 500 Crores in the previous year, the range of budgetary allocation for CSR and Sustainability activities has been raised to 1%-2%. All CPSEs shall strive to maximize their spending on CSRS activities and move towards the higher end of their slabs of budgetary allocation. (Clause 1.5.1)
1.Every company having
 
NET WORTH  ≥ Rs.500 Cr. or
TURNOVER ≥ Rs.1000 Cr. or
A NET PROFIT ≥ Rs.5 Cr.
during
ANY financial year
SHALL CONSTITUTE
a CSR Committee of the Board
consisting of three or more directors, out of which at least one director shall be an independent director. (Sub Clause 1, Clause 135)
 
(5) The Board of every company referred to in sub-section (1), SHALL ENSURE
that the company spends, in every financial year,
AT LEAST TWO PER CENT OF THE AVERAGE NET PROFITS of the company MADE DURING THE THREE IMMEDIATELY PRECEDING FINANCIAL YEARS, in pursuance of its Corporate Social Responsibility Policy:
(Sub Clause 5, Clause 135)
 
(Remark- Since as per Clause 1.11.4 of CSRS Guideline 2013, the same shall stand modified by the provisions of the new Companies Act as and when it shall be in force. Accordingly there would be exemption for those Companies which do not fulfil the above said conditions, more particularly the criteria of net profit of Rs.5 cr. or more. Further the New Company Bill has already been approved in the Lok Sabha, and waiting for the nod of Rajya Sabha and then Hon’ble President of India.
 
Q. Why those CPSEs which has less than Rs.5 Cr. of PAT shall go for long term projects as is mandatory in the CSRS Guideline 2013 )
Loss-making companies are not mandated to earmark specific funding for CSR activities. (Clause 5.2)
They should achieve CSR objectives by integrating business processes with social processes wherever possible and taking up such initiatives which do not involve cash outgo, e.g., by synergising their CSR activities with those of other profit-making cos. (Clause 5.3)
1.Sick or loss making companies or those having a negative Net Worth are not mandated to earmark specific funds for CSRS activities. However, they MUST PURSUE
-CSRS policies by integrating them with their business plans, strategies and processes, which do not involve any financial expenditure. In addition, they may try to attain CSRS objectives through the adoption of innovative methods for water, waste and energy management, reduction of carbon emission, preservation of bio-diversity, and production of goods and services which are consumer and environment friendly, without any additional cost, perhaps even savings to the company. They may also collaborate with the profit making CPSEs and assist them in ingenious ways without financial support in CSRS activities. (Clause 1.5.2)
 
The CSR Budget should be fixed for each financial year. This funding will not lapse. It will be transferred to a CSR Fund, which will accumulate – as in the case of non-Lapsable pool- for the North East.
(Clause 5.4)
1.The budget allocated for CSRS activities / projects planned for each financial year is EXPECTED TO BE SPENT
-within that year.
-If due to some reason, the budget of a year remains unutilised, the same would not lapse. Instead, it would be carried forward to the next year for expenditure on CSRS activities, which were planned for implementation in the previous year, but could not be completed due to some reason.
-However, the PSEs shall have to disclose reasons for not being able to spend the entire budget on CSRS activities as planned for that year, and shall make every endeavour to spend the unutilised budget of any year within the next two financial years.
-In case the CPSEs are unable to spend the unutilised budget within the next two financial years, the unspent amount would be transferred to a ‘SUSTAINABILITY FUND’ to be used for CSR and Sustainability activities. This ‘Sustainability Fund’ would be created separately. Implementation mechanism in this context is also being formulated separately. (Clause 1.5.3)
 
(Remark- Transfer of unspent CSRS fund into Sustainability Fund has been introduced)
(5) The Board of every company referred to in sub-section (1), SHALL ENSURE that the company spends, in every financial year,AT LEAST TWO PER CENT OF THE AVERAGE NET PROFITS of the company MADE DURING THE THREE IMMEDIATELY PRECEDING FINANCIAL YEARS, in pursuance of its Corporate Social Responsibility Policy:
Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.
Explanation.—For the purposes of this section “average net profit” shall be calculated in accordance with the provisions of section 198.
(Sub Clause 5 Clause 135)
(Remark- The New Companies Act is silent on carry forward of the unspent amount or to transfer the same in Sustainability Fund. Therefore there could be chances where Company will escape by providing some reasons in their Board Report.)
In case CPSEs have different Profit Centers like Factories I Plant locations, they may be allocated separate CSR budgets to be spent by them under the Annual CSR Budget allocations.
(Clause 5.5)
6.
CLARIFICATIONS
These Guidelines will supersede/override any other Guidelines/Circulars/ instructions etc. that may have been issued by any Ministry/ Department on any prior date. Guidelines on CSR for CPSEs will henceforth issue only from the Department of Public Enterprises.
(Clause 6.1)
These Guidelines will supersede all the Guidelines / circulars / instructions issued earlier by the Department of Public Enterprises (DPE) on this subject. (Clause 1.12.1)(Remark- No Comment required)
These Guidelines are fully in consonance with the draft Guidelines for Corporate issued by the Ministry of Corporate Affairs as per their website.(Clause 6.2)
1. These guidelines are in consonance with the National Voluntary Guidelines for Social, Environmental & Economic Responsibilities of Business issued by the Ministry of Corporate Affairs in July 2011. (Clause 1.11.3)
(Remark- No Change)
 
Such companies who are operating in sectors such as financial services, and have no specific geographical area or limited area, would adopt and define the areas of their choice for undertaking CSR activities.
(Clause 6.3)
1.Some companies by the very nature of their business have no specific geographical area of commercial operations, like companies in the financial and consultancy services. Such companies can take up CSRS projects at any location of their choice within the country, including the backward regions. (Clause 1.4.6)
(Remark- the choice of locations has been clarified and confined to within the country including the backward regions)
Activities and expenditure related to staff benefits will not count as CSR.
(Clause 6.4)
1.Generally, the employees of a CPSE SHOULD NOT BE
-the direct beneficiaries of the activities undertaken with the budget allocated for CSRS initiatives in any given year.
-However, AN EXCEPTION can be made in case of schools, hospitals, training institutes and other such infrastructure which are created primarily for
-environment protection and/or
-for the benefit of underprivileged communities,
-deprived sections and the society at large,
-but the facilities of which are availed by the employees of the CPSE and their families also,
-provided that the latter category does not constitute more than 25% of the total number of beneficiaries of such facilities.
-The capital cost involved in the creation of such facilities and the annual cost incurred on the maintenance of such infrastructure can be borne from the CSRS budget of the company. (Clause 1.5.7)
(Remark- Activities and expenditure on employees has not been prohibited but restricted for certain exceptional circumstances and the ceiling is 25% of the total number of beneficiaries)
 
Also grants to organizations/ institutions that are not specifically implementing CSR projects specified by the CPSE would not count as CSR.(Clause 6.5)
1.In the selection or choice of CSRS projects, companies SHOULD AVOID
-taking up ad hoc, one time, philanthropic activity, which does not contribute in any way to social value creation, environment protection or sustainable development.
-MERE CONTRIBUTIONS TO PHILANTHROPIC, CHARITABLE OR OTHER ORGANISATIONS WOULD NOT BE CONSIDERED A VALID CSR ACTIVITY.
-The ONLY EXCEPTION being contributions made for natural calamities / disasters and for meeting the emergency needs of employees of sick and loss making CPSEs in distress, not provided for under existing pay revision / wage settlement arrangements. (Clause 1.4.8)
(Remark- No Change w.r.t. grant to organisation)
 
These Guidelines may be amended by the Department of Public Enterprises from time to time with the approval of the competent authority.
(Clause 6.6)
7.
BASELINE SURVEY & DOCUMENTATION
The impact made by CSR activities should be quantified to the best possible extent with reference to base line data, which need to be created by the CPSEs before the start of any project. HENCE BASE-LINE SURVEYS ARE MANDATORY.(Clause 7.1)
1.Before taking any final decision on the selection of any CSRS project, CPSEs should get an exercise / study done to assess the needs of the intended beneficiaries for a realistic assessment of the resource inputs required for the expected level of social / economic / environmental impact through the implementation of the activity / project.
-The data / information collected through this exercise / study before the commencement of the project generally proves useful in impact assessment after the completion of the project.
-Although baseline surveys are generally considered to be very useful scientific tools for a fairly exact measurement of such needs, baseline surveys will not be insisted upon in all cases, provided CPSEs submit credible documentary evidence of having got the need assessment study done through their own resources, or through some specialised agency, or having accessed reliable data in this regard from recognised authoritative secondary sources. (Clause 1.4.18)
(Remark- Mandatory Provision of baseline surveys has been dispensed with subject to submission of credible documentary evidence of having done the need assessment study done)
 
Meticulous documentation relating to CSR approaches, policies, programmes, expenditures, procurement, etc., should be prepared and put in the public domain, (particularly through the internet) and made available to the National CSR Hub.
(Clause 7.2)
1.The companies SHOULD DISCLOSE -their CSRS initiatives on their OFFICIAL WEBSITES.(Clause 1.3.15)
(Remark- No change w.r.t. disclosure on website)
(1) The BOARD’S REPORT under sub-section (3) of section 134 SHALL DISCLOSE
the composition of the Corporate Social Responsibility Committee.
(Sub Clause 2 of Clause 135)
(2) The Board of every company referred to in sub-section (1) shall,—
(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed; and
(Sub Clause 4 of Clause 135)
(3) There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include—
(o) the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year;
(Sub Clause 3 of Clause 134)
(Remark- Disclosure of Composition of Committee and CSR Policy in Board Report has been inducted for the first time.)
8.
MONITORING
Monitoring of the CSR projects is very crucial and needs to be a periodic activity of the Enterprise.
(Clause 8.1)
1.Monitoring of CSRS project goes concurrently with implementation, and is as important. Monitoring is essential to assess if the progress is on expected lines in terms of timelines, budgetary expenditure and achievement of physical targets. Monitoring SHOULD BE DONE
-periodically with the help of identified key performance indicators;
-the periodicity being determined largely by the nature of performance indicators.
-Like implementation, monitoring too should be done in project mode with continuous feedback mechanism, and recourse always available for mid-course correction in implementation, whenever required. (Clause 1.6.11)
(Remark- No change except more elaboration of the provisions)
 
The Boards of CPSEs should discuss the implementation of CSR activities in their Board meetings.(Clause 8.2)
1.Implementation and monitoring of the CSRS activities will be OVERSEEN
-by a Board level committee headed by either the Chairman and / or Managing Director, or an Independent Director as mentioned in para 1.3.9.
-The composition of the committee is to be decided by the BOD of the company, but it is mandatory to have at least one Independent Director as a member of this Committee. (Clause 1.6.13)
(Remark – The tasks of implementation and monitoring have been assigned to the Board Level Committee not the BOD of the Company.)
(3) The Corporate Social Responsibility Committee shall,—
(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;
(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time to time.
(Sub Clause 3 of Clause 135)
(Remark- Functions of the Committee w.r.t. monitoring and implementation of the CSR policy is almost same)
Each CPSE should include a separate paragraph/chapter in the Annual Report on the implementation of CSR activities/projects including the facts relating to physical and financial progress.
(Clause 8.3)
1.A brief summary of CSRS activities SHOULD ALSO BE INCLUDED
-in their Annual Report. (Clause 1.3.15)
(Remark- no change)
The implementation of CSR guidelines will form a part of the Memorandum of Understanding that is signed each year between CPSEs and Government.
(Clause 8.4)
3.As regards the CSRS projects, the guidelines make it mandatory for all CPSEs to undertake at least one project for the development of any one backward district of the country, and at least one project on environmental sustainability. There can be some overlapping of activities between these two projects, but whereas, one project is clearly focused on socio-economic development and inclusive growth of the under developed and neglected regions, the other project is focused mainly on protection of environment and biodiversity conservation.  However, Maharatna companies will have to submit, details of one additional project, making it a total of three projects for evaluation. Impact assessment would be done in cases of completed projects / activities. The on-going long term projects with an implementation span of several years would be adjudged by the achievement of targets set for the year under evaluation. Therefore, at the time of submission of their reports on CSRS projects for the purpose of MoU evaluation, the CPSEs shall have to SUBMIT -all details of planning, selection, implementation, monitoring, and impact assessment of the activities related to these projects. Hence, documented details regarding progress made in stages during implementation and in overcoming the difficulties encountered in the process, the resources deployed, the expenditure incurred, and the performance of the implementing agencies should be available for evaluation purpose. (Clause 1.10.3)(Remark- Not only implementation shall form part of MoU but CPSEs have to submit detail of planning, selection, implementation, monitoring and impact assessment of the activities, etc. also for evaluation purpose. )
 
The performance of each CPSE with reference to its CSR activities should be monitored by the Ministry/Department concerned on a regular basis.
(Clause 8.5)
(Remark- There is no such provision in the existing guidelines)
 
In MoU Guidelines from 2010-11 onwards, 5 marks have been earmarked out of the non-financial parameters for CSR activities and 5marks for Sustainable Development initiatives.
(Clause 8.6)
(Remark- There is no such specific provision in the existing guidelines)
 
For proper and periodic monitoring of CSR activities, companies MAY APPOINT-a CSR committee or a Social Audit Committee or a suitable, credible external agency.(Clause 8.7)
1.Implementation and monitoring of the CSRS activities will be OVERSEEN
-by a Board level committee headed by either the Chairman and / or Managing Director, or an Independent Director as mentioned in para 1.3.9.
-The composition of the committee is to be decided by the BOD of the company, but it is mandatory to have at least one Independent Director as a member of this Committee. (Clause 1.6.13)
(Remark- Constitution of committee has been made mandatory)
 
CSR projects should also be evaluated by an independent external agency. This evaluation should be both concurrent and final.(Clause 8.8)
IN ANY CASE, the final evaluation must always be entrusted to an external agency. (Clause 1.6.12)(Remark- evaluation by external agency has become mandatory provision)
 
9.
ANNEXE
POSSIBLE AREAS OF ACTIVITIES UNDER CSR(THE LIST IS INDICATIVE AND NOT EXHAUSTIVE)
i) Drinking Water Facility
ii) Education
iii) Electricity Facility
iv) Solar Lighting System
v) Health and Family Welfare
vi) Irrigation Facilities
vii) Sanitation and Public Health
viii) Pollution Control
ix) Animal Care
x) Promotion of Sports and Games
xi) Promotion of Art and Culture
xii) Environment friendly technologies
xiii) Promotion of livelihood for economically weaker sections through forward and backward linkages
xiv) Relief to victims of Natural Calamities like earth-quake,. cyclone, drought & flood situation in any part of the country
xv)  Supplementing Development Programmes of the Government.
xvi) Non-conventional Energy Sources
xvii) Construction of Community Centres/Night Shelters/Old Age Homes
xviii) Imparting Vocational Training
xix) Setting up of skill development centres.
xx) Adoption of villages
xxi) Taking action on points suggested by Ministry of Forest and Environment pertaining to Charter on Corporate Responsibility for Environment Protection for 17 categories of Industries.
xxii) Scholarships to meritorious students belonging to SC, ST, OBC and disabled categories.
xxiii) Adoption/Construction of Hostels (especially those for SC/ST and girls),
xxiv)  Skill training, entrepreneurship development and placement assistance programmes for youth.
xxv) Building of Roads, Pathways and Bridges.
xxvi) Entrepreneurship Development Programme (EDP)
xxvii)      Disaster Management Activities including those related to amelioration/ mitigation.
xxviii) Activities related to the preservation of the Environment/Ecology and to Sustainable Development
(Remark- No such list has been specified in the existing guidelines)
SCHEDULE VII(See sections 135)Activities which may be included by companies in their Corporate Social Responsibility Policies
Activities relating to:—
(i) eradicating extreme hunger and poverty;
(ii) promotion of education;
(iii) promoting gender equality and empowering women;
(iv) reducing child mortlity and improving maternal health;
(v) combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases;
(vi) ensuring environmental sustainability;
(vii) employment enhancing vocational skills;
(viii) social business projects;
(ix) contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled
Castes, the Scheduled Tribes, other backward classes, minorities and women; and
(x) such other matters as may be prescribed.
 
(Remark- First six activities are similar to that of UN Millennium Development Goals)
THESE GUIDELINES WILL STAND MODIFIED BY THE PROVISIONS OF THE NEW COMPANIES ACT AND UPDATED SEBI GUIDELINES AS AND WHEN THESE ARE IN PLACE AND MADE ENFORCEABLE. (CLAUSE 1.11.4)

 

THANKS

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