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

Standard

 

COMPLIANCE BY GOVT. COMPANIES

Vs

NON- GOVT. COMPANIES

PART-II

 

 

CORPORATE SOCIAL RESPONSIBILITY

AND

SUSTAINABILITY GUIDELINES 2013

FOR OF CPSES IN INDIA

In furtherance of my earlier post on Compliance by Govt. Companies Vs. Non -Govt. Companies Part-I, in this post I chose to discuss and elaborate the Guidelines on Corporate Social Responsibility and Sustainability (CSRS) issued by Department of Public Enterprise (DPE) on 12th April, 2013.  CSRS Guideline is new but the concept of Corporate Social Responsibility is not new in any Central Public Sector Enterprise (CPSEs) and Listed Company. Prior to CSRS Guidelines, 2013 there were Guidelines on Corporate Social Responsibility issued on 9th April, 2010 and Guidelines on Sustainable Development, 2011. Both these Guidelines were applicable on all the CPSEs till 12th April, 2013.

Broadly there are three sectors in which Corporate world is expected to contribute, these are Education, Health and Environment . The Guidelines on Corporate  Social Responsibility, 2010 was covering the Education and Health Sectors, while Guidelines on Sustainable Development, 2011 was for Environment. But there were similarities in all these three activities e.g. activities relating pollution control (essential for health as well as environment), activities relating to education for Environment Friendly Technology (essential for education as well as environment), etc. Due to these similarities and in order to avoid the duplication of same activities and to avoid the conflict of provisions of both the Guidelines the Department of Public Enterprises has clubbed both the Guidelines, namely, CSR Guidelines, 2010 and Sustainable Development Guidelines, 2011 and issued a new Guidelines namely, Corporate Social Responsibility and Sustainability, 2013 which is in force from 1st April, 2013. 

CSRS Guidelines, 2013 has been issued, keeping in mind the basic principle that Corporate Sector should not only do business and earn profit but simultaneously they should preserve the available resources, contribute in the growth of the weaker section of the society so as to implement the concept of ‘grow together’ every time, even in the normal day to day business. They should do business in that manner which would bring consistency in the growth of the Company with the growth of the nation.

One may think that why should Company invest into CSRS activities when they have already contributed in the growth of nation by payment of various taxes including income tax. The question seems valid, prima facie. But if we delve into depth we will find that it is the taxes because of which our vehicles are talking to air on the road, it is the taxes because of which we sleep tight at night, it is the taxes because of which we inhale free air (else tomorrow troops of neighbor countries will be roaming in Delhi, may be even instead of Dudhwala at our gate we will find their troops tomorrow). So the point is, whatever taxes we are paying those have already been accounted for. Therefore I don’t think we should question that.

Moreover, I would say that every Company, whether Govt., Public, Private, Listed or Unlisted, all of them should voluntarily contribute to the CSRS activities. Why we need even a Guideline on the same? Don’t those Managing Directors of Unlisted Non-Govt. Companies know that there was flood in the north east, or don’t they know that there is drought in West or don’t they know that there was Tsunami in South. They know but don’t care. Why? Because there is no statutory requirement to contribute to these activities.  However they never forget to express their grief on those deprived people. Actually, frankly speaking we all from top to bottom  enjoy to comment than act. All these are results of this attitude. Further, motivation to initiate CSRS activities comes when you get satisfied from what you have. But you know, how many of us are satisfied with ourselves. Recently in a survey it was revealed that 84% Citizens of Australia are satisfied with what they have, I think they would be doing CSRS activities more than what our CPSEs and Listed Companies are doing.               

Any way let us concentrate on new CSRS Guidelines. One major change what CSRS Guidelines, 2013 brought in is that under this Guidelines  emphasis has not only been given to the external stakeholders of the Company but also the internal stakeholders thereof e.g. employees of the Company, while CSR Guidelines, 2010 were not recognizing the activities done for the welfare of internal stakeholders, under the ambit of CSR activities. The new CSRS guideline states that only delegation of the task of planning and implementation of activities under this policy to some officials in the company will not be of much help rather the top management must lead from the front in bringing about the required attitudinal transformation.

 

I endeavored to simplify the provisions of the CSRS guideline 2013 and divided the same into three para:

 

Para-I      – Highlights of the provisions of Corporate Social Responsibility and Sustainability Guidelines, 2013 in three parts namely, Mandatory, Non-Mandatory and Other Provisions,

Para-II     – Checklist of Mandatory Provisions of CSRS 2013 and         

Para-III   – CSR 2010, CSRS 2013 vis a vis Company Bill on CSR

 

Since the provisions of original CSRS Guidelines, 2013 was not divided into mandatory, non-mandatory or other provisions, I have done the same applying my knowledge and skills with a view to simplify the study. There could be any instance in which I have wrongly interpreted the provision, I would be grateful to get notified for the same. Para -I and Para-II are in this post, but due to heavy volume Para -III could not be attached which will follow in the next post.

Hope the contents of this post will be fruitful to all of us in a long run.

Have a wonderful journey…


 

 

PARA-I

HIGHLIGHTS OF CORPORATE SOCIAL RESPONSIBILITY

AND

SUSTAINABILITY GUIDELINES, 2013


 

 

Mandatory Provision

Non-Mandatory Provision  
Other Provision

 

  1. I.                   MANDATORY COMPLIANCE UNDER CSRS GUIDELINES:
  2. A.    GENERAL
  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)

Q- 1. How small budget PSEs shall comply this provision?

  1. 2.      Baseline survey is recognised but not mandatory; however CPSEs should SUBMIT 

–          credible evidence of having made a fairly accurate assessment of the needs of the stakeholders likely to benefitted from their CSRS activity, which would also help in making a fair estimation of the social / environmental impact after the conclusion of the activity. (Clause 1.2.6).

(Remark- A challenge for small budget PSEs).

 

  1. 3.      CPSEs will have to DISCLOSE

–          the reasons for not fully utilising the budget allocated for CSRS activities planned for each year.

–          Besides, the unspent amount of the budget allocated for CSRS activities for a year will have to be spent within the next two financial years, failing which, it would be transferred to a ‘Sustainability Fundto be created separately for CSRS activities. (Clause 1.2.7) (New)

  1. 4.      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)

  1. 5.      Public Sector enterprises are required to HAVE

–          a CSRS policy approved by their respective Boards of Directors.

The CSRS activities undertaken by them under such a policy should also HAVE

–          the approval / ratification of their Boards. Even if the Board of a company were to delegate the authority to approve the CSRS activities to the Board level committee ultimately the ratification of such activities by the Board of Directors would be required

However, CPSEs should frame their CSRS policies and plan their activities in this regard within the framework of DPE’s guidelines on this subject. Within the ambit of these guidelines, it is the discretion of the Board of Directors of CPSEs to decide on the CSRS activities to be undertaken. (Clause 1.3.4)

  1. 6.      Each CPSE shall HAVE

–          a Board levelcommittee headed by either the Chairman and / or Managing Director, or an Independent Director

–          to oversee the implementation of the CSRS policies of the Company and

–          to assist the Board of Directors to formulate suitable policies and strategies to take the CSRS agenda of the company forward in the desired direction. (Clause 1.3.9)

  1. 7.      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)

 

  1. 8.      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)

 

  1. 9.      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)

 (Q- Is Scholarship to the the economically weaker section of the society is not an ad hoc, one time activity?)

  1. B.     PLANNING
  1. 10.  (i) CPSEs must ADOPT

–          a CSRS 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)

  1. 11.  Although CPSEs may select their CSRS projects from a vast range of available options, PRIORITY

–          should be accorded to activities pertaining to:

i) inclusive growth of society, with special attention to the development of weaker sections of society and the backward districts of the country, and

ii) environment sustainability. Hence, it will be mandatory for all CPSEs to SELECT

–          one project in each of the two categories of CSRS activities mentioned above. (Clause 1.4.9)

  1. 12.  Besides the mandatory projects specified in para 1.4.9 above, CPSEs HAVE TO TAKE UP

–          other projects / activities also to fully utilize their annual budget for CSRS.

–          Documentary and other record of the progress made or success achieved in implementing these projects / activities should also be meticulously maintained for the purpose of audit, and for Sustainability reporting and disclosure to all stakeholders. (Clause 1.4.12)    

  1. 13.  In the FIRST CATEGORY of activities mentioned in the para above, CSRS initiatives should FOCUS

–          on capacity building, skill development and infrastructural development for the benefit of the marginalised and under privileged sections of the local communities and also in the backward regions so that avenues are created for their employment and income generation, and they also experience empowerment and inclusion in the economic mainstream. The backward districts referred to here are those which have been identified by the Planning Commission, Government of India for its Backward Region Grant Fund (BRGF) SchemeEach CPSE will have to SELECT

–          one such backward district for initiating CSRS projects with a-prior assessment of the expected level of beneficial impact on the largest number of stakeholders from the budget and other resources at its disposal for such a project. Weaker sections would include SC, ST, OBC, minorities, women and children, BPL families, old and aged, physically challenged, etc. (Clause 1.4.10)

  1. 14.  In the SECOND CATEGORY of activities mentioned in para above, CPSEs will have to PLAN

–          for environmental sustainability and take up projects for

–          water,

–          waste or energy management,

–          promotion of renewable sources of energy,

–          biodiversity conservation, etc.

–          Projects for reduction,

–          re-use and recycle of waste materials,

–          rain-water harvesting and replenishing the ground water supply,

–          protection, conservation and restoration of eco-system,

–          reduction of carbon emissions through energy efficient and renewable energy technologies, greening the supply chain, and innovation in products and services which have a clear and tangible impact on environmental sustainability fall under this category of activities. (Clause 1.4.11)

 

  1. C.    FINANCIAL COMPONENT

 

  1. 15.  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

 

(i) Less than Rs. 100 Crore

(ii) Rs. 100 Crore to Rs. 500 Crore

(iii) Rs. 500 Crore and above

Range of Budgetary allocation for CSR and Sustainability activities

(as % of PAT in previous year)

3% – 5%

2% – 3%

1% – 2%

For all CPSEs having PAT above Rs. 500 Crores in the previous year, the range of budgetary allocation for CSRS 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. 16.  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)

 

  1. 17.  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)

Clause 1.6.5

Activities which are selected under CSRS agenda for external stakeholders SHOULD, AS FAR AS POSSIBLE,

–          be implemented in a project mode, which entails

  • charting the stages of execution in advance through planned processes, with mobilisation of pre-estimated quantum of resources, and within the allocated budgets and prescribed timelines.
  • It also involves assigning clear responsibility and accountability of the designated officials / agencies who are entrusted with the task of implementation.

–          In exceptional cases, where CSRS activities are not implemented in a project mode, the reasons for doing so should be recorded in writing. (Clause 1.6.5)

  1. 18.  UPTO 5% of the annual budget for CSRS activities has to be EARMARKED

–          for Emergency needs, which would include

–          relief work undertaken during natural calamities / disasters, and

–          contributions towards Prime Minister’s / Chief Minister’s Relief Funds and/or

–          to the National Disaster Management Authority.

–          Such contributions would count as valid CSRS activities.

–          Also, CPSEs may utilize this portion of the CSRS budget, or a part thereof, to provide humanitarian assistance to the employees of other sick and loss making CPSEs whose employees are drawing salary, wages that are at least two pay revisions/wage settlements behind the current one and are in real distress and in need of emergency aid for survival. For this, the approval of the BOD of the CPSE and the Administrative Ministry / Department would be required.

–          In exceptional circumstances, supported by reasons recorded in writing and approved by the Administrative Ministry, the budgetary allocation under the provision of Emergency needs can be enhanced by 5% of the budget allocated for CSRS activities in a particular year. However, such enhancement should not become a regular feature. (Clause 1.5.5)

 

  1. 19.  CPSEs will have to EARMARK

–          5% of their annual budget for CSRS activities to meet the Emergency needs as specified in the para above.

–          In case this amount is not utilised in the year of its allocation, it would be carried forward to the next year for utilization for CSRS projects, which if not spent within two years would be transferred to the SUSTAINABILITY FUND. (Clause 1.5.6)

 

  1. 20.  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 CSRS activities. This ‘Sustainability Fund’ would be created separately. Implementation mechanism in this context is also being formulated separately. (Clause 1.5.3)

 

  1. D.    IMPLEMENTATION AND MONITORING
  1. 21.  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)

  1. 22.  In case the Board level committee on CSRS is neither headed by the Chairman and / or the Managing Director, or by an Independent Director, and in case an Independent Director is not a member of this committee, the CPSEs would STILL HAVE TO ALLOCATE

–          budget for CSRS activities every year, depending upon the profitability criteria.

–          However, in such cases the entire amount allocated for CSRS activities would be transferred to ‘SUSTAINABILITY FUND’. Hence, CPSEs are advised to fill the vacancies, if any, of the posts of Independent Directors on their respective Boards, at the earliest. (Clause 1.6.14)

  1. 23.   

        i.            To exercise constant oversight over the implementation of CSRS activities ALL COMPANIES should APPOINT

–          a senior officer not less than one rank lower to the Board level, who will function as the nodal officer, with any suitable designation as decided by the company.

–          The designated nodal officer should be assigned a team of officials to assist him / her.

      ii.            This TEAM shall OVERSEE

–          the implementation of CSRS agenda of the company within the organisation and also outside, i.e. covering internal as well as external stakeholders.

    iii.            The DESIGNATED NODAL OFFICER will REGULARLY SUBMIT

–          reports regarding the progress in the implementation of CSRS activities to the Board level committee headed by the Chairman, or the Managing Director or an Independent Director.

    iv.            The BOARD LEVEL COMMITTEE will in turn, PERIODICALLY SUBMIT

–          the reports to the BOD for their information, consideration and necessary directions. The periodicity of submission of reports by the Committee to the BOD is a matter to be decided by each company. (Clause 1.6.15)

  1. 24.   

                    i.            To facilitate co-ordination of CSRS initiatives of different departments within the organisation, to report on their separate endeavours, to issue policy directives on the subject, and to devise an appropriate corporate communication strategy in this regard, it is EXPECTED

  • that the PSES will appoint a fairly senior officer not less than one rank lower to the Board level to function as the nodal officer.

                  ii.            The DESIGNATED NODAL OFFICER is EXPECTED 

  • to have a team of officials to assist him / her in co-ordination work, which will in no way detract from the importance of CSRS work in which all the supervisory staff in all departments would be continuously engaged in.

                iii.            The composition of the team of officials constituted to assist the nodal officer is to be decided by the BOD, or the Board level committee.

                 iv.            The DESIGNATED NODAL OFFICER will regularly submit

  • reports regarding the progress in the implementation of CSRS activities to the Board level committee. (Clause 1.3.10)
  1. 25.  The Board level committee and the designated nodal officer’s team of officers together will CONSTITUTE

–          the two-tier organisational structure to steer the CSRS agenda of the company. (Clause 1.3.11)

  1. 26.  The Board level committee headed by the Chairman / Managing Director / Independent Director and the below Board level team headed by the nodal officer will CONSTITUTE

–           the two-tier organisational structure within the organisation to steer the CSRS agenda of the company. (Clause 1.6.16)

  1. 27.  The two-tier structure, comprising of a Board level committee headed by either the Chairman and / or Managing Director, or an Independent Director, AND a group of officials headed by a senior executive of not less than one rank below the Board level  which the CPSEs are mandated to create, is EXPECTED TO HAVE

–          the authority and influence to be able to steer the CSRS agenda of the company. (Clause 1.2.5)

  1. 28.  Each CPSE is REQUIRED TO HAVE

–          a two-tier organisational structure for

–          planning,

–          implementing and monitoring the CSRS policies.

–          Formulating policy,

–          selecting CSR projects,

–          devising implementation strategies,

–          earmarking budgets,

–          mobilising resources,

–          engaging external specialised agencies,

–          adopting effective communication strategies for linkage with all stakeholders,

–          keeping the BOD and the top management apprised of all important developments, and

–          preparing sustainability reports will be the task of this two-tier structure.

–          It is expected to function like the brain of the company in matters relating to CSRS.

–          The performance of each CPSE would be judged by how effectively this two-tier organisational structure discharges its role. (Clause 1.10.5)

Q. 1 All the these clauses namely 1.6.15, 1.3.10, 1.3.11, 1.6.16, 1.2.5 and 1.10.5 have covered the same topic. However at the first stage in clause 1.6.15 Guideline states mandatory provision for two tier mechanism while under clause 1.3.10 seems a non mandatory provision. At the same time it is a triplication of almost same provisions… why?

  1. 29.  In any case, the final evaluation must always be entrusted to an external agency. (clause 1.6.12)

 

  1. E.     SUSTAINABILITY REPORTING AND DISCLOSURE
  1. 30.  What lends impetus to sustainability reporting is the policy directives of the Securities and Exchange Board of India (SEBI) that all listed companies have to report on their environmental, social and governance (ESG) initiatives in their Annual Reports. To begin with, it has been made mandatory for the top 100 companies in terms of market capitalisation to submit their Business Responsibility Reports. For the others, it is still a voluntary disclosure and reporting at this stage, but from the discernible trend-setting it appears that it would be made mandatory for other companies also in a phased manner. Therefore, SUSTAINABILITY REPORTING AND DISCLOSURE

–          of all CSRS activities undertaken by a CPSE is mandatory. (Clause 1.7.3)

 

  1. F.     MOU EVALUATION:
  1. 31.  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)

  1. 32.  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)

  1. 33.  CPSEs will also be judged by their sustainability reporting and disclosure practices. From the format and content of these reports, the level of transparency and the sincerity of the company in accepting responsibility of the social, economic and environment impact of its activities would be judged.

 

  1. 34.  As is the practice, CPSEs would have to SUBMIT

–          their self-assessment reports regarding each performance indicators pertaining to CSRS, as mentioned above.

 

  1. II.                NON MANDATORY COMPLIANCE UNDER CSRS GUIDELINES:
  1. A.    GENERAL

 

  1. 1.      PSEs are EXHORTED

–          in the revised guidelines to join hands with other public sector companies

–          for planning, 

–          implementing & monitoring mega projects

–          for optimal use of resources and synergy of expertise and capabilities

–          for maximum socio-economic or environmental impact. (Clause 1.2.9)

  1. 2.      CPSEs SHOULD

–          integrate and align their CSRS policies and activities with their business goals, plans and strategies. (Clause 1.3.5)

  1. 3.      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)

  1. 4.      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)

  1. 5.       

        i.            The corporate enterprises are EXPECTED

–          to subject their performance to scrutiny and audit by external agencies.

      ii.            As a part of their CSR they SHOULD RESORT TO

–          public disclosure of all information for the benefit of all stakeholders.

    iii.            The companies SHOULD DISCLOSE

–          their CSRS initiatives on their official websites.

    iv.            A brief summary of CSRS activities SHOULD ALSO BE INCLUDED

–          in their Annual Report. (Clause 1.3.15)

  1. 6.      CPSEs SHOULD INTEGRATE

–          their CSRS plans and strategy with their business plans and strategies.

–          For easy implementation, long-term CSRS plans should be broken down into medium-term and short-term plans.

–          Each plan must specify the CSRS activities planned to be undertaken for each year, define the responsibilities of the designated authorities to be engaged in this task, and also prescribe the measurable and the expected outcome and social / environmental impact of such activities. (Clause 1.4.2)

  1. 7.      Stakeholder engagement is a continuous process, but is of crucial importance at the stage of planning and selection of CSRS projects.

–          All companies SHOULD HAVE

–          a consultative mechanism to get feedback on the expectations of the key stakeholders.

–          Central / State Government and/or District / local administration should be consulted to obtain their views on area specific needs or the priorities of the intended beneficiaries of the CSR projects planned for the areas under the jurisdiction of these authorities.

–          Gram Sabhas and Panchayati Raj institutions at the village level are important and reliable sources for assessing the social, economic and environmental needs in rural areas. Therefore, as far as possible they should be consulted in planning for CSRS projects. (Clause 1.4.13)

 

  1. 8.      Preservation and promotion of heritage, art, music and culture in keeping with Indian tradition will form a valid CSR activity and therefore planning process SHOULD, KEEPING IN MIND the local needs, incorporate these aspects suitably. (Clause 1.4.14)
  1. 9.      PSEs have so far shown a clear preference for going it alone in selection and implementation of CSRS projects. As a result, barring those in the big league i.e. the Maharatna and Navaratna companies, the others end up spreading their meagre budgets thinly over several CSRS projects, which have at best, only a marginal and transient social / economic / environmental impact. Public Sector companies SHOULD, THEREFORE, TRY TO

–          pool their resources and take up projects which have

–          greater visibility,

–          more number of beneficiaries, and

–          wider and long lasting visible impact. (Clause 1.4.15)

  1. 10.  Reputed and recognised, not-for-profit institutions which have the expertise and professional competence for conducting training, skill development and other capacity building activities that promote inclusive growth and sustainable development and help in realisation of UN Millennium Development Goals through sectoral or regional co-operation can be supported by CPSEs through CSRS initiatives. (Clause 1.4.16)

 

  1. B.     FINANCIAL COMPONENTS
  1. 11.  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)

 

  1. C.    IMPLEMENTATION AND MONITORING

 

  1. 12.  Every PSE SHOULD HAVE

–          a CSR agenda which is internal to the organisation, and

–          a CSR policy which addresses externalities – both of which are important and complementary to each other. (Clause 1.6.1)

  1. 13.  The former is essentially the mandate of a company

–          to conduct its business in a socially responsible way

–          by maintaining high level of organisational integrity and ethical behaviour;

–          conforming to the expected standards of transparency in reporting and disclosing its performance in all the spheres of its activities;

–          demonstrating concern for the welfare of its employees;

–          adopting production methods, commercial operations and management practices

–          that promote social and environmental sustainability;

–          and, retaining the trust and confidence of the investors and shareholders

–          by matching its financial performance with equally commendable achievements in non-financial parameters. (Clause- 1.6.2)

  1. 14.  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)

  1. 15.  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)

  1. 16.  So crucial is monitoring to the success of the projects, being implemented by external agencies, that it must be performed by the CPSEs through their team of officials specifically designated for this task. The external agency, if any, engaged for IMPLEMENTING a project SHOULD NOT BE CONSIDERED

–          for the task of MONITORING AND EVALUATION because of the likely conflict of interest involved in the assignment.

–          If required, IT IS ADVISABLE

–          to use the services of the agency engaged for doing the need assessment study prior to the commencement of the project, to perform the task of monitoring and eventual evaluation of outcome.

–          However, whenever CSRS activities are implemented by a CPSE and its staff, IT IS ADVISABLE

–          to associate an external agency also for monitoring purposes, as it would enable an impartial assessment of work progression, and help in mid-course correction, if required.

–          IN ANY CASE, THE FINAL EVALUATION MUST ALWAYS BE ENTRUSTED TO AN EXTERNAL AGENCY. (CLAUSE 1.6.12)

(Again there is duplication of same provision)

  1. 17.  While engaging or partnering with external agencies, CARE SHOULD BE EXERCISED

–          in selecting only such specialised agencies which have the necessary capabilities and expertise TO IMPLEMENT the CSR projects.

–          The credentials of reliability, integrity and professional competence of such agencies should also be verified.

–          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)

  1. 18.  In implementing their CSRS policies, companies SHOULD EXTEND

–          their reach and oversight to the entire SUPPLY-CHAIN NETWORK to ensure that as far as possible the suppliers, vendors, service providers, clients, and partners are also committed to the same principles and standards of CSRS as the company itself. Public sector companies are encouraged to initiate and implement measures aimed at `greening’ the supply chain. (Clause 1.6.9)

  1. 19.  CPSEs are encouraged to join hands and pool their resources for undertaking projects jointly with other CPSEs / Govt. agencies for long-term mega projects for greater social impact.

–          Co-ordinated efforts of companies can scale up the projects in terms of their size and socio-economic impact, with optimal utilisation of resources of each participating entity, and also accelerate the pace of development, especially of the backward regions. (Clause 1.6.10)

  1. 20.  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)

  1. D.    IMPACT ASSESSMENT

 

  1. 21.  While achievement of targets and expected outcomes can be a source of satisfaction, public sector companies SHOULD GET AN ASSESSMENT DONE

–          of the social / economic / environmental impact of their CSRS activities after the same are completed. (Clause 1.8.3)

  1. 22.  Any impact assessment study requires specialised skills and tools for associated research. Hence, it is a task best carried out by specialised agencies. (Clause 1.8.4)
  1. 23.  It is recognised that small scale activities / projects under CSRS agenda of a company cannot be expected to have any significant social or economic or environmental impact, which can be easily measurable. Hence, the public sector companies ARE URGED TO TAKE UP

–          larger projects, even if fewer in number, for greater social, economic or environmental impact, and get impact assessment studies done after their completion and necessary minimum gestation period. (Clause 1.8.5)

 

  1. III.             OTHER RELEVANT PROVISIONS

 

  1. A.    GENERAL
  1. 1.      As in the previous guidelines, there is provision in the revised guidelines that the unutilised budget for CSR activities planned for a year will not lapse and will, instead, be carried forward to the next year. (Clause 1.2.7)
  1. 2.      In a RADICAL DEPARTURE from the previous guidelines which prohibited employees from being the direct beneficiaries of the CSR policies and activities of their parent company, THE REVISED GUIDELINES ALLOW THE EMPLOYEES TO AVAIL THE INFRASTRUCTURE FACILITIES created by their company from its CSRS budget, PROVIDED the facilities are originally created essentially for the external stakeholders, and the use of these facilities by the company’s employees (internal stakeholders) is only incidental and confined to less than 25% of the total number of beneficiaries. (Clause 1.2.10)
  1. 3.      Changes w.r.t. financial component of CSRS agenda:

–          there is NO SEPARATE ALLOCATION of budget for sustainable development, as was mandated earlier,

–          THE SLAB of budgetary expenditure on CSRS activities for the CPSEs having PAT over Rs.500 crore in the previous year, would now be from 1% – 2%

–          in the earlier guidelines there was a provision of a MINIMUM EXPENDITURE of Rs.3 crores on CSR activities for CPSEs having a net profit of Rs. 100 – 500 crores. This created an anomalous situation visà- vis the CPSEs placed in the higher slab, having a net profit of over Rs.500 crore for which no minimum expenditure was specified in the earlier guidelines. The requirement of a minimum expenditure of Rs.3 crore has been removed in the revised guidelines.

–          However, these CSR guidelines and especially the suggested slabs of budgetary allocation for CSRS activities WOULD STAND MODIFIED AS AND WHEN THE NEW COMPANY LAW BRINGS IN PROVISIONS IN THIS REGARD, WHICH WOULD NEED TO BE FOLLOWED BY ALL COMPANIES INCLUDING THE CPSES (Clause 1.2.11)

  1. 4.      MANDATORY COMPLIANCE WITH LEGAL REQUIREMENTS / RULES / REGULATIONS / LAWS IN LETTER AND IN SPIRIT WILL BE COVERED UNDER CSRS ACTIVITY

–          However, expenditure on such activities would not be covered by CSR‘s financial component and would be considered as mainstream business spend. (Clause 1.3.7)

  1. 5.      CSRS policies SHOULD ADDRESS

–          social, economic and environmental concerns and

–          in the selection of activities the focus should be on the social, economic and environmental impact thereof, rather than mere output or outcomes.

–          Activities which are ad hoc and philanthropic in nature should be avoided.

–          In fact, impact assessment of CSRS initiatives may get greater weightage in performance (MoU) evaluation after completion of the project / activities, than mere certification of having utilized the earmarked budget, or even rigid adherence to timelines.

–          CPSEs are encouraged to join hands and pool their resources and capabilities to create synergy for undertaking joint ventures for projects which have scalability and greater social impact that can trigger socio-economic development through ripple effects. (Clause 1.3.13)

  1. 6.      In brief, it is generally expected that socially responsible public sector enterprises WOULD TAKE INITIATIVES TO:

        i.            promote organisational integrity and ethical business practices through transparency in disclosure and reporting procedures,

      ii.            leverage green technologies, processes and standards to produce goods and services that contribute to social and environment sustainability,

    iii.            contribute to inclusive growth and equitable development in society through capacity building measures, empowerment of the marginalised and underprivileged sections / communities.

    iv.            promote welfare of employees and labour (casual or contractual), by addressing their concerns of safety, security, professional enrichment and healthy working conditions, whether mandated or otherwise. However, expenditure on mandated activities cannot qualify for CSR’s financial components.

CPSEs should formulate policies which meet the expectations of the stakeholders, within their organisational resource capability. (Clause 1.3.18)

 

  1. B.     PLANNING
  1. 7.      Ultimately, a decision regarding the selection of a CSRS activity and the site of its location, and the budgetary and other resource allocation for its implementation, is the SOLE DISCRETION OF THE BOD of a CPSE.

–          It is for the management and the BOD to take into consideration the resource capabilities of the public enterprise, the expectations of the key stakeholders, the expected social, economic and environmental impact of the planned initiative, and then take a carefully calibrated decision with regard to the choice of CSRS project and its location. (Clause 1.4.17)

  1. 8.      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)

 

  1. C.    FINANCIAL COMPONENTS
  1. 9.      The expenditure incurred on

–          baseline survey / need assessment study,

–          on capacity building programs such as

–          training,

–          workshops,

–          seminars,

–          conferences, etc.

–          and on corporate communication strategies for engagement of all stakeholders,

–          whether internal or external,

–          to implement the CSRS agenda of a company, WOULD BE ACCOUNTED FOR

–          as CSRS expenditure from the budget allocated for this purpose. (Clause 1.5.8)

 

 

  1. D.    IMPLEMENTATION AND MONITORING
  1. 10.  CPSEs shall take steps to implement their CSR agenda within the organisation through the active involvement of the employees, who are important internal stakeholders.

–          As CSRS policies are expected to permeate into all the processes and activities of a company, the collective and united effort of all the employees, including the active involvement of the top management, is a sine qua non for the success of CSRS policies of this kind.

–          For the CSR agenda to be internalised in the organisation the employees at all levels, in all departments of the company need to be sensitized to the need for conducting business in a manner that is economically, socially and environmentally sustainable.

–          This involves devising internal communication strategies to spread awareness of CSRS amongst the employees, providing them with education and training necessary for attitudinal change and their conversion to socially and environmentally sustainable methods and practices of doing business, and adopting motivational tools to provide just the right momentum to push all such initiatives. (Clause 1.6.3)

  1. 11.  CSRS policy of a company also addresses the concerns of the external stakeholders – those who are directly impacted economically, socially, or environmentally by the operations and activities of the company, and also those who may not be directly impacted, like communities and society at large.

–          CSRS policy at this level generally addresses the social, economic and environmental concerns of society, and implementation of this policy requires selection of activities / projects, which, as mentioned in the previous chapter, are generally for inclusive growth of society and environmental sustainability. (Clause 1.6.4)

 

  1. E.     SUSTAINABILITY REPORTING AND DISCLOSURE

 

  1. 12.  Sustainability Reporting is the practice of disclosing to the stakeholders

–          the economic, social and environmental initiatives taken by a company,

–          as an indication of its commitment to sustainable development.

–          Public disclosure and reporting of a company’s performance in economic, social & environmental areas is no less important than the initiatives themselves. (Clause 1.7.1)

  1. 13.  Disclosure of a company’s financial performance is a traditional practice, but disclosures in non-financial parameters, which offer a holistic view of a company’s performance, is a relatively recent phenomenon which is rapidly gaining acceptance and recognition as a good corporate practice that enhances the reputation, improves the financial performance and increases the competitive advantage of the company in the long run.

–          However, unlike financial reporting, sustainability reporting in India is still in its infancy, largely unregulated, predominantly a voluntary initiative, and it would take a while for companies to take it seriously and match its quality and content with that of their financial reporting.

–          Nevertheless, a large number of corporate, including Indian companies are resorting to sustainability reporting and the format is generally patterned on the internationally accepted reporting frameworks like the Global Reporting Initiative (GRI). (Clause 1.7.2)

  1. 14.  Public Sector companies must take a cue from this and accept the requirement of Sustainability reporting and disclosure, and internalize the established reporting mechanisms in their system and processes.

–          By reporting transparently and with accountability, public sector companies can gain and reinforce the trust of the stakeholders.

–          This, in turn, would provide a powerful stimulus to their CSRS policies and agenda, and motivate them to pursue them with greater vigour. (Clause 1.7.4)

  1. F.     IMPACT ASSESSMENT

 

  1. 15.  The ultimate test of the success of any CSRS activity / project is the social, economic or environmental impact thereof.

–          Every such activity is planned and implemented with some anticipated impact on society or environment.

–          It is against such perception and expectation of impact that the completed activity / project should be measured to ascertain the degree of its success, or failure. In fact, it is at the time of impact assessment that a well documented and detailed baseline survey or need assessment study done at the commencement of the activity, comes in handy for comparison of data.

–          Conversely, the absence of a baseline survey or a need assessment study is sorely missed at the stage of impact assessment. (Clause 1.8.1)

  1. 16.  Impact assessment has a wider connotation than mere outputs or outcome.

–          These are generally associated with accomplishment of set targets and goals at various stages of progress in implementation.

–          Whereas, impact is the cumulative effect of outcome(s) on the developmental process – affecting society, economy and environment. (Clause 1.8.2)

  1. G.    ADVOCACY AND RESEARCH

 

  1. 17.  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)

  1. 18.  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) Organising 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 CSRS entrusted to it by the Department of Public Enterprises; (Clause 1.9.2)

  1. 19.  Public sector companies can avail the services of the National CSR Hub in seeking guidance on the implementation of their CSRS activities. For this, the companies will have to pay a service charge to the National CSR Hub. The service charge may be decided between the National CSR Hub and the company availing the services, but generally, the service charge should be nominal and adequate to cover the expenses of the services requisitioned and to meet the proportionate cost of running the National CSR Hub establishment during the period of services availed. (Clause 1.9.3)
  1. 20.  The expenditure incurred by the public sector companies in availing the services of the National CSR Hub for the implementation of their CSRS activities would be treated as a part of expenditure of the company under this budgetary Head. (Clause 1.9.4)
  1. H.    MOU EVALUATION

 

  1. 21.  CPSEs would be evaluated under the MoU framework for their achievement in the area of CSRS on the basis of certain key performance indicators. (Clause 1.10.1)
  1. 22.  More specifically they would be judged by:

i) the degree of involvement of the employees and the top management in internalising the CSRS agenda within the organisation;

ii) the degree of success in implementing the CSRS projects they undertake during the year;

iii) the expenditure they incur on these activities (vis-à-vis the annual budgetary allocation);

iv) the effectiveness of the two-tier organisational structure in the process of planning, implementing and monitoring the CSR activities;

v) the efforts made and the success achieved in the engagement of key stakeholders through adoption of a good corporate communication strategy;

vi) the adoption of sustainability reporting and disclosure procedures and practices.

The weightage assigned to each of these non-functional performance indicators of companies would be decided during the MoU task force meetings. (Clause 1.10.2)

  1. I.       MISCELLANEOUS

 

  1. 23.  The Note on `CSRS – Definition, Evolution of the Concepts, Recent Trends and practice’ in the Annexures is not a part of the Guidelines, but serves as a useful background `Concept Paper’ for reference to get a sense of the philosophy and spirit of CSRS and how they are interpreted and practised in different situations. The other material given in the Annexures is also meant only for ready reference. (Clause 1.11.1)
  1. 24.  Projects / activities, whether planned or in various stages of implementation, as per previous guidelines on CSR issued by DPE in April 2010 and guidelines on Sustainable Development issued by DPE in September 2011, would continue to be recognised as valid till completed. (Clause 1.11.2)
  1. 25.  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)
  1. 26.  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)
  1. J.      REPEAL

 

  1. 27.  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)


PARA -II

 

CSRS 2013 CHECK LIST OF MANDATORY PROVISIONS


 

CSRS 2013 Check List of Mandatory Provisions:

 

  1. 1.      Whether CPSEs took 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)
  1. 2.      Baseline survey has been done? If not submit credible evidence of having made a fairly accurate assessment of the needs of the stakeholders likely to benefitted from their CSRS activity. (Clause 1.2.6)
  1. 3.      Whether CPSEs have disclosed the reasons for not fully utilising the budget allocated for CSR and Sustainability activities planned for each year. Whether the unspent amount of the budget allocated for CSRS activities for a year have been spent within the next two financial years, failing which, it would be transferred to a ‘Sustainability Fundto be created separately for CSR and Sustainability activities. (Clause 1.2.7) (New)
  1. 4.      Whether CPSEs have submitted details of 2 projects for scrutiny for the purpose of annual MoU evaluation. Only the Maharatna companies which have larger resources for CSRS activities will have to submit details of one additional project for evaluation. (Clause 1.2.8)
  1. 5.      Whether CSRS policy have been approved by the Boards of Directors of CPSEs. Whether CSRS activities undertaken by PSEs under such a policy havethe approval / ratification of their Boards.
  1. 6.      Whether CPSEs have a Board level committee headed by either the Chairman and / or Managing Director, or an Independent Director (Clause 1.3.9)
  1. 7.      Whether CPSEs have undertaken CSRS projects in the periphery of its commercial operations on priority. (Clause 1.4.4)
  1. 8.      If not in the periphery of its commercial operation whether CSRS projects have been located in any backward area (BRGF) of the country. (Company has 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)

 

  1. 9.      If CPSEs have contributed to philanthropic, charitable or other organisations was that 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)
  1. 10.  Whether the philosophy and spirit of CSRS has been firmly ingrained in the CSRS policy of the company. Whether the policy is 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)
  1. 11.  Whether priority has been accorded to activities pertaining to:

i) inclusive growth of society, with special attention to the development of weaker sections of society and the backward districts of the country, and

ii) environment sustainability.

Whether CPSEs to have selected at least one project in each of the two categories of CSR and Sustainability activities mentioned above. (Clause 1.4.9)

  1. 12.  Whether CPSEs have taken up other projects / activities also to fully utilize their annual budget for CSRS. Whether documentary and other record of the progress made or success achieved in implementing these projects / activities has also been meticulously maintained for the purpose of audit, and for Sustainability reporting and disclosure to all stakeholders. (Clause 1.4.12)  
  1. 13.  In the first category of activities, whether CPSEs have selected one backward districts (which have been identified by the Planning Commission, Government of India for its Backward Region Grant Fund (BRGF) Scheme) for initiating CSR and Sustainability projects with a-prior assessment of the expected level of beneficial impact on the largest number of stakeholders from the budget and other resources at its disposal for such a project.  (Clause 1.4.10)
  1. 14.  In the second category of activities, whether CPSEs have planned for environmental sustainability (Clause 1.4.11)
  1. 15.  Whether CPSEs (except Sick or loss making companies or those having a negative Net Worth) have with the approval of its BOD made a budgetary allocation for CSRS activities / projects for the year as per following scale:

PAT of CPSEin the previous year

(i) Less than Rs. 100 Crore

(ii) Rs. 100 Crore to Rs. 500 Crore

(iii) Rs. 500 Crore and above

Range of Budgetary allocation for CSR and Sustainability activities

(as % of PAT in previous year)

3% – 5%

2% – 3%

1% – 2%

(Clause 1.5.1)

  1. 16.  Whether at least 80% of the annual budget earmarked for CSRS activities have been planned to be spent on implementation of activities in the project mode. (Clause 1.5.4)
  1. 17.  Whether activities which are selected under CSRS agenda for external stakeholders have been implemented in a project mode, if not, whether the reasons for not doing so have been recorded in writing. (Clause 1.6.5)
  1. 18.  Whether upto 5% of the annual budget for CSRS activities have been earmarked for Emergency needs. (Clause 1.5.5)
  1. 19.  Whether the budget allocated for CSRS activities / projects planned for each financial year had been spent within that year. If not, whether the same carried forward to the next year for expenditure on CSRS activities, which were planned for implementation in the previous year and reasons for not being able to spend the entire budget on CSRS activities as planned for that year have been recorded. If CPSEs had been unable to spend the unutilised budget within the next two financial years, whether the unspent amount have been transferred to a ‘SUSTAINABILITY FUND’ to be used for CSR and Sustainability activities. (Clause 1.5.3)
  1. 20.  Whether implementation and monitoring of the CSRS activities is being overseen by a Board level committee headed by either the Chairman and / or Managing Director, or an Independent Director. (Clause 1.6.13)
  1. 21.   

(i)                 Whether CPSEs have appointed a senior officer not less than one rank lower to the Board level, who will function as the nodal officer, with any suitable designation as decided by the company.

(ii)               Whether the designated nodal officer have been assigned a team of officials to assist him / her. Whether the team oversee the implementation of CSRS agenda of the company within the organisation and also outside, i.e. covering internal as well as external stakeholders.

(iii)             Whether the designated nodal officer regularly submits reports regarding the progress in the implementation of CSRS activities to the Board level committee headed by the Chairman, or the Managing Director or an Independent Director.

(iv)             Whether the Board Level Committee periodically submits the reports to the BOD for their information, consideration and necessary directions. (Clause 1.6.15)

  1. 22.  Whether the Board level committee and the designated nodal officer’s team of officers together have constituted the two-tier organisational structure to steer the CSRS agenda of the company. (Clause 1.3.11)
  1. 23.  Whether the final evaluation have been entrusted to an external agency. (clause 1.6.12)
  1. 24.  Whether CPSEs at the time of submission of their reports on CSRS projects for the purpose of MoU evaluation submitted all details of planning, selection, implementation, monitoring, and impact assessment of the activities related to these projects. (Clause 1.10.3)
  1. 25.  Whether CPSEs have provided evidence that initiatives were taken to sensitise the staff regarding the CSRS policies of the organisation, and the need to adopt ethical business practices, through documents, photographs, reports etc. (Clause 1.10.4)
  1. 26.  Whether CPSEs have submitted their self-assessment reports regarding each performance indicators pertaining to CSRS.

 

THANKS

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