Som Mittal lures IT firms to unite their CSR for education fund
Som Mittal, former Nasscom supremo has asked IT firms to rope the mandatory two per cent corporate social responsibility (CSR) to create a country-wide education fund system. Mittal, who stepped aside as the head of the nation’s USD 118 billion IT-BPM industry body in January this year, said that such an effort wifi aid in developing a single delivery platform with multi-lingual modules, which should be available for a zilch cost. “If all the IT companies can combine or team together for the cause of pooling their CSR expenditure to create a free and massive educational forum then just imagine the opportunities it would open,” Mittal told PTI.
He further went on to add, that instead of individually using their CSR costs, companies can come together on education expenditure, especially digital literacy. Mittal, who is a key cog in the team wheel at Nasscom Foundation, said that less than 20 per cent Indians have access to or interface with technology on a regular basis. “Technologies developed through this platform will bridge the educational gap in India, providing an array of resources that otherwise limit the country’s education system,” he extended. He shared that for the National Literacy Mission, he met people who had never witnessed a computer, but leamt that they are intuitive and can make things happen if given access to technology. “So out there, there are people who have the zest to leam and are looking for avenues. If we all can come together and create such a platform, just imagine the opportunities that we can create,” he further added. According to section 135 of the Companies Act, certain class of entities have to spend at least two per cent of their three-year average net profit towards CSR activities. Talking parallels on similar fronts, One Globe 2014 knowledge conference convener Harjiv Singh said: “The beauty of Mittal’s idea is its simplicity and immense universal relevance. If we can get even half the technology companies in India to pool in their 2 per cent mandatory CSR into creating a free and common education repository, the multiplier impact will be several times what they all can achieve individually.” Nasscom Foundation CEO, Rita Soth said under the National Digital Literacy Mission, to get one person per household digital literate is an ambitious target. “But, if companies, not just IT firms, come together with collaborating for this effort I believe it can be achieved with much lesser efforts. So the idea behind Mittal’s suggestion, I feel is to build a collaborative model,” she added.
New Delhi Institute of Management debuts in CSR
India’s ace MBA school, New Delhi Institute of Management, has vented into CSR learning in a massive way, honouring 17 CMDs of India’s Maharatnas and Navratnas at a swanky ceremony at Sin Fort which was attended by more than 2000 national and international delegates, civil servants and judicial officers at New Delhi.
This is the first effort of its kind by any B-school to sensitize its MBA students, after the Govt. of India came out with a law on compulsory 2% spend on CSR. New Delhi Institute of Management has already given 100 hours of CSR attachment with PSUs and MNCs across countries, to its first year MBA students to make them aware of their future responsibilities.
New Delhi Institute of Management introduced CSR as a full subject two years back in its MBA curriculum. The institute honoured the Indian PSUs with highest CSR spend based on research conducted by its faculty.
Former Supreme Court Judges, Justice Mukundakam Sharma and Justice B P Singh, who have been the Chief Justices of Delhi and Bombay High Courts, presented the awards along with India’s greatest dancer, Padma Vibhushan Sonal Mansingh and the Board of Directors of the school.
Awardees included CMDs of IndianOil, NTPC, ONGC, OBC, Oil India Corporation, BHEL, PNB, STC, SAIL, GAIL (India), Power Grid Corporation, Power Finance Corporation, Rural Electrification Corporation, HUDCO, Oriental Insurance, IFFCO and Yes Bank.
Sesa Sterlite Limited, Lanjigarh has bagged the prestigious Greentech Foundation Award in the Gold Category for its superlative achievements in Corporate Social Responsibility (CSR) and Environmental practices.
The award was given in a glittering function on 29-30 January 2014 at JW Marriot, Chandigarh. With this SSL, Lanjigarh has become the only company in India to have received both the awards.
Commenting on the awards, Dr. Mukesh Kumar, COO & President, Sesa Sterlite Ltd., Lanjigarh — Aluminum & Power Business, said, “We are happy to receive the awards and dedicate the same to the local community. The company is committed to the development of the region through inclusive growth and by partnering with the society.”
SSL, Lanjigarh was praised for its commitment & its contribution towards the overall community development in Health, Education, Livelihood and Social Infrastructure.
Vedanta Hospital, Lanjigarh, with its modem equipment, advanced medical facilities and specialist doctors, has been providing free medical treatment to patients in the vicinity The hospital is focusing on malaria eradication, control of sickle cell anemia — a genetic disease, cleft lip & palate surgery and institutional delivery.
Another successful project of the company, DAV Vedanta International School in Lanjigarh is providing quality education to the students of the locality and is one of the coveted educational institutions in the KBK region. The school was recently awarded by the state Environment and Forest Department with PrakrutiMitra Award.
Besides, the school has received recognition from Central Board of Secondary Education (CBSE), under its health and sanitation initiative in association with Ministry of Human Resource Development (HRD), Ministry of Urban Development & GLZ (Deutshe Gesellschaft fur Intemationalle Zusammenarbeit), as the only School in Odisha under Green Rating. Presently, the school is providing free education to more than 700 students, mostiy from the tribal community. SSL, Lanjigarh is also running 37 Child care centers to achieve the overall goal of education to all.
On the environment front, the Company has recently developed a technology, for the first time in the world, to produce red mud powder to eliminate major environmental hazards coming out of alumina refineries. The technology has been applauded by global aluminium producers as inspirational.
SevaTek Start-up eyes rapid growing CSR Social Enterprise in India, US & EMEA
SevaTek, a five person start-up which has offices in Atlanta, United States (US), Chennai and Bengaluru, India, has announced that it will offer a Cloud portal and associated services to Multi-National Companies (MNCs) and Non-Governmental Organisation (NGOs) which want to control and track CSR spending using enterprise class analytics and metric using tools such as Salesforce.com and Microsoft ASP.Net with in-house ERP andBl systems.
SevaTek, which has recentiy won admission into the Nasscom Incubator program (top 300 out of 7000 start-ups) is very optimistic that the new $4 Billion CSR program can be used to transform India via educational, vocational and microfinance programs that target the “bottom of the pyramid” (BOTP) in emerging markets like India and Africa. (Tribute: Dr. CK Prahlad). SevaTek targets the global MNC market for its revenues and growth, which in trim gets channelised into rural and urban NGOs in India. The start-up plans to license its NGO products and programs such as “Digital Divide Solution using Google”; SevaTek “MicroERP Apps” (eg. SevaTek CRM) using Android; QR Code ID Cards and its signature Solar “Digital Kiosk” for Cloud Access. According to the founder and CEO, Kal S. Ayyar, “We applaud the Indian Government’s brilliant move to mandate CSR spending for MNCs which in trim will bring much needed funding, govemance and metrics and a whole lot more efficiency to the burgeoning Social Enterprise sector. As a long time practitioner of Triple Bottom Line, ie People, Planet Profits in that order, I feel that this will set a tremendous precedent for corporate social responsibility efforts across the globe”. SevaTek solves migraines for larger corporations in India, US and EMEA that do business in India. Examples are Microsoft, HP, Honda, Caterpillar, Harley Davidson, Dominos, KFC, McDonalds and Coca Cola with revenues of nearly a billion from their india operations alone. Big MNC firms don’t have the “bandwidth” to track and manage their CSR spends; while on the NGO end, smaller NGO’s are lacking in process, infrastructure, technology and most importantly, execution, to engage with their funding sponsors. We fill that gap with our trademark “Jugaad Innovation” products for NGOs and enterprise class solutions using Cloud and Android apps (“CSR Analytics”) that are tailor-made for addressing these unique challenges. SevaTek, which is a two-month old start-up is currentiy operating in Chennai and Bengaluru and is actively looking for angel investors, joint venture partners, NGOs, Resellers, independent Sales Representatives and part-time employees (Comnumity managers, intems, ambassadors, etc).
The corporate world will rrequire to frame a sustainable and long- term strategy for its social welfare activities from the next fiscal starting April 1, 2014, as this is the date from which a large number of companies will need to set aside at least 2% of their net profits for mandatory spends on Corporate Social Responsibility (CSR) activities.
The rules which are yet to be framed on Section 135 of the Companies Act 2013, deals with CSR, are already pending before the Delhi High Court, which has sought clarity from the Ministry of Corporate Affairs in the case, Mohd. Ahmed (minor) vs UoI.
April 1, 2014 is also the date from which all the provisions of the new Companies Act, 2013, are expected to be enforced replacing the old Companies Act, 1956. The canvas for CSR activities is wide and companies may engage in a variety of causes — eradication of hunger and poverty, promotion of education, promoting gender equality and women empowerment, reducing child mortality and improving maternal health, combating HIV/AIDS, malaria and other diseases, ensuring environmental sustainability, imparting employment and heightening vocational skills, social business projects, contribution to the Prime Minister’s National Relief Fund
According to Ernst and Young research, the CSR-spending stipulation is likely to apply to 2,500 companies. Industry estimates show the total spending on CSR activities may surpass Rs. 20,000 crores within the next few years. It is, therefore, not difficult to gather why a section of India Inc sees this “must comply” regulation as a burden.
For example, the new law in this context does not give the freedom to companies to zero-in on what they think is CSR activity. If Company A wants to donate all its funds to a religious body or a charitable trust it cannot be classified as CSR. But writing a cheque towards the PM National Relief Fund makes the entire amount expenditure undertaken towards CSR, making Company eligible for tax benefits.
So far, the government of India has also not decided on giving tax breaks on CSR funds, as has been demanded by India Inc. It feels that the tax- implications of the mandatory spending on CSR activities are stung with many flaws. According to tax experts, if India Inc sets aside this large sum from its net profit there could be a dent in the tax collection figures to the tune of Rs. 5,000 crore especially if the government does grant income tax exemptions to CSR spending.
Associate, PXV Law Partners Kaustabha Mani said, “Clarifications with respect to classification of CSR activities and its impact on taxation of the company needs to be made by the government.”
As per the new Company Act, 2013, all companies beyond certain financial threshold will need to allocate at least 2% of their average net profit of preceding three years on CSR. Therefore, all companies that are over the set threshold of net worth (over R500 crore), revenue (above R1,000 crore) or net profit (over R5 crore) will be mandated to implement the CSR clause of the new law. While a company is required to give preference to the local area and areas around it where it operates for CSR spend, the rules do not clearly specify what percentage should be spent on CSR activities in local areas and what percentage can be donated.
The corporate sector has been less than enthusiastic about the CSR spending diktat, saying charity cannot be forced upon but rather should be voluntary. “Spending 2% on CSR is a lot especially for companies that are trying to scale up in these difficult times. It must not be imposed,” Azim Premji, the philanthropist and tech tycoon, had said last yean Premji has donated 8.7% from his personal stock-holding in Wipro as endowment to the Azim Premji Foundation.
It is high time that the government clarifies the ambiguities on the key issues raised by the corporate sector on CSR clause, especially when it is relying on the industry to contribute towards the country’s welfare.
Just compliance with rules or carrying out welfare initiatives for the staff does not fall in the sphere of corporate social responsibility (CSR), a senior functionary.
Under the new Companies Act CSR will become mandatory for companies with profits exceeding Rs 5 crore and more, said Bhaskar Chatterjee, director general and chief executive officer of the Indian Institute of Corporate Affairs, Ministry of Corporate Affairs.
Chatterjee said: “CSR, which is made compulsory under the Companies Act and was passed by parliament, comes into effect from April 1,2014.”
“All companies with turnover of Rs.1,000 crore and more – or a net worth of Rs 500 crore and more or net profit of Rs.5 crore and more – will have to spend at least two per cent of their three-year average profit every year on CSR activity,” he added.
Nearly 150 environment, CSR professionals and experts are attending the two-day meet organised by a Delhi-based nongovernmental organisation Greentech Foundation in support with the Indian Institute of Corporate Affairs.
“From April 1, all 16,245 registered companies have to nominate three members for their CSR committee from their board. Companies cannot do whatever they want and claim it as a CSR activity according to the new law,” reckons Chatterjee.
“Under the new rules coming into effect anything done the employees is not CSR, it is a human resource activity. Compliance with any rule or regulation is not CSR. Companies should take up this role and voluntarily do it beyond the rule,” he said.
“Any activity done must have been the part of the CSR policy of the company which must also be made available on the company’s website. CSR must be conducted by professional implementation using implementing agencies,” Chatterjee pointed out.
He added: “The project should have a starting time and an ending time. Any activity that has not been given board approval, passed by the board and does not have a board resolution number is not CSR.”
Kamleshwar Sharan, president of Greentech Foundation, said that with the new rules, the CSR economy will grow many times.
“Unlike in the past, the companies will now be required to spend in structured manner. The old way of writing a cheque for religious cause or an activity that benefits their own workers will not be considered CSR,” Sharan said.
“It is estimated that registered companies in India will spend Rs 20,000 crore on CSR activities alone in 2014 and 2015. This means that there will also be a need for whole lot of CSR professionals and consultants and other specialists,” he said.
Government eyes form new company to manage CSR funds of PSUs
The Union government is eyeing at a proposal to float a company to manage corporate social responsibility (CSR) funds of all central public sector enterprises, to ensure efficient implementation of this social initiative and to free companies from additional responsibility.
The ministry of heavy industries and public enterprises is working on a proposal to set up a company under Section 25 on the ground that an independent entity will have the scale and resources to plan and execute CSR and sustainability activities, a ministry official said. “It (the proposal) is still in the works. We have sought some clarity from the ministry of corporate affairs,” the person said.
The corporate affairs ministry expects that around Rs 15,000-20,000 crore would be spent in a year in various social projects such as environment, skill development, water and sanitation through CSR activities. The public enterprises ministry has mooted a company under Section 25 to manage unspent CSR funds of all PSUs. “We want to set up an institutional structure in form of a company or even a trust. The nominees from Maharatna companies can manage this fund,” the official quoted earlier said.
To go ahead with its proposal, the public enterprises ministry wants to make some amendments in the existing provisions and has approached the corporate affairs ministry.”We have written to them. They can provide us the exemption or make amendments to their existing provisions. If they allow us we can start with a new firm,” he said.
Under the new Companies Act, firms have to set up a CSR committee, including at least one independent director. There is no provision to carry forward the unspent CSR amount in a financial year. But, according to guidelines issued by the department of public enterprises (DPE), a nodal agency for central public sector enterprises, unutilised budget for CSR activities planned for a year will not lapse and will be carried forward to the next year.
“The unspent amount of the budget allocated for CSR and sustainability activities for a year will have to be spent within the next two financial years, failing which it would be transferred to a sustainability fund,” the official said, adding that the new firm can manage this amount.
“Since the guidelines were issued in 2013, we will have to wait till 2016 for sustainability fund to take off. If we have provision for this firm, companies will have an added pressure to spend the amount allocated towards CSR,” he said.
As per a Comptroller and Auditor General (CAG) report, 47 prof it- making central PSEs failed to comply with the CSR norms prescribed by the governmentin20ll-12.
Some experts feel a fund in the lines of Rural Infrastructure Development Fund (RIDF), which gets its funding from the shortfall in lending by commercial banks to priority sector, will be good enough to manage CSR funds. “There is no need to set up a new company. That will be too bureaucratic. Abetter way out is to set up such a fund which can be managed by the DPE itself,” chairman of a state-run firm said, requesting anonymity.
CSR rules acquainted by Government
The Ministry of Corporate Affairs has notified the CSR rules and they would come into effect from April1.
Under the new laws that govern companies, spending on CSR or social welfare activities is mandatory for certain class of firms. They are required to shell out at least 2 per cent of their three—year average annual profit towards such works.
According to Corporate Affairs Minister Sachin Pilot, the rules have been finalised after extensive consultations with all stakeholders. The rules provide for the manner in which CSR Committee shall formulate and monitor the CSR Policy, manner of undertaking CSR activities, role of the board of directors therein and format of disclosure of such activities in the board’s report.
As per the law, companies having net worth of at least Rs 500 crore or having minimum turnover of Rs 1,000 crore or those with at least net profit of Rs 5 crore, have to make CSR spend.
Livelihood enhancement and rural development projects, promoting preventive health care and sanitation as well as making safe drinking water available would be considered as CSR activities.
Working towards protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts would also come under CSR domain.
Various activities aimed at reducing inequalities faced by socially and economically backward groups have been included.
Measures for the benefit of armed forces veterans, war widows and their dependents, setting up homes and hostels for women and orphans, setting up of old age homes, day care centres and such other facilities for senior citizens would be considered as CSR work.
The idea of social responsibility and philanthropy has been a part of charitable enterprises of the Indian business world, as also by the zamindars in the days of the permanent settlement as a tribute to God. A later phase was generated by the Gandhian movement and the initiatives of industrialists of that time, such as, Birlas, Tatas, Modis andDalmias who were inspired in undertaking similar initiatives as a part of the Gandhian philosophy starting with dharamshalas and places of worship.
These initiatives were undertaken under the Indian Trust Act, based on the principles of trusteeship and the fiduciary requirement to provide a return for the gains of business. It is only in the new Companies Act (2013) that statutory provisions and responsibilities pertaining to corporate social responsibility (CSR) have been made mandatory under law, requiring companies havinganet worth of Rs 1,000 crore or more to constitute a separate Corporate Social Responsibility Committee of the Board, of which one member has to be an independent director. As privatisation waned due to policy changes in the nationalisation era, the public sector became an active player in setting up schools and hospitals in their townships.
Though the productivity of the public sector plummeted in the eighties, with privatisation, the public sector still remains active in its social initiatives and the large corporations, such as ONGC and Indian Oil Corporation continue to serve the community in various ways. The revival of CSR in the 1990s can be traced to the upsurge of environmental concerns, which fathered the initial public interest litigations, and more recently the Green Tribunal. Auto manufacturers and others engaged in industries which involve pollutants tend to be targeted, and the Mahindra’s are one of the foremost in CSR as Maruti.
The question is whether CSR is warranted and corporates are happy with CSR featuring in the Companies Act being made mandatory. There are divergent views. Certain companies believe CSR provides an opportunity for being inclusive and the process benefits the outlook of employees as well as customers. Essentially, it is the state’s duty to provide welfare to society under the Constitution. It is another matter if a corporation decides to utilise its funds in social welfare, without being coerced by regulations. There is also a difference in green investing and social projects. If the company’s activity involves production or use of alternative natural resources and other environmentally conscious business people or invest in given mutual funds, that itself goes a large way.
If the company’s business is healthcare, then pro-bono work in that sector also has its positive business indicators. But the CSR schedule to the Act involves unwarranted expenditure by corporations in certain activities in respect of issues which are not within their domain expertise. There is also an element of intrusion of investor rights in introducing mandatory CSR. Both the investor and the corporation are taxpayers. Investment decisions are not made on the basis of CSR projects, but on the dividends issued by the company and the net value. In the zeal for corporate governance and other forms of compliances, lawmakers should not lose sight of the purpose of a limited liability company.
For multinationals that operate in a global market, it is not possible to have separate approaches and staffing for their social responsibilities. Every jurisdiction has its specific regulations for companies and their compliances. In addition, there are intemational CSR standards and guidelines to comply with, all of which is a full time task, particularly, if it has no nexus with the corporations business.
Individual Social Responsibility’ (TSR) is wherein employees invest their skills towards community service. Going beyond the realm of corporate social responsibility (CSR), companies are now looking at the concept of ISR.
The diversified firm Apeejay Surrendra Group has introduced this unique concept, which unlike CSR where the company management invests in social causes, TSR puts the responsibility on employees to usher in the change.
Under the initiative, Apeejay is tying up with NGOs and CSR units of other companies where employees can volunteer for a cause and get rewarded during performance appraisals.
Apeejay Group chairman Karan Paul told PTT, “The ISR program creates the corporate structure that makes it possible for employees to join in a cause, come up with an innovative idea for a social issue, get an effective platform to deliver it and often get the time to deliver within their working hours.”
He further added that CSR running parallel to ISR could be an effective model.
Recently, Apeejay signed an MoU with e-commerce company, under which their employees are imparting computer literacy skills to underprivileged youngsters.
In various cities including Kolkata, Chennai, Delhi and Mumbai, the employees work with NGOs and old- age homes to make a difference into the lives of those deprived.
The management allows the employee to devote even their office working hours to such initiatives under ISR.
Upon the initiative of company’s CSR director Renu Kakkar, the idea started taking shape in 2007-08 as they started nurturing the spirit of volunteering among the employees through various initiatives.
“We treat the ability to volunteer as an added competency of an employee and its mapped into the performance appraisal system. If you are a good citizen, you will also be a good employee and if you are a good employee, you should also be a good citizen,” says Kakkat
ISR has been made a part of the company’s HR department policy. In 2012, employees of the Apeejay Surrendra Group, which has interests in diverse verticals like tea, hospitality, shipping, retail, real estate, etc, devoted around 5000 hours altogether into volunteering.
Employees feel happy when they find that the company’s HR is recognising the volunteering efforts by favouring them in annual performance evaluations.
CSR rules descend: 10 major areas to hog limelight
The government has identified 10 major areas including education, gender equality, environment, national heritage and the Prime minister Relief fund where India Inc can spend to claim credit for the mandatory 2% Corporate Social Responsibility (CSR) expenditure.
The activities which can be included by companies in their CSR policies include: eradicating hunger, poverty, malnutrition and promoting preventive healthcare, promoting sanitation and availability of safe drinking water, promoting education, promoting gender equality, ensuring environmental sustainability, protection of national heritage.
Those spending for the benefit of armed forces veterans, war widows and their dependents would be eligible to cover the expenses under CSR spending rules.
Under gender equality activities related to empowering women, setting up homes and hostels for women and orphans, setting up old age homes, day-care centres and similar facilities for senior citizens and projects on reducing inequalities faced by socially and economically backward groups have been included.