CSR by Indian Companies to remain voluntary

Posted on December 24, 2010 by

Indian companies can now enjoy not spending their 2% of profit on CSR.  Provisions for mandatory requirement of spending 2% of their profits on social cause have been dropped from the present Companies Bill. Now the revised Companies Bill includes only a voluntary requirement of spending target of 2% of the profit on CSR activities by the corporate houses. One aspect that remains compulsory is the inclusion of details of CSR spends in the annual reports.

Corporate Affairs Minister Salman Khurshid cleared that companies must have policy to spend the said amount of their profit on CSR and need to disclose such expenditure. The CSR spends now for corporate houses across the country are neither completely voluntary nor compulsory.

The companies targeted by the bill include those with a minimum net worth of Rs 500 Crore or Annual turnover of more than Rs 1,000 Crore or Net profit of more than Rs 5 Crore in a year. These companies were required, as per the earlier draft, to spend at least 2% of their average net profit during the three preceding fiscals on CSR. The earlier draft was met with reservation from industry bodies. The Industry bodies suggested to the government that the decision on the actual spend and mechanism should be left to individual companies.

Why CSR?

The voluntary compliance of social and ecological responsibility by companies is called Corporate Social Responsibility (CSR).  Corporate social responsibility is basically a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. Corporate social responsibility is represented by the contributions undertaken by companies to society through its business activities and its social investment. This is also to connect the Concept of sustainable development to the company’s level.  (http://bit.ly/goQ9lu )

The ministry of corporate affairs in July 2011 released the “National Voluntary Guidelines on Social, Environmental and Economic responsibilities of Business”. More details about the same are here “National Voluntary Guidelines on Social, Environmental and Economic responsibilities of Business from Ministry of Corporate Affairs

(Source: The Economic Times)

Posted in: Sustainability