Horizons- September 2013

Posted on October 8, 2013 by

CSR mandateThe recently passed Companies Bill, 2012 mandates large organizations to spend part of their net profit on activities related to Corporate Social Responsibility.

Renewable energy presents an opportunity for organizations to make investments in sustainability that will pay back quickly. Purchase of clean energy or investment in clean energy projects addresses sustainability goals in addition to meeting corporate obligations. Investment in RE is therefore an investment in long term sustainability.

In August 2013, the President of India gave assent to the new Companies Bill passed by Lok Sabha thus replacing the old Companies bill of 1956. The new Bill mandates large companies to spend at least two percent of at their average net profits made during the three immediately preceding financial years on Corporate Social Responsibility (CSR). Companies need to earmark this amount in their budgets for the financial year. The Bill also provides a list of activities on which companies may spend their CSR budget.

Clean energy – Efficient Use of CSR Budget

Environmental Sustainability is one of the options for investing the CSR budget mandated by the new Companies Bill. This category aims to address the adverse social impact of wasteful energy use and carbon emissions.

The cost of many clean energy technologies has now decreased enough to make investment in them viable for consumers. Clean energy sources can provide cost-effective power over the long term at predictable rates. Clean energy is also the most effective way to minimize Scope 2 (electricity) emissions.

RE is an ideal venue for investors who seek stable, long term returns. For consumers, it provides a hedge against continuously increasing power prices. For companies with identified CSR budgets, RE provides a combination of cost saving and demonstrable positive impact on environment.

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