The Government is serious about CSR Compliance – Are you?

Introduction

Corporate Social Responsibility (CSR) suggests that the responsibility of the for-profits operating within society, is to also contribute towards its economic, social and environmental development and well-being. The core objective of enforcing a CSR mandate is that businesses cannot succeed in isolation, especially when society at large fails to prosper. The Companies Act, 2013 is therefore, a landmark legislation that made India the first country to mandate and quantify CSR expenditure. This move was an attempt by the government to partner with business houses on the national development agenda.

The Story So Far

It has been close to 5 years since the government mandated that corporates with :
● a net worth of INR 500 cr. or more
● or a turnover of INR 1000 cr. or more
● or a net profit of INR 5 cr. or more

in a given financial year, must spend 2 percent (to be calculated as per Section 198 of the Act) of their average net profits on socially relevant projects as defined in Schedule VII of The Companies Act.

However, even today many corporates eligible for CSR do not contribute to development projects and therefore run a risk of being sent notices for non-compliance and non-conformance of CSR norms.

While a large chunk of eligible corporates have adopted the mandate as an opportunity to further their corporate citizenship and not just as a tick box activity, there is still a large share of eligible companies who are yet to deploy their CSR funds.

SocialDisruptors

SocialDisruptors

Three years after the law came into existence, that is till 2016-17 – close to half of 19,933 eligible companies have not spent any money as part of their CSR obligations (~9468 companies) and as many as 15,422 companies spent less than the prescribed CSR amount during the same period. In addition to the above citations, there are examples of companies as well who have spent upwards of four times of their prescribed CSR budget in the financial year.

However, as we see non-compliance has reduced year-on-year. A recent survey published by NGOBOX (
http://ngobox.org/full-news_CSR-Outlook-Report-by-NGOBOX-analyses-top-359-companies-NGOBOX_22359) revealed interesting insights on CSR compliance among India’s biggest 359 companies which together account for 3/4th of the total CSR spend:

● CSR compliance among these companies stood at 93% for the year 2017-18 up 2% points compared to previous year.
● Metal, mining and mineral (138%) followed by Oil, Drilling, Lubricants and petrochemicals (104%) sectors emerged as the highest CSR compliant industries followed closely by Auto and Auto ancillaries.

Government Initiatives/ Steps Towards Compliance

Things are looking up. The Ministry of Corporate Affairs has also stepped up its effort to encourage corporates to comply with the CSR provisions by setting up:

● National CSR Data Portal –The National Corporate Social Responsibility Data Portal is an initiative by the Ministry of Corporate Affairs, Government of India to establish a platform to disseminate Corporate Social Responsibility related data and information filed by the companies registered with it (https://csr.gov.in)

● National CSR award – The Ministry of Corporate Affairs has instituted National CSR Award (NCSRA) to recognise CSR for inclusive growth and sustainable development. This Award seeks to recognise the companies that have made a transformative impact on society.

Along with the initiatives mentioned above, the ministry has also taken a few steps to increase compliance by:

● Reconstitution of a high-level committee on Corporate Social Responsibility 2018 (HLC-2018) under the Chairmanship of Secretary, Ministry of Corporate Affairs (MCA) to review the existing framework and guide and formulate the roadmap for a coherent policy on Corporate Social Responsibility.

● Centralised Scrutiny and Prosecution Mechanism (CSPM) to promote enforcement of CSR provisions. CSPM has been tasked to start with examination of records of the top 1,000 companies mandated to spend on CSR. The CSPM team of inspectors are issuing show cause notices and prosecution proceedings against non-compliant companies.

In the latest round, prosecution proceedings against 284 companies and show cause notices against 5,382 companies have already been issued.

In view of these efforts, it is clear that the government is serious about bringing rigour and strong scrutiny to ensure the CSR law is strictly followed in the near future.

Current challenges and what Corporate India Can Do

Corporates often find that they have unutilised funds in the last quarter of the financial year. This could be because of several reasons:

● long cycles in identification of impactful projects or/and credible partners
● uncertainty on the exact figure of what the total CSR budget may be due to the change in company profit
● ambiguity in the legal requirements
● difficulties in developing the strategic vision in a multi stake-holder environment
● challenges in planning and executing operations through the year

Some typical avenues that corporate India chooses to disburse its CSR funds are:

● Contribution to the Prime Minister’s National Relief Fund
● Contribution to CSOs working in the chosen area of focus by the corporate
● Contribution to Corporate foundations setup to undertake CSR activities exclusively (Own or External)
● Contribution to multi stakeholder platforms founded to address areas of concern.

Although last minute, it would be imperative for corporates to consider some key points while making their social investment decisions in order to move from a compliance-led CSR function to a more strategic CSR function:

● Recognising CSR as a strategic corporate function : CSR law is here to stay. Recognising the strategic and legal significance of CSR and incorporating it into long-term corporate strategy is imperative.
● CSR Vision : Alignment and long term commitment to company’s CSR anchor ( focus area/audience/geography ) is key in creating long lasting impact and corporate legacy.
● Measure to improve, not prove: A robust monitoring and evaluation mechanism acts well as the steering wheel required to continuously improve CSR interventions and make timely course corrections.
● Outcome first: An outcome led approach as against an input led approach goes a long way in establishing the social impact goals the corporate wants to achieve.

There is a need to fund projects which will not only impact the last mile recipient of the intervention but also bring the culture of empathy and service within the organisation.

Sattva has been working with various corporate clients to help them define their social impact goals and maximise the return on social investment. Our focus is to solve critical problems and find scalable solutions. Several corporates have been a partner to many such collaborations where effective CSR programmes have strategically aligned with business and have provided meaningful solutions to social issues.

● To read more about our work with CSR, check:https://bit.ly/2G9g2UZ
● Talk to us: impact@sattva.co.in

From a cushy corporate job to the development sector

I spent over 16 years driving operational excellence to derive value and efficiency for several corporates. I was good at it and I enjoyed every bit of it. Therefore, my transition to the development space was initially a trial with no long-term commitment.

It may not be an easy transition for everyone either. Corporate life provides some financial comforts. The larger the organisation you leave behind, the more startling is the perceived difference in the sector, and so, it takes time to acclimatise. The basic amenities of large corporations like air-conditioned offices, travelling in comfort, food and beverages in abundance and sometimes just the option of moving to another role in the same organization gives comfort. Unlike many others, I consider myself fortunate that I could quit my job even though there was a reduced pay cheque and I could take the plunge without worrying.

Sattva_ShruteeGangulyBlog
“There is no way that a handful of us can comfortably solve the issues that confront us, given their enormity and complex nature.” Credits: Shrutee Ganguly

From the outside it seemed like a space that was unorganised and largely depressing, mainly because all the success stories somehow do not reach outside a selected few. Never did I think that my values, skills, aspirations or even courage, to see reality upfront will align to the needs of the sector. Until then, participating in employee volunteering activities, making donations, frequent visits to old age homes or rehab centres, and even making myself heard by counting the failures of our social system during lunch table conversations, was the closest I had done to make a difference.

Giving back to society originates from the most inherent human need to nurture positive thoughts and recognise self-worth. It is this journey to self-realisation, feeling worthwhile, experiencing gratitude and leaving a legacy behind, that attracts many people.

But I wanted to go beyond the donation of money, material or labour. I was interested in efforts that have scope to scale and sustain.

Tackling the challenges head-on and doing something about it, is the DNA of this sector. Problem solving is required extensively to ensure every challenge, small and big, is quickly dealt with. My new role gave me an opportunity to use my skills of not just problem-solving, but also building systems and processes where data played a role. In addition, this sector has respect for honest efforts. I had the privilege here to work on many functions which were first in many ways like working with partners and helping them grow by building their capability. This sector has so many people with intent, yet corporate brings an organized and systematic approach to the transformation. Together the results are worth taking a notice.

Having said all that, what this sector does not prepare you initially is the magnitude of the problems that we may encounter. There is no way that a handful of us can comfortably solve the issues that confront us, given their enormity and complex nature. So, working together with same goal at various levels of our socio-economic classification, is our hope to bring collective impact on the ground.

Corporate experience is a definite plus. The tools and techniques which often work for making profits are tweaked to generate better social ROI. Projects selected are based on social importance along with strategic alignment to have long term impact. Change management, which is restricted to a few stakeholders in the corporate world has a much larger connotation here.

Some of the radical work in the sector today requires the best of organisational practices, process expertise and thought leadership by the people who have been there and done that.

The best results are delivered by people who have the choice to do something else, but choose what is important – no money and no designations can alter their grit. They are achievers and have chosen to follow their life’s calling. During my transition, I have met many such incredible people who have largely influenced my thinking today and will shape our tomorrow.

India is maturing as a country, where the need is to balance modern practices with old traditions. As the saying goes, deeper the roots, more difficult it is to shake the tree. Often there are moments of uncertainty, as there is no quick success. So, what really drives us? And my answer to this is simple. Here we are not in the business of selling hope, but hope is what drives our business. In other words, the only driver is to create impact and make a change. The mind shift becomes more real when the ‘I’ becomes ‘we’ and ‘them’ becomes ‘us.

I know I am here for my own selfish reasons. Where else will I get to meet amazing people, witness stories of perseverance, learn from real life experiences, apply skills to solve challenges and to top it all rebuild my faith that the world is getting better.

I think I can safely say that I am here to stay.

This blog was previously published in Qrius.

Rahul Shah

Rahul is part the Consulting Services team in Mumbai, with experience working on organisational development with both small and large NGOs, CSR design and implementation, development impact bonds, fundraising and impact assessment.

His diverse experience in the development sector has evolved from his time working at the grassroots level in Ahmedabad, India, to community organising in his hometown of Washington, DC, consulting with social organisations across domains and managing multi-year development projects. Prior to joining Sattva, Rahul worked with TechnoServe India where he managed a CSR funded accelerator programme for women-led social enterprises and NGOs, and a USAID funded project transferring frugal agricultural innovations from India to Africa. In addition to his development sector work, he has five years of progressive experience in corporate finance with industry leading, Fortune 500 corporations in the United States.

Rahul has an MBA and an MS Finance from the University of Maryland’s Smith School of Business and an Executive Certificate in Non-Profit Management from Georgetown University.

Chaitanya Pathak

Chaitanya is a part of the Consulting Services (Implementation) team in Mumbai, working on design and implementation of CSR projects.

Before Sattva he has worked in the IT services industry with a business intelligence firm. He went on to a Gandhi Fellowship with Kaivalya Education Foundation, working with government systems and stakeholders in rural Rajasthan. Through all these years he continued to volunteer at Make A Difference (MAD), an organisation that works in improving life outcomes for underprivileged children. He is committed to using his knowledge and skills to make lives better, while being a catalyst for social change.

Chaitanya is a Gandhi Fellow and has a B.E. in Computer Technology from Yeshwantrao Chavan College of Engineering, Nagpur.

Urmi Patil

Urmi is a part of our Consulting Services team in Mumbai, supporting the design and implementation of CSR projects.

Before Sattva, she worked in southern Gujarat assisting Ph.D. scholars with their primary research and learning different participatory tools of engagement. She has worked in Government Primary Schools in Uttarakhand for two years where she was able to support schools on processes that improved the learning outcomes of children and enhanced participation of the community members. She has also worked with Mahila Mangal Dals, Yuvak Mangal Dals and Self Help Groups for their capacity building through community-based stakeholder mapping.

Urmi has a Bachelor of Arts, with Economics Honours from Christ University.

Shrutee Ganguly

Shrutee is part of the Consulting Services team, Delhi, and leads engagements with corporate and strategic account clients. She manages a team that works with various implementation partners and NGOs to create long term sustainable impact. Her role demands her to manage customer experience, define strategy and create valuable outcomes in the ecosystem.

Before Sattva she has had 16+ years in diverse corporate domains – banking, product management and consulting. Her key areas of expertise are Operational Excellence; Process Re-engineering, Programme Management, Coaching, Relationship Management & training. She has worked with senior leaders and operations staff to understand cultural dynamics, manage expectations, streamline processes and deliver results. It is her belief that the social sector needs some of these skills to streamline and structure their efforts to create impact and value. At Sattva, Shrutee has worked with the largest education non-profit in India to co-create models to recognise needs of middle management govt officials who are responsible for the policy and implementation at schools. She also worked closely with the client’s programme team to run pilots and gather relevant inputs from teachers and community on teaching practices, child engagement, good practices and challenges.

Shrutee is a post graduate in computer applications from Madras University and an IBM certified Lean coach.

Bobbymon George

Bobbymon heads Assessments in Sattva and is based in our Bangalore office.

He has delivered evaluation assignments across sectors and with key CSR accounts such as ABG, JPMorgan, ACC, Philips, L&T Infotech, L&T Financial Services, Dell and Fidelity. He comes with over 13 years of experience in the development sector, across programme design, implementation and Monitoring and Evaluation. He has led Programme Delivery, Curriculum Development, setting up Monitoring & Evaluation frame works and tools in non-profits.

He is also a master facilitator/trainer in Life Skills.

Satvika Mahajan

Satvika provides strategic advise to international clients at Sattva.

She has also worked with large scale foundations, social enterprises, consortiums and organisations in designing and implementing key strategic solutions and programmes in India.

Satvika’s foray into this sector began early, when she volunteered part-time with Mr. Maheishgirri (current Member of Parliament) in his political campaign on key health initiatives. She was a founding member of the LSR chapter of the international social entrepreneurship society, Enactus, as a part of which, she enabled farmers to transition from chemical farming to organic farming and helped their wives gain alternative means of livelihood, thereby increasing the average household income. As a Young India Fellow, she worked with a Dalit Youth Advocacy Organisation to help them address key operational challenges and address gaps in effective engagement with the youth. She strives to marry her business knowledge with the social context to achieve impact outcomes. She is dedicated to working with social entrepreneurs to bring innovations to scale

Satvika is a Young India Fellow (2016) and has a Bachelors in Commerce from Lady Shri Ram College, Delhi

Garima Goel

Garima is part of the Transformative Advisory team in Delhi, working with Kaivalya Education Foundation (KEF) on the District Transformation Product for 25 districts.

Before Sattva she co-founded a sanitation enterprise called “Project Raahat” which is working in the field of urban sanitation in partnership with the government and is currently operational in 3 states. She represented India and Raahat in London and become ‘Enactus World Champion 2017’, chosen among 36 countries. She has also worked with MPs under the MPLAD programme and ran projects in their adopted villages regarding menstrual hygiene and community development. At Sattva she has worked with Central Square Foundation in landscaping the EdTech industry on a programme to drive efficacy and advocacy for country wide implementation by the government. She is committed to inculcating a bottom up method in development solutions to make them community driven.

Garima did her Bachelors of Management Studies from Shaheed Sukhdev College of Business Studies, with a major in Finance.

Atul Sukumar

Atul helps design, build and implement consulting projects as part of the Consulting Services team in Delhi.

Previously, his experience includes extensive research and analysis on problems of economic policy, education, healthcare, and energy. He has worked as a Data Analyst with the McKinsey Center for Government, a global hub for research, collaboration and innovation in government productivity and performance. He has also worked in consulting organisations, publishing companies, law firms and election campaigns. He is committed to bringing best practices from the private sector to impact public efficiency and effectiveness.

Atul is a liberal arts graduate of the University of Miami.