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CSR in India From voluntary to mandatory?

CSR in India From voluntary to mandatory?. February 25, 2011 David Karlsson. Outline. Background CSR in the Companies Bill 2009 What’s next?. Background. CSR traditionally practiced mainly as philanthropy Changing conditions call for a more holistic approach?.

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CSR in India From voluntary to mandatory?

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  1. CSR in IndiaFrom voluntary to mandatory? February 25, 2011 David Karlsson

  2. Outline • Background • CSR in the Companies Bill 2009 • What’s next?

  3. Background • CSR traditionally practiced mainly as philanthropy • Changing conditions call for a more holistic approach?

  4. CSR in the private sectorVoluntary Guidelines, December 2009 • Core elements; • Care for all Stakeholders • Ethical Functioning • Respect for Workers’ Rights and Welfare • Respect for Human Rights • Respect for Environment • Activities for Social and Inclusive Development

  5. “business practices that ensures the distribution of wealth and well-being of communities in which the business operates.” Salman Khursheed • “[… ] large section of the population remaining as “un-included” from the mainstream” R. Bandyopadhyay

  6. CSR in the public sectorGuidelines, March 2010 • CSR spending already mandatory for CPSEs • ”(CSR) is a concept whereby organisations serve the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities, and the environment in all aspects of their operations.”

  7. Companies Bill 2009 • Revision of Companies Bill from 1956 • Some suggestions: • Rotation of auditor/audit firms every five years • Restrictions on Layers of Subsidiaries • Capping the number of maximum directorships • Managerial remuneration limits

  8. Companies Bill 2009 • Proposal by the Parliamentary Standing Committee on Finance (August 2010) • Every company having a net worth of € 70 million or more, turnover of € 140 million or more, or a net profit of € 0,7 million or more, during a year, shall be required to spend every year at least 2% of the company’s average net profit during the three immediately preceding financial years, on CSR activities of the company’s choosing

  9. Comparison of Guidelines for Private/Public sector CSR spending Private companies CPSEs

  10. Stakeholder consultationsReactions of India Inc. • CSR is about conscience • ”The issue is on the practical side” • No definition of CSR – how to implement and monitor? Consequences for non-compliance? • Law will be counterproductive

  11. What does ”CSR spending” mean? • According to voluntary guidelines; • Identification of projects/activities • Physichal targets with time frame • Implementation and monitoring

  12. What’s next? • Revised Companies Bill ready in April? • Clause on mandatory CSR spending likely to be included • But what will the exact formulation be?

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