Companies report better CSR compliance in FY16
Section 135 of the Companies Act of 2013 requires cos to spend 2% of their average net profit for the immediately preceding three financial years on CSR activities.
Section 135 of the Companies Act of 2013 requires companies need to spend at least 2% of their average net profit for the immediately preceding three financial years on CSR activities.
The survey report said 1,270 BSE-listed companies collectively spent Rs 8,185 crore for FY16 with a cut-off date of December 2016. Interestingly, as per replies filed in the parliament by the minister of state for corporate affairs Arjun Ram Meghwal, the total CSR expenditure for 5,097 companies in FY16 amounted to Rs 9,822 crore.
The survey noted that the CSR performance of companies with respect to requirements of the Companies Act substantially improved over the last year. The results were based on company disclosures and reports filed with the Bombay Stock Exchange (BSE).
The survey incorporated voluntary disclosures by 166 companies of their ‘output data’, which showed that an estimated 1.5 crore people benefited from Rs 3,748 crore spent by them, averaging to about Rs 2,500 being spent per person.
“The fact that companies are budgeting and spending more than the minimum legislative requirement suggests that companies want to do more,” said Chandrajit Banerjee, director general of CII. “There is always room for improvement.”
According to the report, the main reasons for under-spending or lack of CSR spend were planning and implementation, with almost 44% of the companies falling in that category. This is significantly less than 62% in FY15, where 35% companies “required more time to plan”. “Finding the right project” continued to be a challenge for 14% of the companies.
The report further observed that the number of companies spending CSR budgets exclusively through corporate foundations increased to 72 from 60 last year, reflecting an increasing trend towards companies building their own capacities for implementation.
Health and sanitation, education and skill development, and rural development were the top three developmental areas for spends. Out of the 32 industry categories, absolute spends decreased in just two industries— commercial services & supplies and oil & gas.