With CSR, India has led kindly light

During the pandemic, big Indian companies diverted their CSR funds for COVID-19 relief activities

In April 2014, following the amendment to the Companies Act, 2013, India became the first country in the world to make Corporate Social Responsibility (CSR) mandatory. 

The amendment requires companies with a net worth of INR 5 billion (US$70 million) or more, or an annual turnover of INR 10 billion (US$140 million) or more, or net profit of INR 50 million (US$699,125) or more, to spend two per cent of their average net profits of three years on CSR.

This meant that, as part of the CSR compliance, businesses that qualified for CSR would have to ‘invest’ their profits back into the society and could do so in any area of choice including gender equality, education, healthcare, etc.

By imposing a legally-binding obligation on select categories of companies to undertake CSR projects to further social welfare, through the enactment of the Companies Act, 2013, India took a big leap and became the frontrunner of social responsibility. Today, India is the only country that has a law in place that mandates and regulates CSR for ‘qualifying’ companies registered under the Companies Act, 2013.

Eyeing sustainable development

The UN Sustainable Development Goals (SDGs) make a robust framework for companies in India to pin their CSR agenda on. Both were conceived around the same time and have similar end goals or larger objectives.

As a signatory to the 2030 Agenda for Sustainable Development, India is committed to furthering and achieving the Sustainable Development Goals (SDGs). On 25 September 2015, the United Nations General Assembly unanimously adopted Resolution 70/1, Transforming our World: the 2030 Agenda for Sustainable Development.

The document lays out the 17 Sustainable Development Goals that aim to mobilise independent and collective global efforts to achieve critical goals such as ending poverty, fostering peace, safeguarding the rights and dignity of all people, protecting the planet and more.

India is home to 1.3 billion people – one-sixth of all humanity – and plays a very important role in the accomplishment of SDGs, the success of the 2030 Agenda.

In July 2020, in its second Voluntary National Review (VNR) – that serves as a basis for the international review of the progress on the SDGs – India termed the presentation ‘Decade of Action: Taking SDGs from Global to Local’ and made a paradigm shift to a ‘whole-of-society’ approach, with the Government of India engaging subnational and local governments, civil society organisations, local communities, people in vulnerable situations and the private sector.

India is resolute in its commitment to achieve the SDGs that converge with the national development agenda and its motto of Sabka Saath Sabka Vikaas. The government engagement with the private sector is being done through CSR initiatives in a big way as both share common goals. 

Global health crisis

During the COVID-19 outbreak, the Union Ministry of Corporate Affairs issued a notification in March 2020 stating corporate expenditure made towards COVID-19 related activities to fight the pandemic will be considered valid under Corporate Social Responsibility activities of the company.

In January 2021, in another notification by the Ministry, it was stated that ‘spending of CSR funds for carrying out awareness campaigns / programmes or public outreach campaigns on COVID-19 vaccination programme is an eligible CSR activity under item no. (i), (ii) and (xii) of Schedule VII of the Companies Act, 2013 relating to promotion of health care, including preventive health care and sanitisation, promoting education, and, disaster management respectively’.

In July of the same year, the Ministry of Corporate Affairs issued a circular stating ‘spending of CSR funds for COVID-19 vaccination for persons other than the employees and their families, is an eligible CSR activity under item no. (i) of Schedule VII of the Companies Act, 2013 relating to promotion of health care including preventive health care and item no. (xii) relating to disaster management.’ 

The novel coronavirus that gripped the world and hit even the most advanced of nations brutally, redefined the definition of ‘normal’ among other things. At the time, in India, individuals, governments, civil society and companies, came forward and contributed in prevention and rehabilitation in whichever way possible.

Big Indian companies started to divert their CSR funds for COVID-19 relief activities and partnered with other catalysts and change-makers to make sure relief work doesn’t stop.

Companies came up with innovative ways to fund relief activities and earmarked huge CSR sums for the same. This included donation of face masks, sanitisers, hand gloves, etc., in residential areas and for the COVID-19 frontline workers and / or pledging funds for the distribution of these materials. 

Many companies also came forward to build make-shift quarantine facilities and covid care centres including offering their venues and premises to be used for these purposes. 

Then there were those companies that made sure food and other essential products are accessible, physically and financially, when the country was in lockdown. Many made arrangements for meals and others distributed ration packets to the needy. 

During the unprecedented public health emergency, many hospitals faced shortage of medical supplies, equipment, medicines, etc., and companies came forward to meet those demands. A few even reached out to the families of the frontline workers who lost their lives during the pandemic.

The CSR trends

In Financial Year 2020-21, a total of 17,007 companies spent funds on CSR. The total amount spent on CSR activities in the financial year was INR 24, 865.46 Cr. and these activities covered 39 states and Union Territories. Additionally, a total of 36,865 CSR projects were underway in 14 development sectors in India in FY 2020-21.

A closer look at the CSR spent in India in FY 2020-21 shows that the sectors that attracted some of the highest CSR funding were rural development; health, eradicating hunger, poverty and malnutrition, safe drinking water, sanitation; environment, animal welfare, conservation of resources; education, differently-abled, livelihood; heritage, art and culture; and, gender equality, women empowerment, old age homes, reducing inequalities.

The top ten Indian States with the highest CSR spent in FY 2020-21 were in decreasing order of CSR spent Pan India (centralised funds), Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Andhra Pradesh, Delhi, Rajasthan and Telangana. 

The CSR spent of Non-PSU (Public Sector Undertaking) Companies in FY 2020-21 was a whopping INR 20,416.62 Cr (82 per cent) while the PSU Companies contributed INR 4448.84 Cr. (18 per cent) to the total CSR spent in India.

The number of companies that exhibited CSR compliance ‘more than prescribed’ was a lot more than those which didn’t comply or complied to less than the prescribed CSR amount. The number of companies with ‘more than prescribed’ CSR compliance was the highest and stood at 9,374 followed by the number of companies that executed ‘less than prescribed’ CSR compliance and this was 3,291 companies. The number of companies with ‘zero spent’ stood at 2,926 companies and, in the end, the number of companies whose CSR compliance was ‘exactly as prescribed’ was 1,416 companies.

In FY 2020-21, the top ten companies with the highest CSR spent, in descending order, were Reliance Industries Ltd (INR 922 Cr.), Tata Consultancy Services Ltd (INR 674 Cr.), Tata Sons Private Ltd (INR 545 Cr.), HDFC Bank Ltd (INR 534 Cr.), Oil and Natural Gas Corporation Ltd (INR 531 Cr.), Indian Oil Corporation Ltd (INR 445 Cr.), NTPC Ltd (INR 418 Cr.), Infosys Ltd (INR 361 Cr.), ITC Limited (INR 335 Cr.) and Wipro Ltd (INR 246 Cr.).