Institutional EYE

Commentary on Corporate Governance Issues

Corporate Social Responsibility: A lot more than feel-good

March 20, 2019

The Companies Act 2013 expects businesses to spend 2% of their three-year average profits on social initiatives. Even before the Act was put in place companies recognized they need to think about more than just profits – and did so. But since CSR has become mandatory, companies have embraced social causes with a fervour. They now apply the same rigour to causes as diverse - as hunger, poverty, healthcare, education, cleanliness environmental sustainability, and rural development, as they bring to their business.

 

IiAS has been tracking the developments in this sphere since 2013 and has most recently studied the spend by the S&P BSE 100 companies in FY18.

 

The IiAS study of the FY18 Corporate Social Responsibility (CSR) initiatives and disclosures of the S&P BSE 100 companies reveals that companies are taking their CSR initiative seriously, measuring and disclosing the impact they are having on the society. Further, they are on course to achieve the 2% target in the coming years.

 

The key findings are:

 

  1. Companies have spent Rs. 74.6 bn, an increase of 5.8% compared to the previous     year.

  2. In FY18, companies spent 1.9% of their three-year average profits. The aggregate spends by MNC’s and Institutionally owned entities was 2.0%, while it was 1.9% for promoter owned entities and 1.8% for PSUs

  3. The number of companies meeting the 2% spend target has increased from 46 in FY16, 59 in FY 17 to 68 this year.

  4. The top ten companies contribute ~48% to the overall spend on CSR; in FY17, this was 47%.

  5. Education continues to be the focus area for companies ~30% of the aggregate FY18 spend was made towards education projects. Other areas were rural development (13.3%), hunger, poverty and healthcare projects (20.6%). 

  6. Addressing hunger, poverty and malnutrition, and environment sustainability related projects are gaining new grounds as there seems to be substantial increase in CSR spend in these areas.

  7. Companies that undertook impact assessment came down marginally to 78 companies from 81 companies in FY17.

 

You can view the presentation ‘Corporate Social Responsibility: A lot more than feel-good’ by clicking this link.

 

 

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