More and more companies tuning into the Corporate Social Responsibility and are spending more than the budgeted amount as well , A study by CII has revealed.
But the contribution to the Prime Minister’s Relief Fund have declined.
“In FY16, these 1,270 companies collectively spent Rs 8,185 cr, which is 27% more than spend of Rs 6,400 cr in FY15. The spend is 92% of the required CSR budget of Rs 8,900 crore, using two per cent of average net profits of three financial years. The companies collectively had budgeted Rs 10,257 crore , which is 15% more than the minimum budget required”, CII-CSR Annual Tracker 2016 said.
Among the areas of CSR spends, health and sanitation, education and skill development, and rural development were the preferred ones. However, the absolute amount of money contributed to Prime Minister’s Relief Fund declined by 25 per cent to Rs 80.55 crore.
A key feature of CSR disclosures in FY16 is that some companies have begun to disclose output data. 13 percent, or 166 of 1,270 companies making such disclosures, reflects going beyond legislative requirements and improving the quality of disclosures. 1.5 crore people benefitted from Rs 3,747.97 cr spent for which output data has been reported. This averages to Rs 2,498.65 spent per person.
Chandrajit Banerjee, Director General of CII, said “results of CII’s Annual CSR Tracker 2016, clearly demonstrate improvement in the practice and disclosure of practice of CSR by companies. The fact that companies are budgeting and spending more than the minimum legislative requirement suggests that companies want to do more for betterment of communities. There is always room for improvement and I am hopeful that results of FY17 will reflect that improvement.”
The number of companies spending CSR budgets exclusively through corporate foundations increased to 72 from 60 in FY15. The number of companies exclusively spending money directly marginally increased to 233 from 227, whereas that spending money exclusively through implementing agencies remained stable at 249 as compared to 251 in FY15. This tends to suggest that companies are building their own capacities for implementation.
Health and sanitation, education and skill development, and rural development are the top three developmental areas for spends. The absolute amount of money contributed to PM’s Relief Fund reduced by 25% to Rs 80.55 cr. Though the absolute amounts spent in incubation centres, protection of national heritage, and sports development, are small as compared to the top three areas, the percentage increases over the previous year are anywhere between 18 to 122%.
Out of the 32 industry categories, absolute spends have decreased in just two industries, -- commercial services and supplies, and oil and gas. Big increases are reported in automobiles and auto components, consumer durables, metals and mining, financial services, pharma and biotech, telecom services and equipment, textiles, apparels and accessories, transportation, and utilities.
Naushad Forbes, President, CII said CSR is a matter of board-level accountability and the boards should be allowed the space to conduct their job without interference or influence from certain stakeholders that have tendencies to exploit CSR legislation for their narrow gains."
FY16 has been a significant improvement on almost every aspect of CSR legislation. Some companies going beyond the legislative requirements. CESD projects that CSR spends will further increase in FY17, with a back-of-the envelope calculation of around Rs 10,000 cr. There should be improvements in quality of disclosures and more companies disclosing beneficiary data, the survey said.