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India Inc spent just Rs 8,691 crore on CSR in FY19

Even though CSR spending has increased with each passing year, it is too small for the size of corporate India

Sonal Khetarpal | February 20, 2020 | Updated 23:58 IST
India Inc spent just Rs 8,691 crore on CSR in FY19
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Indian corporates spent just Rs 8,691 crore on corporate social responsibility (CSR) during the current financial year, a survey shows. An analysis by KPMG, titled 'India CSR Reporting Survey 2019', shows CSR spending from India Inc rising year-on-year. Even though this amount has increased from Rs 5,115 crore in 2014-15, it is too small for the size of corporate India.

It's been five years since India passed the CSR Act, the Section 135 of the Companies Act, 2013. It got all companies with a net worth of Rs 500 crore, or revenues exceeding Rs 1,000 crore, or net profit over Rs 5 crore, to spend 2 per cent of their average profit over the last three years on CSR programmes. If they fall short, they have to declare why they were unable to spend that amount. While overwhelming in the beginning, it encouraged corporates to work closely with the social sector.

Not only CSR budgets have increased, more companies are spending on CSR. At least 76 per cent of companies compared to 38 per cent in 2014-15 reported that they spend at least 2 per cent of profits on CSR.

In fact, companies are also formalising their social impact strategies. They are setting up CSR departments and formalising CSR processes, and disclosing more information on CSR spends.

KPMG's CSR report analyses the disclosures under the Act by the 100 largest listed Indian companies by market capitalisation. The Act requires that these companies have a Board-level CSR committee that formulates and monitors a CSR policy and recommends CSR spending. The Board must also approve and publicly disclose the CSR policy as well as report what the company has spent on CSR in a prescribed format in the annual report.

Data shows that compliance is at 92 per cent or higher on 17 of the 23 compliance parameters as per the CSR Act.

Disclosure of the amount spent has increased from 30 per cent in 2014-15 to 99 per cent in 2018-19, so only one among top 100 companies is failing to disclose.

Santhosh Jayaram, Partner and Head, Sustainability and CSR Advisory at KPMG India, says, "While the overall CSR spending is increasing, the overall governance indicators around CSR have shown a steady improvement over the last five years. The indicators representing the functioning of the CSR committee, the diversity in CSR committee and the improvement in monitoring and evaluation are showcasing this."

He adds, "This high level of compliance is positive because it shows that CSR has become a Board agenda and has got the attention of the CEO which is crucial to create an impact. 65 per cent of CSR committees include the CEO-which indicates how companies are going beyond the demands of the Act."

Some other interesting data is on how 30 per cent companies have had more than three CSR committee meetings and 41 per cent companies have aligned CSR projects to Sustainable Development Goals (SDGs) in their annual report.

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