New CSR disclosure framework to improve transparency: government official

According to a senior government official, the new corporate CSR expenditure disclosure framework will help collect granular details for analysis and will also bring greater transparency around spending.

The Corporate Social Responsibility (CSR) scheme, applicable to certain categories of profitable businesses, came into force in April 2014 and official data available up to September 30, 2021 showed that an amount of Rs 8,828.11 crore has been spent on such works in recent years. financial year.

According to the National CSR Data Portal, managed by the Ministry of Corporate Affairs, the amount spent in the financial year 2020-21 is Rs 20,360 crore. However, the figure is likely to be higher as companies have until March to submit their CSR-related documents.

During the period 2014-15 to 2020-21, companies spent about Rs 1.09 million on CSR activities including those related to health, education, eradication of poverty, women’s empowerment and rural development.

In the financial year 2019-20, CSR expenditure amounted to Rs 24,864 crore. According to the data available on the portal, the total CSR expenditure over the last two fiscal years is over Rs 45,200 crore.

Earlier this month, the ministry notified Form CSR-2 (Corporate Social Responsibility Report).

The form asks the companies concerned to provide details on the CSR amount spent on ongoing projects as well as those other than ongoing projects.

Other requirements include providing details on the amount spent on impact assessment and whether any capital assets created or acquired through CSR were spent in a given fiscal year.

The official said the idea behind the introduction of the form is to capture granular details about CSR expenditures that are needed for analysis purposes, adding that it will also help stakeholders know what companies are doing. with their CSR obligations.

The form will be in a machine-readable format and the data will also be made available on the CSR portal.

As for the form, some fear that the new disclosure requirements will increase the compliance burden for businesses.

The official noted that the new disclosure requirements aim to “bring greater transparency” into companies’ CSR activities so that the ecosystem is strengthened.

Under the Companies Act 2013, certain categories of profitable entities are required to spend at least 2% of their three-year average annual net profit on CSR activities in a given financial year.

Last December, the Ministry informed Parliament that since the enactment of the CSR provisions with effect from April 2014, companies are responding positively and have shown encouraging signs in embracing the culture of responsibility to society.

In 2021, the department made non-compliance with CSR provisions a tort.

The CSR framework is a process driven by a company’s board of directors that is empowered to plan, decide, execute and monitor CSR activities.

Companies with a net worth of at least Rs 500 crore or a minimum turnover of Rs 1,000 crore or a net profit of Rs 5 crore or more in the previous financial year must spend on CSR activities .

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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