CSR Policy; Publication and Reporting

CSR policy of Indian companies may have more similarities than any other thing. Section 135 read with Schedule VII of the companies Act 2013 decide four corner of CSR policy of Indian companies, which is guided by and supplementary to development vision of Government of India.

Corporate Social Responsibility committee is primary body to formulate and recommend the CSR policy and expenditure thereon. The committee also has to monitor CSR policy implementation and logically expenditure thereon. The Board of a company may approve the policy and budget allocation for different aspect of CSR initiatives.

CSR Policy may primarily differ on method of implementation and secondly on budget allocations. A good policy should be flexible so that any method of implementation may for work it with any possible budget allocation.

A good CSR policy may include:

(1)  CSR Vision Statement;

(2)  CSR Mission Statement;

(3)  Preamble – legal requirement and main focus area of company/group;

(4)  Introduction – company’s willingness, group participation of subsidiary and associate companies, estimated fund for next three years by group;

(5)  Objectives – social and developmental objectives;

(6)  Main Policy –

1. List of policy initiatives and programs under identified areas suggested under Schedule VII;
2. Local area of CSR initiative;
3. Co – operation of other companies working in same geography with same CSR objective for cooperation and to avoid duplicity of initiatives;
4. Participation of stakeholders for identification of end programs;
5. Evaluation of CSR proposals;
6. Implementation methodology

                                          i.    Directly by company; or

                                         ii.    Through a captive organisation of the group companies; or

                                        iii.    Outsourcing to some other specialised agencies;

1. Identification formula for specialised agencies;
2. Budget allocation for each head of CSR policy initiatives;
3. Delegation of powers for selection of activities and incurring expenditure;

(7)  Budget allocation each head of CSR Policy initiatives;

(8)  Treatment of any surplus arising out of CSR project and program [Rule 6(2)];

(9)  Monitoring of CSR Policy implementation;

(10)               Upkeep of any assets created under CSR initiative

(11)               Social audit of CSR initiatives and upkeep of CSR assets; and

(12)               Reporting of CSR initiatives.

The CSR policy shall be available on the website of the company. The policy shall be disclosed by the Board in its report. This should also be ensured that the copy of CSR policy is made available to all stakeholders at grass route level at least in geographic area of implementation of CSR policy so that committee may receive inputs for programmes and reports in case of any violation of CSR policy. I suggest small booklets of CSR policy in local language of the target geography may also be printed and made available for distribution.

Stakeholder involvement is required for success for a CSR initiative. This involvement may be in proposals, implementation, monitoring, up-keeping, maintenance of CSR assets and most importantly stakeholder’s confidence towards company and its CSR initiatives.

We have already discussed the about reporting on CSR in the board report:

Rules 8 read with Section 135(5) has detailed framework for CSR Reporting.  In case of a company CSR reporting shall be part of the Board’s Report. In case of a foreign company; CSR reporting shall be an Annexure to the balance sheet. The policy and the Report shall also be displayed on the website of the company.

The CSR report in Annexure to these Rules has following components:

1. A brief Outline of the CSR Policy (Details on website of the company);
2. The Composition of the CSR committee;
3. Average net profit of the company for last three financial years (for the purpose of CSR);
4. Prescribed CSR Expenditure;
5. Details of CSR spent during the financial year;
6. Reason for not spending the amount;
7. A responsibility statement of the CSR committee about implementation and monitoring of CSR policy

This CSR reporting is part of Board Report under clause (o) of sub – section (3) of Section 134 of the Companies Act, 2013.