As India Inc gears up for mandatory CSR spending from the next fiscal, a new index is in the works for ranking companies on the basis of their efforts and spending towards social welfare schemes.
The index, being prepared by the India Institute of Corporate Affairs and leading stock exchange BSE, would rank the companies in different bands and their performance would be monitored dynamically on the basis of their reporting of CSR (Corporate Social Responsibility) activities.
“The reporting time for the CSR activity of corporate India would be financial year 14-15,” the Indian Institute of Corporate Affairs Director-General and CEO Bhaskar Chatterjee said at a seminar organised by the Centre for Ethical Life and Leadership (CELL).
Asked when the CSR index would come into force, he said, “We are looking at a time frame of eight months or so after financial year 14-15.”
Commenting on the CSR policy, S. Y. Quraishi, Former Chief Election Commissioner of India and Chairman of CELL, said: “India’s CSR Act is a landmark initiative, a first in the world, to involve business in achieving national development goals together with the Government and civil society.”
The proposed CSR Index would assess the impact and performance of companies listed on the BSE in CSR activities.
It would also look at the performance of companies mandated to spend 2 per cent of their profits on CSR activities in line with the new Companies Act.
The performance of companies in CSR areas would be combined with the market performance of companies for selection of companies and the index would be sector neutral.
Besides developing the index, the two bodies would also work on capacity building on CSR, conduct education and awareness programmes and other activities.
Around 8,000 companies would fall under the Act’s ambit and this mandate would translate into an estimated CSR spending of Rs 12,000-15,000 crore annually.