Making it mandatory for India Inc to disclose its CSR activities to stakeholders, the Government released a set of guidelines for all businesses – including MNCs. Observance of these would be voluntary.
“We can keep making rules and people will keep circumventing them. We do not want to work with a stick, because if the end goal is not achieved, then the purpose is defeated,” said Mr R.P.N. Singh, Minister of State for Corporate Affairs.
The MCA also felt that the scope of the term CSR was limited and has renamed it Responsible Business (RB).
There are nine broad principles in the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business. These are well being of employees, human rights, environment consideration, equitable development, safe and sustainable goods and being responsive towards stakeholders, especially disadvantaged, vulnerable and marginalised.
A separate chapter on MSMEs has been included.
“These are a set of broad guidelines and we want the companies to build upon them going forward,” said Mr D.K. Mittal, Secretary, MCA.
The Standing Committee on Finance had suggested that two per cent of average net profit for the preceding three years of companies be made mandatory for companies with a net worth of Rs 500 crore or more, or those that have an annual turnover of at least Rs 1,000 crore, or companies with a net profit of Rs 5 crore or more.
The Guidelines Drafting Committee appointed by Indian Institute of Corporate Affairs and headed by Mr Bharat Wakhlu of Tata Teleservices formulated the new guidelines.
While reporting the RB, the Government suggests making disclosures on the recyclable raw materials used, total number of contractual employees, percentage of women employees, energy efficient technologies, and total water consumed among other things.
Lauding the public sector units for whom it is mandatory to spend two per cent profit after tax on CSR activities, Mr Murli Deora, Minister for Corporate Affairs, said, “The private corporate sector has come a long way from the days of ad hoc charity.”