The Essential Guide To Corporate Social Responsibility

Corporate social responsibility has proved itself to be an integral part of running any organisation. It’s important not to equate CSR with charity. Instead, it should be understood as a partnership to create long-term positive impact for a company’s shareholders. According to the Indian Companies Act 2013, every company with a net worth of at least INR 500 crore, a turnover of at least INR 1000 crore or a minimum net profit of INR 5 crore has to mandatorily spend 2% of the last 3 years’ average net profits on CSR activities.

The CSR Committee

In order to formulate and implement a good CSR strategy, it’s imperative that an organisation sets up a CSR committee. The role of a CSR committee is simple—to create, execute and oversee all CSR activities that the company runs. The committee is also responsible for putting forward an estimate of how much money needs to be set aside for different CSR campaigns. The structure of a CSR committee varies with the kind of organisation you are a part of –

  • For a listed public limited company, you’ll need at least 3 people who hold the position of director, of whom one should be an independent director hired specifically for CSR purposes.
  • For unlisted companies, you won’t require an independent director.
    • If you’re a domestic private organisation, a committee consisting of 2 directors does the job
    • For a foreign company running its operations in India, you’ll need 2 directors, one who’s an Indian national and one foreign national nominated by the parent organisation.

Responsibilities Of The Board

While the CSR committee has its own responsibilities, there are certain obligations that need to be fulfilled independently by the Board Of Directors. Their biggest responsibility is approving the CSR policies put forward by the committee and ensuring that they are implemented. The board also needs to disclose the composition of the CSR committee and publish the CSR policy in the annual report. Apart from this, the CSR policy needs to be disclosed on the company’s website.

While planning CSR activities, the committee and the board should preferentially target local areas. If the board or the committee decides to not spend the mandated amount, they need to expound their reasons in detail in the company’s annual report. In addition to this, companies need to ensure that any capacity building expenditure does not exceed more than 5% of the amount spent on CSR activities. Keep in mind that the money spent on CSR isn’t exempt from taxation.

What Counts As CSR Expenditure?

There are no hard and fast rules on what kind of CSR expenditure a company is allowed to make as long as the funds and initiatives are aligned toward,

  • Eradication of hunger and poverty
  • Education
  • Gender equality
  • Environmental sustainability
  • Protecting national heritage
  • Armed forces dependants
  • Sports activities
  • Technology incubators
  • Prime Minister’s Relief Fund
  • Rural development
  • Slum area development

The Corpus

The CSR corpus is a detailed report of all the CSR activities undertaken by a company. Within this document lies the details of the total CSR expenditure, and any income earned or surplus arising through CSR activities. Organisations can pool resources and include this expenditure in their individual corpora. However, any expenditure which directly benefits the employees and their families cannot be included in the corpus. Also not to be included in the corpus are political contributions and any activities that take place in the normal course of work. If the organisation has run any activities through a trust, foundation or a society, these can also be included in the corpus.

Remember, the key to implementing a good CSR strategy lies with your CSR committee. If your committee members have a well-planned strategy in mind, then executing it becomes an extremely easy and satisfying process. This pretty much covers all you need to know about how a business should run its CSR activities in India. For any assistance with your CSR campaigns, reach out to us at Vardaan, and we’ll make sure that your organisation gets the most out of giving back to society.

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Techniques To Green Your Business

Combining environmental sustainability and business is a procedure that has mystified companies for years. Obstacles like miscommunication between finance and sustainability teams have hindered many companies’ past efforts to comply with green practices. Tying together an effective business plan that incorporates the two requires a lot of planning. Here are a few ways that companies can keep their environmental footprint in check while still turning a fat profit.

Budget With The Environment In Mind

Back in 2004, Johnson and Johnson had a greenhouse gas reduction target that they were unable to meet. That’s when they decided to invest $40 million a year to cut down on emissions. The initial investment was massive, but eventually they cut away a huge chunk of their operating expenses by using solar photovoltaics instead of conventional energy. This also allowed them to predict the returns they would get from such an investment—while funds allocated to regular energy sources tended to fluctuate, solar energy didn’t require any additional investment once the panels were installed. To date, they’ve reduced greenhouse gas emissions by 138,000 metric tons, saving the equivalent of the electricity consumed by 21,000 US households! And guess what? They still achieved a return of 19% on their investment! Factoring sustainability costs into the yearly budget can help companies determine expenses and plan out their operations. That way, they won’t have to compromise on income.

Give The Sustainability Officer More Control

Akzo Nobel, a global paints and coating company, decided to give their Chief Sustainability Officer some power over the budget. So every budgetary request exceeding $5 million had to be run by him and the Finance Controller before approval. That way, he could check whether the request complied with the environmental rules laid down by the company. He was allowed to reject requests that lacked an explanation of why sustainability practices were not considered. These sorts of tactics can be adopted by companies who wish to engage their sustainability teams early on in a new project. It also helps to prevent budget requests that don’t factor in environmental concerns.

Drop Hurdle Rates

Products that are designed to be more friendly to the environment are usually very expensive to create. To tackle this, USP, a company that transports cars and automobiles, eased the minimum return requirement on some of their cars. These machines consumed less fuel and, as a result, cut fuel costs. By doing this, USP stuck to their environmental plans and were able to factor the reduced revenue into their budgets. By lowering the bar for minimum returns on eco-friendly products, companies can give more importance to their environmental performance, and still allocate funds appropriately. Include External Processes When companies draw up a plan for environmental sustainability, they need to take all their dealings into consideration. This means looking at the entire corporate value chain and making sure that it’s aligned with the goals of the firm. For example, Natura asks its suppliers for a sustainability report, to give them a better understanding of Natura’s work culture. This helps the suppliers comprehend how the business, economy, environment, and society are impacted by their actions. That way they can tweak their processes to optimise management systems. Natura checks the environmental impact of the suppliers before choosing one that’s fit for the job. Host a fundraising event. All cause-driven programs are excellent for your image and public relations. It feels good to support something that is meaningful and far reaching. Adopt a green cause and do an annual fundraising event. There are all sorts of campaigns you can participate in, from planting trees to raising funds for social causes, for education, for healthcare, Find one that’s close to your heart and involve your employees. Let this be part of employee engagement activity. Recycle outside the box. In addition to recycling everything that can be recycled, think green when buying or replacing items. Consider purchasing used or vintage office furniture instead of brand new pieces. You can find great deals on barely used office furniture at both online or off line stores. Need new computers, laptops? Think if a refurbished solution will suffice. Most computers, even older ones will do the job for most of us. Any it comes at a fraction of the cost. A smooth flow between business and sustainability may seem like a daunting task, but it’s essential. Without it, companies will be unable to satisfy their environmental duties while still earning a sizeable income.

Keeping Up With CSR Trends: Why Green Is The New Black

What if waste, as we know, totally disappears from the face of the earth? If you, at this very moment, try to find the exact definition of Corporate Social Responsibility there’s a high probability that you would be confused. It’s a highly flexible concept, that evolves differently changes from time to time and from company to company. The basic concept of CSR took birth in the mid-20th century. Since then it has been established as standard aspect of most successful companies, becoming more in vogue as a best practice in the last decade. According to Vardaan, CSR is a very basic and a fundamental business process which ensures that the Corporate engages in a responsible manner with its stakeholders (stakeholder and not only the shareholders) India has lots of socio-economic challenges to be dealt with. By making CSR mandatory for certain categories of specified companies.The government has made the top businesses in the country responsible for their country’s development. According to estimates the CSR spend in India amounts to a cash flow of over INR 100 billion per annum. When an amount in this magnum is put into good use, it is bound to accelerate the development of a society. CSR, today, can be performed in any of the sectors like education, healthcare, environmental, humanitarian crises, and many more. In this piece, lets focus on the environmental sector that deals especially with waste management.

In Green We Believe

The Swachh Bharat Campaign initiated by the Prime Minister has brought with it a fair share of enthusiasm from the citizens. With options like collection, segregation, and disposal of waste, raising campaigns on waste management, constructing clean toilets for the public who don’t have access to them, and many, waste management has a vast scope for improvement. Many companies opt for waste management as a part of their CSR regime and because of that the competition is really high. Having an innovative and unique approach to this, will help you bring your company into the limelight and help instil trust amidst your current customers and prospective ones. Most of the company have an independent department that is in-charge of CSR. If you are new to CSR, taking the help of local organizations to aid you in your CSR work is a great way to go ahead. If you are a SME, then pooling in your resources with couple of other SMEs will help you make a valuable contribution.

ROI, Myth Or Possibility?

Return on investment is a by-product of consistent efforts and disciplined approach towards CSR. Though it is generally defined as financial gain, it can also be measured in terms of brand equity you gain. It can be a relative vector, often immeasurable, but one that helps you realize an aspect of success. With waste management, you have an option of playing the game up close. You can consciously put in efforts to reduce waste generation, reuse materials, and recycle sustainable materials. Though the ROI isn’t direct or immediate, you will reap in the benefits in the future. Small changes to carefully monitor your resources and consumptions will help you downsize your budget. Campaigning about your sustainability stories amidst the consumers is bound to generate interest and raise your value among both stakeholders and consumers. If going traditional in your philanthropy work isn’t your cup of tea, waste management might just be the right way to go. Make your employees environmentally literate by creating engaging programs that teach them core lessons and tricks to tackle these issues. Turn every waste as an opportunity to lead you into a better and cleaner world. Can you use the waste generated as an opportunity to look at a business opportunity, a backward of a forward integration perhaps. Green your company today, for a greener tomorrow. image: http://thumbs.dreamstime.com/z/green-ideas-tree-head-concept-human-brain-icons-recycling-illustration-layered-easy-manipulation-custom-coloring-32692896.jpg

SMEs, It’s Your Turn To Give Back To Society

The Indian Government has embraced the policy of Corporate Social Responsibility in the Companies Act of 2013. The inclusion of several new policies and and provisions has changed the face of Indian corporates. This is a remarkable choice that has put India in the same league as countries such as Norway, Mauritius, and Sweden, who all have vigorous rules for industries on CSR. The only area where India lags behind is that of CSR for smaller businesses—the Companies Act 2013 does not apply to Small and Medium-sized Enterprises (SME), which happen to be major economic drivers in India. SME CSR work Corporate social responsibility is a concept that is normally associated with large companies and is is seen as a chance to give back to the society. The concept was once used by high-profile companies with enough media attention and money to build and uphold a strong brand image in the public eye. These days CSR initiatives have become important for SMEs as well. To understand why it is necessary for SMEs, it is best to understand the meaning and need for Corporate Social Responsibility. What is CSR? Corporate Social Responsibility generally refers to the obligations that the company has to the society. CSR has no definition as such, but the EU stresses that CSR is a voluntary action and is done as a part of the company beyond the law requirements. A company engaged in CSR purposely include the public interest into the working of the organisation. These organisations have a bottom, line of satisfying people, their profit, and the planet. Why Are SMEs Effective At CSR? India’s economy runs on the tiny, but infinitely numerous, contributions of small and medium-sized enterprises. These SMEs employ over 40% of India’s population and contribute to over 45% of the country’s manufacturing output. SMEs provide millions of jobs even to low-skill level workers. The country has over 1.3 million SMEs, who collectively account for 40% of India’s total exports. Small and medium-sized enterprises usually identify closely with the town or region that they are set up in. They have a wider reach across local communities and are spread over a larger area, thus giving them more grassroots influence than larger enterprises, geographically at least. SMEs can easily adapt to their local settings, have a clear understanding of the problems in the area and have access to local resources, making them highly suitable for CSR work. Companies like Jaipur Rugs Co. Pvt. Ltd. do their bit for the community by conducting Educational programs for illiterate artisans and village community members. They also hold health check camps in villages for the poor and help unemployed artists with jobs. This kind of work is possible as the company intimately knows the problems their locality faces. How To Inject CSR In SMEs SMEs need to understand that CSR does not only involve the spending of money. Instead, it works best when an innate part of the brand. However, to reach that level SMEs must first educate themselves on what corporate social responsibility really means. One way to do this is through UN’s unique UNIDO programmes. They have a Triple Bottom Line (TBL) approach, which is popularly known as the 3 Ps—People, Planet, and Profit—to help companies address sustainable development. It has proven to be a simple learning technique for SMEs in developing countries and help companies with their performance for social, environmental, and economic norms. These programmes also help SMEs understand that profit alone is not enough to make a company successful. Rewards For CSR Work To promote CSR work in SMEs, associations such as ASSOCHAM, Businessworld, and FICCI hold award ceremonies to reward and appreciate these companies. These award ceremonies promote CSR practices within SMEs. Elin Appliances Pvt. Ltd. and Jaipur Rugs Co. Pvt. Ltd., NTTF Industries Pvt. Ltd., Smart Aqua Technologies Pvt. Ltd., and Vajja Technologies Pvt. Ltd. were awarded the SMEs and innovation categories at the Businessworld FICCI- SEDF CSR 2010 Awards. Elin Appliances were also awarded at the ASSOCHAM CSR 2011 Awards for their remarkable “Go Green” campaign, where they planted trees in their locality. They also organised health check-up drives in New Delhi, earning them respect in the community and a good reputation among corporates. India’s growing economy and aspiring middle-class shows that it is time that more SMEs begin to change themselves to do what they can for the society and environment and to make India a better place for the future. SMEs must remember that they can only grow while the society and environment around them are balanced. And CSR activities that help organisations create a positive impact in their locality will help boost their brand equity as well.