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NILF - Roundtable
February 14, 2013
Hidden Opportunities in the 2% Mandate
Agenda
1. Catalyzing Change - IT/BPM Industry & Corporate Social
Responsibility
2. The law & prescribed activities (Schedule VII)
3. Key questions specifically for IT-BPM industry
4. What role the NASSCOM Foundation can play?
a) Drafting rules and regulations
b) Implementation
5. Way Ahead…
Catalyzing Change
IT/BPM Industry & CSR • IT-BPM industry’s contribution to the growth of India’s economy -
• provided direct employment to nearly 3 million people, and indirectly to 9 million in 2012.
• revenues of the sector have grown from 1.2 per cent of the GDP in FY1998 to an estimated 7.5 per cent in FY2012.
• History of investing in philanthropy, long-term development projects, humanitarian causes, disaster relief etc.
• Initiatives to promote education, health and general development in rural and urban areas, especially for excluded groups like at-risk children, women and persons with disability
• Community engagements involving employees
• ‘ Catalysing Change – 2012 – Shaping the future’ on the state-of-play of business responsibility (BR) in the IT-BPM industry in India
Clause 135 of Companies Bill 2012 What Does The Law Say?
• Every registered company under companies law or any previous laws
(Section 1, clause 135):
• Net worth of rupees > 500 crore
• Turnover of rupees > 1000 crore
• Net profit of rupees > 5 crore during any financial year
must spend at least 2% of its average net profit every year.
• If the company fails to spend such amount, the board shall explain the
reason for not spending in its financial statement
• A CSR committee of the Board, comprised of three or more directors
and at least one independent director must be formed
• CSR committee will be responsible for designing the policy, deciding the
projects as per schedule VII, decide the CSR spend and monitor that it is
being utilized as planned.
Clause 135 of Companies Bill 2012 Schedule VII – Prescribed CSR Activities
1. Eradicating extreme hunger and
poverty;
2. Promotion of education;
3. Promoting gender equality and
empowering women;
4. Reducing child mortality and improving
maternal health;
5. Combating human immunodeficiency
virus, acquired immune deficiency
syndrome, malaria and other diseases;
6. Ensuring environmental sustainability;
7. Employment enhancing vocational skills
8. Social business projects;
9. Contribution to the Prime Minister's
National Relief Fund or any other fund
set up by the Central Government or
the State Governments for socio-
economic development and relief and
funds for the welfare of the Scheduled
Castes, the Scheduled Tribes, other
backward classes, minorities and
women;
10. Such other matters as may be
prescribed.
• # 1-7: UN Millennium Development Goals
• # 8: Shared Value
• # 9: Public-Private Partnership (PPP)
• # 10: Flexibility
Role NASSCOM Foundation Can Play
Indian Law
Mandated CSR
Companies Bill
Rule Writing
Regulatory Inputs
Industry Inputs
Foundation Programs
Implementation
Advise & Train
CSR Advisory
Services
Awareness Campaigns
Handbook for policy creation, monitoring &
reporting
Convey SEBI reporting divergence & convergence
Strategic & Implementation
Services
Help define CSR Policy
Help companies identify the CSR
activities
Metrics to measure the impact
Support Reporting
Consolidate & Communicate
Role of Aggregator – e.g. NDLM
Thought Leadership
Represent Industry On National
Foundation for CSR
PR
SEBI’s Sustainability Reporting to Top 100
companies
• Should the CSR activities
• be driven from the ‘core business' rather 'environmental & social impact‘?
• involve other stakeholders of the organization – such as suppliers, customers,
investors? If so, how does this impact the supply chain?
• Be driven through ‘Public–Private Partnership’ (PPP), or can it be expanded to
multi-stakeholder projects
• Can CSR training be considered a part of CSR spend?
• Some suggested additions to the Schedule VII
• PwD & Inclusion
• Monitoring & evaluation
• Software donation
• NDLM
Where to spend?
• Internal programs e.g. Accessibility tools development
• Consider volunteering by the staff of companies as a CSR
activity (attaching the money value to volunteering)?
• What should be the maximum percentage of CSR funds
earmarked for Government?
• What happens to the unspent funds – rollover of unspent
funds, anything else?
• Corporate Foundations – should all the activities of
Foundations be considered as CSR for Parent Corporate.
How To Spend?
• Traditional CSR:
• National Digital Literacy Mission (NDLM)
• My Kartavya
• Big Bridge
• NASSCOM Knowledge Network (NKN)
• Urban NKN Centers
• Responsible Business
• Impact Sourcing
• Skills For Employment
Potential Collaborative Projects
• Within financial report?
• Supplemented with narrative format?
• Reporting must include social impact as well as spending
• Integration is the most recent trend on sustainability
reporting; financials to be integrated with Annual
Financial Returns
• National Voluntary Guidelines (NVGs)
• Convergence with global standards
• Global Compact – Communication on Progress (COP)
• GRI Principles
How to Report?
• Recommend Guideline Principles
• Detailed comments on Rules
• Draft Reporting format
Immediate Next Steps
Guiding Principles could include:
• Simple rules , less prescriptive approach , having greater impact, allowing flexibility to business to choose the relevant activities.
• Quantification of the 2% PAT - income from foreign operations must be excluded, same as double taxation between countries ma
• Filter for qualified CSR activities - social and environmental impact
• Inclusion NVGs and the Shared Value principle to include both internal and external initiatives. Will lead to greater inclusive growth and GDP impact.
• Collaborative efforts should be emphasized to leverage efforts and avoid duplication.
Draft Rule Changes
• Reporting on the 2% spend • should be part of existing reporting and standards
• as well integrated with Annual Reports such as SEBI
• focus should be on the impact (both qualitative and quantitative) rather than the financial spend.
• Specific differentiated activities between services and manufacturing need to be considered.
• Schedule VII : Instead of Inclusion, exclusions e.g. Employee Welfare programs in general
Draft Rule Changes continued…
Thank you!
*