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CSR Expenditure rises by 27% in 2016: Study

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Increase of 27% was noted in the expenditure of corporate social responsibility (CSR) funds in 2015-16 as compared to the previous year. The figures rose from Rs 6,400 crore in FY15 to Rs 8,900 crore.

These results are based on disclosures of close to 1,270 companies listed on BSE that had to comply with Section 135 of Companies Act 2013. The analysis was conducted by CII-ITC Centre of Excellence for Sustainable Development in form of Annual CSR Tracker 2016.

The CSR spend is 92% of the required CSR budget of Rs 8,900 cr, using two percent of average net profits of three financial years. The companies collectively had budgeted Rs 10,257 cr, which is 15% more than the minimum budget required.

A notable feature of CSR disclosures in FY16 is that some companies have begun to disclose output data. About 13%, or 166 of 1,270 companies making such disclosures, reflect going beyond legislative requirements and improving the quality of disclosures. Around 1.5 crore people benefitted from Rs 3,747.97 crore spent for which output data has been reported. This, averages to Rs 2,498.65 spent per person.

Chandrajit Banerjee, Director General of CII said, “Results of CII’s Annual CSR Tracker 2016, clearly demonstrate improvement in the practice and disclosure of practice of CSR by companies. The fact that companies are budgeting and spending more than the minimum legislative requirement, suggests that companies want to do more for betterment of communities. There is always room for improvement and I am hopeful that results of FY17 will reflect that improvement.”

The number of companies spending CSR budgets exclusively through corporate foundations increased to 72 from 60 in FY15. The number of companies exclusively spending money directly marginally increased to 233 from 227, whereas that spending money exclusively through implementing agencies remained stable at 249 as compared to 251 in FY15. This tends to suggest that companies are building their own capacities for implementation.

Health and sanitation, education and skill development, and rural development are the top three developmental areas for spends. The absolute amount of money contributed to PM’s Relief Fund reduced by 25% to Rs 80.55 crore. Though the absolute amounts spent in incubation centres, protection of national heritage, and sports development, are small as compared to the top three areas, the percentage increases over the previous year are anywhere between 18% to 122%.

Out of the 32 industry categories, absolute spends have decreased in just two industries, viz., commercial services and supplies and oil and gas. Substantial increase is of CSR expenditure is reported in automobiles and auto components, consumer durables, metals and mining, financial services, pharma and biotech, telecom services and equipment, textiles, apparels and accessories, transportation and utilities.

Naushad Forbes, President, CII said, “This extensive and elaborate analysis of almost 1,300 companies is indicative of their commitment to directly contribute to development of hundreds of thousands of fellow citizens. Companies do good in myriad ways and companies should encourage contributions in unique and innovative areas. CSR is a matter of board-level accountability and the boards should be allowed the space to conduct their job without interference or influence from certain stakeholders that have tendencies to exploit CSR legislation for their narrow gains.”

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The CSR Journal Team