Home CATEGORIES Business Ethics & Philanthropy CSR: Pandemic could devour bulk of CSR kitty in 2020, says CRISIL...

CSR: Pandemic could devour bulk of CSR kitty in 2020, says CRISIL report

348
0
SHARE
 
India Inc appears set to spend all or most of its corporate social responsibility (CSR) kitty for the year on combating the COVID-19 pandemic, be it through contribution to the PM CARES Fund, other relief funds, distribution of food, masks, personal protective equipment for healthcare workers, or relief material to the needy.
CRISIL drew up a list of top 100 companies by revenue and CSR spend each in fiscal 2019, and checked whether they were alive to the need to alleviate the widespread distress caused by the pandemic. Of the 200, approximately 70 appeared in both lists, while 60 figured in only one. Of this total 130, 113 spent on pandemic-related mitigation, according to data available in the public domain up to May 15, 2020.
In less than two months through March 15, 2020, 84 of these companies (including support through the corporate group) had spent INR 7,537 crore on causes that can be classified as CSR spend. The remaining 29 either contributed to other funds (Rs 373 crore), and/or facilitated voluntary employee donations (Rs 84 crore) that cannot be classified as CSR spend, or donated solely in kind (food and masks), for which assigning a monetary value was difficult.
Private sector companies, public sector undertakings and foreign companies have contributed proportionately to their share in the sample. Region-wise, 36 companies in Maharashtra – which accounts for a third of all Covid-19 cases in the country – stand out because they account for 63% of the total spent.
Says Maya Vengurlekar, Chief Operating Officer, CRISIL Foundation, “Interestingly, the 130 companies analysed by CRISIL accounted for nearly 80% of the total CSR spend by all listed companies in fiscal 2019. Assuming other companies would have followed a similar path, India Inc has already allocated over 80% of the annual CSR budget to address the pandemic. This could impact spending on other areas this fiscal.”
Incidentally, the sizeable contributions have come on the back of healthy growth in CSR spending in fiscal 2019. Of the eligible listed companies, 1,276 spent on CSR in fiscal 2019 and duly reported it. Their aggregate CSR spend was Rs 11,392 crore, up from Rs 9,999 crore in fiscal 2018. On average, the spending was a touch over 2% of their average net profit of the preceding three fiscals, as mandated by the Companies Act, 2013.
Says Nitesh Jain, Director, CRISIL Ratings, “The generous contribution by India Inc to address the COVID-19 pandemic comes on the back of healthy growth of 14% in CSR spending in fiscal 2019. Five years since CSR spending was made mandatory, the number of eligible companies as well as cumulative CSR spending have increased every year, signifying improved corporate altruism and compliance.”
Indeed, over two-thirds of the companies spent 2% or more of their net profits, while 10% spent 3% or more. Around 460 did not meet the spending target, though the proportion of such companies has reduced. As was the case in the previous fiscal, education and skill development, healthcare and sanitation, and rural development accounted for 75% of what was spent in fiscal 2019. That was a 5% jump in these areas compared with the previous year. But the share of spends on environment, national heritage protection, and sports shrank.
Public sector companies, which accounted for 9% of the total number of companies, contributed 29%, while private companies, which formed a majority 85%, spent 67%. In both, around two-thirds met the mandate of 2% or more. Financial and energy companies spent way more than manufacturers.
In keeping with the trend, most companies preferred to implement their CSR mandate through non-governmental organisations or trusts in fiscal 2019, too. This, however, could change a little in days to come, given the amendment in rules proposed by the Ministry Corporate Affairs recently.
Disclaimer: This media release is auto-generated. The CSR Journal is not responsible for the content.