More companies in India are complying with corporate social responsibility norms under the Companies Act, 2013, with 76% firms having spent 2% or more of their profits on such initiatives during 2019, according to a report.
The findings of the ‘India CSR Reporting Survey 2019’, compiled by KPMG in India, that covered 100 companies also revealed a 150% rise in the number of firms that have committed to carry forward 2% of the unspent amount.
The Companies Act which came into effect from 1 April 2014 stipulates that firms with a net worth of INR 500 crore or more, or a turnover of INR 100 crore or more, or a net profit of INR 5 crore or more during the immediately preceding financial year are required to spend 2% of their profits on corporate social responsibility (CSR) programmes. Eligible companies need to form a CSR committee, formulate policy, and implement projects in alignment with Schedule VII of the Act. CSR-related disclosures need to be made in the annual report in the format prescribed by the Act.
According to the report, there has been a 325% increase in the number of companies that have disclosed details of outreach in annual report. Besides, 30% of firms studied in the report have had more than three CSR committee meetings.
“While the overall CSR spending is increasing, it is also heartening to observe the increase in number of companies going beyond the 2% mandate and even companies who are not required to spend allocating budgets for CSR and spending,” said Santhosh Jayaram, Partner and Head, Sustainability and CSR Advisory at KPMG in India.