CSR shows steady improvement in past five years: KPMG

The cumulative corporate social responsibility (CSR) expenditure by 100 largest listed Indian-origin companies by market capitalisation (N100) from 2014-15 to 2018-19 totals Rs 35,077 crore, according to a recent report by global professional services firm KPMG.

The cumulative corporate social responsibility (CSR) expenditure by 100 largest listed Indian-origin companies by market capitalisation (N100) from 2014-15 to 2018-19 totals Rs 35,077 crore, according to a recent report by global professional services firm KPMG. The compliance to requirements of Section 135 of the Companies Act by India Inc has seen a significant increase over the last five years, it said. More and more companies comply to a majority of the requirements as specified in the new law with regards to CSR policy, committee, and annual disclosures.

"India Inc's trend on CSR expenditure clearly indicates their willingness to contribute towards nation-building. Nearly 76 percent of companies have spent 2 percent or more during the current year, which is a striking 100 percent increase over the last five years," said the report titled 'India CSR Reporting Survey 2019.' Significantly, the composition of CSR committee has changed and strengthened over the years. The number of companies having more than six members in CSR committee has increased by 200 percent.

About 62 percent of the N100 companies have women in the CSR committee of which one third has women as chairperson of CSR committee, said the report. Nearly 60 percent of N100 companies have more than one independent director on CSR committee and almost similar percent of companies have an independent director as chairperson of CSR committee.

While the Act mandates stating 'mechanism to monitor CSR activities' in CSR policy, companies have gone beyond the mandate and have specified carrying out an impact assessment and social audit for its CSR projects at regular intervals. As a first step towards the same (monitoring activities and outputs), it is evidenced that disclosure on outreach and people impacted has improved by over 325 percent from the base year.

"While the overall CSR spending is increasing, it is also heartening to observe the increase in number of companies going beyond the 2 percent 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. "The overall governance indicators around CSR have shown a steady improvement in the last five years. The indicators representing the functioning of the CSR committee, the diversity in CSR committee and the improvement in monitoring and evaluation are showcasing this," he added.

Energy and power, BFSI and IT consulting sectors are the top three sectors in terms of absolute CSR expenditure during 2018-19, accounting for 66 percent of the total expenditure by N100 companies. The sectors which have spent less than the prescribed 2 percent amount towards their CSR are BFSI, IT, media and entertainment, services, aviation, and telecom, said the report.

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