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Doing good.
SOCIALLY RESPONSIBLE

Charted: Which Indian industries spend the most and the least on social welfare

By Suneera Tandon

India Inc. is being more generous and focused with its CSR spends.

Spending on Corporate Social Responsibility (CSR), or welfare schemes like health and education, by India’s largest firms stood at Rs7,536.30 crore (around $1 billion) in the financial year that ended in March 2018, according to a survey by KPMG India. The survey analysed the CSR spending of India’s top 100 listed companies.

The CSR spending by top Indian companies in 2018 was 47% higher than what it was back in 2014 when India first made it mandatory for large private and public sector firms to spend at least 2% of their net profits on special development projects. The mandatory funding applies to companies with a turnover of Rs1,000 crore or those reporting a profit of over Rs5 crore in a year.

But what began as a legally-binding mandate now seems to have become mainstream. The average spend per company on CSR activities has seen a steady improvement, KPMG noted in its findings. “This year, the two outcomes which are showing progress due to the (CSR) regulation are—governance around CSR and contribution of the private sector in the development,” Santhosh Jayaram, partner and head, sustainability and CSR advisory at KPMG, India, said. KPMG also noted an improvement in governance around CSR. “The functioning of the CSR committee has shown significant development as an increasing number of top executives are involved and CSR is also a boardroom discussion.”

Top spenders and gainers

Companies in the energy and power sector were the leaders in terms of overall CSR spending in India followed by those in the banking and financial services industry (BFSI), the KPMG survey showed. Media and entertainment firms were the laggards.

CSR spending by Indian companies was heavily skewed towards education and healthcare.

At Rs3,893 crore, the two sectors received over 50% of all CSR spends last financial year. In all, over 60% of projects undertaken by large corporates were in these two fields. This was followed by contribution towards rural projects and environment-related causes.

Even though the amount spent on CSR activities jumped year-on-year during the financial year ended March, there was a sharp decline in the number of projects implemented.

In 2018, as many as 1,517 CSR-related projects were commissioned, lower than the 1,897 projects worked on in 2016-17. “The decrease in (the) number of projects indicates corporates have started more focused projects rather than spreading too thin through multiple projects.”

Here are some other highlights from the KPMG report:

  • Average spends: In 2018, the average amount spent on CSR stood at Rs81 crore, up 9% from 2016. On the other hand, the maximum amount committed in 2018 stood at Rs703 crore, up from R593.7 crore in 2016.
  • More players: Over the years, KPMG noted, the number of companies that have spent less than 2% of the mandated CSR funds has also dropped. The number reduced from 52 in 2014-15 to 33 now.
  • Getting innovative: Companies used various methods to deploy their funds towards development projects. Of all companies surveyed, 84 implemented their CSR projects through a combination of direct implementation, their own foundations or through implementing partners.
  • Greater compliance: There was also improved transparency and compliance across companies. Close to 99% of the 100 companies surveyed successfully implemented their planned CSR policy, up from 55% in 2014-15. The report highlighted that over 90% of companies have stand-alone CSR committees. These committees are run by independent directors, of which 64% include at least one woman.