DPE issues guidelines for CPSEs on CSR activities

The Department of Public Enterprises (DPE) recently issued comprehensive ?Guidelines on Corporate Social Responsibility for Central Public Sector Enterprises?. Under these guidelines, it would be mandatory for Central Public Sector Enterprises (CPSEs) to create, through a Board Resolution, a Corporate Social Responsibility (CSR) budget as a specified percentage of net profit of the previous year. The details are as under:

• For CPSEs having profit less than Rs 100 crore: Expenditure range for CSR in a financial year would be 3-5% of the net profit of previous year.
• For CPSEs having profit between from 100 crore to 500 crore: 2-3% of the net profit of previous year (subject to minimum of 3 crore)
• For CPSEs having net profit of more than Rs 500 crore: 0.5 - 2% of the net profit of previous year.

Loss making companies are not mandated to earmark specific funding for CSR activities but may achieve this objective by integrating business processes with social processes, wherever possible.

The CSR budget will have to be fixed for each financial year and the funds would be non-lapsable.The activities under CSR are to be selected in such a manner that the benefits reach the smallest unit, that is, village, panchayat, block or district depending upon the operations and resource capability of the company.

Under these guidelines, the corporations would be required to move from an ad-hoc approach to the project mode with specified time frames and periodic milestones. The activities undertaken under CSR should also be in consonance and consultation with state governments, district administration, local administration as well as central government departments, self-help groups to avoid duplication.

The Boards of CPSEs would be responsible for the implementation of the CSR activity which would then be a part of the annual MOU signed between CPSEs and the government. Also, there is a provision for appointment of a social audit committee and independent external agency for periodic monitoring as well as evaluation of these activities.