CSR Legislation and

Guidelines: Global and India UNIT 3 CSR POLICY GUIDELINES

Structure
3.1 Introduction
3.2 Global Guidelines to Promote CSR Practices
3.3 Guidelines for Public Sector Enterprises
3.4 Guidelines on CSR for CPSEs, 2013 Onwards
3.5 Let Us Sum Up
3.6 Keywords
3.7 Bibliography and Selected Readings
3.8 Check Your Progress – Possible Answers

3.1 INTRODUCTION
In the previous unit, you read about the Companies Act of 2013 and its various
sections that provide guidelines for effective implementation of Section 135 which
stipulates corporate social responsibility practice for companies. As addendums
to the Act, several rules and guidelines have been issued by the government in
due course to facilitate interpretation of the provisions in the Act as well as
streamline implementation. As is understood from previous chapters, Corporate
Social Responsibility (CSR) is a company’s commitment towards all involved
stakeholders to invest for social, economic and environmental good. Over time,
as CSR has taken center stage, companies increasingly realize the competitive
advantages of a responsible business. Thus, there has been more interest drawn
towards investing into CSR activities and seeking returns in terms of social impact
and brand image. The question however remains that what guidelines are there
to support planning, implementation and assessment of CSR practice? Besides
private companies, how are public sector enterprises implementing CSR? Are
there any guidelines to steer the CSR practice of public sector enterprises? How
do the guidelines ensure that the goals of CSR are met? Answers to these questions
lie in understanding in greater detail, guidelines that have been issued by the
government to steer CSR practice among public sector enterprises, their modalities
and transformation over time.

After studying this unit, you should be able to

Discuss the guidelines issued by the government to promote CSR practice

by public sector enterprises.

Elaborate on the evolution of the guidelines and specific dimensions

included/ excluded to make them more holistic and socially responsive.

3.2 GLOBAL GUIDELINES TO PROMOTE CSR

PRACTICES
The global impetus that CSR has received in recent years has oriented companies
to invest socially and evolve a profit-oriented welfare approach. Besides the
legal provisions that bind companies, several initiatives reflect how companies
are investing responsibly to improve their brand image alongside addressing the
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prevailing socio-economic issues in the societal milieu in which they are operating. CSR Policy Guidelines
A comprehensive guidance for companies pertaining to CSR is available in the
form of several globally recognized guidelines, frameworks, principles and tools.
Most of these guidelines relate to the larger concept of sustainability or business
responsibility, in keeping with the fact that these concepts are closely aligned
globally with the notion of CSR (CII, 2013). The United Nations guiding
principles on business and human rights are grounded in recognition of the states’
existing obligations to fulfill human rights and fundamental freedoms, role of
business enterprises in a society to perform specialized functions and the need
for rights and obligations to be matched to appropriate and effective remedies
when breached (United Nations, 2011). These guiding principles apply to all
states and to all business enterprises, both transnational and others, regardless of
their size, sector, location, ownership and structure. These guiding principles are
to be understood as a coherent whole and should be read, individually and
collectively, in terms of their objective of enhancing standards and practices
with regard to business and human rights so as to achieve tangible results for
affected individuals and communities, and thereby also contributing to a socially
sustainable globalization.

United Nations Global Compact (UNGC) is the world’s largest corporate

citizenship initiative with the objective to mainstream adoption of sustainable
and socially responsible policies by businesses around the world. UNGC outlines
10 principles derived from various UN conventions covering four broad areas,
namely: human rights, environmental protection, labour rights and anti-corruption.

The International Labour Organization (ILO, 2017), provides direct guidance to

enterprises (multinational and national) on social policy and inclusive, responsible
and sustainable workplace practices. This is known as ILO’s tripartite declaration
of principles on multinational enterprises and social policy. This is majorly
applicable to multinational organizations.

The Organization for Economic Co-operation and Development (OECD)

established a set of guidelines for multinational enterprises in 1976, and was
thus a pioneer in developing the concept of CSR (OECD Guidelines for
Multinational Enterprises, 2008). The purpose of these guidelines was to improve
the investment climate and encourage the positive contribution multinational
enterprises can make to economic and social progress. In addition to the OECD’s
30 member countries, 11 observer countries have endorsed the guidelines.
Similarly, the Institute for Social and Ethical Accountability has set a series of
standards which enable organizations to become accountable, responsible and
sustainable. Another such tool includes OECD’s CSR policy tool which aims to
help companies gain insight into their current CSR activities, assess its value
and determine other CSR activities that can be employed. Social Value UK
international has created a framework based on Social Generally Accepted
Accounting Principles (SGAAP) that can be used to help manage and understand
the social, economic and environmental outcomes created by an organization or
a person.

Transparency is noted to be a crucial factor to enhance the economic, social and

environmentally responsible focus while conducting any business. Incentives to
encourage CSR reporting such as employee benefits have been focused on to
encourage CSR reporting and measures such as mandatory CSR reporting have
been undertaken to ensure the provision is put into practice. For instance, in 113
CSR Legislation and 2007, the Malaysian government passed a regulation to mandate all publicly
Guidelines: Global and India
listed companies to publish their CSR initiatives in their annual reports on a
“comply or explain” basis. Accordingly, all public listed companies (PLCs) in
Malaysia have to either publish CSR information or need to provide an explanation
as to why they should be exempted. In another example, in 2009, the Denmark
government enforced mandatory CSR reporting, asking all state-owned companies
and companies with total assets of more than €19 million, revenues more than
€38 million and more than 250 employees, to report their social initiatives in
their annual financial reports. For the purposes of enforcing transparency in
businesses with regard to environment, social and governance, France passed a
law called Grenelle II, which mandates integrated sustainability and financial
reporting for all companies listed on the French Stock exchanges, including
subsidiaries of foreign companies located in France and unlisted companies with
sales revenue of more than €400 million and more than 2,000 employees.

On similar lines in India, over the last decade, CSR has rapidly picked up pace
with some companies focusing on strategic CSR initiatives to contribute towards
nation building. Gradually, Indian companies have shifted their focus to need-
based initiatives aligned with the national priorities such as public health,
education, livelihoods, water conservation and natural resource management.
The potential role and responsibility of the business and corporate sector in
contributing towards societal betterment have been intensively deliberated across
the country. In the last five years, the Government of India has been focusing on
persuading companies to participate in addressing social and developmental
issues, not only as a part of their social responsibility but also their business
practices (EY Global CSR Summit, 2013). In order to set a common standard for
companies to better their CSR efforts, voluntary CSR guidelines regarding
sustainability are vital. An adoption and practice of a common set of standards
will hold companies accountable to meet these guidelines while also creating a
peer pressure on other companies for them to comply with the guidelines. In this
regard, the National Voluntary Guidelines (NVGs) on Social, Environmental
and Economic Responsibilities of Business, have been laid down by the Ministry
of Corporate Affairs in order to provide companies with guidance in dealing
with the expectations of inclusive growth and imperatives of climate change,
while working closely within the framework of national aspirations and policies.
These are applicable to all businesses irrespective of size, sector or location
(Ministry of Corporate Affairs, 2018). These NVGs were designed with the intent
of assisting enterprises to become responsible entities whereby they formulate
their financial or business objectives while considering the impact on various
diverse stakeholders including society and environment at large.

Historically, the Indian government has taken several steps even before CSR
became a legal binding on corporates and PSUs alike highlighting that every
public sector enterprise (PSE) being part of the ‘state’ has its “moral responsibility
to play an active role in discharging social obligations endowed on a welfare
state, subject to the financial health of the enterprise” (CAG, 2015). One such
example is the Department of Public Enterprises (DPE) issuing guidelines on
corporate social responsibility for central public sector enterprises in the year
2010. Over time, these guidelines have been reworked and have evolved to include
several other dimensions such as sustainability. The next section will take you
through the evolution of these guidelines over time.

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 CSR Policy Guidelines
Activity 1

Go through the above section and write down the key points of the global
guidelines to promote CSR practices.
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Check Your Progress - 1
Notes: a) Write your answers in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) What are the United Nations Guiding Principles on business and human
rights?
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2) What are National Voluntary Guidelines issued by the Government of India?

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3.3 GUIDELINES FOR PUBLIC SECTOR

ENTERPRISES
Setting an example for the private sector, guidelines regarding expenditure on
CSR activities for Central Public Sector Enterprises were issued by the
Department of Public Enterprises. According to these “Guidelines on Corporate
Social Responsibility and Sustainability for Central Public Sector Enterprises
(CPSE)” revised by the Department of Public Enterprises (DPE), Ministry of
Heavy Industries and Public Enterprises every year, each CPSE shall with the
approval of its Board of Directors make a budgetary allocation for CSR and
Sustainability activities or projects for the year. These guidelines came into effect
from 1st April 2013 and are a revised version of the previous comprehensive
‘Guidelines on Corporate Social Responsibility for Central Public Sector
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CSR Legislation and Enterprises’ issued by The Department of Public Enterprises (DPE), in April
Guidelines: Global and India
2010. The earlier guidelines focused mainly on CSR activities for external
stakeholders whereas the revised guidelines by the DPE also take internal
stakeholders, particularly employees, into account.

3.3.1 Guidelines on CSR for CPSEs, 2010

The Committee on Public Undertakings (COPU) recommended the social
obligation of every public sector enterprise. Resultantly, based on these
recommendations, DPE issued a general set of guidelines in 1994. These
guidelines rendered discretion to the Board of Directors of the PSEs to create
socially responsible business practices in line with their Article of Association
under the aegis of their respective department. It was in the year 2010 that DPE
issued a new set of guidelines which called for integration of the business plan
under CSR with social and environmental concerns related to the CPSE (Ibid,
2015). The guidelines were in the form of specific actionables divided based on
the steps of a project lifecycle:

a) Concept
The guidelines introduce the term ‘triple bottom line’ specifying that corporate
performance be measured on parameters of economic, social and environmental
impact thereby prompting public corporations to reorient the yardsticks to measure
business performance. They state that “Corporate Social Responsibility is a
concept whereby organizations serve the interests of society by taking
responsibility for the impact of their activities on customers, employees,
shareholders, communities and the environment in all aspects of their operations.’’
The guidelines link the concept of CSR with Sustainable Development
highlighting the underlying dimension of integration of social and business goals.

b) Planning
The guidelines specify that CSR planning should be done in a way that it is
relevant for the targeted population, reaches the smallest unit depending on
resource availability and capability, and should match with the long-term business
plan. The ideal scenario for a CSR project is to be located in the periphery of the
place where the company carries out its activities. However, it can be anywhere
in the country if the former is not possible. Specifying the components of an
ideal plan, the guidelines state that a CSR plan should include requirements
relating to baseline survey, activities to be undertaken, budgets allocated, timelines
prescribed, responsibilities and authorities defined and major results expected.
The plan should also detail out the implementation guidelines and the modalities
of monitoring and evaluation.

c) Implementation
For the purpose of implementation, the guidelines direct that implementation
should be done through specialized agencies and not by CPSE staff. Such agencies
can range from community-based organizations, NGOs, Trusts, Village
Panchayats, SHGs, consultancy organizations to contracted agencies for civil
works and should be verified on their track record. Even though the guidelines
separate implementation, they direct all CPSEs to generate awareness among all
staff members about the CSR activities being undertaken. To avoid duplication
of effort, the guidelines state that CSR projects should be dovetailed with other
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governmental initiatives instead of creating duplicity. For selecting activities/ CSR Policy Guidelines
projects, attention should be paid to creating community good will, social impact
and a positive change and also create a positive image for the company. The
implementation component specifically highlights that the project should align
with the millennium development goals and also suggests that the activities should
fall in the ambit of 3 UN Global Compact Principles pertaining to environmental
businesses entailing supporting precautionary approach to environmental
challenges, undertaking initiatives to promote greater environmental responsibility
and encourage the development and diffusion of environmentally friendly
technologies.

d) Research, Documentation, Advocacy, Promotion and Development

The guidelines provision for creating a CSR Hub which will work on compiling
nationwide initiatives leading to a database, conducting research and advocacy,
preparing panels of implementing, monitoring and validation agencies, conduct
conferences, seminars, workshops and acting as a think tank. The CSR hub is
provisioned to be supported by DPE alongside making it eligible to receive
funding from State PSEs, UN agencies, national and state bodies, government
departments, trusts, philanthropic missions of national and international repute.

e) Funding
In 2010, the guidelines provisioned for calculation of the CSR budget using net
profit as the parameter. However, the guidelines only gave a percentage range
for a different range of net profit unlike the current provision of 2%. For companies
having a net profit of less than 100 crores in the previous year, the expenditure
range for CSR in a financial year is specified to be 3-5%, for companies with a
net profit of 100-500 crore, the CSR range is 2-3% and for companies earning a
net profit of 500 crore or more, the specified CSR expenditure range is kept at
0.5-2%. For companies that are making losses, there is no compulsion to earmark
CSR funding. For companies having different profit centers like factories or
plants, there can be different allocated CSR budgets. In the event of an unspent
CSR fund, the guidelines provision for creating a CSR fund which will accumulate
unspent CSR funds and be known as the non-lapsable-pool for the North East.

f) Clarifications
The guidelines clarify that they override any other direction in this regard by any
other ministry or department as they are coherent with the draft guidelines for
corporates issued by the Ministry of Corporate Affairs. Detailing the illegibility
of CSR spends, the guidelines specify that any grant made to an agency not
implementing CSR projects, any activity related to staff benefits will not count
as CSR. They also make provisions for any amendments to the guidelines by
DPE in the future.

g) Baseline Survey and Documentation

Conducting a baseline survey before the start of every project is mandatory. This
is done to ensure that the impact of the CSR activities is quantified. Documentation
of all CSR processes, activities, expenses, etc., is also emphasized upon and
open access in the public domain is provisioned in the guidelines.

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CSR Legislation and h) Monitoring
Guidelines: Global and India
Monitoring is stated to be an important aspect of CSR practice and is specified
to be conducted on a periodic basis. For the purpose of monitoring, the guidelines
provision for creating a CSR committee or a social audit committee and evaluation
by an independent external agency is also mandated for. To ensure that CSR
practice is resulting in impact, the guidelines specify that the concerned ministry/
department should measure a CPSEs performance with reference to its CSR
activities to the extent that from 2010-11, 5 marks are specified for CSR activities
and 5 marks for sustainable development initiatives.

These guidelines witnessed minor amendments such as one dated 4th February,
2011 which directed CPSEs to include contribution to the National CSR Hub
located in the Tata Institute of Social Sciences as CSR spend (DPE, 2011) and
another dated 21st June, 2011 which directed CPSEs to include fee of any CSR
training or workshop as CSR spend.

In totality, the guidelines issued by DPE in 2010 were a precursor to the revised
guidelines issued in 2013 followed by 2014. The revisions thus made in 2014
were largely taking into consideration the CSR Act of 2013 and therefore, the
revised guidelines clearly state that they do not override the provisions of the
Act and are drafted to supplement the CSR provisions in the Act and the Schedule
VII rules.

Activity 2
Go through the above section and write down the key points of the guidelines
for public sector enterprises.
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Check Your Progress - 2
Notes: a) Write your answers in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) Which year was the first set of guidelines issued by the Government of
India to govern the social conduct of businesses?
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2) What are the key components of guidelines on CSR for CPSEs issued by CSR Policy Guidelines
DPE in 2010?
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3.4 GUIDELINES ON CSR FOR CPSEs, 2013

ONWARDS
3.4.1 Revision of Guidelines on CSR for CPSEs, 2010
The Department of Public Enterprises revised the CSR guidelines of 2010 which
became effective from 1st April, 2013. The guidelines propose to infuse policy
content in a large measure. CPSEs are directed to constitute CSR policy in a way
to include sustainability measures as an equally important component. The
following are the key features of the guidelines:

a) CPSEs take up at least one major project for development of a backward

district

b) CPSEs to earmark 5% of their annual budget for CSR and sustainability

activities to meet the emergency needs which may include relief work
undertaken during natural calamities/ disasters/ contribution towards Prime
Minister’s/ Chief Minister’s Relief Funds or to the National Disaster
Management Authority

c) CPSEs to conduct business in a manner that is socially responsible and

mutually beneficial for the business and the society

d) CPSEs to constitute a two tier structure, viz., a board level committee and a
group of officials headed by a senior executive not less than one rank below
the board level to steer the CSR and sustainability agenda of the company

e) CPSEs to disclose reasons for unspent CSR and sustainability budget. The
revised guidelines however provide for the unspent budget being spent
within the next two financial years, failing which, it will be transferred to a
‘Sustainability Fund’ to be created separately for CSR and Sustainability
activities.

f) Unlike the previous guidelines that focused on number of projects, the

revised guidelines advise CPSEs to focus on scalability of CSR and
sustainability projects

g) CPSEs to allow usage of the infrastructural facilities created from CSR and
sustainability budget by employees which should however not exceed 25%
of the total number of beneficiaries

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CSR Legislation and h) Monitoring of the CSR and sustainability activities should be conducted by
Guidelines: Global and India
an external agency. In case of projects being implemented by an external
agency, monitoring of the project must be conducted by the CPSEs through
the team of officials specially designated for the task.

3.4.2 Guidelines on CSR for CPSEs, 2014

Enactment of the Companies Act of 2013 brought all companies including CPSEs
in the ambit of Section 135 and Schedule VII of the Act. As you have studied in
the previous unit, the aforementioned Section and the Schedule lay down the
modalities for any company including public sector enterprises to undertake and
implement CSR. Prior to the CSR rules, the DPE guidelines on sustainability
issued in December, 2012 were applicable to CPSE from April, 2013. In these
guidelines, CSR and sustainable development were treated complementary
wherein CSR was seen as a constituent of the overarching framework of
sustainability. The revised guidelines of 2014 are also based on the same principle
reaffirming the need to look at sustainable development as the larger parameter
alongside which business conduct and CSR agenda should be devised. The
guidelines clarify that they do not supersede the CSR provisions of the Act and
the Schedule VII and any contradiction arising in practice, provisions of the Act
will prevail. Other provisions in the guidelines are as follows:

a) The term sustainability is used in conjunction with CSR with the vision
that provisions in the Act coupled with sustainability initiatives will facilitate
achievement of Sustainable Development Goals. Thus, the guidelines
emphasize the need to take sustainability initiatives in addition to CSR
compliance thereby making it mandatory for CPSEs to ensure CSR
compliance in conjunction with the provisions in the guidelines.

b) Besides the CSR policy that is to be drafted under the Act, the guidelines
mandate CPSEs to have a vision and mission statement detailing how the
CPSE proposes to comply with the guidelines along with description of its
sustainability initiatives. Thus, the guidelines propose the CSR policy to be
named as ‘CSR and Sustainability’ Policy which by no means indicate any
digression from the provisions under the Act but instead reiterate the
commitment of a CPSE towards addressing social, economic and
environmental concerns which may be beyond the ambit of the CSR Act.

c) The CSR and Sustainability Policy must be in accordance with the provisions
of the Act, Schedule VII of the Act, CSR rules and guidelines, and the
policy directions issued by the government from time to time.

d) If there is a need to add new CSR activities that do not fall in the ambit of
the current policy, it can be done with the approval of the board and will be
considered as an amendment to the policy.

e) The guidelines make it mandatory for all CPSEs making profits in the
preceding year to undertake CSR activities even if the net profits do not fall
in the threshold specified in Section 135 (1) of the Act. Specifying that
such CPSEs will be expected to spend at least 2% of the profit made in the
preceding year on CSR activities.

f) In the event of unspent CSR budget, the CPSE will have to specify the
120 reason for not spending the designated amount. However, the unspent CSR
 budget will not lapse and will be carried forward to the next year for CSR Policy Guidelines
utilisation for the purpose for which it was allocated.

g) The activities listed under CSR for any CPSE should align with the national
priorities such as safe drinking water for all, provision of toilets, health and
sanitation, etc. The overarching focus should be sustainable development
and inclusive growth.

h) In line with the emphasis on sustainability, the guidelines recommend that

besides CSR, every CPSE should focus on aligning its business activities
with the social, economic and environmental responsibilities. However, it
is specified that the amount spent on sustainability initiatives in the pursuit
of sustainable development while conducting routine business activities
would not be counted in the 2% CSR spend.

i) Sustainability initiatives by the CPSE should focus on producing goods

and services which are safe and healthy for consumers and the environment,
resource efficient, consumer friendly and environmentally sustainable
through the production life cycle. Alongside, the initiatives should include
steps to promote the welfare of employees, physically challenged, deprived
caste groups in the form of providing conducive work environment.
However, these steps will not be counted for in the CSR spends.

j) The sustainability and inclusive approach adopted by the CPSE should be

extended to the supply and market chain such that vendors, service providers,
clients and partners align with the commitments on growth and development.
The guidelines term this phenomenon as a CPSE being able to ‘green’ the
supply chain.

k) In terms of locating the CSR activities, the first preference should be given
to the ‘local area’ for CSR activities. This ‘local area’ can be in proximity
to the location of the CPSE or any of its plants or factories. However, if this
is not feasible, a CPSE can undertake CSR activities anywhere in the country.

l) The CPSE needs to devise an effective communication strategy in order to

create a continuous dialogue with key stakeholders to obtain their feedback
on the CSR activities by the company. The ultimate decision on CSR
activities however lies with the board.

m) The annual CSR report as stipulated by the Act should also include a section
on the actions taken to implement the provisions listed in the guidelines
such that the stakeholders are informed of not only the CSR activities but
also the actions taken by the CPSE towards sustainable development. The
guidelines further advise the CPSE to release an ‘Annual Sustainability
Report’ to render greater transparency and accountability to the company’s
operations.

n) For the purpose of ascertaining the impact of CSR and sustainability

initiatives, the guidelines advise the CPSEs to undertake a needs assessment
survey before selecting CSR activities. Furthermore, the CPSEs should get
an impact assessment study done by an external agency. The expenditure
incurred on needs assessment survey and impact assessment must be within
the overall limit of 5% of administrative overheads of CSR spend.
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CSR Legislation and o) The guidelines clarify that CPSEs which are statutory corporations should
Guidelines: Global and India
comply with the provisions of the Act, CSR rules and the Guidelines (DPE,
2014).

3.4.3 Recent Amendments

The guidelines issued in the year 2014 have undergone amendments. The first
amendment was issued on 20th November, 2014 which aimed at including select
national priorities under CSR carried out by CPSEs. In the directive, it was
specified that

a) Contributions to Swachh Bharat Kosh set up by the Central Government

for promotion of sanitation and Clean Ganga Fund set up by the Central
Government for the rejuvenation of river Ganga will be considered as
expenditure under CSR.

b) Contributions to Prime Minister’s Relief Fund (PMRF) will not be accepted

if they flow out of budgetary resources, profits or from balance sheets of
PSEs. PMRF will only accept voluntary contributions by individuals and
institutions (DPE, 2014).

The second amendment dated 1st August, 2016 was done to promote observance
of transparency and due diligence in the selection and implementation of CSR
activities by CPSEs. The amendment clarifies that all CPSEs crossing the specified
threshold under Section 135 of the Companies Act, 2013 are mandated to allocate
2% of their average net profits of three preceding years for CSR activities. The
guidelines direct the ministries and departments to advise the CPSEs in their
jurisdiction to:

a) ensure that the CSR activities selected for implementation fall within the
list of activities stated under Schedule VII of the Act

b) ensure that the engagement with stakeholders are in line with the needs of
people

c) upload the CSR policy in the public domain on their website along with the
details of the CSR activities being undertaken and the respective fund
allocation

d) observe transparency and due diligence in the selection and implementation

of activities under CSR

e) establish an institutionalized mechanism for monitoring, reporting and

evaluation

f) make efforts to fully utilize the allocated CSR funds for the year (DPE,
2016)

The third amendment to the 2014 guidelines was issued on 10th December, 2018
which was an outcome of the CPSEs conclave in April 2018. A key outcome of
the conclave was the felt need to implement CSR with a theme-based approach
contributing towards national priorities. Followed by the need, the DPE underwent
deliberations with select CPSEs, departments, ministries, NITI Aayog and
proposed the following course of action for the CPSEs:
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a) CPSEs to identify a common theme for each year for undertaking CSR CSR Policy Guidelines

b) For the year 2018-19, school education and health care are themes for
focused intervention by CPSEs
c) 60% of the annual CSR expenditure should be towards the thematic
programme
d) Aspirational districts to be given preference
e) The annual theme for the next year will be decided by the competent
authority.
The third amendment specifies that the specification of directing 33% CSR funds
towards sanitation and Swachh Bharat Mission activities as specified in the first
amendment is superseded. Making NITI Aayog responsible for piloting the
amendment, the second amendment specifies directions for a CPSE implementing
a CSR activity in an Aspirational district:

a) The CPSE is supposed to designate a senior functionary as nodal officer to

liaise with the district administration of concerned district

b) furnish the details of the nodal officer along with the name of the Aspirational
district to NITI Aayog, the concerned department of the CPSE and DPE

c) furnish details of the projects funded by CPSE under CSR in an Aspirational

district to NITI Aayog, the concerned department of the CPSE and DPE

d) Brief the concerned Prabhari officer of Aspirational district about the CSR
project being funded by CPSE (DPE, 2018).

Activity 3
Go through the above section and write down the key points of the guidelines
for CPSEs.
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Check Your Progress - 3
Notes: a) Write your answers in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) How are the guidelines issued by DPE for CPSEs on CSR in the year 2014
different from the earlier versions?
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CSR Legislation and 2) What is meant by ‘greening’ the supply chain?
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3) What are the essential components of a CSR and Sustainability policy?

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3.5 LET US SUM UP

Since 1994 the Government of India has been taking steps to orient public sector
enterprises on the social and environmental responsibility they carry while
operating in the larger human ecosystem. While there are several sets of guidelines
that were issued by the Department of Public Enterprises for Central Public Sector
Enterprises, a major thrust was observed with the implementation of the
Companies Act of 2013. At the same time, to further the enforcement of provisions
of CSR and Schedule VII and extend the efforts of CPSEs to the tangent of
sustainability, the DPE issued guidelines that resonate with the CSR provisions
of the Companies Act. The guidelines serve as a guiding document for CPSEs to
practice CSR and Sustainability in complementarity. In doing so, the guidelines
suggest measures that facilitate CSR practice among CPSEs extending the impact
to all involved stakeholders.

3.6 KEYWORDS
Department of Public : Department of Public Enterprises is a part of the
Enterprises Ministry of Heavy Industries and Public
Enterprises. It is the nodal department for all
Central Public Sector Enterprises and formulates
policy pertaining to CPSEs.
Central Public Sector : Central Public Sector Enterprises are those
Enterprises companies in which the direct holding of the
Central Government or other CPSEs is 51% or
more.
Sustainability : The process of bringing about change which is
lasting and becomes constant.
Local Area : The surroundings in proximity to a company’s
operational site/ factory or plant.
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Needs Assessment : The study of nature and extent of needs of a CSR Policy Guidelines
population group with respect to the gap between
the current situation and the desired situation.
Social Impact : A substantial, positive and sustainable change that
addresses a pressing social problem.
Responsible Business : The process of running a business which is
Practices socially, economically and environmentally
responsive and positively impactful for all
stakeholders.

3.7 BIBLIOGRAPHY AND SELECTED READINGS

CAG. (2015). Corporate Social Responsibility. Chapter 6. Retrieved on November
14, 2019 from https://cag.gov.in/sites/default/files/audit_report_files/
Union_Compliance_Commercial_2_2015_chapter_9.pdf

Confederation of Indian Industry. (2013) Handbook on Corporate Social

Responsibility in India. Retrieved from ttps://www.pwc.in/assets/pdfs/
publications/2013/handbook-on-corporate-social-responsibility-in-india.pdf

Department of Public Enterprises (DPE). (2010). Guidelines on Corporate Social

Responsibility for Central Public Sector Enterprises. F.No.15 (13)/2007-
DPE(GM). Government of India. Retrieved on December 1, 2019 from https://
www.csr.gov.in/docs/1.7_Annexure%20VII_DPE_CSR_2010.pdf

Department of Public Enterprises (DPE). (2013). New Guidelines on Corporate

Social Responsibility and Sustainability for Central Public Sector Enterprises.
DPE OM No.15 (7)/2012-DPE(GM)-GL-104. Government of India. Retrieved
on December 1, 2019 from https://dpe.gov.in/sites/default/files/
Corporate_Social_Responsibility_Sustainability-Chapter-12.pdf

Department of Public Enterprises (DPE). (2014). Office Memorandum. F.No.15

(13)/2013-DPE(GM). Government of India. Retrieved on December 1, 2019 from
https://dpe.gov.in/sites/default/files/R-174.pdf

Department of Public Enterprises (DPE). (2014). Guidelines on Corporate Social

Responsibility and Sustainability for Central Public Sector Enterprises. F.No.15
(13)/2013-DPE (GM). Government of India. Retrieved on November 10, 2019
from https://dpe.gov.in/sites/default/files/Guidelines_on_CSR_SUS_2014.pdf

Department of Public Enterprises (DPE). (2016). Office Memorandum. No.CSR-

01/0003/2016-Dir (CSR). Government of India. Retrieved on December 1, 2019
from https://dpe.gov.in/sites/default/files/R-176.pdf

Department of Public Enterprises (DPE). (2016). Office Memorandum. No.CSR-

15/0008/2014-Dir (CSR). Government of India. Retrieved on December 1, 2019
from https://dpe.gov.in/sites/default/files/R-175.pdf

Department of Public Enterprises (DPE). (2018). Office Memorandum. No.CSR-

08/0002/2018-Dir (CSR). Government of India. Retrieved on December 1, 2019
from https://dpe.gov.in/guidelines-csr-expenditure-cpses

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CSR Legislation and EY Global CSR Summit 2013, an Agenda for Inclusive Growth. (2013) Corporate
Guidelines: Global and India
Social Responsibility in India-Potential to contribute towards inclusive social
development. Retrieved from ttps://www.ey.com/Publication/vwLUAssets/EY-
Government-and-Public-Sector-Corporate-Social-Responsibility-in-India/$File/
EY-Corporate-Social-Responsibility-in-India.pdf

International Labour Organization (ILO) (2017). Tripartite Declaration of

Principles concerning Multinational Enterprises and Social Policy (MNE
Declaration) - 5th Edition (2017). Retrieved from https://www.ilo.org/empent/
areas/mne-declaration/lang—en/index.htm

OECD Guidelines for Multinational Enterprises. (2008) Retrieved from http://

www.oecd.org/investment/mne/1922428.pdf

Ministry of Corporate Affairs. (2018) National Guidelines on the Economic,

Social and Environmental Responsibilities of Business, 2018. Retrieved from
http://www.mca.gov.in/Ministry/pdf/Draft National Guidelines 2018 _ 2006 2018
. pdf

Social Value UK. The National Network for Social Value. Retrieved from http:/
/www.socialvalueuk.org/

United Nations Human Rights, Office of the High Commissioner. (2011) Guiding
Principles on Business and Human Rights - Implementing the United Nations
“Protect, Respect and Remedy” Framework. Retrieved from https://
www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

3.8 CHECK YOUR PROGRESS - POSSIBLE

ANSWERS
Check Your Progress-1
Answer 1: The United Nations guiding principles on business and human rights
are grounded in recognition of the states’ existing obligations to fulfill human
rights and fundamental freedoms, role of business enterprises in a society to
perform specialized functions and the need for rights and obligations to be matched
to appropriate and effective remedies when breached. These guiding Principles
apply to all states and to all business enterprises, both transnational and others,
regardless of their size, sector, location, ownership and structure.

Answer 2: The National Voluntary Guidelines (NVGs) on Social, Environmental

and Economic Responsibilities of Business were laid down by the Ministry of
Corporate Affairs in order to provide companies with guidance in dealing with
the expectations of inclusive growth and imperatives of climate change, while
working closely within the framework of national aspirations and policies. These
are applicable to all businesses irrespective of size, sector or location. These
NVGs were designed with the intention of assisting enterprises to become
responsible entities whereby they formulate their financial or business objectives
while considering the impact on various diverse stakeholders including society
and environment at large.

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Check Your Progress - 2 CSR Policy Guidelines

Answer 1: DPE issued a general set of guidelines in 1994 based on the

recommendations of the Committee on Public Undertakings (COPU) that
recommended that every public sector enterprise has a social obligation. These
guidelines rendered discretion to the Board of Directors of the PSEs to create
socially responsible business practices in line with their Article of Association
under the aegis of their respective department.

Answer 2: The guidelines on CSR for CPSEs released by DPE in 2010 emphasize
on the triple bottom line for every company highlighting that performance should
also be measured in terms of the social, economic and environmental impact of
a company. The key components of the guidelines include direction on planning,
implementation, research, documentation, advocacy, promotion development,
funding, baseline survey, and documentation and monitoring.
Check Your Progress - 3
Answer 1: The guidelines of the year 2014 are in line with the provisions of
Section 135 (1) of the Companies Act and the Schedule VII clearly specifying
that the provisions do not supersede the provisions of the Act. From the previous
versions, the guidelines of 2014 include aspects of internal and external
stakeholders mentioning how the entire business ecosystem needs to undergo a
change to become socially, economically and environmentally more responsible
and responsive. The new guidelines advise CPSEs to also release annual
sustainability report in addition to the annual CSR report to highlight its
sustainability initiatives, improve transparency and brand image.

Answer 2: The guidelines issued by DPE in the year 2014 recommend that a
CPSE, besides incorporating a CSR and Sustainability approach in its business
internally should also ensure that suppliers, vendors, service providers, clients
and partners are also committed to the same principles and standards of CSR and
sustainability. The measures thus taken will facilitate ‘greening’ of the supply
chain.

Answer 3: The CSR and Sustainability Policy of a CPSE should be in line with
the provisions of the Act, Schedule VII and the Guidelines issued by DPE in
2014. The policy should capture the spirit and philosophy of CSR and
Sustainability and should serve as the referral document for planning CSR
activities accordingly.

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