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Within a fortnight, the BSE will launch a new exchange that will help listed companies meet their social impact spending requirements. Called Sammaan, the platform has been designed as an intermediary between corporates willing to spend on philanthropy and cash-starved non-government organisations.
The non-profit exchange assumes significance in the backdrop of the amended Companies Act of 2013 that mandates that every company with a net worth of ₹500 crore or a turnover of ₹1,000 crore or net profit of ₹5 crore should spend at least two per cent of its three-year annual average net profit on corporate social responsibility (CSR) initiatives. Of the 4,000-odd companies listed on the BSE, 1,294 have to comply with this rule.
Sammaan will launch with about a thousand projects listed by NGOs across the country, which deal with subjects ranging from education, art and culture, and sports to sanitation, women’s empowerment and environment sustainability. While NGOs can list their projects on Sammaan for free, their work first needs to be green-lighted by six central ministries. They will also have to disclose twice a year how they spent the funds raised through the exchange. In the first few years, Sammaan will enlist agencies such as Dasra, HelpYourNGO, Credibility Alliance and GiveIndia to audit the projects. The Institute of Chartered Accountants of India has also agreed to sign off on CSR spending made through Sammaan.
“The new exchange will be a simple way for them, and for countless other unlisted companies, to comply with the CSR rules,” said Praveen Chakravarty, Independent Strategic Advisor to BSE, who negotiated BSE’s memorandum of understanding with industry body CII and the Indian Institute of Corporate Affairs (part of the Ministry of Corporate Affairs) that led to Sammaan.
Eventually, based on Sammaan’s success, the BSE may even consider launching an index of companies making ethical investments, along the lines of FTSE4Good Index Series, Chakravarty said.
The CSR rules became applicable in FY15 and sources say not many companies have even made the mandatory disclosures, let alone spend on CSR.
Chakravarty believes companies still have a glimmer of hope that the rules will just go away. “But the then Corporate Affairs Minister Sachin Pilot,” he says, “intended the rule as a nudge, not a tax. The compulsory disclosures are meant to shame companies into giving.” It’s a tried-and-tested mechanism, Chakravarty explains. “Even the Rockefellers and Carnegies had to be shamed into giving.”
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