Steel, retail, cement firms better at CSR than tech companies: IIMB report

IT companies lag behind steel, retail and cement sectors in Corporate Social Responsibility (CSR) spending. Sourav Mukherji, Associate Professor, Indian Institute of Management-Bangalore (IIM-B), said: “Currently, non-IT companies are spending more than two per cent of net profits on CSR but IT firms spend just 0.3-1.5 per cent.”

Speaking at the CSITM-Nasscom Workshop on CSR: Rules, Legal Implications and Opportunities , Mukherji said according to the study of several companies’ annual reports, it had been observed that the IT and communication sector recorded the lowest CSR spending because “they neither employ the underprivileged nor have a clear notification on CSR spends from the Government.”

Strategic CSR According to the notified rules, CSR spends exclude ‘activities undertaken in pursuance of the normal course of business of the company’. Further, IT companies are mainly unaware of the tax treatment on CSR spends.

Talking about CSR policy adopted by companies, Mukherji said: “A strategic CSR Model is where sourcing happens in the industry with no extra work done and this is where cement companies are striking the right chord. The same cannot be adapted to the IT domain, so there is a need for these companies, which file net profit of say ₹5 crore or more, to constitute a committee with three or more directors.”

Explaining the need for CSR committees, Abhishek Hunbad, Co-founder, NextGen, said: “The committees will set up mechanisms to monitor the activities and govern money flow, project flow and work flow, and look to deploy the CSR budget as a venture capitalist and not as philanthropist.”

First, he urged companies to decide their areas of intervention (education/ healthcare/sanitation) and then work together with Nasscom-directed NGOs to make a difference to society. “Incubation centres are also an intervention approved by the Government. NextGen was incubated at IIMB in 2009 and is now a multimillion dollar company,” he said.

Mohan Reddy, Vice-Chairperson, Nasscom Executive Council, and Founder-Chairman and Managing Director, Cyient Ltd, presented an industry overview.

He said: “With the intention to support communities and neighbourhoods, the Government reviewed the Companies Act and added the two per cent CSR clause. Now, there are about 8,000 companies with over $2 billion of CSR funds.” Listing out the social initiatives, Ganesh Natarajan, Chair, Nasscom Foundation, and Vice-Chairman and CEO, Zensar Technologies, said: “The National Digital Literacy Mission is our pet project and we invite corporate partners to set up digital literacy centres in villages; Nasscom will adopt an NGO to run these centres.”

Digital literacy Defining technology as a path-breaker, Natarajan said Nasscom believes digital literacy can create an inclusive and sustainable India. He urged the heads of companies not to cut ‘fat cheques for NGOs’ but to work alongside Nasscom to create and engage employees in making the country a ‘digitally-empowered community’.

Santosh Jayaram, Technical Director of Sustainability and Climate Change at KPMG India; Rajiv Badekar, Partner, KPMG, and Rita Soni, CEO, Nasscom Foundation, spoke on tax treatment of CSR spends, what qualifies as CSR in the new law, formation of committees, and the selection process of NGOs, among other things.

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