‘Companies should look beyond financial gains’ (18 dec 2013)
MUMBAI, DEC. 17:
The government wants Indian companies to take part in the development of society and the new Company’s Act provides an opportunity for corporations and the government to work hand in hand for this purpose, according to Bhaskar Chatterjee, CEO, Indian Institute of Corporate Affairs.
The Institute is an autonomous organisation established by the Ministry of Corporate Affairs. Chatterjee has been closely associated with the framing of the current set of corporate social responsibility (CSR) guidelines in the Companies Act, 2013, that make CSR spend mandatory for companies.
“We are evolving a model that is truly Indian, developed for India, by India and in India. The idea is to address the lack of social and economic development in many areas, as also to reach out to the poor and the marginalised,'' he told Business Line.
The rules and provisions related to the new Companies Act are to be notified by the first half of January 2014. “Corporates need to go beyond financial gains and must be accountable for social, economic and environmental effects of their businesses. The corporate social responsibility legislation provides an opportunity to refocus by catalysing a process of national regeneration, wherein Corporate India can work hand in hand with the government,'' said Chatterjee.
Stating that CSR means different things to the western world than in India, Chatterjee said, “For us in India, social development is more important. The ministry wants companies to take part in the development of society.''
The Act enjoins that CSR moves away from the backroom to the boardroom. “This CSR is not about charity, not about philanthropy, nor giving away freebies to people. This is about corporates actually engaging their businesses in doing good for society,'' he said. “In the government system, we have large resources. We tried for more than 60 years to remove poverty and we know that companies want to join in that effort. We are looking to synergise their efforts to drive our social agenda,'' he added.
Chatterjee said though there were 800,000 registered companies in India, “the legislation applies only to 2 per cent of these. About 16,000 companies will fall within the ambit of the legislation. These are the fat cat companies, those who have enormous turnover and consistent profits. Not the smaller ones.'' Incidentally, not spending on CSR or even failing to report it to the Ministry of Corporate Affairs is set to attract a fine of Rs 50 lakh and even imprisonment of two years.
