Greater role for CPSEs in nation building
The department of public enterprises ( DPE) has come out with revised guidelines on corporate social responsibility ( CSR), which are more pragmatic and easier to implement. That would encourage central public sector enterprises ( CPSEs) to focus on quality of CSR projects rather than quantity and create intended social, economic and environmental impact, which should in turn help to meet the national goal of inclusive growth.
Besides, the new norms, which have to be integrated into core business, should also go a long way towards raising the level of corporate governance in CPSEs, according to development experts.
The new norms have merged CSR and sustainable development ( SD) to avoid the confusion that would emanate from overlapping of the two areas. Further, the number of projects has been reduced from 10 to 2 ( Maharatnas are required to undertake one additional project). Besides, central public sector enterprises ( CPSEs) have been granted flexibility to serve interests of not only external stakeholders but also of their own employees.
The revised guidelines are designed to involve CPSEs’ top management in formulation and implementation of CSR policy so that CSR could become an integral part of their core business. For example, CPSEs are required to set up a board level committee headed by an independent director to develop CSR strategy and implement projects. The policy has to be approved by the board.
?Earlier, CSR was just a financial thing for the PSUs. Now they have to do business ethically, do things for sustainable development,? said DPE secretary OP Rawat.
To expound on his point, Rawat added: ?Now every employee must leave minimum carbon footprint while producing goods and services.?
The new norms also stipulate robust project monitoring mechanism. For example, if a company is implementing CSR projects through its own employees, it will be required to undertake project monitoring through a third party. On the other hand, if work is being undertaken through a third party, it will be required to do monitoring through its own employees.
Infrastructure developed by CPSEs will be counted as CSR even if some of their own employees also use such facilities. However, the number of employees is capped at 25% of total beneficiaries. This will enable PSU employees to access social infrastructure like hospitals and schools built by them under CSR. Under the previous guidelines, every CSR project had to be undertaken through a third party and employees were not allowed to be beneficiaries. ?New CSR guidelines are more implementable,? said Arindam Guha, senior director, Deloitte Touche.
The new guidelines stipulate that CPSEs can carry forward unspent CSR for just two years. If money is not spent during this time, it will go into a ‘sustainability fund.’
Normally, PSUs want to do things independently. That leaves little scope for cooperation between CPSEs for large projects. But the new CSR guidelines are meant to encourage collaboration. ?Revised norms emphasize collaboration among CPSEs for implementing mega projects, which may be beyond the capacity of individual CPSEs, for larger good of the society.? pointed out Ranjan Mohapatra, president, Vision Consulting.
PSUs have been asked to focus on economically under-developed districts for CSR work. New guidelines give enhanced role to CPSEs in country’s economic development, according to Parul Soni, executive director, development advisory services, E&Y.
But some experts feel that there is still scope for improving guidelines. ?It is disappointing not to see a clear thrust on the promotion of the respect for human rights, which coincidentally is also a key objective of the United Nations,? said Monish Chatrath, a governance expert at Mazars India.
The DPE guidelines are in line with the Companies Bill, 2012 which is awaiting parliamentary approval. That would ensure policy continuity for CPSEs after the new company law comes into force.