Forcible CSR wont work, says JJ Irani

Written by MG Arun | Mumbai | Updated: Nov 28 2011, 08:29am hrs
The Companies Bill will institutionalise corporate social responsibility (CSR) but JJ Irani, former director of Tata Sons who led a panel to draft the Bill in 2005 opposes such mandatory provisions. People will find ways to skirt anything that is mandated, he told FE in an exclusive interview, referring to the provision mandating companies to aside 2% of profits for CSR.

Making companies spend on the basis of the profits is not a good idea, said Irani. My objection is that the percentage is wrong, because profits fluctuate. So, should a company spend more on CSR when it is making good profits, and spend nothing when down in the dumps

Irani also said changing auditors, as the Bill proposes, is not a good idea. He said he had pointed out to the ministry that major frauds break out after new auditors join, since they are not familiar with the workings of the company.