Short on system backup, companies can't play CSR long game

economictimes.indiatimes.com:

corporate social responsibility (CSR) spending might be paved with good intentions. But a combination of regulatory restrictions around budgets, timelines and reporting, and a compliance mindset is holding companies back from taking a long-term approach to CSR, according to India Inc CSR heads and multiple social sector experts. A recent newsletter by the ministry of corporate affairs (MCA) stated that while CSR spends had nearly doubled from 2016 to 2021, it was “imperative that the companies take a long-term comprehensive approach to yield productive results,” as reported by ET earlier.

With the CSR budget dependent on the net profit of companies, it is difficult for companies to predict their CSR spending from a longterm perspective. The focus then is on meeting year-on-year spending targets, which usually result in companies undertaking programmes that do not have a longer-term sustainability, Vaishali Nigam Sinha, co-founder and chairperson-sustainability, ReNew, told ET. The 2013 law states that CSR spending should be a minimum of 2% of average net profit of the three preceding years.

When the budget is based on profitability, companies tend to be risk-averse, said Neera Nundy, co-founder of Dasra, a strategic philanthropy foundation. “As a result, agreements with non-profits working on the ground will be year-to-year at times. Sometimes, there are only verbal commitments.” The requirement to do a 12-monthly reporting of CSR spending is another restriction.