Thursday, December 30, 2010

Corporate Social Responsibility of PSUs

The guidelines on Corporate Social Responsibility for Central Public Sector Enterprises (CPSEs) issued by the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, lay stress on the link of Corporate Social Responsibility with sustainable development.

The guidelines define Corporate Social Responsibility (CSR) as a philosophy wherein organizations serve the interest of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. Under theses guidelines, the long-term CSR Plan is to match with the long-term Business Plan of the Organization. The activities under CSR are to be selected in such a manner that the benefits reach the smallest unit i.e., village, panchayat, block or district depending upon the operations and resource capability of the company.

Under these guidelines, CPSEs have to create, mandatorily through a Board Resolution, a CSR budget as a specified percentage of net profit of the previous year. Expenditure range of CSR in a financial year is 3-5% of the net profit of previous year in case of CPSEs having profit less than Rs.100 crores; 2-3% (subject fo minimum of Rs.3 crores) in case the profit ranges from Rs.100 crores to Rs.500 crores and 0.5-2% in case of CPSEs having a net profit of more than Rs.500 crores in the previous year. The CSR budget has to be fixed for each financial year and the funds would be non-lapseable. Special stress has been laid on the proper monitoring of the CSR projects undertaken. The Boards of the CPSEs would be responsible for the implementation of the CSR activity which would then be a part of the annual Memorandum of Understanding (MoU) signed between the CPSEs and the Government.

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