Legally Enforced Corporate Responsibility: Can it work in India? Sudhir Singh Dungarpur on the Companies Act and CSR in India From QFINANCE: The Ultimate Resource 4th Edition, Published September 2013 www.qfinance.com Sudhir Singh Dungarpur is partner and head of the development sector practice at KPMG in India. He has over 18 years' global experience in both start-ups and multinationals, and his strength lies in developing new businesses and divisions in highly competitive environments.
In the UN Human Development Index 2011, India ranked a lowly 134 out of 187 countries, with 30% of its population estimated to be living below the poverty line. Socio-economic inequality has become an urgent priority in India, especially over the last decade. With the Companies Bill, 2012, passed in the Lok Sabha in December 2012, discussions on its impact on corporate India have been gathering steam. Section 135 of the Companies Bill mandates that companies having net worth of INR 500 crore (circa US$100m) or more during any financial year shall constitute a Corporate Social Responsibility Committee, which is obliged to: formulate a CSR policy; allocate funds; and monitor the progress of the CSR activities. Today, those investing in India's development sector are under increasing pressure to demonstrate the social impact created through their activities. In QFINANCE: The Ultimate Resource, 4th edition publishing this week, KPMG India's Sudhir Singh Dungarpur sets out his impact-measurement tools: • • •
A tool that monetizes social, environmental, and financial outcomes of a developmentsector project or programme, through a combination of Return on Investment (ROI), CostBenefit Analysis (CBA) Opportunity Cost Analysis, and so on; A participatory tool that uses financial proxies to uncover the value of all outcomes, including those that do not have direct market values, and which are often left out of traditional impact assessments; A tool that goes beyond a quantitative indicator and gives a narrative of how, a project, programme, organization or policy creates values. Also, it must explore the processes by which it attempts to create an impact, thereby yielding lessons for shareholders.
Ultimately, to be ahead in the game, companies must not only engage in strategic CSR, but they must also demonstrate how their investments are creating sustainable value for society at large. Evaluating CSR programmes with impact-measurement tools can bring a lot of value to companies. For further information, or to contact the author about a longer piece or viewpoint, please do not hesitate to get in touch with Sophia.Blackwell@Bloomsbury.com- Tel: 020 7631 5831 More information at www.qfinance.com About QFINANCE QFINANCE is a unique collaboration of more than 300 of the world’s leading practitioners and visionaries in finance and financial management, providing an unparalleled range of crossreferenced resources, which are sure to satisfy the hungriest of minds. www.qfinance.com