Cos may soon earn ‘credit’ for doing good

Cos may soon earn ‘credit’ for doing good
The Hindu Business Line, November 18, 2009, Page 1

Govt mulls corporate social responsibility credits on lines of carbon trading.

Arun S, New Delhi

Companies may soon be able to trade in Corporate Social Responsibility (CSR) credits, akin to trading in Certified Emission Reductions (CERs or carbon credits, in common parlance).

At a FICCI event, the Corporate Affairs Minister, Mr Salman Khursheed, said the Government could come up with norms on CSR credits on the lines of carbon credits and companies can, in turn, trade in such credits.

Mr Khurshid told Business Line later, “Industry should seriously think about this idea (trading in CSR credits) and send us their suggestions. We are studying the practical implications and will seek the opinion of other ministries.” If the response is positive, the Government may include it in the new Companies Bill.

The Minister said the companies would have to get certification for their CSR activities from a government body and earn credits. The credits could then be traded in a CSR credit exchange.

The company that does not want to do a CSR activity would then have to purchase CSR credits from companies that have earned them.

This is similar to carbon credit where the polluter gets his right to pollute by buying the carbon credits from companies that have earned them through environment-friendly activities.

The Ministry has roped FICCI into the CSR credits project and has asked the Indian Institute of Corporate Affairs to undertake a study on the scope of CSR credit trading.

“Though CSR initiatives are part of normal functioning of companies, they don’t get any tax exemptions. But if a company donates money to a charitable trust, it gets tax exemption. We want companies to do their own CSR activities and get some exemptions for them and not just passively donate to charity,” Mr Khursheed said.

The activities that are likely to earn CSR credits are education, housing, health and sustainable projects, not just for employees but also for the company’s ‘catchment’ areas, the Minister said.

Ms Vijaya Sampath, Group General Counsel and Company Secretary, Bharti Enterprises Ltd, told Business Line that though the idea is innovative and interesting, the Government and the corporate sector needs to look at its viability.