Govt to look at index for corporate social responsibility

Govt to look at index for corporate social responsibility
The Hindu Business Line, December 18, 2009, Page 15

Our Bureau, New Delhi

The Corporate Affairs Minister, Mr Salman Khursheed, said on Thursday that the Government wants to explore the possibility of having an index based on corporate social responsibility (CSR).

Addressing a FICCI event on CSR here, Mr Khursheed said in the West, there are indices that benchmark the performance of companies on the basis of their CSR activities.

Fiscal sops

“We want to see whether it is possible to take that a step further,” the Minister said, adding that companies should integrate CSR strategies into their manner of doing business. He said the Government could give fiscal incentives to companies for their CSR activities.

Last month, the Minister had 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. 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.

DIVERSIONARY TACTIC

Speaking at the same event, the former SEBI Chairman, Mr M. Damodaran, sounded alarm bells on companies that are using CSR activities to divert attention from their illegal acts.

Mr Damodaran said even some companies -- whose leaders have been lauded as heroes by reputed organisations such as Forbes for their philanthropy -- are using CSR activities as diversionary tactics to cover up their non-compliance of laws.

“We seem to equate philanthropy with heroes,” he said, adding, however, that some of the activities of the companies of those heroes are anything but heroic. Without naming any companies that are committing such illegal acts, Mr Damodaran said, “Merit lists, honours lists and badges of courage are just to deflect attention from what is really happening.”

He said companies are treating CSR as just an expenditure item in their balance sheet by spending money on completely irrelevant activities instead of doing something useful for the communities in which they live and work. Mr Damodaran said CSR as a theme has remained in the margins for corporate India for far too long, adding that it was time that CSR occupied central space.

RCom issue

Mr Khursheed said his Ministry will look into the allegations of financial irregularities against Reliance Communications (RCom) only if systems like MCA-21 throws up any aberrations regarding its financial statements.

“If there is a violation of Companies Act (by RCom) that is picked up by MCA-21, then we will look at it. Also, if the Department of Telecom asks us (Corporate Affairs Ministry), we will look into it. But if individuals write to us (about RCom) we will just pass it on to regulators,” the Minister said. He, however, said the issues of company law violations will come only at the fag end of the probe.