nasscom ilf 2013: day 1: nf rountable
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NILF - Roundtable
February 14, 2013
Hidden Opportunities in the 2% Mandate
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Agenda
1. Catalyzing Change - IT/BPM Industry & Corporate Social
Responsibility
2. The law & prescribed activities (Schedule VII)
3. Key questions specifically for IT-BPM industry
4. What role the NASSCOM Foundation can play?
a) Drafting rules and regulations
b) Implementation
5. Way Ahead…
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Catalyzing Change
IT/BPM Industry & CSR • IT-BPM industry’s contribution to the growth of India’s economy -
• provided direct employment to nearly 3 million people, and indirectly to 9 million in 2012.
• revenues of the sector have grown from 1.2 per cent of the GDP in FY1998 to an estimated 7.5 per cent in FY2012.
• History of investing in philanthropy, long-term development projects, humanitarian causes, disaster relief etc.
• Initiatives to promote education, health and general development in rural and urban areas, especially for excluded groups like at-risk children, women and persons with disability
• Community engagements involving employees
• ‘ Catalysing Change – 2012 – Shaping the future’ on the state-of-play of business responsibility (BR) in the IT-BPM industry in India
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Clause 135 of Companies Bill 2012 What Does The Law Say?
• Every registered company under companies law or any previous laws
(Section 1, clause 135):
• Net worth of rupees > 500 crore
• Turnover of rupees > 1000 crore
• Net profit of rupees > 5 crore during any financial year
must spend at least 2% of its average net profit every year.
• If the company fails to spend such amount, the board shall explain the
reason for not spending in its financial statement
• A CSR committee of the Board, comprised of three or more directors
and at least one independent director must be formed
• CSR committee will be responsible for designing the policy, deciding the
projects as per schedule VII, decide the CSR spend and monitor that it is
being utilized as planned.
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Clause 135 of Companies Bill 2012 Schedule VII – Prescribed CSR Activities
1. Eradicating extreme hunger and
poverty;
2. Promotion of education;
3. Promoting gender equality and
empowering women;
4. Reducing child mortality and improving
maternal health;
5. Combating human immunodeficiency
virus, acquired immune deficiency
syndrome, malaria and other diseases;
6. Ensuring environmental sustainability;
7. Employment enhancing vocational skills
8. Social business projects;
9. Contribution to the Prime Minister's
National Relief Fund or any other fund
set up by the Central Government or
the State Governments for socio-
economic development and relief and
funds for the welfare of the Scheduled
Castes, the Scheduled Tribes, other
backward classes, minorities and
women;
10. Such other matters as may be
prescribed.
• # 1-7: UN Millennium Development Goals
• # 8: Shared Value
• # 9: Public-Private Partnership (PPP)
• # 10: Flexibility
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Role NASSCOM Foundation Can Play
Indian Law
Mandated CSR
Companies Bill
Rule Writing
Regulatory Inputs
Industry Inputs
Foundation Programs
Implementation
Advise & Train
CSR Advisory
Services
Awareness Campaigns
Handbook for policy creation, monitoring &
reporting
Convey SEBI reporting divergence & convergence
Strategic & Implementation
Services
Help define CSR Policy
Help companies identify the CSR
activities
Metrics to measure the impact
Support Reporting
Consolidate & Communicate
Role of Aggregator – e.g. NDLM
Thought Leadership
Represent Industry On National
Foundation for CSR
PR
SEBI’s Sustainability Reporting to Top 100
companies
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• Should the CSR activities
• be driven from the ‘core business' rather 'environmental & social impact‘?
• involve other stakeholders of the organization – such as suppliers, customers,
investors? If so, how does this impact the supply chain?
• Be driven through ‘Public–Private Partnership’ (PPP), or can it be expanded to
multi-stakeholder projects
• Can CSR training be considered a part of CSR spend?
• Some suggested additions to the Schedule VII
• PwD & Inclusion
• Monitoring & evaluation
• Software donation
• NDLM
Where to spend?
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• Internal programs e.g. Accessibility tools development
• Consider volunteering by the staff of companies as a CSR
activity (attaching the money value to volunteering)?
• What should be the maximum percentage of CSR funds
earmarked for Government?
• What happens to the unspent funds – rollover of unspent
funds, anything else?
• Corporate Foundations – should all the activities of
Foundations be considered as CSR for Parent Corporate.
How To Spend?
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• Traditional CSR:
• National Digital Literacy Mission (NDLM)
• My Kartavya
• Big Bridge
• NASSCOM Knowledge Network (NKN)
• Urban NKN Centers
• Responsible Business
• Impact Sourcing
• Skills For Employment
Potential Collaborative Projects
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• Within financial report?
• Supplemented with narrative format?
• Reporting must include social impact as well as spending
• Integration is the most recent trend on sustainability
reporting; financials to be integrated with Annual
Financial Returns
• National Voluntary Guidelines (NVGs)
• Convergence with global standards
• Global Compact – Communication on Progress (COP)
• GRI Principles
How to Report?
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• Recommend Guideline Principles
• Detailed comments on Rules
• Draft Reporting format
Immediate Next Steps
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Guiding Principles could include:
• Simple rules , less prescriptive approach , having greater impact, allowing flexibility to business to choose the relevant activities.
• Quantification of the 2% PAT - income from foreign operations must be excluded, same as double taxation between countries ma
• Filter for qualified CSR activities - social and environmental impact
• Inclusion NVGs and the Shared Value principle to include both internal and external initiatives. Will lead to greater inclusive growth and GDP impact.
• Collaborative efforts should be emphasized to leverage efforts and avoid duplication.
Draft Rule Changes
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• Reporting on the 2% spend • should be part of existing reporting and standards
• as well integrated with Annual Reports such as SEBI
• focus should be on the impact (both qualitative and quantitative) rather than the financial spend.
• Specific differentiated activities between services and manufacturing need to be considered.
• Schedule VII : Instead of Inclusion, exclusions e.g. Employee Welfare programs in general
Draft Rule Changes continued…
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Thank you!
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