The India Companies Act 2013: A primer for WBCSD members with operations in India

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Geneva, December 7, 2015 – An issue brief published today by the World Business Council for Sustainable Development (WBCSD) and the CII-ITC Centre of Excellence for Sustainable Development (CII-CESD) provides companies with operations in India with a primer on India’s legislative Corporate Social Responsibility (CSR) mandate.

The primer captures the facts of CSR legislation in India, with the aim of providing fact-based information on the legislation in a detailed manner. Opinions or judgements on legislation are beyond the scope of the brief.

India’s corporate law got a major upgrade in 2013 with the Companies Act 20133, drafting of which was influenced by corporate scandals in India and elsewhere. Its intent is to improve accountability and responsibility of companies when it comes to business conduct. The Act, which came into effect in April 2014, manages to clinch a couple of “first in the world” moves. One of them is Section 135, popularly known as “the CSR clause”. Interestingly, the Act makes CSR a matter of corporate governance from planning, monitoring, and reporting perspectives. Contrary to the popular belief that the Act mandates 2% spending on CSR activities, it actually requires companies to spend this amount, or to explain why they did not.

Companies are experimenting with ways to leverage this mandated spend to have lasting impacts across the sustainability spectrum. The WBCSD and the CII-ITC Centre of Excellence for Sustainable Development will monitor developments and distill best practice.

Here are the Indian WBCSD members’ perspectives on the CSR clause:
“There is a real opportunity from a sustainability point of view to be creative on how we invest this money in areas such as renewable energy”
– Tony Henshaw, Group CSO, Aditya Birla Group

“As well as working on sustainability in the core business, we are using a part of our profits to support social and economic change and give back to the people we are working with. 3% of our profits are directed towards these activities, primarily strengthening education systems, and primarily through the Jain Charitable Trust.”
– Dr. Dilip Kulkarni, President, Agri-Food Division, Jain Irrigation

“The Godrej Group has always actively championed social responsibility. Twenty-five percent of the shares of our Group’s holding company are held in trusts that support healthcare, education and environmental sustainability. As part of our Vision 2020, we are committed to creating a more employable workforce, building a Greener India and innovating for good and green products. Till date, we have trained over 1,30,000 youth in skills that will enhance their earning potential. In line with our greener India commitment, we are making environmental sustainability a key part of the

manufacturing process and value chain across our businesses. And through innovation in our product pipeline, we are developing products that are safe and environmentally sustainable. Thus we are completely in sync with the current CSR bill.”
– Vikas Goswami, Head Good and Green, Godrej Industries Limited and Associate Companies

The WBCSD and India

India is home to 1.2 billion people, a fast growing economy and vibrant business community, coupled with severe poverty, rapid urbanization, water stress and limited energy access. It is one of the front lines of sustainable development.

Achieving the Vision2050 set out by WBCSD, a world in which 9 billion people live well and within the boundaries of the planet by mid-century, requires the active engagement and insight of the Indian business community.

The WBCSD has established a legal entity and staff team in India to support and increase the Indian representation within the membership of WBCSD, and to support more business action by members in India. The WBCSD India office provides a platform for members to engage with other Indian corporates, industry, policy, NGO and media audiences to address sustainability challenges. It also partners with other Indian organizations, most notably CII-CESD, part of the WBCSD’s Global Network of partner organizations, to accelerate and scale up progress toward business solutions for a sustainable world.

At time of going to print, 10 Indian headquartered companies are members of the Council, and more than 40 member companies members are engaged with WBCSD India on programs and action in the country.

WBCSD India contact point

Joe Phelan
Director of WBCSD India
delhi@wbcsd.org
+91(0)11 33 521 527

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