CSR in Public Sector Enterprises

The
provisions relating to corporate social responsibility (CSR) in the Companies
Bill, 2011 have garnered sufficient attention on the topic. Those provisions
are largely in the nature of CSR spending. While the Bill is pending in
Parliament, the Department of Public Enterprises
has proceeded to issue a revised
set
of “Guidelines on Corporate Social Responsibility and Sustainability
for Central Public Sector Enterprises” that would become effective from April
1, 2013.
Unlike
the Companies Bill and also the previous version of the guidelines applicable
to central public sector enterprises (CPSEs) which focused largely on external
stakeholders and CSR spending, the new version of the guidelines emphasizes CSR
as a way of life and as an integral part of the operations and business of the
company. While the current debate in India equates CSR with corporate
philanthropy, the new guidelines for CPSEs does more than that and requires
companies to follow ethical systems and sustainable management practices.
The
guidelines contain detailed provisions on the manner in which CPSEs can carry
out their CSR practices, which also mandate every CPSE to carry out a minimum
number of external projects “for development of a backward district” that “has
the potential of contributing significantly in the long run to socio-economic
growth in all the backward regions of the country”.

It is not clear whether
there is adequate data to determine the success of implementation of these
efforts by CPSEs in the past, but by imposing higher standards of social
responsibility and sustainability on public enterprises, the Government is
sending a strong signal to the private sector regarding the importance of CSR
in India.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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