Are the rules vague and definition of sectors that need spending under corporate social responsibility (CSR) hampering or hurting the activities?

The CSR rules merely mandate that companies with a net worth of Rs.500 crore or revenue of Rs.1,000 crore or net profit of Rs.5 crore should spend 2% of their average profit in the last three years on social development-related activities.

In the first year of the rules taking effect, most companies reports show that they were focused on compliance rather than monitoring the impact of their initiatives.

Experts suggest that with companies must put in place monitoring mechanisms to help gauge their impact. For most top listed companies, CSR initiatives have been part of sustainability reports for over five years now but for companies undertaking CSR for the first time there is little or no impact to assess.

Those who have been conducting assessments are largely the top listed companies of the National Stock Exchange and till last year many of these companies were including social initiatives as part of their sustainability reports. However, these assessments are used for internal purposes and are not in the public domain.

In the absence of a framework, the assessments have been far and varied. Some feel a structure is needed, which would help streamline the measurement of these social initiatives.