Indian Institution of Corporate Affairs (IICA) and BSE Ltd. today signed an MoU in Mumbai to work collaboratively to develop a Corporate Social Responsibility (CSR) index, take up capacity building on CSR, conduct education and awareness programmes, and other activities to facilitate a more effective corporate participation in CSR areas. Shri Sachin Pilot, Minister of State for Corporate Affairs, was present on this occasion.
Transparency is very important and so the companies must disclose their spending and areas of spend on their own websites and the MCA website as well. The IICA and BSE partnership will go a long way on raising the level of awareness and accountability, Shri Pilot said. Speaking of the development of CSR index as one of the deliverables of the MoU, he stressed that Top corporate leadership must lead from the front. It is a new beginning, new initiative for companies with the wherewithal to undertake such initiatives. The index will help in giving a larger platform to such companies and also a global perspective.
Mr. R. Ramadorai, Chairman, BSE Ltd, while addressing the gathering spoke of earlier BSE interventions in developing such indices and also the importance of development of the CSR index, in the context of the new Companies Act. BSE through this partnership with IICA shall work on CSR Index which will be driver for CSR practices for the Indian Corporate world and an ideal option for investors to put their money for ˜responsible investment™. Increasingly more investors are considering CSR as an important investment theme both globally as well as in domestic markets. Mr. Ramdorai added.
Dr Bhaskar Chatterjee, DG & CEO, IICA termed the event as a historic occasion when the premier stock exchange of the country and a national institute has decided to collaborate. This MOU will be a major landmark to get a better insight into the domain of CSR. One of the initiatives under the MoU, the CSR index, is a noble idea and will be put into action after consultations with the leading experts in that field. The CSR index would seek to promote investor participation, consumer interest and socio economic benefits to the disadvantaged communities by generating awareness and accountability in CSR spending, he elaborated.
Indian Institution of Corporate Affairs (IICA) was established by Ministry of Corporate Affairs (MCA), Government of India to act as think-tank and centre of excellence to support the growth of the corporate sector in India through an integrated and multi-disciplinary approach. In the new Companies Act, 2013 it has been mandated for eligible companies to spend 2% of their profits on CSR activities. This initiative of the Ministry of Corporate Affairs which requires companies to look beyond shareholder value and make CSR a core driver of their strategy shall bring competitive advantage to Indian Inc with the global players in the long run and shall attract more investment from investors.
Further to assist Indian companies to drive their business models based on this approach, IICA through this MOU which amongst other things would also work with BSE Ltd to make a CSR Index. BSE, with more than 5200 listed companies, highest in the world shall enable IICA and BSE in this initiative to get more comprehensive perspective of CSR practices followed by Indian Corporate across various industries segment and shall enable to make India representative CSR Index.
The proposed IICA-BSE CSR Index shall assess impact and performance of companies listed at BSE in CSR activities. The Index would also look at the performance of companies in their mandatory CSR spend as per the new Companies Act, 2013 as one of the important and objective criteria. The information provided in the public domain on CSR activities by these listed companies and which is also assured, shall have more preference in the various evaluation parameters of the Index. Performance of the companies in CSR areas would be combined with the market performance of companies for selection of companies. The Index would be sector neutral. Companies eligible to be included in the Index for further evaluation shall ensure basic compliance as per proposed CSR regulations.
IICA-BSE proposes to form an Advisory Committee which would guide for CSR index construction and its design. This Advisory Committee would have consultative approach and interact with various stakeholders so that best global practices are aligned to Indian needs as per Section 135, Companies Act 2013, in the index construction and it becomes benchmark index to assess Indian corporate in CSR.
IICA-BSE shall also work on capacity building to assist companies for meeting their agenda of CSR and would conduct awareness programme in next 6 months.
This CSR Index shall be viewed by all market participants to track the leaders in CSR activities in India. Top performers of this CSR Index shall be drivers for other corporate in India to perform and meet the expectations of all stakeholders in the society. As capital market gets more aligned to international norms long terms investors with very sizable amount of investible money such as pension funds, insurance companies and funds with mandate of ˜Responsible Investment™ would look at such index and its top performers to decide their investments. Globally it has been observed indices based on CSR or ESG themes have outperformed the benchmark indices.