CSR: Companies(CSR POLICY) Amendment Rules 2021 India

The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 signify the evolution of CSR in India, moving beyond compliance to a more strategic, structured and impact focused approach. This article outlines what stands out for us at 4th Wheel, in terms of the Government’s directive on how CSR is to be approached and undertaken by the private sector in India.

  1. The new obligation on CSR Committees to prepare an ‘annual action plan’ in pursuance of the CSR Policy, brings the much needed strategic approach to CSR activities in the country. This requirement will now result in private sector organisations in strategically planning, designing, documenting, monitoring and evaluating CSR initiatives, creating an ecosystem which will be built on data, results and evidence. 
  2. The rules take an evolved structured approach to development assistance and CSR activities in India, which can be seen through the definition of ‘administrative overheads’, which does not include costs associated with design, implementation, monitoring and evaluation. This recognises that these processes and functions are distinct and critical, which deserve a budget, structure and strategy of their own.
  3. By specifically defining ‘ongoing projects’ a distinction has been made  between one time interventions and multi-year programs. Along with a recognition for consistent development activities and long term engagement with communities, it gives programs like these the importance they deserve and signals a determinative approach to CSR projects in the country, which is based on evidence and impact results. 
  4. The rules also outline that companies can now invest in creation of capital assets among communities. This inclusion will point companies in the right direction on investing in institutionalising community based groups like SHGs, FPOs, collectives, etc., training and capacitating members, providing them with technology, equipment and credit. This in turn will have very positive ramifications on the skilling and livelihood ambitions of India. 
  5. The reference to companies hiring consulting agencies and international development organisations for strategic and technical expertise is another very positive stride forward. Other than getting external support for designing, monitoring and evaluation of their CSR projects as per their CSR policy, the rules also highlight the need for capacity building of CSR personnel within organisations.
  6. The New Companies Act amendments gives Social Impact Management the importance it deserves in the Corporate Social Responsibility space. Organisations now need to compulsorily commission impact evaluations. Incorporating impact evaluation into CSR operations will allow organisations to examine the implications of their CSR strategies, and evaluate their social investments in terms of their impacts upon quality of life of communities, and hone the potential of the social responsibility of their business.

 To summarise, the amended rules provide a renewed momentum to Corporate Social Responsibility investments and activities in the country, which will be based on well-defined strategies (objectives, criteria, guiding principles), with evidence and data at the forefront.

4th Wheel is committed to ‘strengthening social programs’ through the integration of data, technology and partnerships. We aid organisations to build programmatic and organisational Theory of Change frameworks and Monitoring and Evaluation Strategies. Our work focuses on rigorous impact assessment studies and building data management systems. It is heartening to note development assistance and Corporate Social Responsibility  is finally moving in the absolute right direction.

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