Indian Institution of Corporate Affairs (IICA) signed an MoU with Bombay Stock Exchange Ltd. in Mumbai on 23 September 2013 in order to work collaboratively for development of a Corporate Social Responsibility (CSR) index.
Apart from CSR index, the MoU was also signed for taking up capacity building on CSR, conduct education and awareness programmes, and other activities to facilitate a more effective corporate participation in CSR areas. CSR index will play a crucial role, and shall be done in context with the new Companies Act, 2013. 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.
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.
About Indian Institution of Corporate Affairs (IICA)
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.
As per the new Companies Act, 2013 it is mandatory for eligible companies to spend 2 percent of their profits on CSR activities.
Highlights of the MoU
• 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. It is important to note that BSE has 5200 listed companies.
• 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.
• Performance of the companies in CSR areas would be combined with the market performance of companies for selection of companies.
• Companies eligible to be included in the Index for further evaluation shall ensure basic compliance as per proposed CSR regulations.
• The Index would be sector neutral.
• IICA-BSE also proposed 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.
• The new 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.