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IMPACT ASSESSMENT ON CSR || WHY IMPACT ASSESSMENT?

Q: What is the aim behind evaluating the impact of CSR activities?

A: The goal of impact assessment is to gauge the social effects of specific CSR projects. It aims to prompt companies to make informed decisions before allocating CSR funds and to understand the outcomes of their CSR investments. This not only helps companies plan better but also enhances the effectiveness of CSR initiatives.

 

Q: Which types of companies must conduct impact assessments?

A: Rule 8(3) of the Companies (CSR Policy) Rules, 2014 mandates that certain companies must carry out impact assessments:

1. Companies with an average CSR obligation of Rs. 10 crore or more over the past three financial years.

2. Companies with CSR projects costing at least Rs. 1 crore, completed no less than a year before the assessment. Impact assessment is necessary only if both conditions are met. Otherwise, it's voluntary.

 

Q: Are companies obligated to conduct impact assessments for the fiscal year 2020-21?

A: The provisions for impact assessment became effective on January 22, 2021. Thus, companies are required to assess the impact of CSR projects completed on or after this date. However, it's advisable for the board to also assess projects from previous financial years.

 

Q: Who is authorized to conduct impact assessments?

A: According to Rule 8(3) of the Companies CSR Policy Rule 2014, impact assessments must be conducted by an independent agency. The board has the authority to set eligibility criteria for selecting this agency.

 

Q: Is the expenditure on impact assessment separate from administrative overheads?

A: Yes, the expenditure on impact assessment is additional to the specified administrative overheads of 5%. Companies can allocate up to 5% of their total CSR expenditure or 50 lakh rupees (whichever is lower) specifically for impact assessment.

 

Q: Must impact assessment reports for all CSR projects be included in the annual CSR report?

A: Rule 8(3)(b) of the Companies (CSR Policy) Rules, 2014 states that impact assessment reports should be presented to the board and attached to the CSR report. However, it's acceptable to provide a web link to access the full reports, along with an executive summary in the annual CSR report.

 

Q: In cases where multiple companies collaborate on a CSR project, should one company's impact assessment be shared with others?

A: Yes, if multiple companies collaborate on a CSR project, the impact assessment conducted by one company can be shared with the others for disclosure to the board and inclusion in the annual CSR report. The cost of impact assessment can be shared among collaborating companies, adhering to the prescribed limit in Rule 8(3)(c) of the Companies (CSR Policy) Rules, 2014.

 

Q: What steps can companies take to ensure the effectiveness of their CSR impact assessments?

A: Companies can ensure the effectiveness of their CSR impact assessments by:

  • Engaging reputable independent agencies for conducting assessments.

  • Establishing clear eligibility criteria for selecting assessment agencies.

  • Regularly reviewing and updating their impact assessment methodologies.

  • Integrating feedback from stakeholders into the assessment process.

  • Using impact assessment findings to inform future CSR strategy and decision-making.

 

Q: How can companies measure the social impact of their CSR projects?

A: Companies can measure the social impact of their CSR projects through various methods, including:

  • Conducting surveys and interviews with beneficiaries and stakeholders.

  • Collecting quantitative data on indicators such as increased access to education, healthcare, or employment opportunities.

  • Comparing outcomes achieved against predefined goals and targets.

  • Conducting cost-benefit analysis to evaluate the efficiency and effectiveness of CSR interventions.

  • Using qualitative techniques such as case studies and storytelling to capture the broader societal changes resulting from CSR initiatives.

 

Q: What are the benefits of conducting impact assessments for CSR projects?

A: Conducting impact assessments for CSR projects offers several benefits, including:

  • Providing valuable feedback for companies to refine and improve their CSR strategies.

  • Demonstrating accountability and transparency to stakeholders by showcasing the tangible outcomes of CSR investments.

  • Enhancing the credibility and reputation of companies as socially responsible entities.

  • Informing decision-making by identifying successful approaches and areas for improvement.

  • - Facilitating learning and knowledge-sharing within the organization and across the industry.


Q: Can companies use standardized tools or frameworks to conduct CSR impact assessments?

A: Yes, companies can utilize standardized tools or frameworks to conduct CSR impact assessments. Some commonly used frameworks include:

  • The Social Return on Investment (SROI) framework, which quantifies the social value generated by CSR investments.

  • The Global Reporting Initiative (GRI) Standards, which provide guidelines for reporting on economic, environmental, and social impacts.

  • The Impact Reporting and Investment Standards (IRIS), which offer a comprehensive set of metrics for measuring social, environmental, and financial performance.

  • The United Nations Sustainable Development Goals (SDGs), which provide a global framework for addressing key social and environmental challenges.

  • Companies can choose the framework that best aligns with their CSR objectives and stakeholders' expectations.

 

Q: How can companies ensure the credibility and reliability of their CSR impact assessments?

A: Companies can ensure the credibility and reliability of their CSR impact assessments by:

  • Engaging qualified and impartial third-party assessors with relevant expertise and experience.

  • Using rigorous methodologies and robust data collection techniques to ensure accuracy and validity.

  • Providing transparent documentation of assessment processes, including data sources, analysis methods, and assumptions.

  • Seeking feedback from diverse stakeholders, including beneficiaries, community members, and experts, to validate findings and interpretations.

  • Conducting periodic reviews and audits of impact assessment processes to identify and address any potential biases or inaccuracies.



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