The Department of Public Enterprises (DPE) has issued guidelines on Corporate Social Responsibility (CSR) and Sustainability for Central Public Sector Enterprises (CPSEs) in April, 2013 wherein each CPSE shall, with the approval of its Board of Directors, make a budgetary allocation for CSR and Sustainability activities/projects for the year. Giving this information in written reply to a question in the Rajya Sabha recently, Shri Sachin Pilot, Minister of Corporate Affairs, said that the budgetary allocation is to be based on the profitability of the company and it is determined by the Profit After Tax (PAT) of the company in the previous year as per the following details:

Shri Pilot informed the House that the performance of CPSEs on CSR and Sustainability is evaluated by the DPE through the MoU mechanism signed with the CPSE concerned. The guidelines make it mandatory for all CPSEs to have a two-tier structure, comprising of a Board level Committee headed by either the Chairman and/or Managing Director, or an Independent Director, and a group of officers headed by a senior executive not less than one rank below the Board level. This two-tier structure is expected to have the authority and influence to be able to move forward the CSR agenda of the company. The implementation of CSR guidelines is also monitored by the administrative Ministry/Department concerned with CPSEs. An appropriate mechanism is being developed for reporting

Corporate social responsibility budget linked to prior-year profit, with mandated two-tier governance and monitoring framework. CPSEs must allocate an annual budget for Corporate Social Responsibility and Sustainability activities determined by prior-year Profit After Tax, within prescribed percentage ranges tied to PAT bands, and their CSR performance is evaluated through the MoU mechanism. CPSEs are required to maintain a two-tier structure-a Board-level Committee chaired by the Chairman/MD or an Independent Director and a group of officers led by a senior executive one rank below Board level-to oversee CSR implementation, which is monitored by the administrative Ministry/Department and subject to a reporting mechanism under development.