The Applicability Test
The Companies (CSR Policy) Rules, 2014 require a company with an average CSR obligation of ₹10 crore or more in the three immediately preceding financial years, and with CSR projects having an outlay of ₹1 crore or more, to undertake an impact assessment of its CSR projects. The assessment must be conducted by an independent agency, and the report must be placed before the board.
The Scope of the Assessment
The impact assessment should evaluate: the project’s relevance to the community; the achievement of the stated objectives; the efficiency of resource use; the sustainability of the outcomes; and the lessons for future project design. The assessment should use a methodology that is appropriate to the project’s nature—quantitative surveys, qualitative interviews, or a combination—and should disclose the limitations of the methodology.
The Independent Agency
The impact assessment agency should be independent of the implementing agency and the company. The agency should have demonstrated experience in social-impact evaluation. The company should document the selection process and the agency’s credentials. An assessment conducted by an entity related to the company or the implementing agency is vulnerable to a finding of bias.
Timing and Coverage
The impact assessment must be conducted for the projects completed during the financial year, and the report must be placed before the board. The assessment should cover a representative sample where the number of projects is large. The company should maintain a schedule that identifies the projects requiring assessment each year, so that the assessment is not compressed into the final quarter.
The Disclosure
The board’s report must disclose the impact assessment report or a summary. The disclosure should include the project name, the assessment findings, and the corrective actions taken. A disclosure that states only that an assessment was conducted, without the findings, does not satisfy the transparency objective.
The Strategic Value
An impact assessment that is treated as a compliance formality misses its governance value. The findings should inform the next year’s annual action plan, the selection of implementing agencies, and the CSR committee’s review. A company that conducts the assessment but does not change its project design based on the findings is not using the assessment as a management tool.
Call to Action: For CSR impact assessment scoping, agency selection, or board reporting, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.