New Delhi: The Corporate Social Responsibility (CSR) framework that the Ministry of Coal launched in New Delhi on September 8 asks coal companies to plan community spending for mine closure from the time mining begins. "The just transition framework applies from the commencement of mining activity, not only at the closure phase," the framework document states.
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The framework applies in the first instance to Coal India Limited (CIL) and its subsidiaries, NLC India Limited and The Singareni Collieries Company Limited. The document says it "may equally be adopted by private coal companies and by mine developers and operators that are eligible under Section 135 of the Companies Act, 2013." Section 135 is the provision that makes CSR spending mandatory for companies above set thresholds. The framework describes itself as "advisory in nature."
The framework divides a mine's life into three stages. While a mine is operating, "CSR addresses in-migration pressure, population growth, project-affected family displacement impacts, and early community infrastructure needs." As production declines and the mine nears closure, CSR "focuses on livelihood diversification and reducing community dependence on mine employment." Once the mine has closed, CSR "sustains community assets, supports residual populations (including tribal communities), and ensures continuity of operations and maintenance of completed CSR infrastructure."
That structure came out of field pilots at Mahanadi Coalfields Limited (MCL), a CIL subsidiary, and at CG Natural Resources Private Limited in Surguja. "The pilot confirmed that a single, generic CSR approach does not serve the coal sector well, because community expectations and development needs differ across the active, closure, and post-closure stages of a mine," the document says. It links this work to RECLAIM, the Ministry's community engagement and development framework for mine closure and repurposing. The document calls RECLAIM "relevant for long-term community-facing CSR planning in coal regions."
For CIL's subsidiaries, the framework recommends that each put at least one mine lifecycle transition project into its Annual Action Plan for 2026-27. Subsidiaries are to identify mines "scheduled for closure or significant production reduction within 10 years." They are then to design "a community-facing CSR response (skill diversification, livelihood support, alternative enterprise) aligned with RECLAIM."
The recommendation follows the framework's review of company disclosures. "No CIL subsidiary has integrated mine lifecycle community transition planning into its Annual Action Plan or CSR strategy as at FY 2023-24," the document states. RECLAIM itself, it notes, "was launched after the review period and has not yet been operationalised in any subsidiary CSR plan."
To judge how prepared these villages are, the framework sets out a 20-domain Community Readiness Checklist. The checklist is meant "for villages located near mines scheduled for closure, exhaustion, major production reduction, or transition within the next 5-10 years." It asks, for instance, whether "household dependence on mine-linked income" has been mapped. It also asks whether the company has mapped "transporters, loaders, petty vendors, informal service providers and women workers." Each domain carries up to two points. A village scoring below 20 out of 40 falls in the red band, marked "High social transition risk," with the required action given as "Immediate community readiness intervention required."
The framework sets a minimum even for mines still in full production. Companies should map how many households in a village depend on mine employment for their income. They should also have "at least one livelihood diversification CSR project active or sanctioned in the village before production begins to decline."
This work is kept separate from a mine's legal duties. "Statutory mine closure plan activities and final mine closure deposit utilisation are not CSR," the framework states. Its terms of use go further: "Nothing in this framework should be read as suggesting that a statutory obligation may be met through CSR."
Private companies get room to scale the framework to their size. "The framework is drafted so that a private coal company may adopt it proportionately, selecting a reduced set of tools where its obligation is smaller," the document says. It sets out a "minimum viable toolkit" for companies with CSR obligations between Rs 50 lakh and Rs 5 crore. The toolkit is a need assessment, key performance indicator (KPI) assignment and a community grievance register. The framework also asks the Ministry to issue a sector advisory encouraging commercial coal block holders to adopt its standards, with IICA running a one-day orientation workshop.
The framework also addresses community work done by a coal company's wider corporate group. Where a parent company, group entity or associated foundation carries out such work, the activity "should be attributed to the entity that actually plans and funds it." It "should not be reported as the statutory CSR of the coal company unless that company is the obligated entity and the expenditure is booked as its CSR," the document says.
The pilots also looked at what happens to projects once they are complete. "The pilot found that assets and donated items are sometimes underused or misused after handover," the framework says. In response, it recommends a named owner or community committee for every asset. It also recommends checking that assets are in use "at defined intervals, for example at three, six, and 12 months." Assets handed over to a village should go to the Gram Panchayat as an institution, "not to any individual office-bearer in personal capacity."
The pilots made a similar finding about who runs CSR. "The pilot confirmed that CSR is often handled as an additional charge of operational staff, without a dedicated team or specialised social-development capacity," the document says. CSR cells, it recommends, "should not rely solely on operational or technical staff carrying CSR as an additional responsibility." Companies with large CSR budgets should consider a standalone CSR unit.
The framework sets out checks for choosing the non-governmental organisations and other agencies that carry out CSR projects on the ground. "Selecting agencies on lowest cost alone may not produce the best social outcomes," it says. Where procurement rules allow, it recommends selection on quality as well as cost. An agency should not be proposed for two or more concurrent projects in the same theme unless the reasons for its competitive selection are on file. Before the same agency is chosen again in the same area, an independent impact assessment of its earlier project must be reviewed. Any "external direction or pressure to select a specific implementing agency must be recorded in the PAC minutes," the document says, referring to the Project Appraisal Committee.
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The framework suggests that no single project type take more than about 40 percent of a company's annual CSR budget. Going beyond that "without a fresh need-assessment finding and CSR Committee approval, is not consistent with the approach recommended in this framework," it says. The document leaves this reference point to the ministry to consider. Where the Department of Public Enterprises' thematic guidelines for public sector CSR apply, those guidelines take precedence.
On environmental projects, the framework raises a legal question that remains open. "The permissibility of simultaneously earning monetisable Green Credits under the Green Credit Rules, 2023 ... on activities funded through mandatory CSR has not been explicitly addressed in either the Green Credit Rules or the Companies (CSR Policy) Rules, 2014," it states. Companies are told to get a legal opinion before registering CSR-funded projects on the Green Credit Portal. "Monetising credits on mandatory CSR activities may constitute indirect commercial benefit under MCA General Circular No. 14/2021, FAQ 4.3," the document adds.
A note by Union Minister of Coal and Mines G Kishan Reddy says that CSR "should demonstrate not merely the resources deployed, but the tangible and lasting changes created in the lives of people and communities." Minister of State for Coal and Mines Satish Chandra Dubey says, "CSR must ultimately be measured by outcomes and improvements in people's lives, rather than expenditure alone."
Coal Secretary Vikram Dev Dutt writes, "That the first CSR framework for an entire sector should come from coal is, to my mind, entirely in character." Additional Secretary Rupinder Brar sets out the task: "The endeavour ahead is to move from expenditure-led CSR to need-based, outcome-oriented and community-centred development."
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