Corporate Social Responsibility (CSR) Policy

INTRODUCTION

The Corporate Social Responsibility (hereinafter referred to as 'CSR') Policy governs SGS India Private Limited and its social initiatives and activities in India. SGS uses its scale and expertise to enable a more sustainable future and ensures that it minimizes its impact on the environment throughout the value chain. With a purpose is to enable a better, safer and more interconnected world, SGS India concentrates its social interventions and actions to solve important problems in society and enabling communities and economies to prosper. While it strives to deliver excellence in business, it wholeheartedly contributes towards being a part of positive societal change.

The Company supports various projects permitted under relevant provisions of CSR regulations, as applicable for the time being in force. It aims to develop the required capability and self-reliance of beneficiaries at the grass roots, especially of women, in the strong belief that these are the critical cornerstones that define social and economic development of a society; It provides assistance to organizations engaged in driving positive change in society to help them reach and deliver their full potential. Lastly, it contributes to creating stronger and more inclusive communities.

SGS India implements its CSR interventions through (i) Company personnel, or (ii) external implementing agencies and partners from public and private sector. It encourages its employees to volunteer and fundraise and supports their efforts to make a difference.

This is an affiliate-level policy, which respects and embraces the pillars of the global corporate policies applicable such us the Corporate Sustainability Principles and the Global Community Policy.

This policy is also in line with Section 135 of the Companies Act 2013, as enacted in the Republic of India. Section 135 of the Companies Act 2013 is applicable to every company, including its holding or subsidiary, and foreign companies having its branch or project office in India and with net worth of INR 500cr (INR 5bn) or more, or a turnover of INR 1000cr (INR 10bn) or more, or a net profit of INR 5cr (INR50m) or more during any of the three preceding financial years. Under this section of the Companies Act 2013, in every financial year, such company must allocate at least 2% of its average net profits made during the 3 immediately preceding financial years. The Company must also constitute a CSR committee and Executive committee, formulate a CSR policy, recommend CSR expenditure amount, monitor policies and activities, and report to the Chairperson, Chairperson must approve the CSR policy; and include the CSR Report in its Annual Report (Annexure 2).

I. BRIEF BACKGROUND OF SGS INDIA PRIVATE LIMITED (“SGS”)

SGS Group is a global leader in inspection, verification, testing and certification services with more than 89,000 employees. It operates a network of over 2,600 offices and laboratories around the world in more than 140 countries, and has its headquarters in Geneva, Switzerland. The SGS group is recognized as the global benchmark for quality and integrity. As a professional, independent and reliable partner, SGS is committed to the delivery of enhanced value for its shareholders, clients, employees and all stakeholders.

SGS India Pvt. Ltd., founded in 1950, is a wholly owned subsidiary of SGS S.A. and is one of the pioneers in providing inspection, verification, testing and certification services in India. With its corporate headquarters in Mumbai, SGS India has a vast network of offices and laboratories across India. With years of local experience and a workforce of more than 3,660 motivated and multi-disciplined professionals, SGS India Pvt. Ltd. offers a high level of expertise in quality testing, inspection and certification services to a wide range of industries, including agriculture, minerals, oil & gas and consumer products together with various other services to the Government and Institutions.

II. CORPORATE SOCIAL RESPONSIBILITY PHILOSOPHY

The activities of SGS are spread across almost all the States in India. The vast range of activities and businesses which come under the ambit of SGS, provide SGS immense opportunities to contribute to the society in different aspects and ways across the country.

The CSR initiatives of SGS is steered by the guiding principle of sensitivity to the needs of the people, enhancing the quality of their lives and protection of environment.

Corporate Social Responsibility of SGS involves the following:

1. Welfare measures for the community at large including employees and their families, to ensure the poorer section of the society is benefited.
2. Contribution by way of social and cultural development, imparting education, training and social awareness especially for the economically backward class for their development and to enable them to be financially stable.
3. Protection and safeguard of environment and maintaining ecological balance.

III. OBJECTIVES OF THE CSR POLICY

The key objectives of the CSR policy are as under:

1. To specify focus areas for CSR activities;
2. To set out the implementation strategy of the CSR initiatives;
3. To institute the monitoring mechanism for the CSR initiatives;
4. To lay down the methodology for and measuring the outcomes and impact of the CSR initiatives.

IV. FOCUS AREAS FOR CSR INITIATIVES

As the business activities of SGS extend over almost all parts of India, SGS will have several opportunities of varying scales and expanse to make a social impact on the people and their livelihood and environment.

SGS India is committed to initiate and drive the CSR projects in accordance with the focus area as per SGS group and as per Companies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014, as listed below.

The focus areas as per SGS Group are:

1. Quality Education (1. Education)
2. Decent work and Economic growth (5. Social Empowerment & 6. Rural development)
3. Climate Action (4. Environment)
4. Life on Land (3. Health care & 7. Sports and Culture)
5. Life Below Water (2. Water & 4. Environment)
6. Gender Equality (1. Education)

The focus areas as per Companies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 are:

1. Education – Promoting education and employment enhancement skills among children, women, elderly and the differently abled and livelihood enhancement.
2. Water Supply - Making available safe drinking water in rural areas.
3. Health care - Providing improved and affordable access to medical facilities and medicines.
4. Environment – Promoting environmental sustainability, ecological balance, conservation of natural resources and maintaining quality of soil, air and water.
5. Social Empowerment – Training and supporting self-employment opportunities.
6. Rural development – Providing infrastructure for village electricity/solar light/windmills and training the beneficiaries to operate and maintain the same.
7. Sports and Culture – Promoting sports and culture.
8. Granting donation/financial assistance/sponsorship to reputed NGOs of the Society/locality doing/involved in upliftment of the society.
9. Disaster Mitigation and help for victims and affected areas.
10. Protecting and maintaining heritage sites
11. Contribution to Prime Minister Relief Fund, or any other fund set up by the Central Government or State Government for socio-economic development and relief and funds for the welfare of the schedule castes, scheduled tribes, other backward classes, minorities and women.
12. Contribution to Swachh Bharat Kosh set up by Central Government for promotion of sanitation and making available safe drinking water and contribution to Clean Ganga Fund set up by Central Government for rejuvenating the river Ganga.

1. Education

1. Support to Technical/Vocational Institutions for their self- development
2. Academic education by way of financial assistance to Primary, Middle and Higher Secondary Schools
3. Adult literacy especially amongst those belonging to below poverty line.
4. Awareness programs on girl education
5. Counseling of parents
6. Special attention on education, training and rehabilitation of mentally & physically challenged children/persons.
7. Spreading awareness of law amongst people and disadvantageous sections of the society about their rights & remedies available.
8. Promotion of professional education by setting up educational institutions offering courses in Engineering, Nursing, Management, Medicine, Technical subjects, etc.
9. Provide fees to poor and meritorious, preferably girl students of the schools near SGS’s operations to enable them to get uninterrupted education.
10. Provide cycle to needy girl students who are attending school in remote and distant areas.

2. Water Supply including Drinking Water

1. Installation/Repair of Hand Pumps/Tube Wells
2. Digging/Renovation of Wells
3. Gainful utilization of waste water from underground mines for cultivation or any other purpose.
4. Development/construction of Water Tank/Ponds.
5. Rain water-harvesting scheme.
6. Formation of a task force of volunteers to educate people regarding proper use of drinking water.
7. Empowerment to the villagers for maintenance of the above facilities for availability of water.

3. Health Care - Organizing health awareness Camps on

1. AIDS TB and Leprosy
2. Social evils like alcohol, smoking, drug abuse etc.
3. Child and Mother care
4. Diet and Nutrition.
5. Operation Jyoti – Vision 2020 to help the people of the peripheral area for necessary assistance.
6. Blood donation camps.
7. Diabetics detection & Hypertension Camps
8. Family Welfare.
9. Senior Citizen Health Care Wellness Clinics
10. Fully equipped Mobile Medical Vans
11. Supplement the different programs organized by Local/State authorities.

4. Environment

1. Organizing sensitizing programs on Environment Management and Pollution Control.
2. Green belt Development
3. Afforestation, Social Forestry, Maintenance of Dams and Parks.
4. Restoration of mined out lands.
5. Development of jobs related to agro products i.e. Dairy/Poultry/farming and others.
6. Plantation of saplings.
7. Animal care.

5. Social Empowerment

1. Self /Gainful Employment Opportunities – Training of Rural Youth for Self-Employment (TRYSEM) on Welding, Fabrication, and other Electronic appliances.
2. To aid villagers having small patch of land to develop mushroom farming, medicinal plants, farming & other cash crops to make them economically dependent on their available land resources. Training may be provided by agricultural experts for above farming.
3. Organizing training programs for women on tailoring Embroidery designs, Home Foods/Fast Foods, Pickles, Painting and Interior Decoration and other Vocational Courses.
4. Care for senior citizens.
5. Adoption/construction of Hostels (specially for the underprivileged girls)

6. Rural development

1. To develop infrastructural facilities for providing electricity through Solar Lights or alternative renewal energy to the nearby villages. Recurring expenditure should be borne by the beneficiaries.
2. To install windmills as alternative source for providing electricity in villages.

7. Sports and Culture

1. Promotion of Sports and Cultural Activities for participation in State and National level.
2. Promotion/Development of sports activities in nearby villages by conducting tournaments like Football, Kabaddi and Kho Kho and other sports
3. Providing accessories and other requirements for Football, Volleyball, Hockey to young and talented villagers.
4. Promotion of National level teams.
5. Sponsorship of National Sports events.
6. Sponsorship of Cultural event to restore Indian Cultural Traditions and Values.
7. Providing facilities for physically handicapped persons
8. Supporting preparing of documentary films to promote sports
9. Granting financial assistance/donation/sponsorship for sport events

8. Granting donations to NGOs for approved purposes as per this policy.

9. Disaster Mitigation:

1. To provide food, cloths, medicine and other essential things to the peoples of disaster affected areas.
2. Granting financial assistance/donations for rebuilding infrastructure, health care and rehabilitation programs for disaster affected areas.

SGS will take up other CSR initiatives as may be required from time to time, in accordance with the focus area as per SGS group and in compliance with Schedule VII of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014.

Preference will be given to the local area and areas around which SGS operates for undertaking the CSR activities.

V. ROLES AND RESPONSIBILITIES

 This policy applies to all employees and management in India.

The CSR Committee is responsible for the overall management and supervision of the CSR activities in India. The CSR Executive Committee will develop consistent narratives and programs to build stakeholder trust and to continually improve the Company’s reputation and profile as a responsible corporate citizen.

Individual employees must comply with the requirements of this policy and supervisors are responsible

for ensuring compliance.

Any employee who has knowledge of a potential or actual violation of this CSR Policy must promptly

report this to the CSR Executive Committee according to the existing policy and guidelines.

This requires transparency and integrity in all its business dealings and this principle applies fully to all CSR activities as well.

VI. RECORD RETENTION

Records governed by this policy must be maintained in accordance with applicable SGS India, local and/or divisional policies or procedures.

VII. RESTRICTIONS AND PROHIBITIONS

The following activities are prone to have a negative effect on Company’s image and thus

should be avoided. The company will not, in its CSR activities:

1. Support organizations that discriminate based on age, sex, race, religion, national origin, sexual orientation, or disability with respect to employment, volunteer participation, or the provision of services.
2. Solicit financial support for politicians, candidates for political office or political parties. Political donations made by individual employees must not jeopardize the company’s regional and global reputation
3. Engage with organizations and programs that are averse to the Company, or that may involve a potential conflict of interest for the Company;
4. Reward, attempt to reward or to influence persons or entities that do business with, or are in a position to generate business for the Company
5. Use any type of CSR activity in violation of local and international bribery and corruption and other financial crime laws, rules, regulations or internal SGS policies and control

Note: The Company can exclude certain types of organizations (e.g. political parties or activist organizations) to protect the Company’s integrity and reputation

VIII. GOVERNANCE FRAMEWORK / KEY OPERATING PROCEDURE

CSR Committee:

The Company will set up a CSR Committee. This will be the apex body that will provide the overall direction & governance to the CSR programme being undertaken by the Company in line with the SGS Group & new CSR provisions, as articulated in Section 135 of the Indian Companies Act 2013, and the attendant rules, clarifications and circulars issued by the Ministry of Corporate Affairs.

The CSR Committee is headed by the Managing Director, and other Board of Directors as its members.

CSR Executive Committee

The executive committee comprises of the following Members responsible for day to day execution of tasks as below:

While the CSR Executive Committee will be the responsible for all financial decisions and programme approvals, it may work with relevant officers of the company for effective and efficient management of the various programs and attendant processes. Such officers will be responsible to and report to the CSR Executive Committee for all activities undertaken to implement/manage the approved CSR programme. Proportionate Salary and related cost of such officers will be considered as CSR activity expenses.

The Chief Financial Officer (CFO) or the person responsible for financial management will certify that the funds so disbursed have been utilized for the purposes and in the manner as approved by CSR Committee and Board.

CSR Committee will have minimum 2 meeting in a year, however Executive Committee may meet any number of times as per their need.

IX. GENERAL GUIDELINES FOR GRANT: PROJECT SELECTION AND MANAGEMENT

The Company will work either directly or with non-profit organizations and agencies including any CSR Foundation set up by the Company/ group, if any, which directly or indirectly provides services and support to disadvantaged individuals, families and communities and who channel the funds to directly benefit the targeted beneficiaries. In general, all CSR activities which are not inconsistent with the provisions of the local laws should:

1. reflect the Company’s Corporate Social Responsibility strategy;
2. promote best practices and provide initial funding for projects;
3. enjoy high relevance in a defined target group and involve employees and other stakeholders wherever possible;
4. provide for engaging communication and stakeholder involvement;
5. involve a sustainable commitment and have a long-term effect on the community; and
6. comply with all external relevant laws, rules and regulations of the respective jurisdiction, as well as internal policies

As a general rule, to be considered for a grant, a grantee is required to be a non-profit organisation, registered under the prescribed rules and regulations, with an established track record of minimum three years in undertaking similar programmes and projects.

Selected grantees will execute the projects funded by the Company under a well laid out Memorandum of Understanding including terms of reference, clear roles and responsibilities and project criteria.

The partners will provide periodic progress reports and annually provide the following reports:

1. Funds utilisation report with supporting documents
2. Beneficiary progress report
3. Project impact report

Project selection criteria

1. Community impact: Do the proceeds benefit a broad community in a positive way and help the community move towards sustainable economic independence?
2. Financial need: Has the proposal demonstrated that there is a real need for financial assistance for the project being proposed?
3. Management capability: Does the current organisational structure reflect integrity and capability in administering the proposed programme in a fair and transparent manner?
4. Alignment of organisation: Does the beneficiary organisation have religious or political objectives or affiliations? Is the organisation secular in serving the broader community?
5. Leverage potential: Does the project take advantage of opportunities to leverage Company’s funding from other private, foundation and government sources to ensure sustainability of the programme?
6. Inclusive growth: Does the organisation promote inclusive growth?
7. Innovative solutions: Is the project promoting innovative ways to provide long-term benefits?
8. Involvement potential: Can the company’s staff be involved in volunteering activities in the project?
9. Does the project aim at encouraging proactive engagement of community stakeholders in all development processes of the project?
10. Measurable Results: The project should produce measurable results which must be quantifiable and have feasible monitoring and evaluation indicators that can be tracked
11. Sustainable: The project should have potential for replicability, scalability and sustainability
12. Exit: The project should have a clear exit strategy

Initial Screening: concerned officers of the Company/group will do an initial screening to establish minimum track record, general reputation, compliance status and alignment of a project to this policy.

Referral to the CSR Executive Committee: Once the initial checks are positive, the proposal will be referred to the CSR Executive Committee for approval to invite the project/NGO to apply via the formal Grant Application process. An invitation to enter the formal grant application process does not imply that the project will be approved. This will be made clear to the applying NGOs.

Grant Application Process

1. Project applications should be made in a specified Grant Application Format (Annexure 3)
2. Each request for approval should be made in a formal manner with original signatures and
3. attachments for audit and record-keeping
4. Each project should have provisions for monitoring and impact valuation and should provide
5. periodic implementation reports
6. Each project application is evaluated on its own merits to be in compliance with our purpose and objectives
7. Funding levels are flexible and are dictated by the needs of the organisation and funding availability

Grant Appraisal Process

1. The duly filled in Grant Application Form will be submitted to the CSR Executive Committee
2. The Committee or a subset (as the supervising Manager for a particular Programme) may request further information and documentation, as appropriate
3. Due diligence checks and reviews on the organisation including field visits will be performed to ensure that it meets the criteria of our selection
4. To mitigate reputational risks and ensure proper use of funds, a special screening may apply including those relating to anti-financial crime.
5. A thorough appraisal of the project design and objectives will be performed to ensure its feasibility
6. The Committee or the Supervising Manager may ask for meetings with the Project representatives as part of its appraisal process

Grant Approval Process

1. Once a project is identified and the selection criteria are fully met, the final project proposal will be discussed by the full CSR Executive Committee
2. The Committee will review the project application and SGS will have the right to approve/reject the proposal or ask for more information/amendments in the proposal
3. Upon in-principal approval by the Committee subject to all internal SGS controls being satisfied, the Company will enter into an MOU with the applicant for the project
4. The proposed agreement will be sent to Legal, Compliance, Tax and where required to Anti- Financial Crime, for clearance. It will then be sent to the Committee for final approvals before it is presented to Finance for payment. CSR team will follow up for original copy of receipt or acknowledgement of payment

X. IMPLEMENTATION

CSR activities would be undertaken as projects or programs or activities, excluding activities undertaken in pursuance of the normal course of business.

SGS would undertake CSR activities in any of the following manners:

• directly by SGS through its employees or through a registered trust or a registered society or a company established by SGS or through its holding, subsidiary or associate company under section 8 of the Companies Act, 2013 or otherwise; or
• through other foundations, trusts or a company registered under section 8 of the Companies Act, 2013 or section 25 of the erstwhile Companies Act, 1956;
• partnering with other organisations/ institutions who specialize in such projects;
• engaging the services of specialized agencies to implement the projects.

If the trust, society or company is not established by SGS or its holding, subsidiary or associate company, SGS would ensure that it has an established track record of three years in undertaking similar programs or projects.

Specialized agencies would include:

1. Community based organization whether formal or informal.
2. Elected local bodies such as Panchayats
3. Voluntary Agencies (NGOs)
4. Institutes/Academic Organizations
5. Trusts
6. Self-help groups
7. Government, Semi Government and autonomous Organizations.
8. Standing Conference of Public Enterprises (SCOPE)
9. Mahila Mondals/Samitis and the like
10. Contracted agencies for civil works
11. Professional Consultancy Organization

While partnering with other organisations / institutions or engaging the services of specialized agencies the credentials of such entities would be verified and all requisite information/ documents as listed in Annexure 1 would be obtained and necessary documentation would be completed.

XI. MONITORING MECHANISM

1. In terms of the provisions of section 135 of the Companies Act, 2013 read with The Companies (Corporate Social Responsibility Policy) Rules, 2014 the Board of Directors (Board) of SGS have constituted a Corporate Social Responsibility (CSR) Committee comprising of all Directors.
2. The Committee shall be headed by the one of its members, being the directors of the Company.
3. The CSR Committee has formulated this CSR Policy indicating the activities to be undertaken by SGS.
4. The CSR Committee after considering the recommendations made by the CSR Executive Committee has approved this CSR Policy.
5. The CSR Executive Committee along with the CSR team of employees of SGS would be responsible for implementing and taking decisions in respect of the CSR Policy.
6. The CSR Executive Committee shall monitor the implementation of the CSR projects / programs / activities from time to time and issue suitable directions to the CSR team.
7. The CSR Executive Committee shall decide the priority of the activities to be undertaken for CSR.
8. The CSR Executive Committee shall hold at least two meeting every year for reviewing the implementation of the CSR Policy and report their findings / views to the CSR Committee.
9. The CSR Executive Committee shall review the CSR Policy from time to time and suggest modifications, if required.
10. The CSR Executive committee can communicate with any means of communication.

XII. BUDGET

1. Minimum of 2 % of the average net profit of the last 3 years will be spent on CSR initiatives undertaken by SGS.
2. CSR Executive Committee of SGS would act as “NODAL” and would put up all cases to the CSR Executive Chairperson for consideration. The Chairperson will approve the proposal. MD will authorize the expenditure as per the approval/ his financial limits under Delegation Authority Matrix (DAM). If there is any deviation in the expenditure from the approved proposal, it would be put up for CSR Executive Committee approval.
3. All expenses towards the programs / projects / activities will be supported with appropriate documents.
4. In the event that 2% of the average net profit of the last 3 years is not spent in a financial year on the selected CSR activities, reasons for the same shall be specified in the annual report (Annexure 2) on CSR activities in the Board’s report.
5. Any surplus generated out of the CSR activities will not be added to the normal business profits of SGS.

Measuring and Reporting The Outcomes And Impact

1. Designated Employee of SGS India appointed for CSR activity will prepare the report on CSR Activities and report to Director Legal, Compliance and Branch Operations. Proportionate Salary and related cost of designated employee will be considered as CSR activity expenses.

1. Director Legal, Compliance and Branch Operations will report to CSR executive Committee.

1. The report(s) shall include the details of the program’s effectiveness in achieving the desired objectives by actually reaching out to the beneficiaries or intended beneficiaries of the respective projects / programs / activities.

1. Based on effectiveness and necessity, CSR Executive Committee could recommend to the CSR Committee for continuation or withdrawal of any project / program / activity.

Base Line Survey & Documentation

1. CSR activities where Community Development Program is involved, base line survey would be carried out and cost benefit assessed.

1. Meticulous documentation relating to CSR policies, programs, expenditures, procurement etc. shall be prepared and placed before the CSR Committee.

XIII. UPKEEP AND MAINTENANCE OF ASSETS CREATED

Maintenance of assets created under CSR would be the responsibility of the concerned beneficiaries and local representative of the society. Before any capital investment is made, an undertaking would be taken from the representatives of local community that they would be responsible for maintenance of the assets.

Annexure 1

List of documents / information to be obtained / considered while engaging other entities

1. Memorandum of Association and Articles of Association
2. Charter constituting the entity
3. Registration Certification
4. Audited financial statements / accounts for last three years
5. IT Exemption Certificate under Section 80G / 35(i), as may be applicable and available
6. Pan Card
7. Letter of authority or approval, as may be applicable, for the entity to undertake the project
8. Details of the entity’s organization structure, capability, technical skills and manpower resources.
9. CSR-1 or any other applicable form as may be prescribed by Government for the time being in force

Annexure – 2

Annual Report on Corporate Social Responsibility (CSR) activities

1. A brief outline of the CSR Policy of the Company:
2. The Composition of the CSR Committee :

3. Provide the web-link where Composition of CSR committee, CSR Policy and CSR projects approved by the board are disclosed on the website of the Company:

4. Provide the executive summary along with web-links Impact assessment of CSR projects carried out in pursuance of sub-rule (3) of rule 8, if applicable :

5. 1. Average net profit of the company as per sub –section(5) of section 135:(b) Two percent of average net profit of the Company as per sub –section (5) of section 135:
   2. Surplus arising out of the CSR projects or programmers or activities of the previous financial years: NA
   3. Amount required to be set off for the financial year, if any:
   4. Total CSR obligation for the financial year {(b)+(c)-(d)}:

6. 1. Amount spent on CSR Projects (both Ongoing Project and other than Ongoing Project):
   2. Amount spent in Administrative Overheads
   3. Amount spent on Impact Assessment, if applicable
   4. Total amount spent for the Financial Year [(a)+(b)+(c)]:
   5. CSR amount spent or unspent for the financial year:

(f) Excess amount for set off, if any: Not applicable

7. (a) Details of Unspent Corporate Social Responsibility amount for the preceding three financial years:

8. Whether any capital assets have been created or acquired through Corporate Social Responsibility amount spent in the Financial Year:

If yes, enter the number of capital assets created/acquired

Furnish the details relating to such asset(s) so created or acquired through Corporate Social Responsibility amount spent in the Financial Year:

(All the fields should be captured as appearing in the revenue record, flat no, house no, Municipal Office/Municipal Corporation/ Gram panchayat are to be specified and also the area of the immovable property as well as boundaries)

9. Specify the reason(s), if the company has failed to spend two per cent of the average net profit as per sub-section (5) of section 135: