Corporate Social Responsibility (CSR) in India has reached a significant milestone, marking 10 years since the enactment of the Companies Act of 2013, which made it mandatory for companies to invest in CSR initiatives
Corporate Social Responsibility (CSR) in India has reached a significant milestone, marking 10 years since the enactment of the Companies Act of 2013, which made it mandatory for companies to invest in CSR initiatives. The introduction of CSR as a legal requirement marked a pivotal shift in how businesses in India approach social responsibility. What began as a voluntary effort is now a cornerstone of how companies engage with society.
This article takes a closer look at the evolution of CSR in India over the past decade, divided into three scenarios: pre-COVID, COVID, and post-COVID.
Genesis of CSR:CSR was officially coined by American economist Howard Bowen in 1953, who is often regarded as the “father of CSR.” India’s corporate sector has a philanthropic side. Early in the 20th century, industrialists like Jamshedji Tata and G.D. Birla pioneered the integration of business with social good. Many businesses engaged in CSR activities through charity, donations, and support for community projects. Their efforts formed the foundation for modern CSR.
Pre-COVID Era:Towards the end of the 20th century, global businesses began embracing CSR as a framework for ethical and responsible operations. A significant milestone came in 2013 when India became the first country to mandate CSR under the Companies Act, requiring eligible companies to allocate at least 2% of their three-year average net profits to CSR activities. The law heightened awareness among companies operating in India about their social responsibilities and corporate obligations. The scope of CSR expanded to include concepts like the triple bottom line, corporate citizenship, shared value, corporate sustainability, and business responsibility.
CSR during COVID:It is interesting to state that as per Economic Survey 2023-24, CSR spending in India has increased by an impressive 53 percent from 2014 to 2022. Corporates had collectively spent INR 1.53 lakh crore on CSR initiatives. Over half of this figure was spent from 2019 to 2022 alone, with many companies exceeding their obligations. This was a period of COVID and the crisis underscored the importance of health, and social welfare, forcing businesses to rethink how they could contribute to the nation’s recovery.
COVID-19 served as a wake-up call to organizations that started to actively look at how they can give back to society without violating social distancing norms. The Government of India (GoI) had declared that companies tackling the COVID-19 crisis would be eligible under the two percent CSR mandate laid out in The Companies Act, in 2013 and the CSR community sprung into action for relief and rehabilitation activities, including essential services, preventive healthcare and sanitation, vaccination efforts, and social protection of vulnerable groups, skilling, and education, research and development. All this, collectively, contributed to a changing CSR approach.
At this stage, companies began to view CSR not just as a responsibility, but as an opportunity to tackle systemic issues that the pandemic had intensified, such as healthcare infrastructure, education, and employment. For instance, with schools shifting to online learning during the pandemic, education became an even more pressing area for CSR investment. Many companies focused their efforts on providing digital tools, devices, and connectivity to underserved children, particularly in rural areas, to enable them to continue their education.
CSR mandate post-Covid: A Game Changer
Mandate, culture, and shift. Yes. I am seeing this. Culture. Because CSR is part of an organization's culture, it is becoming something very important.
The mandate, to my mind, has shifted the conversation around social impact and taken it to the board level and has also been empowering teams and volunteers within companies. Areas like education, health, sanitation, rural development, gender equality, environmental sustainability, and volunteering became focus areas for CSR.
In the post-COVID landscape, CSR has stepped further to focus on education, employability, volunteering, supporting small-scale enterprises, financial literacy, and community well-being. Additionally, there is a push toward gender equality, with companies offering support for women entrepreneurs and workers who were disproportionately affected by the socio-economic downturn.
The Big Picture Today:
India stands as a shining example of growth in the global economy, with forecasts suggesting it is on track to become a $10 trillion-plus economy within the next decade (IMF and Oxford Economics). Against the robust economic trajectory, integrating CSR will be crucial in addressing social, environmental, and economic challenges, ensuring that development benefits all sectors of society. In the coming decade, I strongly believe the shift will happen towards a more powerful metric: impact and I mean qualitative.
Stronger push for transparency and accountability- Over time, companies have become more focused on measuring the impact of their CSR efforts. The need for substantial outcomes from CSR investments is more important than ever. Impact assessments, stakeholder feedback, and data-driven reporting have become critical tools for ensuring that CSR activities are effective and aligned with the broader social goals.
Expansion of scope- CSR has expanded its scope beyond health and education to support digital literacy and STEAM education programs, especially for underprivileged youth, to bridge the skills gap, inclusive employment, create opportunities for persons with different abilities, renewable energy, waste management, water conservation, and biodiversity protection. What remains the same is that their endeavor continues to complement the larger goals of the government as well as the Sustainable Development Goals (SDGs) set by the United Nations.
Cultural shifts: By participating directly in initiatives that impact social causes, employees gain a personal connection to the work being done, making the CSR efforts more meaningful. As employees witness the tangible outcomes of their contributions, they are more likely to be motivated, engaged, and aligned with the organization’s broader social goals.
Building strong partnerships between Corporates and NGOs: The top challenge faced by both Implementing Partners (NGOs) and Corporates in CSR is securing reliable and effective implementing partners. For NGOs, finding the right corporate collaborators is essential for driving impactful social change, while for corporations, partnering with credible NGOs is key to ensuring the success and sustainability of their CSR efforts. To address this, both NGOs and Corporates must prioritize building strong partnerships based on shared values and goals. Corporates can invest in due diligence to identify NGOs with proven track records and aligned mission, while NGOs can focus on showcasing their capabilities, and commitment to sustainable impact.
Complement with ESG principles- The concepts of CSR and ESG (Environmental, Social, Governance), have converged, as the scope of CSR has broadened across large firms to include more environmental initiatives, given the scale of the climate crisis worldwide. Around 23 percent of the Indian corporates prioritized environmental projects in their CSR fund allocation during the financial year 2022-23 (India CSR Outlook Report 2023).
Co-creation via Public-Private-People Partnerships(4Ps)- There has been an increasing emphasis on collaboration between businesses, governments, non-profits, and most importantly, the community. The 4Ps have proven to be highly effective in addressing complex challenges such as healthcare, education, and rural development. Companies are working alongside local governments and NGOs to pool resources, expertise, and networks to maximize the reach and impact of their CSR projects.
CSR has become a more strategic component of corporate operations. Companies now understand that well-executed CSR initiatives can create value for both business and society. This shift is especially transformative in regional and rural India. With the majority of India’s population living in rural areas, corporate involvement in education, healthcare, water security, sports, and skill development and livelihood generation is of paramount importance.
Conclusion:
Let’s face it. CSR will never be the same. The next decade is set to be a transformative period for CSR in India. The pandemic has underscored the significance of resilience, sustainability, and DEI (Diversity, Equity, and Inclusion), and these themes will remain central to CSR strategies in the years ahead. It is likely to involve deeper engagement with ESG factors and businesses will be expected to play an even more active role in shaping a sustainable and equitable future.
The article is authored by Rajesh Krishnan, CEO, United Way Bengaluru
