The Corporate Social Responsibility (CSR) mandate—which requires companies meeting specific sales and profit thresholds to dedicate at least 2 percent of their annual profits to social initiatives—has ignited a big shift within India’s corporate sector. Today, CSR in India is a regulatory requirement and a catalyst for social change, pouring in substantial capital and sparking a wave of innovation to address critical societal challenges. Through thoughtful CSR implementation, companies fund impactful programmes that benefit people nationwide. This shift highlights CSR’s role as a powerful tool for positive change, bridging the gap between corporate success and social responsibility in India. The State of CSR in India (2014-2022) report by Sattva offers an in-depth analysis of the evolving CSR landscape. It explores critical questions about the effectiveness of CSR funds as development finance, identifies the major funders and examines where the money is being directed.
The report reveals that since the mandate’s introduction in 2014, CSR funding has surpassed Rs. 1.53 lakh crores. Nearly half of this funding comes from the top five industries—BFSI (Banking, Financial Services and Insurance), Oil, IT, Energy and Mining. Over the past eight years, CSR expenditure has grown by 1.5 times, with the last three years alone accounting for more than half of the total CSR spending since the mandate’s inception.
Taking the Sustainable Leap
While education and healthcare have historically received the largest share of CSR funds, accounting for 50 per cent of the total allocation, environmental sustainability has become an increasingly significant focus in recent years. In FY 2021-22, spending on ecological sustainability surged by 130 percent, marking the highest increase across all sectors. This shift reflects broader changes in corporate priorities, with India’s growing prominence as the fifth-largest economy and a key player in global supply chains driving heightened attention to Environmental, Social and Governance (ESG) factors.
In 2021, SEBI introduced the Business Responsibility and Sustainability Reporting (BRSR) framework, a comprehensive ESG reporting standard requiring the top 1,000 listed companies to disclose their sustainability practices. SEBI has also launched the BRSR Core, which includes nine key parameters that focus on reducing carbon footprints, promoting sustainable business practices and integrating circular economy principles into business operations. Thus, as boardrooms increasingly grapple with ESG and supply chain risks, CSR funding is crucial in supporting corporate initiatives aimed at environmental sustainability.
This aligns with India’s commitment to achieving net-zero emissions by 2070, as outlined at COP26. The country focuses on key sectors like electricity, urbanisation, transport, forests, finance and industry. Therefore, in the long run, businesses in these sectors must embrace transformative practices that integrate ESG and sustainability into their core operations. CSR serves as a critical enabler of this change. This trend underscores the growing recognition that sustainable business practices are not just a moral imperative but a strategic necessity for the future.
Collaborations for the Win
Collaborations between corporations and government bodies have seen significant growth, driven by a shared vision of creating a better future. For example, ITC’s watershed development program in Maharashtra illustrates the power of these collaborations, where the company has worked alongside state governments to drive large-scale water conservation initiatives in rural areas. Similarly, through its Bajaj Foundation, the Bajaj Group has focused on rural healthcare, sanitation and livelihood support, working closely with the Maharashtra state government to improve community well-being. Therefore, such partnerships can create scalable impact by leveraging the expertise and resources of multiple stakeholders. Such CSR initiatives not only foster innovation but also open up new market opportunities, offering the potential for significant long-term partnership.
Furthermore, companies are partnering with government entities at various levels—village, block, district, state and central—to amplify their impact. By tapping into existing government schemes and resources, these collaborations help drive systemic change and ensure that programs reach their full potential. The synergy between the corporate and government sectors strengthens the implementation of initiatives, enabling them to make a tangible, lasting difference on the ground.
Blended finance as the way forward
Blended finance has emerged as a promising strategy to enhance the impact of CSR investments, combining development funds with private capital to drive social impact and advance sustainable development projects. In India, the blended finance market has seen impressive growth, with a compound annual growth rate of 18.8 per cent, far outpacing the global market rate of around 11 per cent.
Blended finance is a powerful tool that helps reduce investment risk while supporting projects with social impact. Combining concessional funding or grants with commercial investments can unlock the resources needed to drive large-scale, positive change. This approach makes it easier to finance private sector-led projects that offer financial returns and deliver meaningful social benefits.
CSR can potentially play a pivotal role in India’s blended finance landscape, but it faces significant regulatory challenges. Current laws restrict the use of CSR funds for profit-generating investments, limiting corporates’ ability to leverage blended finance models that create both social value and financial returns. To fully harness the scaled up value-change that CSR brings in driving sustainable development, there is a pressing need for a comprehensive framework. A framework that enables corporations to engage in blended finance while complying with CSR regulations for projects that can bridge the gap between social objectives and financial sustainability.
In conclusion, CSR in India has evolved from a regulatory requirement to a powerful tool for social change, driving impactful initiatives nationwide. As India moves towards its commitment to achieving net-zero emissions by 2070, businesses are increasingly integrating sustainability into their core operations. ESG materiality assessment can help companies pinpoint the most significant issues to their business and stakeholders. Aligning CSR efforts with these key material priorities will allow businesses to drive more significant impact and accelerate their sustainability journey.
Smile and CSR
Smile Foundation has been at the forefront of leveraging Corporate Social Responsibility (CSR) partnerships to address critical education, healthcare, skilling and women entrepreneurship challenges in India. Recognising the systemic gaps in access to quality medical care, we collaborate with corporates to implement innovative programmes that prioritise underserved and marginalised communities. Our initiatives epitomise how CSR can bring services directly to the doorstep of those in need. By combining corporate funding with local expertise, Smile Foundation ensures regular best education, health check-ups, diagnostic services, skilling courses, women empowerment and awareness campaigns in remote and underserved areas, effectively bridging the urban-rural healthcare divide.
Beyond direct service delivery, Smile Foundation works with CSR partners to strengthen community ecosystems. This includes capacity-building for frontline workers, integrating digital health solutions and promoting practices for better quality of life. Through partnerships with corporate entities, Smile Foundation has not only expanded the reach of its initiatives but has also ensured their long-term sustainability, contributing to more resilient communities. These efforts exemplify how strategic CSR collaboration can transform access and outcomes in India.
