The year 2024 marks a significant milestone for India in its journey towards implementing more strategic and meaningful social initiatives in its landscape. For it has been 10 years since the country realised that social change cannot be brought about just by the government without contributions from individuals and private parties. In 2014, the union government mandated Corporate Social Responsibility (CSR) under the Companies Act, 2013 to join hands with corporates in their journey. Following the landmark legislature, the country has witnessed a profound shift in how companies involve themselves and engage with societal issues. During the tenure, the traditional philanthropy has not just grown to accommodate corporate philanthropists but also widened its wings to create strategic and sustainable initiatives in society. The transformation, which is a dynamic interplay between corporate acumen and social responsibility, has been resulting in significant progress in various sectors in recent times.
Evolution of Corporate Social Responsibility (CSR)
Corporate Social Responsibility is a self-regulating business model that assists a business in being socially accountable to itself, its stakeholders, and the public. In simpler terms, it is an idea that companies should operate in accordance with the policies that can make a sustainable positive impact on society and the environment. By voluntarily integrating ethical, sustainable, and responsible practices into their core business strategies, companies aim to create an impact on consumers, stakeholders, employees, and society. CSR activities go beyond the legal obligations of companies.
Though philanthropy has been in the blood of businessmen for years, the path to streamline and monitor CSR mandate activities began in the late 2000s. That’s when the Indian government recognized the importance of inclusive growth and believed it to be an essential part of becoming a superpower. It also fell in line with the government’s commitment to uplift and include the marginalised sections of society in the growth process. Subsequently, inclusive growth was a part of its 11th five-year plan in 2007. That’s the story of conception of CSR. According to the Ministry of Corporate Affairs, “it was conceived as an instrument for integrating social, environmental, and human development concerns in the entire value chain of corporate business.”
The government took the first step towards mainstreaming business-led responsibilities in 2009 and issued ‘voluntary guidelines on corporate social responsibility, 2009’. Two years later, the refined guidelines provided an understanding and approach for inculcating responsible business conduct among companies. A set of nine principles was released as the ‘National Voluntary Guidelines on Social, Environmental, and Economic Responsibilities of Business, 2011.
The mandate
To check on non-compliance, the government made CSR mandatory under Section 135(4) of the Companies Act, 2013. It became effective in April 2014. The legislature requires companies with a specific turnover or net worth to spend at least 2% of their average net profits from the last three financial years on CSR annually. India is one of the very few countries that has mandated the provision. It was believed to be an essential and significant move in pushing the country towards achieving sustainable development goals by creating a public-private partnership.
The legislature provides a set of activities that can be included under the CSR policies of the companies. They are:
- Promotion of education
- Promotion of gender equality and empowering women
- Reducing child mortality and improving maternal health
- Eradicating extreme hunger and poverty
- Social business projects
- Ensuring environmental sustainability
- Combating diseases like AIDS and malaria.
- Enhancing vocational skills
- Contribution of funds for socio-economic development projects.
A decade after CSR mandate for corporates
Around the same time, about 10 years ago, there had been a lot of criticism and speculation from various stakeholders, though some of them supported the government’s move with enthusiasm. Those who supported it saw this move as an opportunity to formalise and increase their existing philanthropic activities. They believed that CSR activities would be institutionalised and would create a more structured and impactful approach to corporate philanthropy. However, activities had seen the move as an approach to increase the funds rather than improving the quality of projects. Critics worried that corporates might treat the move as a mere checkbox to tick, rather than focusing on meeting the minimum requirements to implement socio-economic projects.
However, as time passed, many companies started to adapt to the new legislature and involve themselves wholeheartedly. Many of them developed comprehensive CSR strategies and set up dedicated teams to manage them. This has also allowed corporates to explore the avenue of establishing partnerships with government bodies, Non-Governmental Organisations (NGOs) and other community groups to take initiatives. This approach has helped in leveraging expertise and resources. It in turn came in handy to tackle social issues more effectively. The mandate has also ensured greater transparency and accountability in CSR activities. Both corporates and the government have been publishing detailed CSR reports.
Important data
According to the National CSR portal, 24,392 companies in 40 states and union territories have spent Rs 29,986 crore on CSR activities in the financial year 2022-23. The amount has increased significantly over a period of time. In 2018-19, the amount stood at Rs 20,217 crore. As many as 51,966 projects got implemented across 14 development sectors in 2022–23. The number was 32,071 in 2018-19. Companies have spent more than Rs 1000 crores in areas like rural development, sports, education, livelihood, women empowerment, gender equality, health, and sanitation. The portal says that non-public sector companies have spent more than public sector companies. While PSUs spent Rs 4,095 crore, non-PSUs spent Rs 25,891 crore. Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Delhi were in a list as the top 5 high-performing states.
Social innovation through CSR mandate
The mandate has also played as a catalyst for social innovation in the country. For over the last 10 years, corporates have come up with creative solutions to pressing social issues using their own resources, networks, and expertise. Technologies are used for social good. For instance, ITC’s mission, Sunehra Kal, has been focusing on sustainable water management techniques like rainwater harvesting, watershed development, and other water conservation programmes. Similarly, Mahindra’s sustainability in agriculture programme works towards enhancing agricultural productivity and sustainability by providing farmers with access to training, resources, and technology. They are assisting the farmers by training them with effective irrigation techniques and soil health management practices.
In the last decade, India has witnessed how CSR can evolve into a powerful driver of social change and innovation. Visible impacts across sectors reflect a growing recognition that corporate responsibility extends beyond philanthropy to include strategic, proactive, innovative, and sustainable initiatives to tackle socio-economic issues. As CSR continues to evolve, the focus will continue to remain on creating meaning and sustainable impacts in society that will address both immediate and long-term requirements.
Our corporate partnerships
Smile Foundation’s corporate partnerships have been instrumental in advancing our mission to improve the lives of underserved communities in India. Over the past decade, as India embraced business-led social change through the Corporate Social Responsibility (CSR) mandate, Smile Foundation has actively collaborated with various corporates to create impactful social initiatives. These partnerships have enabled us to leverage corporate expertise, resources, and networks to tackle pressing social issues effectively.
With the support of corporate partners, we have been able to scale our programmes across multiple sectors, including education, healthcare, women’s empowerment, and skill development. These collaborations have not only provided essential funding but also introduced innovative approaches and solutions, combining corporate acumen with social responsibility. For example, through joint initiatives, we have been able to conduct health camps, provide vocational training, and support sustainable education and livelihood programmes, reaching thousands of beneficiaries in marginalised communities.
The decade-long journey of business-led social change has demonstrated that impactful corporate partnerships are key to creating sustainable social development. By working together, Smile Foundation and its corporate partners continue to drive meaningful change, addressing both immediate needs and long-term societal goals. These collaborations are a hat tip to the power of collective action in creating a more equitable and inclusive society.
