Driving Social Change: The Role of CSR in Building Stronger Communities
By -Kapeel Barsaiyan & Kshipra Simon, Buddh Jyoti Foundation
Charity and service have always been integral to Indian culture, where helping the weak and contributing to creation is seen as a fundamental dharma. In fact, the world’s biggest donor, Jamsetji Tata, was an Indian. The country takes pride in being home to some of the world’s most prominent philanthropists.
With the implementation of mandatory Corporate Social Responsibility (CSR) under the Companies Act of 2013, corporate philanthropy gained a structured approach in India. This legislation requires companies to allocate 2% of their average net profits to CSR initiatives. Over the past decade, this mandate has encouraged businesses to act more ethically and sustainably, fostering a more strategic and impactful approach to community engagement.
CSR’s Impact in Numbers
Mandatory CSR has significantly boosted spending across critical sectors such as education, healthcare, and environmental sustainability. Over the years, CSR spending in India has shown a consistent upward trend:
- FY 2017-18: ₹17,096 crore
- FY 2018-19: ₹20,217 crore
- FY 2019-20: ₹249.65 billion
- FY 2020-21: ₹262.10 billion
- FY 2021-22: ₹26,278 crore
- FY 2022-23: ₹29,986.92 crore
The Economic Survey 2024 highlighted that CSR spending increased by an impressive 53% between the financial years 2017-18 and 2021-22. However, in 2023, CSR spending fell slightly below the mandated 2% of net profits.
Multifaceted Benefits of CSR
Beyond contributing to national development, CSR offers extensive benefits to businesses themselves, impacting stakeholders in numerous positive ways:
1. Builds Corporate Reputation and Trust
Active CSR initiatives enhance a company’s reputation and build stakeholder trust. Companies with robust social responsibility practices are perceived as moral and reliable, improving their overall brand image.
2. Promotes Environmental Sustainability
Environmental sustainability-focused CSR projects help minimize carbon emissions and conserve natural resources. These initiatives not only protect the planet but also align with growing consumer demand for eco-friendly practices and products.
3. Boosts Employee Satisfaction
Employee morale is significantly enhanced when companies demonstrate a commitment to societal values. Employees who feel appreciated and aligned with their company’s ethical stance are more motivated, leading to improved performance and loyalty.
4. Enhances Customer Loyalty
Consumers increasingly prefer businesses that share their values. Companies with strong CSR initiatives often build a loyal customer base willing to pay more for their products and services due to shared principles and trust.
5. Advances Community Development and Social Equity
Investments in community infrastructure, education, healthcare, and economic development create long-lasting benefits that go beyond short-term profits. CSR activities can tackle pressing societal issues like poverty, unemployment, and inequality. Collaboration between businesses, governments, and non-profits can amplify these impacts, creating programs that provide jobs, mentorship, and entrepreneurial opportunities in underserved communities.
Driving Social Change through Leadership
Corporate Social Responsibility (CSR) has emerged as a cornerstone of modern leadership. Businesses increasingly recognize their potential to drive meaningful change by addressing societal challenges and fostering environmental sustainability. Through well-implemented CSR strategies, companies not only advance social equity and community development but also achieve a competitive edge in today’s values-driven market.
By leveraging their resources and expertise, corporations can create a profound and lasting impact, demonstrating that business success and social good can go hand in hand.