Listed firms record 16% rise in CSR spending
Corporate social responsibility (CSR) spending of NSE-listed companies saw the highest year-on-year jump in four years at 15.7% in fiscal 2024 on the back of strong profit growth, according to a study that analysed the numbers from 1,394 companies. CSR spends at these companies rose to Rs. 17,967 crore in 2023-24, as they saw a 18% rise in average net profit (of the preceding three years). The spending rose 4.8% to Rs. 15524 crore in FY23 and was flattish in the previous two fiscal years. The top 10 companies in terms of CSR spending — led by HDFC Bank, Reliance Industries and Tata Consultancy Services - accounted for 34% of the total amount. Other top companies are ONGC, Tata Steel, ICICI Bank, Indian Oil, Infosys, ITC and PowerGrid. Spending by public sector units rose 19% over the previous year — 66 PSUs spent Rs. 3,717 crore in FY24, up from Rs. 3,136 crore spent by 56 PSUs in FY23.
The CSR law, which came into force in April 2014, mandates that companies with at least a net worth of Rs. 500 crore, revenue of Rs. 1,000 crore or net profit of Rs. 5 crore during the preceding financial year must spend 2% of the average net profit of the previous three years on CSR projects.
As per CSR requirements, the amount required to be spent by these 1394 companies was Rs. 18,309 crore (Rs. 15,713 crore in FY23), against which they spent slightly lower at Rs. 17,967 crore (Rs. 15,524 crore in 2022-23). The average three-year net profit of companies listed on the NSE has more than doubled from Rs. 4.18 lakh crore in 2014-15, the first year of this regulation, to Rs. 9.62 lakh crore in 2023-24.
While the uptick in spending is a function of profits going up over the years, companies have also become more structured and thoughtful in the way they are spending on CSR, as per experts. They are aligning these spends to their strategy and corporate purpose, and have shifted from projects to themes; for example: education in Raipur district. In addition, they are now measuring the impact. Accordingly, the thresholds may now be revised upwards to keep the relatively smaller companies out of the purview of this regulation, which was the original intent as well.
