India Inc’s corporate social responsibility (CSR) spends remained relatively flat in the financial year 2021-22, according to a recent analysis commissioned by the Times of India. The report showed that CSR project spends in FY22 amounted to Rs 14,558 crore, which was marginally lower than the Rs 14,615 crore spent the previous year. However, the number of companies under the corporate social responsibility universe increased from 1,251 to 1,278.
Under the CSR law, companies with a net worth of over Rs 500 crore, or revenue of Rs 1,000 crore and above, or net profit of over Rs 5 crore, are required to spend 2% of their average net profits of the previous three years on CSR projects. The 2021 amendment allows companies to defer corporate social responsibility funds for a period, supporting multi-year projects and transferring unspent amounts from ongoing projects to separate bank accounts for use in the next three years.
The report noted that the top areas of corporate social responsibility spending continued to be healthcare and education, accounting for nearly 60% of the total amount spent. Disaster management was a newly-introduced schedule that gained prominence, according to Prime Database MD Pranav Haldea. “Companies are formulating multi-year projects of higher value, as the average per capita project expenditure is showing a positive trend,” said Shivananda Shetty, Head of ESG Advisory at KPMG in India.
Despite the slight decrease in total corporate social responsibility spending, the report highlighted the positive trend in per capita project expenditure, indicating that companies are increasing the value and duration of their projects. This is a positive development as it reflects a more strategic and long-term approach to CSR rather than simply meeting the minimum requirements of the law.
Moreover, the flexibility provided by the 2021 amendment enables companies to make better use of their CSR funds, particularly during the pandemic when the need for support was higher than ever. Companies were able to allocate more funds towards healthcare and disaster management, which were among the most critical areas during the pandemic.
It is also worth noting that the increase in the number of companies under the CSR universe indicates that more companies are recognizing the importance of CSR and are actively working towards fulfilling their social responsibilities. This is a positive trend that is expected to continue as more companies integrate CSR into their business strategies and operations.
In conclusion, while the total amount of CSR spending remained relatively flat in FY22, the report highlights the positive trend in per capita project expenditure and the increasing number of companies under the CSR universe. This indicates that companies are taking a more strategic and long-term approach to CSR and are actively working towards fulfilling their social responsibilities. With the flexibility provided by the 2021 amendment, it is expected that more companies will continue to allocate funds towards critical areas such as healthcare and disaster management in the future.
The report commissioned by TOI revealed that while the total CSR spend for FY22 was slightly lower than the previous year, the number of companies contributing to CSR projects increased. The analysis covered 1,278 companies listed on the National Stock Exchange (NSE), and it showed that these companies had spent a total of Rs 14,558 crore on CSR projects in the financial year 2021-22.
The report found that healthcare and education continued to be the top areas of focus for companies, accounting for nearly 60% of the total CSR spends. However, the area of disaster management has gained prominence, as companies have been focusing on multi-year projects of higher value.
“The positive trend in average per capita project expenditure suggests that companies are focusing on higher impact projects,” said Shivananda Shetty, head of ESG advisory at KPMG in India.
In addition to the top areas of healthcare, education, and disaster management, companies have also been contributing to other social causes such as poverty alleviation, rural development, and environmental sustainability.
