(Mohan Bhulani, NTI): In the fiscal year 2022-23, companies on the NSE main board saw a 5% increase in their Corporate Social Responsibility (CSR) spending, reaching Rs 15,524 crore, up from Rs 14,816 crore the previous year, as reported by primeinfobase.com. This rise is attributed to a 13% growth in the average net profit over the last three years, with a regulatory mandate requiring 2% of this profit to be allocated to CSR initiatives.
CSR initiatives encompass a range of activities such as charitable donations, community service, environmental conservation efforts, and support for social causes including education and healthcare. These actions reflect the corporate sector’s acknowledgment of its societal responsibilities and its commitment to effecting positive change.
Pranav Haldea, Managing Director of PRIME Database Group, notes that while the profit increase necessitated a higher CSR expenditure, these companies had already been exceeding the mandated spending over the past three years (2019-20 to 2021-22). Consequently, the uptick in spending for 2022-23 was relatively modest.
The CSR legislation, effective since April 2014, obliges companies to dedicate 2% of their net profit to CSR projects, provided they meet certain criteria based on net worth, revenue, or net profit.
Haldea suggests that the government should consider updating these financial thresholds to reflect the current economic landscape and promote “ease of doing business.” Since the regulation’s inception in 2014-15, the average three-year net profit for NSE-listed companies has nearly doubled, from Rs 4.18 lakh crore to Rs 8.14 lakh crore in 2022-23.
An upward revision of these thresholds could exempt smaller companies from the regulation, aligning with the original legislative intent.
As of March 31, 2023, primeinfobase.com records 1,893 companies on the NSE main board. Out of these, 1,854 have published their annual reports for 2022-23, with 1,830 disclosing CSR details. Among them, 1,296 companies were required to invest in CSR, an increase from 1,214 in the previous year.
In 2022-23, 1,271 companies (98% of those obligated) reported CSR expenditures, up from 1,191 (also 98%) in 2021-22. However, 25 companies did not fulfill their CSR spending mandate. The top ten CSR contributors for the fiscal year included HDFC Bank, TCS, Reliance Industries, Tata Steel, ONGC, ICICI Bank, Infosys, ITC, Power Grid, and NTPC, accounting for 33% of the total CSR expenditure.
Interestingly, 48 companies reported CSR spending despite incurring average losses over the past three years. This group includes Tata Motors, IDFC First Bank, MRPL, CPCL, BHEL, Jaiprakash Ventures, Aditya Birla Fashion & Retail, MSP Steel & Power, Star Health & Allied Insurance, and Patel Engineering.
Public Sector Undertakings (PSUs) saw a 17% decrease in CSR spending, with 56 PSUs investing Rs 3,136 crore in 2022-23, down from Rs 3,766 crore by 59 PSUs the year before.
The states receiving the most CSR funds were Maharashtra, Rajasthan, Gujarat, Tamil Nadu, Chhattisgarh, Uttar Pradesh, Haryana, Telangana, Odisha, and Karnataka.
