Beyond Compliance

Meaningful CSR entails bringing in a social development focus to business operations and leveraging core competencies to achieve the goals.

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India was the first country in the world to make CSR expenditure by companies mandatory—this was done via Section 135 of the Companies Act 2013. According to CII, 1,270 companies spent ₹ 8,185 crore on CSR in 2015-16 (up by over 25% since 2014-15), with a focus on health and sanitation, education and skills development, and rural development. Other countries are now looking to replicate elements of the Act based on the Indian experience.

The world has set for itself 17 global sustainable development goals (and 169 targets) to be achieved by 2030. India’s performance on these goals will be critical for them to be achieved, within which the Indian corporate sector’s contribution to social development would be an important component. The Act should be a key enabler for this. While three years is too short a time to assess its impact on India’s social development performance, it is a good time to ask whether it can be significant, whether it can make a difference to the country’s social development status, and what more the corporate sector needs to do to make CSR a factor in India’s progress. This article attempts to do just this.

The Act and its implications for social development

While the Indian state remains the principal actor to address its social development challenges, NGOs and companies have been willing contributors. Several companies have contributed significantly to helping communities around their work sites and beyond improve the quality of their lives, in some cases spending more than the 2% of profit expected of companies in the Act.