Introduction
Corporate governance forms the cornerstone of organizational ethics and accountability. With the world undergoing rapid globalization and an increasing focus on social responsibility, the importance of strong corporate governance has never been more pronounced. Traditionally, businesses were driven by the objective of maximizing shareholder value, placing the interests of shareholders above all else. However, the modern corporate governance paradigm has evolved, calling on companies to recognize a wider responsibility — one that encompasses not only shareholders but also society and the environment at large. This shift is at the heart of Corporate Social Responsibility (CSR), Section – 135 of The Companies Act, 2013, a framework that pushes businesses beyond narrow profit-driven goals towards a more inclusive, ethical, and sustainable approach in their operations. CSR emphasizes that success today is no longer just about financial performance but also about the positive social and environmental impact a company can make in the communities where it operates and from which it sources its resources.
In today’s business landscape, companies are confronted with a complex array of challenges, including climate change, social inequality, and depletion of natural resources. These challenges have made the need for a comprehensive CSR framework increasingly apparent. For nations like India, which have committed to ambitious environmental and social goals through international agreements and development summits, CSR has become a critical tool. By adopting sustainable practices and supporting local communities, businesses are in a unique position to drive positive change, promoting environmental sustainability and social equity. Moreover, through CSR, India can project itself as a forward-looking, responsible actor on the global stage. The present discussion will explore the concept of corporate social responsibility in detail, examining how businesses can be agents of change in addressing the pressing global challenges of our time. Moreover, the ripple effects of CSR extend beyond national boundaries. In an increasingly globalized economy, companies are scrutinized by international consumers and investors who are placing greater value on ethical and sustainable business practices. A company that adopts a strong CSR framework not only enhances its reputation but also attracts investment and consumer loyalty from those who prioritize environmental and social responsibility. Additionally, corporate governance and CSR are no longer optional add-ons for businesses; they are integral components of a successful and sustainable business strategy in the 21st century. As the global community grapples with the interconnected challenges of environmental degradation, social inequality, and resource scarcity, businesses have the potential to be powerful agents of change. By embracing CSR, companies can drive positive impacts not only on their bottom line but also on the world around them, positioning themselves as leaders in the pursuit of a more equitable and sustainable future
Page Contents
- What is Corporate Social Responsibility (CSR)
- CSR Activities
- Significance of CSR
- Overview of CSR in India
- Changes introduced by CSR Amendment Act, 2020
- Examples of Corporate Social Responsibility in India
- Major CSR-Related Provisions under SEBI LODR Regulations
- Major CSR-Related Provisions under SEBI LODR Regulations
- Corporate social responsibility in foreign countries
- Corporate Social Responsibility (CSR) Importance
- Conclusion
What is Corporate Social Responsibility (CSR)
Concept of Corporate Social Responsibility (CSR) – The idea behind corporate social responsibility or CSR, as defined in Section 135 of the Companies Act, 2013, and the related Corporate Social Responsibility (Policy) Rules, 2014, is one of the most important clauses related to environmental, social, and governance (ESG) activities nowadays.3 According to these rules, businesses that satisfy specific turnover or net worth requirements must yearly devote at least 2% of their average net profits over the previous three fiscal years to CSR initiatives. India has demonstrated its commitment to ensuring that businesses actively contribute to the social and environmental welfare of the communities in which they operate by being one of the few countries in the world to enact legislation requiring CSR compliance for corporations.
The fact that CSR laws are in place in India shows that the nation wants to advance an economic model that is not just profitable but also socially and environmentally conscious. By taking into account the wider effects of corporate actions on other stakeholders, such as employees, consumers, local communities, and the environment, CSR goes beyond standard business practices.4 CSR’s primary goal is to promote sustainable development, making sure that companies make significant contributions to environmental preservation and societal well-being in addition to pursuing financial success. The Triple Bottom Line, which emphasises that businesses should balance their financial, social, and environmental responsibilities, is in line with CSR programs, according to the United Nations Industrial Development Organisation (UNIDO). By integrating CSR strategies into their operations, companies can enhance their socio-economic performance, becoming more competitive while fostering sustainable growth.5
CSR Activities
Corporate Social Responsibility (CSR) encourages companies to contribute positively to society, the economy, and the environment. This responsibility goes beyond legal obligations and aims at creating a more ethical and sustainable business environment. CSR initiatives motivate businesses to engage in activities such as:
1.Involving Local Community Members: It is recommended that businesses actively engage local communities in their operations, whether it is through employment, skill development, or hands-on involvement in community-based initiatives. This fosters a symbiotic connection in which the community and the business both gain, as well as strengthening the tie between the latter and the local population.
2. Making Use of “Socially Responsible Investment” (SRI): SRI is the term for the practice of making investments in businesses, projects, or endeavours that adhere to a set of moral principles. It is especially applicable to projects that address social justice, environmental sustainability, and corporate Businesses can match their investment portfolios to their overarching social and environmental objectives by implementing SRI strategies.
3. Building Friendly Relationships with Workers and Customers: Promoting a pleasant workplace culture and solidifying bonds with workers and customers are important components of corporate social responsibility (CSR). Ensuring equitable treatment, equal opportunity, and fostering a supportive work environment are all part of this. Similar to this, businesses want to win over customers’ trust and loyalty by being open, moral, and attentive to their requirements.
4. Taking Part in Environmental Protection and Sustainability Actions and Activities: Businesses are encouraged to use strategies that reduce their negative effects on the environment, such as waste reduction, resource efficiency, and sustainable production and manufacturing methods. With the goal of promoting long-term environmental sustainability, this involves implementing renewable energy sources, reducing pollution, and conserving natural resources.
5. Paying Fair Wages to Workers: The need of fair labor practices is emphasized by CSR in point five, Paying Fair Wages to Workers. By paying workers fairly for their labor, companies can help to lower income inequality, raise living standards for workers, and uphold moral values in the workplace.
6. Advocating and Endorsing Social Justice Policy Reforms: Businesses have the ability to promote and endorse social policies that aim to improve human rights, combat injustice, and encourage diversity and Businesses help to create a more just and equitable society by endorsing these measures.
7. Innovating Products to Address Social or Environmental Issues: Corporate Social Responsibility (CSR) encourages innovation for the greater good in addition to This entails generating goods or services that contribute to the resolution of urgent environmental or social problems. Examples of such projects include the development of eco-friendly packaging, energy-efficient goods, and ways to increase access to healthcare and education.
8. Making an Effort to Lessen the Carbon Footprint: With climate change becoming a major global concern, CSR places a lot of emphasis on lowering carbon In order to assure a smaller environmental impact, businesses are urged to implement strategies to minimize their carbon footprint through energy-efficient practices, waste reduction, logistical optimization, and the use of green technologies.
9. Contributing Appreciable Profits to Charitable Causes: CSR also includes direct financial contributions to charitable causes or non-profit organizations working on critical social or environmental issues. These contributions can support a variety of initiatives, including poverty alleviation, disaster relief, healthcare, and education, ultimately fostering social welfare.
By engaging in these CSR activities, companies not only fulfill their ethical responsibilities but also enhance their reputation, build consumer trust, and contribute to the overall well-being of society and the environment.
Significance of CSR
In today’s world, Corporate Social Responsibility (CSR) has become increasingly important as it promotes sustainable social and economic growth within modern capitalist societies. The significance of CSR can be seen in several key areas:
- Enhanced Brand Reputation – Companies that engage in ethical practices and actively support CSR initiatives build a positive public image, which enhances brand These companies gain respect and loyalty from the community, fostering strong customer connections and boosting brand recognition.
- Growth in Revenue and Customer Base – When a business invests in meaningful social and environmental projects alongside its regular operations, it appeals to both existing and potential This positive perception often leads to higher sales, as consumers are more inclined to support companies they view as ethically responsible.
- Increased Employee Loyalty and Engagement – A company’s commitment to CSR helps create a favorable workplace image, attracting employees who appreciate working for a socially conscious organization. Such environments foster greater employee satisfaction and loyalty, which improves retention and overall productivity as employees feel more fulfilled and connected to the company’s mission.
- Contribution to Poverty Alleviation – The business sector has the resources and expertise to make a substantial impact on poverty reduction. By supporting community-based initiatives, companies can address social inequality at the grassroots level, bridging the gap left by government efforts and contributing to the upliftment of marginalized
- Competitive Advantage – CSR-active companies often gain a competitive edge over rivals who lack similar initiatives. For example, with increasing consumer preference for eco- friendly products, businesses that adopt sustainable practices and adhere to CSR standards see a rise in demand, driving sales and expanding their market share. In essence, CSR strengthens a company’s reputation, attracts loyal customers and employees, and sets it apart from competitors, all while making a positive impact on society.
Overview of CSR in India
Corporate Social Responsibility (CSR) has deep roots in Indian society, tracing back to ancient times when kings, landlords, and early businesses actively embraced social responsibility as a core value. The idea that “the more you give, the more you receive” has long resonated with Indian culture, emphasizing the importance of collective efforts for the sustainable growth of both individuals and communities. In India, corporate social responsibility has long been viewed as a type of philanthropy. However, a major change was brought about by the Companies Act of 2013, which made corporate social responsibility (CSR) a formal legal requirement rather than merely a moral or voluntary undertaking. In particular, Section 135 of the Companies Act established a framework for required corporate social responsibility (CSR), making India one of the first nations to formally mandate that select businesses donate a portion of their earnings to charitable causes. Companies with a net worth of at least ₹500 crore, an annual turnover of at least ₹1,000 crore, or a net profit of at least ₹5 crore are obliged by Section 135 to establish a CSR committee on their board. This committee is in charge of managing CSR initiatives and must have a minimum of three directors, one of whom must be independent. These eligible businesses must fund CSR projects annually with at least 2% of their typical net income.
Companies can engage in a variety of activities as part of their CSR initiatives, as listed in Schedule VII of the Companies Act. These initiatives address issues like malnutrition, environmental sustainability, inequality reduction, gender equality, and education. In addition, Rule 2(d) of the Companies (CSR Policy) Rules allows businesses the freedom to choose projects that best suit their principles and available resources while still following the Act’s requirements. Lastly, Rule 8 of the 2014 Corporate Social Responsibility Policy Rules mandates that businesses post an annual CSR report on their websites, encouraging accountability and openness in CSR expenditures. Together, these regulations demonstrate India’s commitment to integrating CSR into the corporate sector and encouraging businesses to contribute meaningfully to social welfare.6
Changes introduced by CSR Amendment Act, 2020
The Corporate Social Responsibility (CSR) Amendment Act, 2020 brought several key changes to India’s CSR framework, refining how businesses contribute to social initiatives. A corporation is a legally recognized entity created to carry out business activities. Companies choose their structure—be it a corporation, partnership, or sole proprietorship—based on tax benefits, financial accountability, and corporate laws, which may vary by state. The chosen structure impacts the organization’s ownership and management style, aligning it with its industry and financial goals.
Under the Companies Act, 2013, any company with a net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more must set up a CSR committee. This committee ensures that at least 2% of the company’s average net profit over the past three years is allocated to CSR activities annually. However, the 2020 Amendment introduced an exemption for companies with an annual CSR obligation of up to ₹50 lakh, allowing them to bypass the requirement to form a CSR committee. Furthermore, if a company spends more than its CSR obligation, it can carry forward the excess amount and count it against future CSR liabilities, which encourages continued or increased spending on CSR activities.
For companies failing to comply with CSR obligations under Sections 135(5) and 135(6) of the Act, the 2020 amendment introduced specific penalties:
- A penalty of either double the amount that should have been transferred to the specified fund or unspent CSR account, or ₹1 crore, whichever is less.
- Individual officers at fault face a penalty of one-tenth of the required transfer amount or ₹2 lakh, whichever is less.
The amendment also clarified exclusions from CSR activities:
- Activities directly related to the company’s regular
- Operations outside
- Contributions to political
- Activities that exclusively benefit the company’s
Additional definitions and guidelines in the 2020 amendment provide further clarity:
- The term “CSR strategy” is now defined as a document outlining the company’s approach to planning, implementing, and monitoring its CSR initiatives.
- A new category called “ongoing projects” includes CSR initiatives that extend over a period of up to three years, excluding the start year.
- Unspent CSR funds are to be accumulated in a newly introduced “National Unspent CSR Fund,” with government oversight ensuring that these funds are directed towards impactful CSR projects. These amendments aim to make CSR more effective, encourage accountability, and support long-term projects that contribute to India’s social and economic development.7
Examples of Corporate Social Responsibility in India
India is highly active in Corporate Social Responsibility (CSR), addressing issues like poverty, gender equality, and education. Some notable examples of companies leading CSR initiatives include:
Tata Group – Tata Group, one of India’s prominent conglomerates, engages in extensive CSR programs aimed at uplifting local communities and alleviating poverty. Its initiatives focus on women’s empowerment, income generation, rural development, and social welfare through self- help groups. In education, Tata provides scholarships and supports various educational institutions. Tata’s CSR efforts also extend to healthcare, with programs supporting children’s education, immunization drives, and HIV/AIDS awareness. They have contributed to infrastructure by establishing hospitals, research centers, educational institutions, sports academies, and cultural centers. Tata also promotes economic empowerment through agricultural initiatives, environmental protection, sports scholarships, and further infrastructure development. Recently, Tata contributed INR 1500 crore to the PM CARES fund to help combat COVID-19.
Ultratech Cement – Ultratech Cement, India’s largest cement manufacturer, is involved in CSR efforts across 407 villages nationwide, with a focus on sustainability and community self-reliance. Its initiatives support social welfare, education, transportation, and healthcare, alongside family programs, environmental conservation, and livelihood development. The company has organized medical clinics, vaccination and sanitation drives, tree plantation projects, school enrollment drives, water management campaigns, industrial training programs, and organic farming initiatives, all aimed at enhancing the quality of life in these communities. These examples highlight the commitment of Indian companies to driving sustainable and socially beneficial change.
Major CSR-Related Provisions under SEBI LODR Regulations
Under the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, Corporate Social Responsibility (CSR) activities are largely addressed through the Business Responsibility and Sustainability Report (BRSR), which mandates Environmental, Social, and Governance (ESG) disclosures by listed companies. (Business Responsibility and Sustainability Reporting by Listed Entities – SEBI)
Major CSR-Related Provisions under SEBI LODR Regulations
1.Business Responsibility and Sustainability Report (BRSR) – Starting from the financial year 2022–23, SEBI requires the top 1,000 listed companies (by market capitalization) to file a BRSR, replacing the earlier Business Responsibility Report (BRR). The BRSR is aligned with the National Guidelines on Responsible Business Conduct (NGRBCs) and covers disclosures across nine principles, focusing on areas such as business ethics, employee welfare, and environmental stewardship. (Amendments in SEBI (LODR) Regulations, 2018, Business Responsibility and Sustainability Reporting by Listed Entities – SEBI)
2. BRSR Core Assurance – From FY 2024–25, the top 250 listed companies must have their BRSR disclosures independently assured by a third party. This requirement aims to strengthen the reliability and transparency of ESG reporting. Assurance will initially be mandatory for the top 150 listed companies during the same period. (SEBI Circular: BRSR Core Assurance & Disclosure Format Revision – CSR)
3. ESG Disclosures Across the Value Chain – Effective from FY 2025–26, listed companies will also need to report ESG data related to their key value chain partners (covering 75% of their upstream and downstream transactions by value). Initially based on a “comply or explain” principle, third-party assurance for these disclosures will become mandatory later. (SEBI extends ESG disclosure deadline for listed companies: Key changes and implications, ET LegalWorld, SEBI Circular: BRSR Core Assurance & Disclosure Format Revision – CSR, BRSR Reporting in India: Key Changes to ESG Disclosures)
4. Green Credit Initiative – Under Principle 6 of the BRSR, a new leadership indicator encourages companies to report the Green Credits they generate or purchase, including those linked to their top 10 value chain partners. This step is intended to foster greater environmental responsibility within businesses. (BRSR Reporting in India: Key Changes to ESG Disclosures, SEBI extends ESG disclosure deadline for listed companies: Key changes and implications, ET Legal World)
5. CSR Committees and Board-Level Duties – While the SEBI LODR Regulations do not require the formation of a CSR Committee, the Companies Act, 2013 mandates it for companies meeting specified thresholds. Such companies must establish a CSR Committee responsible for overseeing CSR initiatives. The Board of Directors must approve the CSR policy and ensure its execution, with details about the CSR Committee’s composition and the CSR Policy being disclosed in the Board’s Report and published on the company’s website. (Mandatory Committees- SEBI Regulations & Companies Act).
Corporate Social Responsibility (CSR) has gained substantial momentum globally, with many countries and international organizations championing initiatives that encourage businesses to operate ethically and sustainably.
The United Nations – The United Nations (UN) has been pivotal in promoting CSR worldwide, particularly through its “Global Compact” initiative, the largest corporate sustainability program in existence. This program, endorsed by numerous nations, commits its participants to uphold globally recognized CSR standards. The UN monitors the implementation of these standards, encouraging companies to prioritize social and environmental responsibilities. The concept of “mandatory CSR” is increasingly embraced globally, suggesting that corporate laws and directors’ fiduciary duties could enforce CSR as a legal obligation. While CSR is generally voluntary, some countries have taken legislative steps to make CSR participation mandatory. China, the United Kingdom, South Africa, and Indonesia are notable examples where CSR is embedded in corporate statutes, requiring companies to contribute actively to social and environmental initiatives.
China – China was one of the first countries to formally introduce CSR within its corporate laws. Under the People’s Republic of China’s Company Law of 2006, businesses are explicitly required to fulfill “social responsibility.” However, China’s approach to CSR extends beyond mere corporate guidelines; it functions as a judicial obligation. Chinese courts frequently interpret and enforce CSR standards, underscoring the judiciary’s role in upholding responsible business conduct. These international and national efforts illustrate a shared global commitment to CSR, encouraging businesses worldwide to make meaningful contributions to sustainable and ethical development.8
Corporate Social Responsibility (CSR) Importance
1.Reputation and Brand Image: Companies that actively engage in CSR often build stronger, more positive reputations. This can lead to increased customer loyalty and trust.
2. Customer Attraction and Retention: Modern consumers, especially younger generations, prefer to support businesses that care about social and environmental issues.
3. Employee Satisfaction and Retention: Employees are more likely to be proud of and stay with a company that demonstrates ethical practices and contributes to the community.
4. Risk Management: CSR helps companies anticipate and mitigate potential legal and reputational risks by encouraging responsible behavior.
5. Investor Appeal: Many investors now consider environmental, social, and governance (ESG) factors when making investment decisions.
6. Community and Environmental Impact: CSR initiatives contribute to sustainable development by supporting education, reducing environmental harm, and addressing social
7. Regulatory Compliance: Engaging in CSR can help companies stay ahead of changing laws and regulations related to labor, environmental standards, and ethical practices.
Conclusion
Corporate Social Responsibility (CSR) defines the obligations that local businesses have not only towards their communities but also towards the nation as a whole. It is essential to expand this concept to include “individual social responsibility,” as the accountability for actions and their consequences ultimately rests with society as a whole.
At its core, CSR emphasizes the importance of looking beyond mere profit generation. India has taken a pioneering step by being the first country to mandate statutory compliance for CSR spending. However, numerous challenges still need to be addressed to make CSR more effective. These challenges cannot be tackled in isolation; they require collaborative efforts from the government, businesses, and society. This cooperative approach is vital not just in India, but also in other countries, where the successful implementation of CSR hinges on having a structured framework that allows for meaningful engagement and accountability.
Globally, the concept of corporate citizenship has gained significant traction and is now a prominent part of the business agenda. Yet, several obstacles remain that must be overcome for this concept to become a reality. A key issue is the need for more robust measures to assess the impact and effectiveness of CSR initiatives. Businesses often struggle with how to promote their CSR efforts in a way that resonates with stakeholders and creates genuine social value. Addressing these issues requires a commitment to transparency and improved communication among all stakeholders involved. Open dialogue is crucial for fostering trust and collaboration, which in turn can lead to more impactful CSR strategies. As we move forward, it is essential that businesses prioritize accountability and engage with their communities meaningfully, recognizing that their success is intertwined with the well-being of society at large. By doing so, we can transform the theory of CSR into a practical reality that benefits everyone.
1 Rishabh Kumar, 3rd Year, BBALLB (Corporate Law), University of Petroleum & Energy Studies, Dehradun
2 Clark, G. L., & Soulsby, A. (2007), Corporate governance and international business, Oxford University Press.
3 The Companies Act, 2013
4 Ministry of Corporate Affairs, Government of India. (2013), The Companies Act, 2013, Available at Ministry of Corporate Affairs: https://www.mca.gov.in/content/mca/global/en/home.html
5 United Nations Industrial Development Organization (UNIDO), (n.d.), Corporate Social Responsibility (CSR). Available at https://www.unido.org/
6 The Companies Act, 2013
7 Corporate Social Responsibility Amendment Act, 2020
8 https://www.researchgate.net/publication/5219574_A_Review_of_Corporate_Social_Responsibility_in_India – Last accessed on 24/4/25
Author Bio
Corporate Social Responsibility (CSR) is not just a legal requirement, but a reflection of a company’s values and vision for society. I believe that businesses should not only focus on profits, but also give back to the communities they serve. This article clearly shows how India has taken a bold step by making CSR mandatory, encouraging companies to support education, healthcare, the environment, and social equality. I think it is a powerful way to bring about positive change. When companies act responsibly and ethically, they gain trust and respect from the public. In today’s world, where social and environmental challenges are growing, I feel CSR plays a very important role in building a more sustainable and fair future for all.