Less corporate responsibility? India Inc's CSR spending slowed down in FY23

In FY23, there was only a 5 per cent increase in CSR spending compared to the previous year, due to which, CSR spending as a percentage of net profit fell to a six-year low of 1.87 per cent

India Inc’s corporate social responsibility (CSR) spending in FY23 grew slower than the average net profit of companies for the same period, Mint reported citing data from capital market research firm Prime Infobase. 

The companies listed on the National Stock Exchange’s (NSE) main board spent Rs 15,524 crore on CSR in FY23 (the most recent year for which data is available), a 5 per cent increase from the Rs 14,816 crore spent the previous year.

However, this growth lagged behind a 13 per cent rise in average net profit over the preceding three years. The Companies Act, 2013, mandates that firms allocate 2 per cent of their three-year average net profit to CSR annually. 

Due to the slow growth, CSR spending as a percentage of net profit fell to a six-year low of 1.87 per cent in FY23, compared to 2.02 per cent and 2.13 per cent in the previous two fiscal years, Mint added.

The analysis covered companies that are obligated to spend on CSR based on their profits. In FY23, 1,296 companies were included, with 1,271 of them spending some amount on CSR, up from 1,191 in FY22. 

Who were the top CSR spenders in FY23?

HDFC Bank was the top spender at Rs 821 crore, followed by Tata Consultancy Services with Rs 783 crore. Energy giants like Reliance Industries and NTPC also featured prominently, with the top 10 spenders accounting for 33 per cent of the total CSR expenditure.

Approximately 30 per cent of companies met their prescribed spending, while 49 per cent exceeded it. Notable companies in this category included NHPC, Jindal Steel & Power, and ICICI Bank. Additionally, 75 companies not mandated to spend on CSR due to insufficient profits or losses contributed Rs 142 crore.

Tata Motors, despite reporting a three-year loss exceeding Rs 4,000 crore, spent nearly Rs 21 crore on CSR. IDFC First Bank also spent Rs 17.5 crore on CSR despite a net loss of nearly Rs 590 crore over three years.

Where was the CSR money spent?

Environmental sustainability saw the largest increase in CSR spending at 76 per cent, followed by education (41 per cent) and rural development (26 per cent). Conversely, spending on disaster management dropped by 77 per cent, slum development by 75 per cent, and the PM’s relief fund by 59 per cent. 

Spending on hunger, poverty, and healthcare decreased from Rs 876 crore in FY22 to Rs 804 crore in FY23. 

Although companies are no longer required to disclose CSR spending details due to a recent amendment, 610 of 1,296 companies voluntarily provided this information in FY23, the report said.