Corporate Social Responsibility (CSR)

Last Updated On -28 Jul 2025

In the contemporary business landscape, profitability alone cannot define a firm's success. Businesses are now expected to be more responsible and accountable to all the stakeholders. This gave birth to the concept of Corporate Social Responsibility (CSR) which is the integration of social and environmental concerns by a business to the stakeholders.

CSR connects the two divergent aspects of the business profitability and philanthropic obligations by ensuring corporations take social responsibility towards governance and environmental concerns. This is important, especially for students and professionals in commerce, as CSR is important for academic and real life business engagement.

What is Corporate Social Responsibility (CSR)?

CSR is a development strategy that seeks to reconcile a business with the social environment as it integrates social, ethical, and environmental concerns with business activities. It attempts to balance the business and social environment. CSR is a business self-regulation initiative to ensure that companies do act for the public interest.

CSR and social responsiveness is not just donations and charity but a strategic development for a company's reputation which is designed to match the social interests with the business and industry goals and benefits.

Definition from United Nations Industrial Development Organization (UNIDO)

“Corporate Social Responsibility is a management concept in which companies plan social and environmental issues and their concerns in business operations and stakeholder relations.”

Key Features of CSR

CSR must not be treated as a public relations tool. Corporations often commit the blunder of engaging in CSR for the sole purpose of boosting their public image. Companies must instead pursue authenticity, measurable impact, and genuine, sustained intent. Lack of transparency and misuse of CSR funds can severely damage a company's reputation.

1. Voluntary Yet Accountable

CSR is often a matter of a company’s business policy; however, in India, specific companies have a legal mandate to CSR expenditure. This unique interplay makes CSR both a moral and, to an extent, legal requirement.

2. Stakeholder-Oriented

CSR encompasses a broader range of constituents beyond shareholders, which includes employees, patrons, suppliers, communities, and the surrounding natural environment. It mandates that business activities provide wider social good.

3. Ethical and Transparent Practices

CSR promotes corporate compliance with the law and endorses fair employment, honesty in advertisement, ethically acceptable procurement, and adheres to the principles of good corporate governance.

4. Sustainable Development

CSR encompasses environmental sustainability, sustainable community development, and preservation of ecosystems through the eye of long-term sustainability.

5. Social Investment

CSR encompasses social initiatives such as skill development, educational sponsorship, healthcare programs, community service, and development of physical structures in economically underprivileged regions.

CSR Under Companies Act, 2013 (India)

India is one of the few countries where CSR is legally mandated for certain companies. Under Section 135 of Companies Act 2013, the following companies are mandated to spend two percent of their average net profits from the last three years on CSR activities:

Net worth of ₹500 crore or more
Turnover of ₹1,000 crore or more
Net profit of ₹5 crore or more

They are also required to create a CSR Committee and report their activities in the annual report.

Common Areas of CSR Spending

Compliance is just one facet of Corporate Social Responsibility; the other is the dedication to socially responsible growth. In the contemporary business environment, CSR functions as a strategic instrument that advances sustainable development, improves stakeholder relations, and bolsters corporate reputation. Be it a seasoned scholar of commerce or a budding business executive, the understanding of CSR will be a major part of any career shaping the business world of the future.

Promotion of education and skill development
Healthcare and sanitation
Environmental sustainability
Rural development projects
Gender equality and women empowerment
Support to old-age homes and differently-abled persons
Promotion of arts, culture and heritage

Key Examples for CSR

Tata Group: Tata is widely recognized for their ethical conduct, and robust CSR activities and Tata Trusts which fund education, healthcare, rural development and arts.

Infosys: The Infosys Foundation engages in healthcare, education, and also in the development of arts and culture.

ITC Limited: ITC Limited keeps its focus on the e-Choupal initiative as a part of its CSR, which encourages rural development and sustainable agriculture.

Why is CSR Important?

The primary objective of CSR is to harmonize corporate success and social development.

Establishes brand reputation and customer trust
Improves employee satisfaction and retention
Encourages innovation for sustainability
Lessens operational risks and regulatory scrutiny
Strengthens relationships with the community
Supports the achievement of development goals

Did you know?

In 2014, India became the first country in the world to legally mandate Corporate Social Responsibility (CSR) through its Companies Act.

Frequently Asked Questions (FAQs)

Is CSR compulsory in India?

Yes. Companies that fulfill the qualifying indicators as per Section 135 of the Companies Act, 2013 have mandatory CSR spend and report obligations.

Can donations to political parties be included under CSR?

No. Political contributions are expressly excluded from CSR scope.

How is CSR monitored?

In order to report on CSR, companies are required to have a CSR committee, keep a record of the relevant activities, and report on the activities in the Board Report and the annual return filed with the Ministry of Corporate Affairs.