News
India Inc’s spending on CSR initiatives hit a speed bump in FY23
Summary
- In FY23, the most recent year for which data is available, the CSR budgets of listed companies grew much more slowly than their net profits, a recent analysis showed.
India Inc’s spending on corporate social responsibility (CSR) grew at a slower pace than the average net profit of companies in FY23, the most recent year for which data is available. Companies listed on the National Stock Exchange’s main board spent ₹15,524 crore in that fiscal year, just 5% more than the ₹14,816 crore spent the previous year, according to a recent analysis by primeinfobase.com.
This was despite a 13% rise in their average net profit in the previous three years. According to the Companies Act, a firm should spend 2% of its three-year trailing average net profit on CSR activities in a year.
The slow growth meant that CSP spends as a percentage of net profit hit a six-year low of 1.87% in FY23, against 2.02% and 2.13% in the previous two fiscal years.
For each year, the analysis covered companies that were obligated to spend on CSR based on their profits. In FY23, the analysis covered 1,296 companies, of which 1,271 spent at least some amount on CSR, up from 1,191 in FY22.
According to Pranav Haldea, managing director, PRIME Database Group, “While the increase in profits did result in an increase in the amount required to be spent, to their credit, these companies as a whole had already been spending more than required in the previous three years (FY20 to FY22). Thus, the increase in the amount spent in FY23 was not as significant."
The biggest CSR spenders were HDFC Bank, with ₹821 crore, and IT major Tata Consultancy Services with ₹783 crore. This list also included energy and power giants such as Reliance Industries and NTPC. The top 10 spenders together accounted for 33% of the total expenditure on CSR.
About 30% of companies spent as much as prescribed, while 49% exceeded their prescribed spending. These included companies such as NHPC, Jindal Steel & Power and ICICI Bank.
Another 75 companies that were not required to spend on CSR – either because they reported a loss or did not generate enough profit – also spent ₹142 crore on such activities in FY23.
Despite reporting a loss of more than ₹4,000 crore over the three years to FY23, Tata Motors spent nearly ₹21 crore on CSR. IDFC First Bank, too, spent ₹17.5 crore on CSR despite recording a net loss of nearly ₹590 crore in the three years to FY23.
CSR expenditure on environmental sustainability saw the biggest jump – nearly 76% – that year, followed by education (41%) and rural development (26%). Spending on disaster management fell the most (77%) followed by slum development (75%) and the PM’s relief fund (59%). CSR expenditure on hunger, poverty and healthcare dipped from ₹876 crore in FY22 to ₹804 crore in FY23. According to the latest amendment by the ministry of corporate affairs, companies are not required to disclose their CSR spending details, but 610 of 1,296 companies volunteered this information in FY23.
