NEW DELHI (India CSR): In the financial year 2022-23 (FY23), Corporate Social Responsibility (CSR) expenditures by listed companies fell short of the required amounts, leading to a five-year high of Rs 1,475 crore in unspent funds. This trend underscores a significant gap in fulfilling CSR obligations, reflecting inconsistencies in corporate commitment to social and environmental causes.
The Growing CSR Shortfall
Despite the legal mandates governing CSR in India, many listed companies have failed to meet their required CSR expenditure. According to data from corporate tracker primeinfobase.com, these companies collectively spent Rs 15,602 crore on CSR activities in FY23.
However, this figure fell short of the Rs 15,787 crore they were required to spend, resulting in a shortfall of Rs 185 crore. While some companies exceeded their mandated contributions, a significant number failed to allocate even the minimum required amount, leading to an alarming increase in unspent funds.
Unspent CSR Funds Hit Record High
The Rs 1,475 crore in unspent CSR funds marks the highest figure recorded in the past five years. This amount represents the aggregate shortfall from companies that did not meet the mandated CSR expenditure, as documented in their annual reports. The rise in unspent funds highlights a troubling trend where companies, despite being legally bound to contribute to social and environmental initiatives, are falling short of their responsibilities.
Decline in CSR Spending Ratios
During FY23, listed companies allocated Rs 99 for every Rs 100 mandated for CSR projects, marking the lowest spending ratio in the past five years. In contrast, FY20 saw companies spending Rs 111 for every Rs 100 required, reflecting a more proactive approach to CSR obligations. This decline in spending ratios indicates a growing reluctance or inability among companies to prioritize CSR, which could have long-term implications for the communities and sectors they are supposed to support.
Here’s a table summarizing the key facts related to CSR spending in FY23:
This table provides a clear overview of the key statistics and trends related to CSR spending for FY23.
| Total CSR Expenditure Required (FY23) | Rs 15,787 crore |
| Actual CSR Expenditure (FY23) | Rs 15,602 crore |
| Shortfall in CSR Expenditure | Rs 185 crore |
| Unspent CSR Funds (FY23) | Rs 1,475 crore (highest in the past five years) |
| Average CSR Spending per Company (FY23) | Rs 11.29 crore |
| Average CSR Spending per Company (FY22) | Rs 11.76 crore |
| Average CSR Spending per Company (FY21) | Rs 12.41 crore |
| CSR Spending as Percentage of Net Profits (FY23) | 1.91% (below the prescribed 2% requirement) |
| Ratio of CSR Spending to Mandated Amount (FY23) | Rs 99 for every Rs 100 mandated |
| Ratio of CSR Spending to Mandated Amount (FY20) | Rs 111 for every Rs 100 mandated |
| Number of Companies Defaulting on CSR Expenditure | 4,855 companies (one-fifth of the total listed companies) |
| CSR Activities Covered | Environment, health, skill development, drinking water, sanitation, etc. |
Average CSR Spending Decreases
The average CSR spending per company in FY23 was Rs 11.29 crore, representing a four percent decrease from FY22 and a nine percent decrease from FY21. This downward trend in CSR spending per company is concerning, especially when considering the increasing need for corporate involvement in social and environmental issues. On aggregate, listed companies spent only 1.91 percent of their net profits on CSR activities, falling short of the prescribed two percent requirement.
Widespread Non-Compliance Among Companies
According to data from the National CSR Portal under the Ministry of Corporate Affairs, 4,855 companies—accounting for one-fifth of the total companies—failed to meet the prescribed CSR expenditure. This widespread non-compliance raises questions about the effectiveness of current CSR regulations and the commitment of companies to contributing to the broader societal good.
The Need for Strengthened CSR Compliance
The significant shortfall in CSR spending and the increase in unspent funds in FY23 highlight the need for stronger enforcement of CSR regulations and greater accountability among companies. As India continues to grapple with pressing social and environmental challenges, the role of corporate entities in addressing these issues through CSR initiatives becomes increasingly vital. Moving forward, it is crucial for companies to not only meet their CSR obligations but to actively engage in meaningful and impactful projects that contribute to the well-being of society.
(India CSR)
