Opinion | CSR: Compliance To Catalyst For Change

The role of CSR has evolved significantly since its inception in 2014. Today, corporates are increasingly adopting a problem-first approach, going beyond the transactional nature of funding programmes to create a more enduring impact. Let me elaborate on a couple of key observations of the trends we've noticed that trace this evolution.

Problem-First Approach

One of the key changes noticed is that companies are increasingly shifting their approach from project-based funding to problem-solving. Identifying key societal challenges that align with the material needs of the industry they operate in enables businesses to contribute more meaningfully to addressing systemic issues.

For instance, pharmaceutical companies focus on improving healthcare access, preventive care, and medical innovations, aligning their CSR efforts with their mission to enhance public health. Similarly, tech companies concentrate on digital literacy, cybersecurity, and innovation-driven education, using their capabilities to close digital gaps and foster technological growth. So while education and healthcare remain top CSR priorities, according to the State of CSR Report, 2024, there has emerged a shift in CSR spending in emerging areas such as livelihood projects and natural resource conservation. CSR spending on livelihood enhancement has surged nearly twofold in FY 2022-23 compared to the previous year. Simultaneously, CSR activities in the conservation of natural resources have doubled, driven by mounting concerns over climate risk and environmental sustainability. A couple of other interesting findings:

● In FY 2022-23, BFSI and IT/ITES companies shifted their focus back to the Education sector
● More than 30% of funding in Livelihood projects is from BFSI companies
● Rural Development projects are championed by BFSI, Mining and Energy companies

By ensuring these interventions are well-structured and aligned with Schedule VII, companies can also seamlessly integrate CSR efforts with broader societal development goals, achieving both compliance as well as a lasting impact.

Focus On Innovation

Another critical shift is that CSR is now seen as a vehicle for innovation, often employing mechanisms such as innovative finance to attract further investment and enhance the scale and sustainability of solutions.

India, despite its burgeoning innovation ecosystem and being home to the third-largest startup environment globally, has traditionally lagged in public sector funding for R&D. In response, CSR initiatives have emerged to fill this funding gap by channelling corporate resources into fostering social innovation and R&D. Companies are increasingly directing their CSR investments toward incubators, research centres, and university partnerships that focus on developing new solutions to pressing societal problems. This not only bridges the funding deficit but also accelerates India's transition to a knowledge-based economy. Through targeted investments in innovation, companies are supporting advancements in areas like clean energy, healthcare innovation, and agricultural sustainability. Some examples of targeted CSR investments in innovation:

● A transport manufacturing company has partnered with a start-up incubator to launch a sustainable mobility incubation programme, supporting startups in building ecosystems for urban mobility solutions in India

● The R&D unit of a global automotive company has accelerated an e-mobility start up by helping establish battery swapping infrastructure for e-rickshaws, boosting drivers' daily incomes by up to INR 500

● A large global networking company partnered with a non-profit to launch an accelerator, focused on fostering innovation in the agricultural sector

This trend is poised to gain further momentum, as the government also places a strategic focus on innovation and research & development, as highlighted in the recent Union Budget. With a ₹1 lakh crore allocation toward private sector-driven research and initiatives like the operationalisation of the Anusandhan National Research Fund, the government is echoing the corporate sector's push toward a more knowledge-driven economy. State governments and Global Capability Centers (GCCs) are further complementing these efforts by creating supportive environments for research-driven CSR interventions, thus strengthening the ecosystem.

Shrinking Project Funnels With Increased Ticket Sizes

Recent regulatory amendments allowing the transfer of unspent CSR amounts to “ongoing” projects and permitting the carryover of funds for up to three years appear to have prompted a strategic shift in the way that corporates approach CSR. Corporates are increasingly focusing on flagship programmes that align with longer-term impact goals, moving away from traditional one-time donations and short-term projects with immediate but limited results.

So there is a streamlining of project funnels while increasing the ticket size for each project. Over the past three years, companies in the ₹100-500 crore and ₹50-100 crore spend categories have decreased the number of projects while increasing the average project ticket size, indicating a shift towards larger, more impactful initiatives.

More than just funds, companies are bringing in expertise, in synchronisation with other global players - coming together to jointly invest and pool resources, expertise, and networks to maximise the impact of their social responsibility initiatives. This growing trend of CSR-to-CSR collaboration is data-led and built on leveraging individual expertise, resource pooling, and the sharing of knowledge and best practices. For instance, several major tech companies have collaborated to advance "tech for good" initiatives, working together to solve socio-economic challenges by promoting digital literacy, access to healthcare through telemedicine, and advancements in the circular economy.

CSR Becoming A Catalyst For Societal Impact

Corporates are not only deploying funds but are also playing a catalytic role by engaging in collaborative partnerships with other corporates, government, academic institutions, incubators, NGOs, and other stakeholders to unlock resources and drive systemic transformation. These evolutionary shifts encourage businesses to channel their resources toward sectors with significant social gaps—particularly where public capital has been insufficient.

In today's landscape, strategic CSR functions as a bridge between business and social value, with companies aligning their strategies to achieve long-term goals while maintaining responsiveness to evolving ground realities and creating a domino effect for societal impact at scale.

(The author is Co-founder and CEO, Sattva Consulting)

Disclaimer: These are the personal opinions of the author