An Empirical Study on the Corporate Social Responsibility Regime in India: Pre-COVID and COVID Times

Abstract

Companies have shown social responsibility towards their stakeholders through corporate philanthropic efforts, known as Corporate Social Responsibility (‘CSR’). These efforts aim to maximise the welfare of the stakeholders and take care of the needs of society. The parent legislation for the Indian companies, that is, the Companies Act, brought a paradigm shift in 2013 when it mandated certain companies to spend mandatorily on CSR activities. Since then, the CSR legislation has been subject to frequent changes through amendments and clarifications. Various changes were brought to CSR policies in the past 2 years during COVID-19, including allocation of CSR funds towards COVID-19 relief funds, carry forward of excessive CSR expenditure and 100% tax deduction on COVID-19-related activities. This has affected how companies allocate their CSR funds. To study this change, this empirical study analyses the shifts in CSR expenditure of the top 25 companies of the Fortune 500 list in pre-COVID-19 financial year 2017–2018 and COVID-19 hit financial year 2020–2021. The study uses a secondary data collection method, that is, self-reported annual reports, to arrive at ratios given as percentages or fractions, and a comparison is made across the two periods. The authors deliberate upon the limitations of the CSR regime as revealed by the COVID-19 pandemic and address questions relating to the CSR regime’s efficiency in providing societal good. Furthermore, the authors study the modified CSR expenditure pattern adopted by several companies consequent of COVID-19. This study concludes by offering recommendations that strive to inspire a more sustainable, efficient and pragmatic CSR regime in India. JEL Classification: G39, D22, M14