Impactful CSR: Where strategy meets responsibility

Authored by Dr. Sanjay Bhardwaj, Associate Partner, Development Sector & CSR Advisory, Government Infrastructure and Development Sector Advisory Services, Forvis Mazars in India

Corporates often remain focused on compliance rather than driving purpose-driven impact. However, the scenario can be changed by aligning CSR with business acumen, leveraging technology, and valuing transparency. And that will deliver enduring impact.

India’s corporate social responsibility regime, formalised through Section 135 of the Companies Act (2013), mandates eligible companies to allocate 2% of their net profits to social causes. Yet, despite this regulatory milestone, a significant proportion of CSR projects in India struggle to generate sustained impact, as highlighted by recent reports on implementation challenges and monitoring gaps.  This is largely because CSR strategies often remain tethered to compliance, rather than evolving into authentic, purpose-driven initiatives that align with environmental, social, and governance (ESG) principles.

What are corporates doing? – The fundamental challenges

The mandatory 2% spending rule, though pivotal in mobilising resources, has unintentionally bred a culture of “checkbox compliance.” Many firms focus on ticking regulatory boxes over crafting meaningful interventions. A common example is the funding of school infrastructure projects without any mechanisms to track enrolment, attendance, or learning outcomes—often leaving the infrastructure underutilised and disconnected from the communities they aim to serve.

Another fundamental issue is the lack of genuine stakeholder engagement. While large organisations have adopted participatory approaches in their rural interventions, most companies limit their engagement to perfunctory consultations. This has fuelled resistance, especially in sectors like renewable energy, where communities feel excluded from decision-making. Although the National Guidelines on Responsible Business Conduct (NGRBC) encourage inclusive stakeholder practices, only 34% of Indian firms involve NGOs or grassroots institutions in the design of their CSR projects, leaving a vast opportunity for improvement.

Despite CSR spending reaching ₹29,986 crore in FY 2023–24, more than half of the projects still lack outcome-based frameworks. Education receives the largest chunk (₹10,085 crore), yet literacy indicators in many targeted areas remain stagnant. Some companies offer a contrasting approach by aligning CSR with core competencies, measuring parameters such as employment outcomes in skilling initiatives and patient recovery rates in healthcare, thereby moving the needle towards measurable impact. This points to a broader issue of strategic misalignment. While organisations working in the IT/ITeS space utilise their IT heritage to support digital literacy, many others indulge in generic philanthropy that bears little relation to their business strengths. The NGRBC’s Principle 2 specifically calls for CSR to be embedded in sustainable business models. Another conglomerate in India implements a circular economy coalition and weaves waste reduction into its supply chain, illustrating how companies can integrate CSR meaningfully into their operations.

In addition to strategic alignment, companies can further strengthen CSR by integrating employee well-being, mental health, and active involvement in strategy development. Trends like employee volunteering and giving programs boost internal culture, engagement, and retention. Co-creating CSR initiatives with employees also fosters innovation and ensures alignment with both personal values and corporate goals.

Moreover, transparency remains a significant concern. Only about 30% of Indian companies subject their CSR reports to third-party audits, despite the introduction of Form CSR-2 in 2021 aimed at standardising disclosures. In contrast, some large corporates publish detailed annual sustainability reports—covering carbon footprint reductions and programme outcomes—setting a benchmark in fostering trust through disclosure.

Short-termism is yet another barrier to impact. Many companies prefer quarterly health camps or ad-hoc donation drives rather than long-term programmes. In comparison, a few leading organisations have a long-duration CSR plan achieving sustained output along with long-term commitment toward communities. India’s CSR landscape could benefit immensely from similar multi-year strategies, particularly in sectors like clean energy and climate resilience.

What can be done?

Technological integration lags global trends. There are scores of leading examples which can become the blueprint of success for others. Reliance Foundation’s blockchain-based agricultural grant tracking and Infosys’s AI-powered water management systems illustrate promising examples. However, such innovations remain rare. Encouragingly, the 2022 CSR Amendment Rules now explicitly allow for technology-led interventions, signaling a policy push toward scalable, efficient delivery models.

For Indian firms seeking to transform their CSR outcomes, a four-pronged approach can serve as a robust framework.

1. Undertaking a materiality assessment can help align CSR with both core business strengths and national development priorities, for example, tech firms supporting digital literacy initiatives under Digital India.

2. Co-creating interventions with NGOs, as seen in Tata Group’s collaboration with Smile Foundation for rural education, fosters community ownership.

3. Deploying technologies such as IoT for real-time monitoring or blockchain for fund traceability ensures greater accountability.

4. Reporting should shift from financial inputs to impact-linked outcomes, ideally through globally recognised frameworks like the Global Reporting Initiative (GRI).

Exciting opportunities are emerging. Take for example, Mahindra Group’s efforts in the circular economy space, Microsoft’s AI for Earth partnership with Indian conservation NGOs, and SEBI’s push for ESG-aligned Business Responsibility Reports (read BRSR) all imply a turning tide. Companies that embed CSR into their sustainability agenda are likely to gain a competitive edge while meeting regulatory obligations.

Water scarcity remains a critical challenge in rural India, often leading to migration, poor agricultural productivity, and health issues. In Anantapur, one of India’s driest districts, Coca-Cola India’s Anandana Foundation, in partnership with the SM Sehgal Foundation, launched Project Jaldhara. By constructing five check dams, the initiative replenished groundwater, revived agriculture, and enabled farmers to cultivate multiple crops annually transforming previously barren fields into productive farmland. Similarly, in Sikar, Rajasthan, Anandana’s water conservation projects rejuvenated over a billion liters of water, directly benefiting thousands. Women, who once walked miles for water, now have time for education and economic activities, highlighting how targeted CSR efforts can reduce drudgery, improve health, and foster economic resilience in rural communities.

India’s heavy reliance on agriculture, coupled with limited alternative livelihood options, often results in income instability and migration. Tata Trusts’ Open Source Fisheries (OSF) initiative addresses this by training rural fishing communities in improved aquaculture techniques, positively impacting over 35,000 households and reducing distress migration. Similarly, Reliance Foundation’s Bharat India Jodo (BIJ) project, implemented by SARDA, focuses on supporting small and marginal farmers in Mandla, Madhya Pradesh. The program promotes sustainable agriculture, helps farmers diversify crops, and facilitates access to markets, thereby increasing income and reducing dependence on single-crop farming.

These examples underscore how CSR initiatives, when strategically aligned with local needs, can deliver tangible improvements, addressing some of India’s most pressing challenges.

Many corporate social responsibility (CSR) projects could be more effective if companies involved local government bodies, such as Panchayats or town councils, from the start. These local groups have a deep understanding of their communities and can identify what is truly needed. However, in many cases, they are not included in the planning process.

For example, in a health programme, it is much more beneficial to design the initiative with input from local health workers who are familiar with the issues faced by the community. When CSR efforts align with existing government schemes, such as the Jal Jeevan Mission or rural job programs, they can reach a larger audience without having to start from scratch. This collaboration also helps prevent duplication of efforts that are already being implemented.

In some areas, local officials can assist in mobilising volunteers, land, or infrastructure, which can enhance the delivery of CSR initiatives at no additional cost. Some companies have attempted to establish a central hub for testing new ideas and disseminating them to nearby areas, with support from local groups. This model can continue even after the company moves on. And new ideas, such as social stock exchanges, may make it easier for local NGOs to acquire funds and produce results. Local trust, built over time, is hard to buy; and when companies treat local leaders as real partners, not just beneficiaries, the results are deeper and longer-lasting.

India’s CSR movement stands at a crossroads. The path from regulatory obligation to strategic value creation requires companies to evolve from mere funders to co-creators of sustainable change. A few leading organisations are already demonstrating that when CSR aligns with business acumen, leverages technology, and values transparency, it delivers enduring impact. To make real progress, Indian companies need to stop viewing CSR as an external function and instead see it as central to their identity. This means creating cross-functional teams that include CSR experts, business strategists, and frontline staff who understand ground realities. It also involves making CSR data-driven by tracking not just how money is spent but how lives are changed.

Strong leadership is key when CEOs champion CSR, not just in speeches but in boardrooms, the whole organisation responds. Lastly, companies must be open to feedback from beneficiaries, partners, and employees and use it to evolve their initiatives. This continuous improvement mindset will help CSR stay relevant, responsive, and truly impactful. With ESG becoming institutionalised, firms embracing the NGRBC principles will not only fulfil mandates but also strengthen brand equity and long-term resilience. The time is ripe for Indian CSR to transition from illusion to innovation, transforming corporate intent into meaningful nation-building.

The article was featured on CSR Mandate on 27 June. Read here