Corporate Social Responsibility (CSR) has become a cornerstone of responsible business practices, and central public sector enterprises (CPSEs) are increasingly stepping up to the plate. Recent data reveal a surge in CSR spending by CPSEs, marking a four-year high in FY24. According to the latest Public Enterprises Survey, CPSEs collectively spent a remarkable ₹4,911 crore on CSR activities in FY24, a significant 19 per cent increase from the previous year. Notably, the top 10 CPSEs accounted for a substantial 56.72 per cent of the total CSR expenditure.

CPSEs allocate their CSR funds to a diverse range of initiatives that encompass poverty alleviation to fostering skill development, promoting rural development, and enhancing financial inclusion. Healthcare and sanitation are also key areas of focus, particularly in underserved communities.

Education and skill development hold paramount importance, with programmes designed to promote quality education and provide vocational training to enhance employability and empower individuals. Environmental sustainability is a core concern, with projects aimed at protecting the environment, promoting renewable energy sources, and mitigating the impact of climate change. Furthermore, initiatives focused on empowering women and supporting economically disadvantaged sections of society play a crucial role in achieving social equity.

By addressing critical issues such as poverty, healthcare, and education, CPSEs contribute to building a more equitable and inclusive society. CSR spending stimulated economic activity and generate employment opportunities.

For instance, projects focusing on rural development and infrastructure development create jobs and revitalise local economies. By investing in environmental protection and promoting renewable energy, CPSEs contribute to sustainable development and mitigate the impact of climate change. CSR activities enhance the reputation of CPSEs and build trust among stakeholders, attracting customers, investors, and employees. Finally, CSR initiatives demonstrate the commitment of CPSEs to ethical and responsible business practices, promoting transparency, accountability, and social responsiveness.

Looking ahead

Moving forward, prioritisation and focus are paramount, requiring CPSEs to identify and prioritise areas where their CSR efforts have the greatest impact. This may involve conducting thorough need assessments and collaborating closely with local communities to understand their specific needs and priorities. Robust monitoring and evaluation systems are essential to track the progress and impact of CSR initiatives.

This data can be used to refine programmes, identify areas for improvement, and demonstrate accountability to stakeholders. Innovation and collaboration can significantly amplify the impact of CSR initiatives. CPSEs can leverage innovation and technology to enhance the effectiveness of their programmes and collaborate with NGOs, academic institutions, and other stakeholders to leverage diverse expertise and resources.

Investing in capacity building within CPSEs is crucial to ensure that they have the necessary skills and knowledge to effectively implement and manage CSR programmes. By embracing these considerations, CPSEs can transform CSR to a strategic imperative that drives sustainable development and contributes to a more equitable and inclusive society. The journey towards a more socially responsible future for CPSEs is ongoing, and by embracing these principles, they can continue to play a vital role in shaping a better tomorrow for India.

Saravanan is a professor of finance and accounting at IIM Tiruchirappalli, and Williams is the Head of India at Sernova Financial. Views are personal