Corporate Social Responsibility (CSR) initially began as a voluntary form of private regulation, but over time governments gradually became more involved—particularly in Europe, with the UK as the frontrunner. Collaboration between national governments and private industries increased with the aim of protecting and promoting social objectives, as challenges such as poverty eradication, environmental degradation, and sustainability became increasingly difficult to address. After gaining wider prominence in the UK in the 1980s during a period of high unemployment and social unrest, CSR has since become a priority issue on the public agenda in many countries.

Sustainable Development and CSR

One of the core elements of CSR—sustainable development—was defined by the Brundtland Commission in 1987 as development that fulfils current needs without compromising the ability of future generations to meet their own. This concept integrates three essential elements: safeguarding the environment, promoting social inclusivity, and advancing economically.

The interplay between sustainable development, economic activity, and laws is critical in today’s global landscape. Understanding these dynamics in China and South Asian countries provides valuable insights into the challenges and opportunities these regions face as they strive for sustainable growth, social responsibility, and innovation. Proposed collaborative efforts among these countries endorse existing research that highlights the need for knowledge-sharing platforms to expedite technological advancements. Additionally, studies of social welfare systems contribute to ongoing discourse on optimizing safety nets and implementing strategies to address inequality and poverty.

CSR As Development Tool

In efforts to address the manifold challenges of development, CSR emerged as a tool for governments to integrate the corporate sector into the socio-economic development process. Corporates also found CSR useful in improving their public image and in contributing to societal well-being without compromising core goals of profitability and market expansion.

The growth of contextual management methods—which emphasise the influence of culture, religion, and institutions—has further shaped CSR in both developed and developing nations. Given South Asia’s growing significance globally, research interest in CSR within the region has increased. Many businesses are now re-evaluating their CSR initiatives in response to rising public expectations of ethical corporate behaviour, especially in the post-pandemic context.

CSR Practices In Sri Lanka, Bangladesh

In Sri Lanka, CSR practices vary depending on whether a firm is domestic or part of a multinational chain, with the latter being more advanced in CSR awareness. Research shows that socially responsible corporate behaviour in South Asia is often influenced by religious beliefs—Hinduism, Buddhism, Christianity, and Islam. Some studies indicate that cultural and religious convictions of corporate decision-makers in Sri Lanka make domestic firms more attentive to social issues such as unemployment and poverty, even at the expense of environmental concerns.

CSR and business ethics have become increasingly important worldwide, and instances of neglecting these principles are not uncommon. A study on the Rana Plaza catastrophe involving Bangladesh’s readymade garment industry found that adherence to CSR and ethical guidelines is crucial for protecting employee and community rights, ensuring fairness, meeting social responsibilities, and ultimately enhancing profitability and sustainability.

India’s Mandatory CSR Framework

India’s mandatory CSR initiative, introduced by the Companies Act of 2013, requires companies to spend at least 2% of their average net profits from the previous three years on CSR activities. The legislation aims to leverage corporate resources and capabilities to address India’s development challenges. Companies may implement CSR directly or through third-party agencies, focusing on 12 approved areas including education, health, and rural development.

An analysis of the top 4,149 CSR companies in FY 2023–24—representing nearly 87% of total CSR outlay (around ₹30,000 crore)—shows contrasts between Indian and global firms. While Indian companies account for roughly three-fourths of spending, multinational corporations have steadily carved out a 25% share of contributors and 18% of total spending.

Foreign-origin firms, despite spending less individually, account for nearly half of the CSR value generated by global companies. They tend to employ strategic approaches aligned with global frameworks that create both brand and ecosystem value. Indian-origin firms, meanwhile, pursue expansive, locally rooted programmes covering multiple community needs.

A growing commitment toward voluntarism is also evident. In FY 2023–24, 765 companies spent at least twice their prescribed CSR budgets. Another 380 companies without any legal obligation voluntarily invested over ₹800 crore in social development. Smaller firms, especially those spending under ₹1 crore annually, often fund village schools, primary health centres, and livelihood programmes—initiatives that create direct, tangible impact.

Larger corporations are shifting to multi-year programmes, with nearly 40% of CSR budgets committed to ongoing projects. CSR is increasingly seen as a source of long-term social capital. Geographically, Tier-1 cities’ CSR share fell from 33% to 29%, while Tier-2 cities and industrial hubs recorded growth rates of 55% and 120%, respectively.

Sustainability Gaps and SDG Challenges

Despite increased social-sector spending, India still lags behind NITI Aayog’s targets required to meet the SDG commitments by 2030. Social-sector spending stands at approximately ₹23 lakh crore (8.3% of GDP) in FY 2023, growing at a robust 13% annually. Public spending makes up 95% of this total. However, India still falls short of the estimated 13% of GDP required to meet SDG goals such as poverty eradication, quality education, healthcare, gender equality, and climate action.

Corporate compliance with the CSR mandate has risen significantly, from around 30% in FY 2018 to more than 60% in FY 2022, reflecting greater corporate commitment to sustainability.

CSR, Profitability, and the Role of NGOs

Studies reveal that socially conscious behaviour enhances business profitability. While revenue remains the primary objective for businesses, large corporations increasingly integrate CSR strategies—community engagement, stakeholder participation, and environmental and social reporting—into their core operations.

An important pillar of CSR is the role of non-government organisations (NGOs) as partners in channeling funds to social sectors. While NGOs are committed to social development, their work is severely constrained without funding support. CSR funding strengthens the NGO ecosystem, while corporates gain a credible channel to fulfil their ethical and social commitments. Governments, in turn, benefit from effective partnerships with corporates and NGOs, enabling shared responsibility for social-sector goals.

Though some activities may fall short of ethical or social objectives, CSR provides continuous opportunities for deliberation, course correction, and improved strategies—contributing to a more inclusive and socially relevant development process.

References:

[i] Does Government Have a Role to Play in Corporate Social Responsibility? https://www.givingforce.com/blog/does-government-have-a-role-to-play-in-corporate-social-responsibility

 

[ii] Our Common Future-Report of the World Commission on Environment and Development,https://sustainabledevelopment.un.org

[iii] A comparative study of economic activity and sustainable development in China and Three South Asian Countries | Discover SustainabilityA comparative study of economic activity and sustainable development in China and Three South Asian Countries | Discover Sustainability https://share.google/Qdn0t56RcAVRXHLPg

 ·[iv] Xiaozhan Wang

·Zhuojie Li

·Anna Kalinowska‐Żeleźnik

A Study on the Influence Factors and Configuration Effects of Cause's Attributes and Self‐Construal on Consumer's Purchase Intention—Based on PLS‐SEM and FSQCA Methodshttps://www.researchgate.net/publication/303594898_Corporate_social_responsibility_CSR_-_insights_from_South_Asia

·[v] Saif Ur Rehman

·Yacoub Hamdan

• CEO Greed, Corporate Governance, and CSR Performance: Asian EvidenceMay 2023https://www.researchgate.net/publication/303594898_Corporate_social_responsibility_CSR_-_insights_from_South_Asia

 [vi] Samsul Alam Corporate Social Responsibility and Ethical Practices in the Readymade Garment Industry: Unraveling the Impact of the Rana Plaza Catastrophe

·June 2025

·DIU Journal of Business and Entrepreneurship 18(1):1-33

DOI:10.2139/ssrn.5325424

[vii] Mandatory Corporate Social Responsibility (CSR) in India

https://www.unesco.org/en/dtc-financing-toolkit/mandatory-corporate-social-responsibility-csr-india

[viii]  Melissa CyrillCorporate Social Responsibility in India, August 14, 2025https://www.india-briefing.com/news/corporate-social-responsibility-india-5511.html/

[ix] CSR's Next Act How the Coming Decade Will Redefine Corporate Impact, 7th Edition | October 2025https://www.sattva.co.in/wp-content/uploads/2025/11/CSRs-Next-act-Nov-25.pdf

[x] India Philanthropy Report 2024 Philanthropy as the bridge for impact in India’s growth,dasra ,Bain &company, https://www.dasra.org/pdf/resources/1712033199.pdf

[xi] Santanu Kumar Das et alAn Empirical Study on the Impact of the Corporate Social Responsibility of the Indian Corporate Sector, Journal of Economic Integration Vol. 37, No. 4, December 2022, 790-808 https://doi.org/10.11130/jei.2022.37.4.790 ⓒ 2022-

 

(The writer is a retired Special Secretary, Government of India. Views expressed are personal. He can be reached at ppmitra56@gmail.com)