Ensure more bang for the CSR buck

economictimes.indiatimes.com:

CSR funding continues to have two favourites — health and education. According to ET's analysis of new corporate affairs ministry data, in third position now is 'environspend', which has increased by 70% since CSR became mandatory in FY22 and double the amount of FY21, displacing rural development from medal position. Total CSR spending has increased by about 80% since 2014-15, when it became mandatory for businesses above a certain threshold to spend a minimum of 2% of their three-year average net profit towards social causes.

From ₹6,338 crore in FY14, CSR spending rose to ₹25,933 crore in FY22. But here's the thing — despite the increased flow of funds, CSR impact has been limited. The requirement that businesses use CSR funds in their area of operation results in concentrating spending on education and health.

Schools provide for a straightforward avenue to undertake CSR. Similarly with health, where spending includes initiatives related to dealing with hunger, malnutrition, drinking water and sanitation. The pandemic also pushed up health-spend.

Despite the major jump in environment-related spend, in absolute terms, it remains relatively small. And, for perspective, this kitty includes animal welfare, tree plantation and resource conservation. For CSR spending to be leveraged and have impact, there must be a greater alignment between spending plans of individual businesses and national priorities in the sector.

Using CSR funds for capital and operational expenditure will improve impact. CSR spends are marked by regional imbalance — concentrated in Maharashtra, Karnataka, Gujarat, Tamil Nadu and Uttar Pradesh, while northeast states account for less than 1%. Time to revisit how CSR funds are utilised to maximise