The Origin and Evolution of Corporate Social Responsibility (CSR) in India: A Historical Perspective

Corporate Social Responsibility (CSR) has emerged as a significant aspect of business practices globally, reflecting a commitment to sustainable development and societal well-being. In Indian context, CSR has a deep-rooted history that intertwines with the country’s social and economic transformation. The origins of CSR in India traces back to its historical evolution in the country when Mr Jamshedji Tata in 1892 established the JN Tata Endowment, which provided scholarships to Indian students to study abroad. He donated funds for the establishment of the Indian Institute of Science in Bangalore and established the Tata Memorial Hospital in Mumbai in 1941, which is now one of India’s leading cancer treatment centres. He has been a classic example for cultivating a solid foundation for CSR in the country.

The roots of CSR in India can be traced back to ancient times when the concept of “dharma” emphasized the moral duty of individuals and communities towards society. The practice of giving back to society was ingrained in Indian culture, with philanthropic activities being undertaken by wealthy individuals, merchants, and kings to uplift their communities. This tradition continued through various dynasties and empires, exemplified by the patronage of art, education, and healthcare.

After gaining independence from colonial rule in 1947, India embarked on a journey of nation-building, prioritizing socio-economic development and poverty eradication. In the early years, the government played a dominant role in social welfare initiatives through its policies and programs. However, with the liberalization of the Indian economy in the 1990s, the private sector began to gain prominence, leading to a re-evaluation of role of businesses in society.

A significant turning point in the history of CSR in India came with the enactment of the Companies Act, 2013. The legislation made it mandatory for certain qualifying companies to allocate a portion of their profits towards CSR activities. This legal provision was a ground-breaking step, making India the first country to mandate CSR expenditure through a statutory requirement.

The law required companies meeting certain financial thresholds to spend at least 2% of their average net profits of the preceding three years on CSR initiatives. The scope of eligible activities included promoting education, eradicating hunger, and poverty, ensuring environmental sustainability, supporting healthcare, empowering women, and promoting social equality. The Companies Act, 2013 also laid down reporting requirements, necessitating companies to disclose their CSR initiatives in their annual reports.

Since the introduction of mandatory CSR, the corporate landscape in India has witnessed a significant shift. Numerous companies, both large and small, have embraced CSR as an integral part of their business strategies. CSR initiatives have expanded beyond mere philanthropy and charity to encompass sustainable development, environmental conservation, skill development, and community empowerment.

Companies in India have adopted innovative approaches to CSR, including partnerships with non-governmental organizations (NGOs), collaborations with government agencies, and engagement with local communities. They have undertaken projects that address pressing societal challenges, such as education and skill development programs for underprivileged youth, healthcare initiatives in rural areas, sanitation campaigns, and renewable energy projects.

The mandatory CSR provision has contributed to the emergence of a more socially conscious business environment in India. Companies have recognized the potential of CSR to enhance their brand reputation, build stakeholder trust, and create long-term sustainable value. CSR initiatives have played a pivotal role in driving positive social change, bridging gaps in access to education, healthcare, and livelihood opportunities.

Furthermore, CSR activities have complemented the efforts of the government in addressing social and environmental issues, often through collaborations and partnerships. By aligning their business objectives with societal needs, companies have contributed to the overall development of the communities in which they operate.

The concept of CSR in India has evolved from traditional philanthropy to a more structured and strategic approach, thanks to legislative interventions and changing business paradigms. The mandatory CSR provision has led to a proliferation of impactful initiatives undertaken by Indian companies across various sectors. CSR has become an essential element of corporate governance and sustainability.