CSR spending by listed firms jumps 23% in FY25 led by strong profit growth

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Make us preferred source on Google Whatsapp twitter Facebook Reddit PRINT Corporates are no longer just chasing profits — they’re also investing in the brighter side of society, channeling their success into meaningful social upliftment while continuing to thrive in business. Corporate Social Responsibility (CSR) spending by companies listed on stock exchanges registered a sharp rise of 23% in FY25, reaching Rs 22,212 crore compared with Rs 18,011 crore in the previous financial year. The increase has been attributed largely to robust corporate profitability. Pranav Haldea, Managing Director of PRIME Database Group, said the surge in CSR expenditure was driven by a significant 22% growth in the average net profits of these companies over the preceding three years. Under existing regulations, firms meeting specified financial thresholds are required to allocate at least 2% of their average net profits towards CSR initiatives. The latest rise follows a 16% increase in CSR spending recorded in FY24, marking a period of strong recovery after nearly four years of stagnation. CSR outlays had remained relatively flat between 2019-20 and 2022-23, inching up marginally from Rs 14,776 crore to Rs 15,561 crore during that time, according to data compiled by PRIME Database Group. The number of companies undertaking CSR activities also increased during the year. Of the 1,549 companies mandated to spend on CSR, as many as 1,521, or 98%, reported such expenditure in FY25, up from 1,372 companies in FY24. However, 28 companies failed to spend any amount despite being under obligation, it said. It said a majority of companies stepped up their CSR commitments. As many as 934 firms, representing 70% of the total, increased their spending compared to the previous year. While 438 companies, or 28%, spent exactly the prescribed amount, 751 companies — nearly 48% — exceeded the mandatory requirement. Notably, 28 companies reported CSR spending despite incurring losses during the year. Sector-wise, education continued to attract the highest allocation, with Rs 1,137 crore directed towards educational initiatives. Healthcare followed as the second-largest area of focus, receiving Rs 840 crore. In contrast, sectors such as slum development, support for armed forces veterans, and disaster management continued to see minimal or negligible funding, Prime Database said. The CSR framework in India, which came into effect in April 2014, mandates eligible companies to spend 2% of their average net profits over the previous three financial years on CSR activities. It applies to companies with a net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more. Haldea said the government is now considering revising these financial thresholds upward, a move he has long advocated for. He argued that raising the limits would improve the ease of doing business and align the framework with its original intent of excluding relatively smaller companies from mandatory CSR obligations. According to Prime Database, a total of 2,142 companies were listed on the NSE main board as of March 31, 2025. Annual reports for FY25 were available for 2,081 of these companies, of which 2,066 disclosed CSR-related information. Among these, 1,549 companies were required to undertake CSR spending, up from 1,399 in the previous year. The analysis is based on this set of companies. The average net profit of these 1,549 companies over the last three years rose to Rs 11.76 lakh crore in FY25 from Rs 9.64 lakh crore in the previous year. Consequently, the mandated CSR expenditure increased to Rs 22,732 crore, compared with Rs 18,351 crore in FY24. However, actual spending stood slightly lower at Rs 22,212 crore. The gap between the required and actual spending has been attributed to unspent CSR funds. Companies transferred Rs 3,223 crore to their Unspent CSR Accounts for utilisation in subsequent years, contributing to the shortfall. At the same time, 315 companies fell short of meeting the mandatory 2% spending requirement, up from 258 companies in the previous year. This was primarily due to the adoption of multi-year CSR projects, where unspent funds are carried forward for use within the next three financial years. If these funds remain unutilised beyond this period, they must be transferred to specified government funds such as the Prime Minister’s National Relief Fund or the PM CARES Fund. Public sector undertakings (PSUs) also recorded an increase in CSR expenditure. A total of 71 PSUs spent Rs 4,791 crore in FY25, marking a 19% rise from Rs 3,717 crore spent by 67 PSUs in FY24, it said. The CSR law also requires companies spending over Rs 50 lakh annually on CSR activities to constitute a CSR committee comprising at least three board members, including one independent director. Of the companies analysed, 1,162 reported CSR spending above Rs 50 lakh, and 1,102 had established the requisite CSR committees. Additionally, 520 companies exceeded the minimum requirement by appointing more than three members to their CSR committees. In terms of disclosure practices, a notification issued by the Ministry of Corporate Affairs on September 20, 2022, simplified reporting requirements by removing the obligation to provide detailed information on CSR projects, including sector and location. Despite this, 531 companies voluntarily disclosed such details in their annual reports, offering insights into the allocation of CSR funds across sectors.