What Boards Need to Know About CSR Today

As Corporate Social Responsibility (CSR) continues to evolve from a peripheral obligation to a core strategic function, the role of the boardroom has never been more critical. In India, where CSR is not just a voluntary measure but a statutory obligation under the Companies Act, 2013, boards are expected to demonstrate oversight, ethical stewardship, and strategic alignment of CSR with business goals.

This article outlines the key considerations for boards in 2025 and beyond, in light of regulatory developments, stakeholder expectations, and the growing focus on impact and transparency.

1. Understanding the Regulatory Landscape

India is one of the few countries in the world with a mandatory CSR regime, as per Section 135 of the Companies Act, 2013, and its subsequent amendments. Companies meeting specific financial thresholds must spend at least 2% of their average net profits (of the preceding three years) on CSR activities.

🔗 Ministry of Corporate Affairs – CSR Portal
🔗 MCA Notification – CSR Rules

Boards must ensure:

• Proper constitution of a CSR Committee (if applicable)
• CSR policy alignment with Schedule VII areas
• Annual disclosures in Board Reports and the MCA portal
• Monitoring of unspent CSR amounts and impact assessment reports for projects above ₹1 crore and 1-year duration

2. Strategic Integration Is No Longer Optional

CSR must now be viewed through a strategic lens—not as philanthropy but as a long-term business investment. The best-performing organizations embed CSR into their core business model, linking it with ESG (Environmental, Social, Governance) goals, risk mitigation, and stakeholder trust.

For boards, this means asking:

• Is our CSR aligned with our sustainability and ESG priorities?
• Are we leveraging CSR to enhance license to operate in key markets?
• Are our CSR projects creating measurable impact or just meeting compliance?

3. Impact Assessment and Reporting: A Board-Level Responsibility

With the introduction of mandatory impact assessments (for projects above specified thresholds), boards must ensure their CSR spends lead to tangible, measurable outcomes.

What boards should review:

• Are we choosing the right implementation partners (NGOs, agencies)?
• Are we investing in capacity building and long-term projects?
• How are we validating impact reports and third-party evaluations?
• Boards must also ensure transparent communication in annual reports, BRSR disclosures (Business Responsibility and Sustainability Reporting), and CSR portals.

4. Navigating Risks and Reputational Implications

CSR missteps such as failure to spend, poor project monitoring, or unverified partners can invite penalties, regulatory scrutiny, and public backlash. The Companies (Amendment) Act, 2020 introduced penal provisions for non-compliance.

Boards must build robust risk frameworks, conduct due diligence on implementation agencies, and establish real-time monitoring mechanisms.

5. Fostering Innovation and Board-Level Advocacy

Boards should encourage:

• Pilots and innovations in tech-enabled CSR (e.g., using AI for impact tracking)
• Inclusive engagement, especially in tribal, rural, and underserved communities
• Partnerships with government schemes, such as PMKVY (skill development) or Jal Jeevan Mission (water conservation)

Forward-thinking boards advocate for employee-led CSR, cross-sector collaborations, and new models of shared value creation.

In today’s fast-changing world, CSR is no longer a side note—it’s a strategic imperative. As CSR matures into a core business function, board engagement is non-negotiable. Compliance is just the beginning; boards must now take ownership of impact, transparency, and stakeholder trust.

Those that remain passive risk falling behind, while those who lead with purpose and foresight will find that CSR is not just about doing good—it’s about doing well by doing good. Because the companies that thrive tomorrow will be those whose impact extends far beyond the bottom line.