Corporate social responsibility (CSR) and corporate financial performance (CFP): a panel data analysis of BSE 500 companies in India
Abstract Corporate social responsibility (CSR) has become a significant focus in the corporate world, emphasizing ethical practices and sustainable development. CSR is important because it ensures that businesses act ethically, contribute positively to economic growth, and improve societal well-bein...
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| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Springer
2025-04-01
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| Series: | Discover Sustainability |
| Subjects: | |
| Online Access: | https://doi.org/10.1007/s43621-025-01113-z |
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| Summary: | Abstract Corporate social responsibility (CSR) has become a significant focus in the corporate world, emphasizing ethical practices and sustainable development. CSR is important because it ensures that businesses act ethically, contribute positively to economic growth, and improve societal well-being, addressing stakeholder interests while fostering trust and reputation. It is imperative in India due to legal mandates under the Companies Act, of 2013, requiring companies to allocate a portion of profits to CSR, thus aligning corporate goals with national priorities like education, healthcare, and sustainability. CSR's role in addressing climate change is crucial, especially in India, a country vulnerable to extreme weather, where companies contribute to reforestation, renewable energy, and community resilience projects, supporting India’s commitments to global climate goals such as the Paris Agreement and net-zero targets. This study explores the interplay between CSR and CFP within BSE 500 companies in India, offering insights into their interconnected impact on business sustainability and profitability. The study analyzed data from the annual reports of 204 Indian firms from 2016 to 2023, yielding a dataset of 1,632 observations. The research design was explanatory, and the results indicate that CSR has no significant impact on CFP. The findings that CSR has no significant impact on CFP suggest several policy implications. Policymakers should focus on creating frameworks that encourage companies to align CSR activities with their core business strategies, ensuring these initiatives are both impactful and economically beneficial. Additionally, there is a need to enhance stakeholder awareness and engagement, so that CSR efforts are more valued in the market. Regulatory bodies might also consider offering incentives for innovative and sustainable CSR projects that demonstrate measurable economic and social benefits. Lastly, fostering transparency and improved reporting standards for CSR activities could help bridge the gap between CSR investments and their perceived financial returns. |
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| ISSN: | 2662-9984 |