CSR activities as a catalyst for financial success: evidence from Indian companies

This study examines the relationship between Corporate Social Responsibility (CSR) practices and financial performance in Indian firms, particularly regarding the implementation of long-term sustainability into their operations. Non-financial companies listed on the National Stock Exchange of India (NSE-100 firms) constitute the sample, so no banking or financial institutions are included due to their distinct set of regulatory guidelines. Financial performance is defined by Net Profit Margin (NPM), Revenue Growth (RG), Return On Assets (ROA), Return On Equity (ROE), and Tobin’s Q (TQ). Data relating to CSR expenditures and ESG scores were obtained from CRISIL, including the source of Environmental (ES), Social (SS), Governance (GS) and an overall ESG score. Using descriptive statistics, correlation analysis, and fixed effects panel data regression model analysis, the relationship between CSR variables and financial performance was examined. Analysis of the results indicates that there is a strong, positive relationship between CSR expenditures and financial performance (profitability, revenue growth, asset productivity, and market value). Results also illustrate how effective corporate governance will further facilitate the success of CSR initiatives. This research provides insight into the way firms can use CSR to achieve both their financial and social purposes in today’s business environment.