Corporate Social Responsibility Spending and Financial Performance: Evidencefrom selected NIFTY Firms in India

Abstract

This study examines the relationship between Corporate Social Responsibility (CSR) expenditure and accounting-based financial performance, measured through Return on Assets (ROA) and Return on Equity (ROE), for selected NIFTY-listed companies over the period 2020–21 to 2024–25. Using secondary data collected from published annual reports, the research evaluates trends in CSR spending and assesses its influence on firm profitability. The findings indicate a consistent upward trajectory in CSR investments across most of the sampled companies, reflecting increased regulatory compliance and growing stakeholder expectations toward sustainable business practices. Despite this rising trend, the empirical analysis reveals that the relationship between CSR expenditure and financial performance is not uniform. Correlation results suggest that the impact of CSR varies significantly across firms. Companies such as TCS and HUL demonstrate a strong positive association, indicating that strategic CSR initiatives may enhance financial outcomes. In contrast, firms like HDFC Bank and Bajaj show a negative relationship, suggesting that CSR spending does not immediately translate into improved profitability. Meanwhile, Reliance and L&T present weak or inconsistent associations, highlighting the complexity of the CSR–performance linkage. Overall, the study concludes that CSR expenditure alone does not guarantee improved financial performance, and its effectiveness depends on firm-specific strategies, industry characteristics, and the alignment of CSR initiatives with core business objectives.