Social Impact Assessment Through Valuation of Social Wealth Created by Csr Expenditures in India

Abstract

It is crucial for every business to show a strong commitment to sustainability, embed it in their business culture, exceed stakeholder expectations, and redefine their value offerings. Ever since corporate social responsibility (CSR) has been made mandatory by the Companies Act 2013, there has been huge money flowing to various social developmental projects undertaken by Indian companies. By looking at the sheer size of financial resources involved in the CSR initiatives of the corporate we got motivated to assess the impact of CSR expenditure through the valuation of social assets or wealth created to date as well as on forecasted future cash flows using enterprise valuation techniques. Based on our analysis, we found that approximately ₹3,84,129.25 crore (1.3 per cent of Indian current GDP) of social wealth is created based on the annual average CSR expenditure (cash flow) till the financial year 2021–22 (FY22) and approximately ₹7,29,570.69 crore of social wealth (2.5 per cent of Indian current GDP) based on forecasted future cash flows at current valuation.