ESG Basics
ESG vs. CSR in India — Clearing Up the Confusion
CSR is a spending mandate under company law. ESG is a way of measuring how your whole business operates. Indian companies often conflate the two — here's the actual difference.
TL;DR
CSR (Corporate Social Responsibility) in India is a legal spending requirement under the Companies Act — certain companies must spend a fixed percentage of profit on approved social causes. ESG (Environmental, Social, Governance) is a much broader measurement of how the entire business operates and is reported, not spent. A company can have a large CSR budget and still score poorly on ESG, and vice versa — they solve different problems.
Who this is for
Indian company staff — especially in finance or compliance — who already know CSR well from Companies Act obligations and are trying to understand how ESG is different, not just a rebrand of the same thing.
Plain explanation
CSR is a spending line, mandated by Indian company law (Section 135 of the Companies Act, 2013). If your company crosses certain size thresholds, you must spend a fixed percentage of profit on approved activities — education, healthcare, environmental projects, and similar causes defined in Schedule VII of the Act. It's fundamentally a philanthropy and compliance requirement: spend the money, report the spend, done.
ESG is a measurement system, not a spending requirement. It asks: how does this company actually operate? How much pollution does it produce? How does it treat its workers? Is its governance honest and transparent? ESG doesn't ask you to donate money anywhere — it asks you to measure and disclose data about your core operations. A company can be ESG-strong (low emissions, safe workplace, clean governance) while spending very little on CSR-eligible causes, or ESG-weak while dutifully writing its CSR cheque every year.
The confusion is understandable: both terms get used by the same sustainability teams, both show up in the same annual report, and both are ways a company demonstrates it's "doing good." But one is a spending mandate, the other is an operating and reporting standard.
India specifics
CSR applicability (Section 135): a company must comply if it meets any one of these thresholds in the preceding financial year — net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more. If in scope, the company must spend at least 2% of its average net profit over the preceding three financial years on CSR activities.
A 2026 amendment bill has been introduced in Parliament proposing to raise the net-profit trigger from ₹5 crore to ₹10 crore (leaving the net worth and turnover thresholds unchanged). As of this writing it has not yet received presidential assent — until it's notified into law, the existing ₹5 crore threshold still applies. Don't assume the higher threshold applies to you yet.
BRSR, by contrast, applies by market-cap rank (top 1,000 listed companies), not by profit or turnover, and doesn't ask you to spend anything — it asks you to disclose. A company can be in scope for both CSR and BRSR simultaneously, in scope for one and not the other, or in scope for neither.
Worked example
Meridian Castings, a listed mid-cap with ₹6 crore net profit last year, is in scope for CSR — it must spend roughly 2% of its average 3-year profit (say, around ₹11 lakh) on approved causes like a local school renovation. Separately, because it ranks around #850 by market capitalisation, it's also in scope for BRSR — it must disclose data on its emissions, worker safety, and governance practices, regardless of what it spends on CSR.
These are two entirely separate compliance tracks. Meridian's finance team handles the CSR spend and Schedule VII documentation; its sustainability lead handles the BRSR disclosure. A well-run CSR program doesn't reduce what BRSR requires the company to report, and strong BRSR data doesn't satisfy the CSR spending obligation.
Checklist
- Check separately whether you're in scope for CSR (net worth/turnover/profit thresholds) and for BRSR (market-cap rank) — they use different tests.
- Don't report CSR spend as a substitute for ESG data in a customer questionnaire — they're asking for operational metrics, not a donation total.
- If a 2026 amendment changes your CSR threshold, confirm it's actually been notified into law before assuming you're out of scope.
- Keep CSR and ESG/BRSR reporting as separate workstreams internally, even if the same person manages both.
What to do next
If BRSR is the disclosure you're actually trying to understand, here's the full picture.
Current as of: 22 July 2026. CSR thresholds under Section 135 may change if the Corporate Laws (Amendment) Bill, 2026 is passed and notified — verify current applicability against the latest MCA notification before relying on any threshold here.
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