Panel study finds divergent CSR spending among Indian manufacturers

India’s mandatory corporate social responsibility policy produced different patterns of spending among polluting and non-polluting manufacturers, according to an econometric analysis of 605 firms tracked from 2006 to 2021. The study found that, following implementation of Section 135 of the Companies Act, 2013, polluting firms recorded a smaller increase in corporate social responsibility expenditure than non-polluting firms. The researchers interpret the result as evidence that firms with different pollution intensities responded differently to the same regulatory requirement.

The analysis examines India’s pioneering approach to compulsory CSR, which made specified forms of corporate social responsibility mandatory. Rather than evaluating compliance through a simple before-and-after comparison, the authors used firm-level panel data and a range of econometric methods, including difference-in-differences. This design was intended to identify whether the policy was followed by differential changes in CSR expenditure and innovation behavior between polluting and non-polluting firms.

The evidence comes from a balanced panel of 605 Indian manufacturing firms covering 2006–2021, allowing the analysis to follow the same firms across the pre-policy and post-policy periods. Dividing firms according to pollution intensity made it possible to examine whether mandatory CSR generated a common compliance response or a segmented one. The reported central result is a smaller increase in CSR expenditure among polluting firms after the reform, while non-polluting firms showed a larger increase. This is an observed difference associated with policy implementation, not evidence that pollution status alone caused the spending pattern.

The authors describe the findings as confirming heterogeneous responses to mandatory CSR and say they have implications for environmental-policy design in pollution-intensive industries. The results suggest that a uniform legal obligation may translate into different levels of corporate spending depending on how polluting a firm is. The study also considers whether innovation behavior changed alongside expenditure, but the supplied research abstract reports its principal quantitative conclusion in terms of differential CSR spending rather than a specific innovation effect.

As an observational panel-econometric study, the research does not directly establish that mandatory CSR reduced pollution or improved environmental performance. Its measured outcome is CSR expenditure, and its clearest result is the divergence between polluting and non-polluting manufacturers following implementation of the policy. The analysis also comes from an accepted, open-access research article that the publisher notes may undergo further edits before replacement by the final version of record. Within those limits, the study provides evidence that India’s first mandatory CSR regime coincided with compliance patterns shaped by firms’ pollution intensity.

Subject of Research: Econometric analysis of mandatory CSR expenditure among Indian manufacturing firms with different pollution intensities.

Article Title: Analysing the impact of mandatory Corporate Social Responsibility on manufacturing firms in India

Article References: Varkey, A. M. (2026). Analysing the impact of mandatory Corporate Social Responsibility on manufacturing firms in India. Discover Sustainability. https://doi.org/10.1007/s43621-026-04484-z

Image Credits: AI Generated

DOI: 10.1007/s43621-026-04484-z

Keywords: mandatory CSR, corporate social responsibility, Indian manufacturing, polluting firms, difference-in-differences, panel data, environmental policy, firm compliance, Companies Act 2013, innovation behavior, Analysing, impact