Evaluating the Impact of Corporate Social Responsibility on Financial Performance and Reporting: Evidence from India's FMCG Sector

Abstract

This research explores the relationship between Corporate Social Responsibility (CSR) disclosures and the financial performance of India’s fast moving consumer goods (FMCG) sector. Using data from 2020 to 2024 on 200 companies and 3 key CSR points of evidence (a CSR committee, IFRS S1/S2 sustainability reports, GRI standards), Return on Equity (ROE), Return on Assets (ROA) and Earnings Per Share (EPS) were calculated as measures of financial performance. A quantitative methodological process using descriptive statistics, independent samples t-tests, Pearson correlation analysis, and multiple regression models within SPSS was conducted to assess the data. The results showed the presence of a CSR committee was statistically significantly and positively correlated with improved financial performance, mainly within ROA and EPS, whereas disclosures based on GRI and IFRS S1 or S2 did not show any statistically significant correlation with profitability. Meanwhile, the mean return on assets (7.62% versus 3.01%) and earnings per share (0.16 versus 0.14) of companies with a formal board committee for CSR was significantly higher compared with companies without one.

These results suggest that CSR constructs with dedicated committees and other governance-type mechanisms tend to have more influence on financial outcomes than those that are merely disclosure-type. This means that Indian FMCG firms can unlock greater value by incorporating CSR at a governance and operational level, rather than merely complying with certain disclosure obligations. By distinguishing between the different impact of CSR constructs, this paper contributes to the wider literature on CSR-performance. It also provides insight for policy makers and corporate managers interested in better embedding sustainability within their organisations in developing countries such as India.