Corporate social responsibility: Issues for businesses
Like in most countries of the World, CSR is not legally binding in Nepal. Today, there are countries with developed laws which require organizations to work in a socially responsible and calculated manner. Such practices have actually helped not only to sustain the environment but grow the businesses as well
Corporate Social Responsibility (CSR) in Nepal seems an issue that many businesses in Nepal have deliberately chosen not to address or all the wrong reasons.
It needs no explaining that businesses in Nepal are way behind the rest of the world in introducing CSR into their business model.
Although in the political arena a lot is being said (and done) about the issues of gender and development, we are far from linking gender or social responsibility themes to business. CSR it is understood as simply as charitable works of a business.
It is a type of CSR but not the only type. The business community in Nepal still needs to understand that CSR obligations can be met even without making sizable grants or additional investment.
Significant social or environmental difference can be achieved without making any grant or additional investments. It is actually very simple for businesses to make a CSR contribution without making any grant or additional investments.
To give you an example, insuring gender equitable value chains or eco-friendly value chains can be extremely important CSR obligations that any corporate can fulfill without much of an added investment.
To understand better, we may look at CSR in two broad models. The first is the kind what we have conventionally understood, of the kind where businesses or corporations provide funding and resources for social causes.
Another kind of CSR involves producing products or services that are in the best interests of society. As discussed earlier, this may include things like being environment-friendly and purposefully creating employments for employing the marginalized people. In reality a corporate can perform CSR of varying kinds and scale.
Replacement of hazardous material by safe materials in itself is a part of CSR. If the corporate so wills, it can go on and take larger social and environmental initiatives.
It is not difficult to understand that the business would be creating sustainable businesses for themselves through its CSR activities. Businesses can actually increase benefit through CSR.
Consumer perception on consumption is changing globally, and changing rapidly. Through public relations tools companies are shaping consumer positive perception of their companies by show casing their CSR activities.
Publicizing the corporate grants, volunteer programs, or other CSR activities can be a powerful branding tool. With the rise of the social media corporates can easily communicate about their CSR initiatives these days.
The corporates can also still use the print media and reach a critical mass.
Like in most countries of the World, CSR is not legally binding in Nepal. Today, there are countries with developed laws which require organizations to work in a socially responsible and calculated manner. Such practices have actually helped not only to sustain the environment but sustain and grow the businesses as well.
With our eternal and multi-dimensional close ties with India, we may have a lot to learn from India. India formally introduced CSR into its legal system through a section on CSR in the Companies Act introduced in 2013.
The 2013 Companies Act in India has a new section that says that companies with a net worth over INRs 500 crores, turnover more than INRs 1000 crore, or a net profit in excess of INRs 5 crores are required to set up a CSR committee at board level. These companies need to spend at least 2% of their average net profits on CSR.
The board of the company can undertake its CSR activities through a registered not-for-profit or conduct the CSR activities on its own if the company has three years of proven experience in undertaking similar activities.
If measures are taken to educate the businesses, there are reasons to believe that CSR is going to be a rising trend and will be here to stay. Socially and environmentally well-intended corporates have been adopting this approach successfully.
Global trends are sure to catch up in Nepal as well. It is after all a business interest to assume social responsibilities. It can be used to increase their profits, enhance company image and as a matter of fact reduce increased governmental regulation.
We are most likely to see companies integrating CSR into their business strategies as the corporates start to realize that CSR can be a means to sustain their businesses while contributing to the social and environmental cause.
Having said that, it must also be carefully considered that addressing social issues are at times complicated.
Those in the corporate world may not always be the ones best equipped to deal with social problems so there are risks pertaining there.
However, if corporates decide to have competent social activists in their payroll or work closely with the capable and dedicated civil society organizations, such risks can be averted.