Corporate Social Responsibility (CSR) is a business concept that contributes to sustainable development by bringing economic, social and environmental benefits for all the possible stakeholders.
Early models of corporate social responsibility (CSR) typically held the “social” aspect and referred directly to those responsibilities above and beyond economic and legal obligations. Thus, for many, CSR was and still is synonymous with voluntary and philanthropic acts by business organizations designed to alleviate social ills or benefit a disadvantaged group chosen by the corporation’s managers. However, in modern days, the models on CSR have four main sources, namely, economic, legal, philanthropic and ethical. So, we can say that there are two divergent views about what corporate social responsibility is and how should it be carried out. The ‘Charity Principle’ focuses only on philanthropy and views that the rich in the society must help the poor whereas the ‘Stewardship Principle’ states that organisations are just gatekeepers of the society’s wealth which should be used for societal development since all of it comes from the society itself. The growing relevance of CSR is mainly due to five identifiable trends viz. growing affluence, ecological sustainability, globalization, brand name and free flow of information.
In CSR, although a lot of work has been done in developed countries, developing countries are far behind in this area and not much has been written on it. CSR is an emerging issue in these days to improve conditions of factory workers in developing countries. CSR dimensions in the context of Nepal, which is still regarded as underdeveloped country, is really challenging.
The issues faced by the developed countries are not the same as the problems of under developed countries affecting CSR Practices. It also widely varies according to the local communities’ participation, contribution and the conditions applicable to the nation. Under-developed capital markets, weak legal controls and investors’ protection, and economic or political uncertainty often stand in the way of CSR engagement of corporations.
If we look at our neighboring countries India and China, these countries follow unique CSR practices from the highly developed countries. With the influence of Late Mahatma Gandhi philosophy, the pioneering efforts of CSR were made by the Tata Group in the nineteenth century. Managing Director of Tata Steel Limited (TISCO) announced that in future, TISCO would not deal with companies, which do not conform to the company’s CSR standards.
In China, creating more and more employment opportunities is regarded as main dimension of CSR. In China, the general public may not even be aware of a company’s CSR initiatives. For this reason, many CSR programs unite with the priorities of the local or provincial governments, such as education, health care and environmental protection.
Although the concept and practice of CSR is originated from the West, social responsibility of business is not a new phenomenon in our country. In the past 100 years of history of Nepal, few business communities have contributed their wealth to build educational institutions, temples and large Dharmasalas (inns built for religious purposes) for general public and pilgrims. Hundreds of acres of Guthi land (personal lands usually donated to temples) have been donated by some landlords in the name of Gods and Goddesses. When the country is hit by natural calamities such as flood, famine and earthquake, the businessmen are always there at the front to donate food, cloth and other amenities. In the past, the available texts and evidences indicate, Nepalese business, despite being small and inconsequential in view of its limited role in the economy, opted for the path of responsible business practices and charity wherever feasible. These historical evidences of the participation of business community indicate that Nepalese business communities and companies basically carried the social responsibility with gusto and commitment but are rather more philanthropic in nature.
Some of the notable CSR activities that we can see in our society are that of Hotel Dwarika and Kathmandu Guest House. Dwarika’s Hotel’s primary method of CSR is also connected to its founding idea of collecting traditional pieces of woodwork from around Kathmandu valley. As a result, they have outlined their main initiative as the “restoration and conservation of our culture and architectural heritage,”
Kathmandu Guest House, within the hotel that mitigates their environmental such as using LED light bulbs and recycled paper, and dual flush European style toilets, and investing in a efficient generator. Externally they organize volunteer days and work towards women’s empowerment.
Status of Corporate Social Responsibility in Nepal
Evaluating the status of CSR in Nepal,
- Awareness: it has been seen that the Nepalese organizations have been highly aware and involved in the activities, which are socially desirable. So far the awareness of CSR is concerned, it has been rising in some selected Nepalese companies to protect their family-brand image, which is not at all wrong in this transitional period. However, it also appears that companies still have to go a long way to focus on both inside and outside CSR agenda. Once companies maintain CSR activities inside, they can come outside with CSR agenda in helping people in our society that might help to raise their brand-image, competitiveness and secure profits.
- Understanding: There is a mixed understanding regarding what CSR is and what activities should be named under it. Although there is high awareness about the subject the understanding seems to be low in our Nepalese society.
In Nepalese scenario, establishing an industry is regarded as CSR because it provides employment opportunity for people. At this situation where millions of people are leaving the country for work, it is of course necessary to create and provide opportunities to these people. To make companies socially responsible it is essential to pay VAT (value added tax) and service tax. Industries should not hide their actual income. So, CSR is not just limited to relationship between business and the society but the way businesses are carried out in an ethical manner for the well-being of the society.
- Government Role: Government in developing countries usually promotes Foreign Direct Investment (FDI) for economic development rather than promoting standard CSR practices among corporations. Most corporations do not follow any national or international benchmark in practicing CSR and corporations perceive CSR as being practices such as sponsorship of sporting events, donations to charities, and other social activities. Government has a positive role in advocating CSR practices among corporations. If the government’s role is ineffective, market protection and sustainability will be compromised. Same is the case with Nepal making us believe that the role of Government of Nepal is highly inadequate.
- Institutional arrangement: There exists an Ad hoc institutional arrangement in the society. It seems like the people wait for some bad event to occur and then take steps in the name of CSR.
- Disclosure: There are limited means, poor content, inadequate format and no third party verification for revelation of any CSR activity carried out.
CSR is not mandatory in Nepal and all the institutions practicing it have made the disclosure in voluntary basis. Child and women developments, religious activity, games and sports activities, blood donations were among the thrust areas of CSR. As a whole, giving in corporate Nepal is called Corporate Social Responsibility (CSR). The small number of business houses mostly family owned and their profit-making attitudes are the key factors to effect on CSR intention of Nepalese companies.
In conclusion, we can say that Nepalese corporations are aware about what CSR is but have a mixed understanding and perspective as to the way it should be carried out. Most have philanthropic perspective while some have stakeholder perspective. As compared to the developed countries, CSR in Nepal is still in its initial stage and carrying out CSR activities don’t have any specified rules or regulations. Therefore, we can say that although the status of CSR is not very satisfactory but it is increasing and most firms are taking it positively by trying to take their social responsibilities more seriously. With good governance and adequate government role, CSR can be highly improved and the Nepalese society can be made much better.