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Corporate Social Responsibility in Nepal: Status,

Major Issues and Way Forward
@ Dr Bal Ram Chapagain
Assistant Professor, Central Department of Management, TU

Concept of Corporate Social Responsibility

The concept of corporate social responsibility (CSR) is essentially about the role of business
in society. But, a universally agreed-upon definition of CSR has not yet been developed.
It is continuously evolving particularly since the last seven decades. There are verities
of conceptualisations regarding the responsibilities of business towards society – from
pure profit making approach in one extreme of the continuum to the active participation
of business in wide array of activities beyond profit maximisation on the other extreme.
Among various, some of the widely discussed conceptualisations of CSR are: constrained
profit making approach, philanthropic approach, stakeholder approach, Carroll's CSR
pyramid, triple bottom line approach, creating shared value approach, and political CSR.
Constrained profit making approach, aka shareholder approach, argues that there is one
and only one responsibility of business – to maximize profit while confirming to the basic
rules of the society, both those embodied in law and those embodied in ethical custom.
In contrary, philanthropic approach asserts that companies should contribute to social
causes in cash, kind or whatever is necessary to promote society's well being. Stakeholder
approach has relatively broader conceptualisation of CSR. According to this approach, it
is the responsibility of business to protect and promote the prudent interests of different
internal as well as external stakeholders of business– not just shareholders. By reaffirming
and simplifying the stakeholder approach, Carroll's CSR pyramid illustrates four basic
responsibilities of business, namely, economic responsibilities, legal responsibilities,
ethical responsibilities and philanthropic responsibilities. Triple bottom line approach
explicitly recognizes environmental responsibility besides economic prosperity and social
justice.
Creating shared value (CSV) approach and political CSR are relatively new paradigms
of CSR. CSV approach emphasises on the application of innovative approaches that
simultaneously benefits business and society. Finally, political CSR suggests companies to
engage in public deliberations, collective decisions, and the provision of public goods or
restriction of public bads in cases where public authorities are unable or unwilling to fulfil
their role.
Despite spectrum of viewpoints, the central idea of CSR is to do business in line with the
values and expectations of society beyond profit maximisation. Briefly, CSR may be defined
as the obligation of business to obey the law, run the business in an ethical manner, fulfil
the prudent interests of different stakeholders without compromising the sustainability

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of business as well as the environment, and actively engage in the provisioning of public
goods whenever necessary.

Status of CSR in Nepal

Interest in CSR is tremendously increasing in the Nepalese context particularly during the
recent years. Despite the growing interest in CSR, there is a lack of proper understanding of
CSR among managers and other stakeholders. Most people including corporate managers
and policy makers still believe that giving something back to society or contributing to
social causes after making profit is synonymous to CSR. Moreover, we see some ‘saying-
doing gap’ in the Nepalese context. The actual business practices are not as greener as the
views of managers or business people. However, things are gradually changing.
With the growing popularity of CSR, several studies have been done in the recent years to
identify the status of CSR practices in Nepal. A study conducted by South Asia Watch on
Trade, Economics & Environment (SAWTEE) and Environmental Camps for Conservation
Awareness (ECCA) found that the top most priorities of Nepalese businesses are to fulfil
the needs and expectations of customers and shareholders. Only 25 percent companies
showed their interest to uplift the weaker sections of society. But, interestingly, 37 percent
company managers said that their community initiatives would go up in future. Likewise,
a recent study conducted in the context of listed companies of Nepal revealed that the
overall status of CSR practices in Nepal is above the moderate level. Companies are largely
following governance guidelines set by the regulators, they seem responsible towards
customer as well as shareholder needs but community, and environment related CSR
activities are still inadequately attended.
CSR practices of some companies like Standard Chartered Bank Nepal Ltd. (SCBNL), Butwal
Power Company Ltd. (BPCL) and Unilever Nepal Ltd. (UNL) are exemplary. For instance,
SCBNL's socially responsible philosophy is captured in its brand promise, "here for good".
It has its own written CSR policies, strategies and code of ethics. Most of its CSR activities
including the launching of risk management toolkit for micro-finance institutions (MFIs),
financial literacy program, deprived sector lending, and supporting the fight against financial
crime are integrated with strategy and core business operations. It has prepared social and
environmental standards for itself and its business partners. The bank is also committed
to good corporate governance, diversity & inclusion, and employee development for
the benefit of both business and society. Besides, the bank is also actively engaged in
supporting social causes including support to Maiti Nepal (an NGO) to establish Low-Cost
Sanitary Pad-Making Project aimed at providing entrepreneurship opportunities to human
trafficking survivors of Maiti Nepal and help them attain financial independence. The bank
is also actively engaged in health and education programs through employee volunteering
as well as cash contribution. Most recently, the bank donated NPR 1 crore 16 lakhs to
the Government's Corona Virus Control and Treatment Relief Fund. Standard Chartered
Group had earlier announced launch of a $50 million global fund to aid those affected by
the COVID-19 pandemic across its footprints.

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But, unfortunately, practices of many other companies are ad-hoc, isolated from core
business, and hence failing to create a win-win situation between business and society.
According to news reports repeatedly, many companies are engaging in window dressing
that is, spending nominal amount of money for social causes in order to create a false
impression among stakeholders whereas their business activities are fundamentally either
illegal or unethical.
However, because of recent legal provisions of mandatory spending on CSR by all
banking and financial institutions (BFIs) as well as certain types of industrial enterprises,
philanthropic CSR can be expected to grow in the near future. According to the existing
legal provisions, all BFIs, medium as well as large sized industrial enterprises, and cottage
and small industrial enterprises having annual turnover more than NPR 15 crore are
required to allocate and spend at least 1 percent of the annual net profit in the designated
CSR activities.
According to different circulars of Nepal Rastra Bank (NRB), BFIs are required to spend
allocated amount in specified sectors including education, health, environment protection,
financial literacy, programs relating to sustainable development goals (SDGs), and child
day care centre for their employees. However, CSR activities that provide personal or
political benefits to the members of BOD cannot be undertaken to mainly to minimize the
chances of conflict of interests. Likewise, according to Industrial Enterprise Regulation,
2019, specified types of industrial enterprises are required to spend allocated amount
in specified areas including natural calamities, community health, arts & culture, income
generation programmes for disadvantaged group of people and rural women, community
education, pollution control and environmental protection, campaigns against smoking
and other social evils, and community infrastructure projects. However, detailed standard
operating procedures on CSR spending in line with the requirements of Industrial
Enterprise Act and regulations are yet to prepare.

Major Issues and the Way Forward

The governments of least developed countries like Nepal tend to have limited resources,
capacity and competence in solving myriads of socio-economic problems. Thus raised the
issue of whose responsibility is to do what in order to have a healthy and rewarding society.
Is the state the only responsible for the socio-economic wellbeing of the citizens? Where
do we draw the line between state's and other actors' responsibilities? Can business
sector be a missing link in achieving country's cherished mission of socio-economic
transformation? Is the promotion of corporate social responsibility a right way to move
forward? If yes, how is it possible?
Among other things, promoting corporate social responsibility can obviously be one
of the right ways to create a win-win-win situation between business, society and the
government. However, proper understanding of the concept of CSR is the first prerequisite
towards the long journey of promoting CSR in Nepal. Executives and managers of business
should understand the fact that both responsible earning and spending for social causes
are the important aspects of responsible business philosophy. Responsible earning entails

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proper obedience to all applicable laws and regulations, doing morally right things even
when no one compels, duly following governance guidelines, fulfilling prudent needs of
all stakeholders, protecting the environment and so on. But, as stated in the previous
section, most of the Nepalese managers still believe that CSR is synonymous to corporate
philanthropy, i.e., spending for social causes. Many business people still have several
misconceptions about CSR and they interpret it quite narrowly, such as, CSR is relevant
only after making profit, it is isolated from core business activities, it is for big business
only, and it hurts competitiveness.
Therefore, first, there is a need to properly educate managers about the broader
conceptualisation of CSR. Second, CSR should be considered as if it were a business.
For this, institutionalisation of CSR through the development of firm's own CSR policies
and strategies, establishing CSR unit or manager solely devoted to this issue, using CSR
related international standards and/or developing own CSR implementation and reporting
guidelines etc. are vitally important. It is also noteworthy to mention that companies
should focus on creating shared value approaches rather than merely on traditional
philanthropic activities. Though companies should remain within the rules of the game,
they are not responsible for all the country's problems, nor do they have the resources
to solve them all. Each company can identify the particular set of societal problems that
it is best equipped to help resolve and from which it can gain the greatest competitive
benefit. Other businesses, government and different actors of society may attend rest of
the issues. By doing so, sustainable and profitable business model can be created in one
hand and society will be benefitted on the other hand.
The government, media, academia, and NGO/INGOs should also play important roles in
promoting corporate social responsibility in Nepal. Trade and business associations as well
as entities established with special purpose such as National Business Initiative (NBI) can
also play important roles in this endeavour.
The government should come forward with all possible roles – mandating, facilitating,
collaborating, and endorsing. Specifically, following are the important suggestions that
can be given to the government and policy makers in order to promote CSR in Nepal.
yy Create awareness on CSR such as through creating CSR web portal, hosting a TV
show, declaring and celebrating CSR day etc.
yy Regulating responsible business behaviour through appropriate laws, regulations,
standard operating procedures, circulars, CSR reporting standards etc.
yy Giving tax exemption and other clearly spelled out incentives for cleaner production
and certain types of CSR activities, which are congruent with the priority areas for
achieving government's social goals.
yy Establish a mechanism for firm's CSR rating and provide awards to socially
responsible firms. However, the rating criteria should incorporate both responsible
earning and spending for social causes.
yy Create a platform for dialogue and collaborative efforts among business,

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government, civil society Organisations, and experts in handling critical social

agenda.
yy Lead by example through good governance, sustainable public procurement,
endorsing pro-CSR standards and systems, using shared value approach and
publishing CSR reports in government owned businesses etc.
Besides the government, media can and should play an important role in promoting CSR
in Nepal. To this end, media should pursue transparent and responsible editorial policy,
report both irresponsible as well as responsible business practices, provide adequate
space to articles or discussions on responsible business and sustainable development
issues, embrace responsible advertisement policy, collect adequate evidence and respect
the rights of concerned parties or individuals in publishing critical socio-political issues etc.
Likewise, universities should introduce ethics and CSR courses in their academic curricula
particularly in Bachelor and Master level management programs, vigorously interact with
corporate sector to identify the critical CSR issues they are facing, and collaborate with
corporate sectors in conducting relevant researches. Business partners in its supply chain,
NGOs, consumers, special interest groups, local community, social networking sites, and
other stakeholders of business can also play important roles from their own spheres of
influence in promoting CSR in Nepal.
Briefly, everyone should think from the premise that business and society are not in
different camps; they are in the same boat. Thus, business, government and other actors
of society should perform their respective roles in order to promote CSR in Nepal and
create a win-win-win situation between business, society and the government.

References
Chapagain, B. R. (2018). Business and society. Kathmandu, Nepal: Asmita Books Publishers
& Distributors (P) Ltd.
SAWTEE, & ECCA. (2010). A study on status of corporate social responsibility in Nepal.
Kathmandu, Nepal: Author.
Various articles from academic and trade journals.
https://archive.nrb.org.np/bfr/circular/2073-74/2073_74_For_A_,_B_&_C_Class--
Circular_11-Corporate_Social_Responsibility_Related.pdf
https://av.sc.com/np/content/docs/np-annual-report-2018-2019.pdf
https://moics.gov.np/en/download-archive/
http://www.lawcommission.gov.np/np/archives/52416

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