Corporate social responsibility in Nepal

Siddha Raj Pant

Recently, a marketing manager of a distillery audaciously claimed to be evading tax to make up for extortion by various political outfits. Similarly, another owner of a popular low-cost liquor brand is absconding following charges of misappropriating millions from a bank against him. Likewise, the chairman of the FNNCI was arrested for fraudulent business practices.In this context, it was ironic that Kathmandu played host to “South Asian NGO Consultative Meet on Promotion of Corporate Social Responsibility”, a three-day regional conference from April 25 to 27. The message is loud and clear. Whether or not businesses abide by their responsibility towards the society, civil society represented by vigilante NGOs will continue to keep an eagle eye on the impact companies have on the society and other stakeholders. But without government help, NGOs can do no more than name and shame unscrupulous businessmen.

Originally, the companies were created by the governments to do essential public work. This practice gradually evolved into an economic model with enhanced efficiency and effective use of resources. This model of economic development is the best as it enlarges the size of the pie than seek a larger portion of a smaller pie. Philosophically too, a rational being will tend to go that extra mile only if there are incentives to do so.Even though political myopia in promoting unionism and barriers to entry into and exit from the market would remain for a while, it will be imprudent to think of life without private businesses for both their might and importance is increasing day by day (51 of the world’s 100 largest economies are corporations, not countries). The important task is to gauge socialdesirability of these institutions and determine the minimum acceptable ethical behaviour or social responsibility.

Caught in the dilemma of development imperative and amorality associated with private corporations, governments across the globe are changing their role from that of a competitor with private businesses to one regulating the private entities in favour of the consumers, the environment and the state.As the role of corporations is evolving from an immoral entity into a legal one, they will have to behave ethically as prescribed by the law. No country allows, by law, fraud and smuggling. This minimal level of ethics should be maintained irrespective of whether it makes an economic sense for a business. But some companies adopt high ethical standards if only to differentiate themselves from their competitors.

But does it pay to be an ethical business in Nepal? There is no definite answer. The level of ethical adherence depends upon societal expectations, institutional capabilities, economic freedom, awareness and education level of citizens. Other factors apart, in order to promote social responsibility of companies the state, along with watchdog NGOs, should strengthen the capacity to regulate businesses and benchmark good practices.

Source: The Himalayan Times, May 25, 2007