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🇳🇵 Nepal /Economy & Trade

Private sector ready to improve social responsibility spending but won’t surrender funds

From Kathmandu Post · () English

Summarized and contextualized by DistantNews.

At a glance

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  • Nepal's private sector opposes a government proposal to mandate that companies deposit Corporate Social Responsibility (CSR) funds into a central government account.
  • Businesses argue that CSR is a corporate responsibility to address operational impacts, not a government revenue source or general welfare fund.
  • The proposed changes would remove private sector control over CSR spending, despite no private sector representation on the fund's governing board.

Nepal's private sector is strongly opposing a government proposal that would require companies to deposit their mandatory Corporate Social Responsibility (CSR) allocations into a centrally managed government fund, rather than spending the money directly on community projects.

The draft bill to amend the Company Act, prepared by the Ministry of Industry, Commerce and Supplies, is part of broader reforms aimed at simplifying company administration and promoting investment. However, if enacted, it would fundamentally alter Nepal's current CSR framework. Under existing rules, companies allocate a portion of their profits to projects benefiting communities affected by their operations, focusing on areas like education, healthcare, and local infrastructure.

The proposed legislation mandates that companies with an annual turnover exceeding Rs250 million deposit at least one percent of their annual net profit into a new Corporate Social Responsibility Fund. Smaller companies would also contribute, though the amount is unspecified. Business leaders argue that this move transforms CSR from a corporate responsibility into a government revenue stream.

This money is not a tax. It does not belong to the state. It is meant to address the impacts that businesses create in areas where they operate. It is about fulfilling corporate responsibility.

— Anjan ShresthaExplaining the private sector's view on CSR and opposing its treatment as government revenue.

"This money is not a tax. It does not belong to the state," stated Anjan Shrestha, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). "It is meant to address the impacts that businesses create in areas where they operate. It is about fulfilling corporate responsibility."

While acknowledging the government's role in identifying priority sectors, the private sector insists on retaining control over fund implementation. Shrestha proposed that companies should continue implementing CSR programs under clear government guidelines. The proposed governing board for the fund, chaired by the minister for industry, commerce and supplies, includes government officials but notably lacks any private sector representatives, despite the fund being financed entirely by corporate contributions.

The private sector should continue implementing CSR programmes while complying with clear government guidelines.

— Anjan ShresthaProposing an alternative approach to CSR management.
DistantNews Editorial

Originally published by Kathmandu Post. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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