Council divided on whether CSR should be mandatory

The clause will be revisited before it’s presented again for endorsement 

Council: The issue of whether Corporate Social Responsibility (CSR) spending should be made mandatory for profit-making companies was the highlight of the discussion on Companies Bill in the National Council yesterday.

The debate sparked off when Sarpang’s member Dhan Bdr Mongar said it should not be mandatory for all profit-making companies to spend a certain percentage of their annual profit on CSR activities. The bill proposes to keep aside a minimum percent of companies’ annual profit for CSR spending.

CSR is a social responsibility of businesses to pay back to society for using resources and harming the environment. The economic affairs committee will revisit the clause before endorsement.

“Companies generate employment, substitute import, encourage export, pay annual tax and provide services to public,” he said. This, he said, was also one of the reasons why the government gives tax holidays to new companies.

However, he added that CSR contribution should be mandatory only for companies that spew ill effects in the society, harm the environment, and pose threat to human and animal lives through their products.

Samtse’s representative Sangay Khandu said some companies have been contributing to the society in cash and kind even without it being mandatory. However, he said some businesses have not contributed a penny since CSR is voluntary.

“If it is voluntary, there is a risk that some companies may not pay at all,” he said. He said one of the companies that’s already paying back to the society is Lhaki Cement in Gomtu, Samtse.

Member from Trongsa Tharchen, who stood in support of the CSR, said it would be good to prescribe that a certain percentage of companies’ profits should be given directly to the local government. “The local leaders know what needs to be done in their locality,” he said.

If it is not compulsory, he cautioned that political parties could misuse the CSR contribution for electoral gains. This is because, he said, owners of businesses are often linked to a political party or its member.

Member from Bumthang, Nima, said that though the bill states for contribution of CSR, it does not prescribe any action for failure to do so. He also said that CSR and voluntary contributions by companies should be differentiated.

The bill seeks to repeal the Companies Act of the Kingdom of Bhutan 2000. The economic affairs committee’s chairman Pema Tenzin said the bill seeks to strengthen good corporate governance, code of conduct of company managers, incorporation and winding up, accounting and auditing, rights of minority shareholders and corporate social responsibility.

The national Assembly passed the bill in the last session.

MB Subba

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