Comparison between CSR guidelines of Pakistan and India
Introduction:
Today, I have decided to give the readers a snapshot of what type of CSR legislation/guidelines are being recommended in Pakistan in comparison with India. First, I am briefly covering the CSR guidelines from Pakistani perspective followed by the Indian. One major difference between the two is that CSR in Pakistan are volunteer guidelines whereas, in India, it has become legislation. Further details are given below.
CSR guidelines in Pakistan:
For covering the CSR practices in companies operating in Pakistan, it is expected that they integrate these activities into corporate practices which have some social impacts. Thus, a more volunteered and self-regulating structure to adhere to some standard practices/guidelines of this notion exist in Pakistan. In this regard, as I explained in my earlier blogs, Securities and Exchange Commission of Pakistan (SECP) has formulated some voluntary guidelines for CSR in 2013 for promoting responsible business conducts which are in the larger public interest, discard harmful practices and ensure corporate philanthropy.
SECP expects and encourage companies to go beyond these minimum guidelines and formulate such models which stick to fair, transparent and responsible business practices. Boards of Directors are expected to take these initiatives and make CSR policy integrated with the vision and mission of the organization. The companies are expected to allocate a portion of their profits ranges from 1 to 2% in the priority areas highlighted by the SECP.
The priority areas of focus underlined by the SECP are
Nevertheless, there are some laws which can be put under the CSR umbrella to which companies are bound to adhere. For example
Besides, there are other numerous provisions in the constitution of Pakistan such as Fundamental Rights and Principles of Policy for forced labour and slavery, Article 11(3) for under aged child labour, Article 37(e) for safety of workplace and maternity benefits for women in employment and Article 38 for equal rights for everyone regardless of age, gender, cast and creed etc. All these laws are covering different aspects of CSR. However, these laws are prohibiting companies from acting in a certain way only; whereas, CSR expects companies to go beyond and proactively promote societal well being.
CSR legislation in India:
As far as CSR legislation in India is concerned, the county took a leading role in the world by making CSR contribution mandatory for the companies operating there. The corporate law of India has been updated after almost 50 years by the parliament which is called The Companies Act 2013. Among the major points out of 294 pages document of this law which are relevant to CSR are
A CSR board committee should be set up comprised 3 directors out of which 1 must be independent. The committee will make sure that 2% of the companies profits must be spent on CSR otherwise; explain the reason in the annual report in case of non-compliance. This law is applicable to all national and international companies with
The board must be responsible of implementation of this law and prior to the boards annual meeting; they must submit a detailed report comprised of the initiatives taken and the areas of focus.
Conclusion:
Though India has made CSR contributions mandatory instead of volunteer, however, these efforts too are mostly limited to philanthropic activities as the law itself suggests that the company can either pay this percentage to the central governments socio-economic developmental programs or they can identify different programs in the nearby areas around their operations and invest in them. Nonetheless, a more holistic approach towards CSR is still at large in India too. Pakistan has therefore, the opportunity to address these gaps in case they opt for a legislation regarding CSR by looking into the best practices and models around the world including Indian legislation.
Source
Introduction:
Today, I have decided to give the readers a snapshot of what type of CSR legislation/guidelines are being recommended in Pakistan in comparison with India. First, I am briefly covering the CSR guidelines from Pakistani perspective followed by the Indian. One major difference between the two is that CSR in Pakistan are volunteer guidelines whereas, in India, it has become legislation. Further details are given below.
CSR guidelines in Pakistan:
For covering the CSR practices in companies operating in Pakistan, it is expected that they integrate these activities into corporate practices which have some social impacts. Thus, a more volunteered and self-regulating structure to adhere to some standard practices/guidelines of this notion exist in Pakistan. In this regard, as I explained in my earlier blogs, Securities and Exchange Commission of Pakistan (SECP) has formulated some voluntary guidelines for CSR in 2013 for promoting responsible business conducts which are in the larger public interest, discard harmful practices and ensure corporate philanthropy.
SECP expects and encourage companies to go beyond these minimum guidelines and formulate such models which stick to fair, transparent and responsible business practices. Boards of Directors are expected to take these initiatives and make CSR policy integrated with the vision and mission of the organization. The companies are expected to allocate a portion of their profits ranges from 1 to 2% in the priority areas highlighted by the SECP.
The priority areas of focus underlined by the SECP are
- Community investment (skill development, livelihood, health, education, infrastructure, social enterprise development, safe drinking water, poverty alleviation, youth development and environment conservation.
- Governance (human rights, transparency, anti-corruption, business practices, stakeholder relations, responsible marketing)
- Product responsibility
- Work life balance
- Safety (risk management, disaster management)
- Climate Change
Nevertheless, there are some laws which can be put under the CSR umbrella to which companies are bound to adhere. For example
- Corporate laws
- Environmental laws
- Labour laws
- Consumer Protection laws
- Right to service laws etc.
Besides, there are other numerous provisions in the constitution of Pakistan such as Fundamental Rights and Principles of Policy for forced labour and slavery, Article 11(3) for under aged child labour, Article 37(e) for safety of workplace and maternity benefits for women in employment and Article 38 for equal rights for everyone regardless of age, gender, cast and creed etc. All these laws are covering different aspects of CSR. However, these laws are prohibiting companies from acting in a certain way only; whereas, CSR expects companies to go beyond and proactively promote societal well being.
CSR legislation in India:
As far as CSR legislation in India is concerned, the county took a leading role in the world by making CSR contribution mandatory for the companies operating there. The corporate law of India has been updated after almost 50 years by the parliament which is called The Companies Act 2013. Among the major points out of 294 pages document of this law which are relevant to CSR are
- One third of the members of the board of directors must be independent with at least one female member.
- Disclosure of top executives salaries in the form of ratio with the average employees salary.
- And shareholders can file class lawsuits.
- Mandating the companies to spend 2% of the profits on CSR.
A CSR board committee should be set up comprised 3 directors out of which 1 must be independent. The committee will make sure that 2% of the companies profits must be spent on CSR otherwise; explain the reason in the annual report in case of non-compliance. This law is applicable to all national and international companies with
- Net worth of 5 billion IND Rupees i.e. US $83 million approximately
- Turnover of 10 billion IND Rupees or more i.e. US $160 million approximately
- Net profit of 50 million IND Rupees or more i.e. US $830,000 approximately.
The board must be responsible of implementation of this law and prior to the boards annual meeting; they must submit a detailed report comprised of the initiatives taken and the areas of focus.
(The above excerpts are adopted from The Indias Companies Act 2013, and bsr.org)
Conclusion:
Though India has made CSR contributions mandatory instead of volunteer, however, these efforts too are mostly limited to philanthropic activities as the law itself suggests that the company can either pay this percentage to the central governments socio-economic developmental programs or they can identify different programs in the nearby areas around their operations and invest in them. Nonetheless, a more holistic approach towards CSR is still at large in India too. Pakistan has therefore, the opportunity to address these gaps in case they opt for a legislation regarding CSR by looking into the best practices and models around the world including Indian legislation.
Source
