Mallen Baker's Blog

Philippines joins the rush to legislate on CSR

4 Sep 2009

After the moves in Nigeria to introduce what is effectively a CSR tax - a requirement for companies to pay towards social projects - now the next possible country to join this unhelpful trend is the Philippines.

A bill requiring companies to observe CSR has been filed in the House of Representatives.

Companies would be required by the CSR Act 2009 to "consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. According to the bill's sponsor, Rep. Diosdada M. Arroyo, companies had shown that their sole purpose was instead to maximise their returns on investment.

At least the measure is a bit less patently a grab for cash than the Nigerian measure. The focus is on the responsibility of companies to their stakeholders.

The difficulty of this kind of legislation comes in the detail. How do you ultimately decide whether a company is taking its responsibilities seriously? It involves far-reaching judgements on some pretty intangible issues.

That said, it is not an unhelpful message to the kinds of business leaders that really choose not to engage in CSR that, at some point, governments will choose to exercise the one power that they unquestionably have, which is to throw legislation around.

It needs a light touch, however. As soon as you become prescriptive about outcomes, or processes, you simply slap a wave of bureaucracy at best, and rank political interference at worst, over the heads of business and use that process to discredit the term 'CSR'.

As the proposal currently stands, it would require companies big and small to come up with their own CSR programmes. It sounds relatively light touch compared to how it might have been conceived.

Let's see if it stays that way, and what the actual impact will be.

Tags: CSR legislation corporate social responsibility Philippines Mallen Baker

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