Master of Laws (LL.M.

Corporate Social, Human Rights

and Environmental Responsibility
Tejendra Giri
Nepal Law Campus
Date : 2080-03-10
 Contents
1. Introduction
2. Definition of Corporate Social Responsibility
3. Purpose of Corporate Social Responsibility
4. Type of Corporate Social Responsibility
5. Responsibility toward Stakeholders
6. Theories Corporate Social Responsibility
7. Principles of Corporate Social Responsibility
8. Subjects of Corporate Social Responsibility
9. Approaches Corporate Social Responsibility
10. Demerits of Corporate Social Responsibility
11. Corporate Environmental Responsibility
12. Corporate Human Rights Responsibility
13. Legal Provision in Corporate Social Responsibility
14. Implications of Corporate Responsibility
 Introduction
• Milton Friedman Claims that the ethical mandate of company is to increase
the shareholders profit. Reason behinds this is company are accountable
to is shareholders since it is running on the shareholder’ resources.

• If company is accountable to shareholders for the uses of their resources

then in real ground company are using society’s resource then company
must be primarily responsible to society.

 The fund that company borrows from Bank and Financial Institutions is
that of the society.
 Company directly and indirectly uses natural resources of the nation
which is belong to society.
 Company uses human resources of society.
 It is the society that gives company an opportunity to earn and flourish.
 Introduction
• In the business enterprises, there are TWO philosophies in existence.
 First, Economic Philosophy that believes on Profit Maximization and
 Second, Social Philosophy that emphasizes on Social Service,
Consumerism, Protection of Environment and Development of
Society.
• Company is not merely a legal institution, it is rather a legal device for the
attainment of any social or economic end and to a large extent publicly and
socially responsible
• A company is responsibility to the customers in the sense that management
owes to improve products, good service, and fear dealing.
• The company responsible to the employees in the sense that management
has to give high wages, pensions and insurance benefit, a medical care
program, and a stable employment, etc.
• Company’s responsibility to the public at large is very widespread, such as
contribution to the charitable work, research and development activities and
support for higher activities.
 Introduction
• Corporate Social Responsibility refers to the voluntary efforts of businesses to
contribute to sustainable development by addressing social, environmental, and
economic issues.

• Corporate Social Responsibility is represented by the contributions undertaken by

companies to society through its core business activities, its social investment and
philanthropy programmers and its engagement in public policy.

• Corporate Social Responsibility refers to strategies that companies put into corporate
behaviour as part of corporate governance that are designed to ensure the company’s
operations are ethical and beneficial for society.
• Corporate Social Responsibility is a concept whereby companies integrate social and
environmental concerns in their business operations and interactions with their
stakeholders.
• Corporate Social Responsibility is the way through which a company achieves a
balance of economic, environmental and social imperatives (“Triple-Bottom-Line-
Approach”), while at the same time addressing the expectations of shareholders and
stakeholders.
 Definition of Corporate Social Responsibility
According to Keth Devis, Corporate Social Responsibility as -
“Social Responsibility refers to the businessman’s decision and actions
taken for reasons as least partially beyond the firm's direct economic or technical
interest.”

According to Michel Hopkins:

“Corporate Social Responsibility is concerned with treating the
stakeholders of a company or institution ethically or in a responsible manner. ‘Ethically
or in a responsible manner’ refers to treating key stakeholders in a manner deemed
acceptable according to international norms.”

The European Union, A Green Paper on Corporate Social Responsibility

(Published in 2001) defining Corporate Social Responsibility as:
“The voluntary integration of companies’ social and ecological concerns
into their business activities and their relationships with their stakeholders. Being socially
responsible means not only fully satisfying the applicable legal obligations but also
going beyond and investing ‘more’ in human capital, the environment, and
stakeholder relations.”
 Definition of Corporate Social Responsibility
The International Organization for Standardization (ISO) defines Corporate Social
Responsibility through its ISO 26000 standards on Corporate Social Responsibility
as:
“The responsibility of an organization for the impacts of its decisions and
activities on society and the environment, resulting in ethical behaviour and
transparency which contributes to sustainable development, including the health
and well-being of society; takes into account the expectations of
stakeholders; complies with current laws and is consistent with international
standards of behaviour; and is integrated throughout the organization and
implemented in its relations.”

According to World Business Council for Sustainable Development (WBCSD)

definition:
"Corporate Social Responsibility is the continuing commitment by
business to behave ethically and contribute to economic development while improving
the quality of life of the workforce and their families as well as of the local community
and society at large"
 Definition of Corporate Social Responsibility
According to United Nations Industrial Development Organization
(UNIDO),
“Corporate Social Responsibility is a management concept whereby
companies integrate social and environmental concerns in their business
operations and interactions with their stakeholders.”

A.P. Smith Manufacturing Co. Vs. Barlow (1953), the Supreme Court of
New Jersey held that
“just as the conditions prevailing when corporations were
originally created required that they serve public as well as private
interests; modem conditions require that corporations acknowledge and
discharge social as well as private responsibilities as members of the
communities within which they operate."
 Purpose of Corporate Social Responsibility
• Enhance Corporate Image and Reputation.
• Develop the obligation towards the greater good of the society.
• Create the environment for long run sustainability of business.
• Create balance between social power and social responsibility of business
• Increase the loyal Customers.
• Enhance job satisfaction and loyalty of employee.
• Retain the human resources working in company.
• Decrease the cost of Production, ultimately lead to savings in costs.
• Resolve the social problem before it goes to worse.
• Improvement on risk management.
• Improve the financial performance.
• Avoidance of costly and restrictive government regulations.
• Enhancement of ability to make profit.
 Types of Corporate Social Responsibility
In 1991, researcher Archie B. Carroll, improved Social Responsibility
Categories model and proposed the ‘Pyramid of corporate social
responsibility.‘ The pyramid included the four components of corporate
social responsibility
1. Economic Responsibility (make profits),
2. Legal Responsibility (follow laws),
3. Ethical Responsibility (be fair), and
4. Philanthropic Responsibility (be charitable).
 Types of Corporate Social Responsibility
Economic • Common goal of many business organizations is to make profits.
Responsibility • Economic social responsibility also starts with being profitable.
• Profit is required for to produce goods and services, for further investment, to
create Jobs, to pays Tax to the governments and to making payments related to the
supply chain of the business.
• Keeping costs to a minimum.
• Maximizing income.
• Investing in developing and growing the business in the long term.
• Ensuring financial risks are managed correctly.
• Providing a return to your owners and/or shareholders.

Legal • This is also straightforward and a minimum requirement for all businesses: to obey
Responsibility the law.
• Being truthful and transparent about the safety and security of the products or
services you sell.
• Keeping your employees and customers safe.
• Ensuring that you meet environmental, health and safety requirements.
• Reducing harmful practices, such as decreasing pollution, greenhouse gas
emissions, the use of single-use plastics, water consumption, and general waste
• Paying taxes.
 Types of Corporate Social Responsibility
Ethical • Ethical responsibility is concerned with ensuring an organization is operating in a fair and
Responsibilities ethical manner.
• Organizations that embrace ethical responsibility aim to practice ethical behaviour through
fair treatment of all stakeholders, including leadership, investors, employees, suppliers, and
customers.
• The responsibility towards offering equal to or better (liveable wage) than minimum
wages to employees and, using ethically sourced raw material (not purchasing products
resulting from slavery or child labour).

Philanthropic • This is the highest level of responsibility and goes beyond any legal or regulatory
Responsibility expectations. It's about being a "good corporate citizen," actively improving the world
around there.
• Philanthropic responsibility refers to a business’s aim to actively make the world and
society a better place.
• Enabling team members to take part in volunteering programs during work time.
• Sponsoring community initiatives.
• Offering mentoring expertise to non profits.
• Entering into community or charitable partnerships.
• Donating to charity, and offering employee donation-match schemes.
• Tackling wider global issues, such as poverty, climate change, racism, or gender inequality.
 Types of Corporate Social Responsibility
• In 2003, Schwartz & Carroll proposed the three-domain model of CSR.
• Three-domain model of CSR is also called Intersecting Circle (IC) CSR model
• The three-domain model consists of only three categories; economic, legal and
ethical.
• The Intersecting Circle (IC) CSR model is very different from the pyramid model.
• The major point of differentiation between the two models is that:
 It recognizes that there is a possibility of interrelationships between the
different domains of CSR and second and,
 it rejects the hierarchical order of importance.
 Types of Corporate Social Responsibility
Concentric Circle CSR model
 The Concentric Circle model which is also known as the CON model shares some
similarities with Carroll’s Pyramid and IC model.
 For instance, the CON model also states economic responsibility as one of the
core social responsibilities.
 As like the IC model, the CON model also emphasizes the interrelationships
among different responsibilities.
 However, besides these similarities, there is a major difference as well. In
contrast to the Pyramid model and IC model, the CON model states that non-
economic social responsibilities are the one that embraces core economic
responsibilities.
 Responsibility toward Stakeholders
Shareholders • Shareholders invest in company in return of profit.
• The primary responsibility of company is to increase shareholders’ wealth, to give good
returns on investment, to give dividends at the proper time, to protect the interest of
minority shareholders and to invite the shareholder in General Meeting.

Employees • Fair Treatment

• No Discrimination on the basis of sex, caste or creed
• Fair wages
• Fair Appraisal System
• Healthy and Safe working environment
• Establishment of fair work standards and norms
• The provision of labour welfare facilities
• Fair opportunity for accomplishment and Promotion
• Proper recognition, appreciation, and encouragement of special skills and capabilities of
the workers
• Installation of an efficient grievances handling system
• An opportunity for participating in managerial decisions to the extent desirable.
• Proper training and development programmes so that workers can develop themselves
according to a changing environment.
• Family welfare.
 Responsibility toward Stakeholders
Consumer • Provide products of proven quality
• Regular Research and Development to augment the product and to innovate.
• To ensue the product reaches the customer and to check any sort of black marketing
or profiteering by middlemen and anti social elements
• To supply good as reasonable prices
• To provide required after sale services (such spare parts)
• To provide the sufficient information about the product including its adverse effects
and risks and the care to be taken while using the products.
• To hear and redress the genuine grievances of customers.
• To avoid any type of cartel information that a attempts to reap monopoly profits.

Community • To Prevent environment pollution and to prevent ecological imbalance

• Improve the efficiency of business operations
• Contributing to research and development
• Development of backward areas
• Promotion of small scale industry
• Development of region in which they are operating
• Taking steps to conserve scare resources and developing alternatives wherever
possible.
 Responsibility toward Stakeholders
Environment • companies are the contributors of pollution, so they are required to
contribute for mitigation of pollution problem. Companies have to take
necessary preventive and remedial measures to tackle environmental
problems.
• Company are under a social duty to help, devise and follows some strategies
to eradicate environmental pollution.

State • Company is responsible to the state as well.

• Company is an authority and legal entity to pay tax and other contribution
in accordance with law.
• The company has to perform its duty observing the laws and regulations in
its business activities. Companies must not indulge in malpractice’s and
illegal activities and should not avoid tax- paying responsibility.
• It has a duty not to bribe and push the officials and corruption for the
benefit of company.
• It must contribute the state to promote social stability, development and
progress.
 Theories of Corporate Social Responsibility

1. Maximizing Profits theory

2. Moral Minimum Theory
3. Stakeholders Interest Theory
4. Institution Legitimacy Theory
5. Corporate Citizenship Theory
6. Corporate Social Audit Theory
 Theories of Corporate Social Responsibility
1. Maximizing • Profit maximization is the act of achieving the highest revenue or profit. Profit is gap between
Profits
theory revenue and to cost of the company.
• The profit maximization theory is the principle that every company should operate in order to
make a profit.
• Milton Friedman, who won the Nobel Prize in Economics Advocates this theory he asserts that in
a free society, “there is one and only on social responsibility of business to use its resources and
engage in activities designed to increase its profits as long as it stays within the rules of game,
which is to say, engage in open and free competition without deception and fraud”
• Profit is core concern of the business company and it is necessary for the existence and survival
of the company.

2. Moral • Theory states that a company has the responsibility to make a profit, while at the same
Minimum time not causing any harm to others.
Theory • This theory of social responsibility is called moral minimum.
• Under this theory, as long as business corrects the social injury it causes, it has met its duty of
social responsibility. For example, if a corporation pollutes water but compensates those whom it
injures, it has met its moral minimum duty of social responsibility.
• The legislative body and judiciary have established laws that enforce the moral minimum of
social responsibility on corporation. For example, occupational safety laws establish minimum
safety standers for protecting employee from injuries in the work place.
• Consumer protection laws also establish safety requirements for products and make
manufactures and sellers for injuries caused by effective products.
 Theories of Corporate Social Responsibility
3. Stakeholders Interest • The modern concept of stakeholder includes suppliers,
Theory customers, stockholders, employees, communities,
political group, media and government.
• This stakeholder’s interest’s effect on the process of
decision making and profit oriented business activities
of a company.
• The theory states that interest of those stakeholders
must be balance.

4. Institution Legitimacy • The principle of institutional legitimacy denotes that,

Theory society grants legitimacy and power to business, and
that the business institutions must use its power in a
way that society considers responsible.
 Theories of Corporate Social Responsibility
5. Corporate • The corporate citizenship theory of CSR says that a business has
Citizenship responsibility to do well and have to be responsible for helping to solve
Theory social problem.
• This theory contends that corporation owes a duty to promote the same
social goods, as do individual members of society.
• Proponents of “do well” theory argue that corporation owes a debt to
society to make it a better place and that duty arises because of the
social power bestowed on them.
• Social power is a gift from society and should be used to good ends. For
example, company has a moral duty to subsidize school and help
educate children etc.

6. Corporate • The theory advocates that corporate audits should be extended to

Social Audit include not only audits of the financial health of a corporation, but also
Theory is moral health.
• The audit would examine how well employees have adhered to the
Company’s Code of Ethics and how well the corporation has met its duty
of social responsibility..
 Principles of Corporate Social Responsibility (UN Global Compact)
• Corporate sustainability starts with a company’s value system and a principles-based
approach to doing business.
• This means operating in ways that, at a minimum, meet fundamental responsibilities in
the areas of human rights, labour, environment and anti-corruption.
• Responsible businesses enact the same values and principles wherever they have a
presence, and know that good practices in one area do not offset harm in another.
• By incorporating the Ten Principles of the UN Global Compact into strategies, policies
and procedures, and establishing a culture of integrity, companies are not only
upholding their basic responsibilities to people and planet, but also setting the stage for
long-term success.
• The Ten Principles of the United Nations Global Compact are derived from:
the Universal Declaration of Human Rights, the International Labour Organization’s
Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on
Environment and Development, and the United Nations Convention Against Corruption.
 Principles of Corporate Social Responsibility (UN Global Compact)
Human Rights
Principle 1: Businesses should support and respect the protection of internationally
proclaimed human rights; and
Principle 2: make sure that they are not complicit in human rights abuses.
Labour
Principle 3: Businesses should uphold the freedom of association and the effective recognition
of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly
technologies.
Anti-Corruption
Principle 10: Businesses should work against corruption in all its forms, including extortion
and bribery.
 Principles of Corporate Social Responsibility ( ISO 26000)

1. Accountability
2. Transparency
3. Ethical behaviour
4. Respect for stakeholder interests
5. Respect for the rule of law
6. Respect for international norms of behavior
7. Respect for human rights
 Subjects of Corporate Social Responsibility (ISO 26000)
• Organizational governance: Decisions are to be made in consideration of the expectations
of society. Accountability, transparency, ethics, and stakeholders should be factors in the
organization’s decision-making process.
• Human rights: All humans have the right to fair treatment and the elimination of
discrimination, torture, and exploitation.
• Labour practices: Those working on behalf of the organization are not a commodity. The
goal is to prevent unfair competition based on exploitation and abuse.
• Environment: The organization has a responsibility to reduce and eliminate unsustainable
volumes and patterns of production and consumption and to ensure that resource
consumption per person becomes sustainable.
• Fair operating practices: Building systems of fair competition, preventing corruption,
encouraging fair competition, and promoting the reliability of fair business practices help to
build sustainable social systems.
• Consumer issues: The promotion of just, sustainable, and equitable economic and social
development with respect to consumer health, safety, and access is the organization’s
responsibility.
• Community involvement and development: The organization should be involved with
creating sustainable social structures where increasing levels of education and well-being
can exist.
 Approaches of Corporate Social Responsibility
Social responsibility involves taking actions that help advance society. A
socially responsible organization attempts to remain ethical, putting
morals ahead of profits. There are four approaches that businesses take in
order to be more responsible.
1. Obstructive Approach
2. Defensive Approach
3. Accommodating Approach
4. Proactive Approach
Obstructionist and Defensive stances relate to approaches that require
little or no corporate action. Accommodative and Proactive stances are on
the higher end of the spectrum and involve a greater acceptance of being
social responsible as a corporate citizen.
 Approaches of Corporate Social Responsibility
1. Obstructive • A company that takes an obstructive stance toward social responsibility
Approach attempts to defend its economic priorities by blocking any attempts to point
out the company's lack of social responsibility. For example,
the corporation that takes an obstructionist stance may cross an ethical or legal
line, such as dumping hazardous material in a local landfill. Its response is to do
nothing to correct its actions and may deny wrongdoing when confronted.
• An obstructive company does not make social responsibility an effort, instead
making profits the most important aspect of its business.
• Obstructive businesses as immoral since they may exploit their employees,
pollute natural lands or deceive customers.
• When faced with specific social demands, obstructive companies often deny
any wrongdoing and may even use obstacles to deliberately delay or divert
investigation of their practices.
2. Defensive • Companies that take a defensive stance towards social responsibility are not
Approach particularly responsible.
• companies may consider themselves neutral, and they make profits a more
important motive than performing actions in a socially responsible way.
• These companies make a point of following the law to ensure that others
cannot take legal action against them. For example, a company may create more
waste than necessary, but it will remove the waste in a legal method rather than
dumping it illegally.
 Approaches of Corporate Social Responsibility
3. Accommodating • An accommodating stance signifies that a company believes social
Approach responsibility is important -- and perhaps as important as making a profit.
• These companies satisfy all legal requirements and attempt to meet ethical
standards.
• An accommodating company does not attempt to hide its actions and remains
open about why it takes specific actions. For example, it may decrease its
creation of waste, source products that are not tested on animals and pay its
employees a fair wage.
• The company would keep its records open to the public. Though these
companies are often socially responsible, they may change their policies in
response to criticism.

4. Proactive
Approach • The proactive approach is the highest degree of CSR.
• Usually, Companies that believe in social responsibility beyond ethical, legal,
and profitable motives will take proactive steps to support efforts that
strengthen the community.
• Rather than waiting for a request — as happens with the accommodative
stance — these companies generally seek opportunities to support charitable
organizations and various causes.
 Demerits of Corporate Social Responsibility
• Increases civil and criminal litigation against companies and
management
• Loss of top talents
• Loss of investors
• Increases cost of capital
• Decline in stock value
• Loss of customers and business partners
• Loss of public contracts and public procurement procedures
• Loss of business partners.
 Corporate Environment Responsibility
• Companies must behave as Environmental Stewardship.

• CSR may cover:

 a company running its business responsibly in relation to internal
stakeholders (shareholders, employees, customers and suppliers);
 the role of business in relationship to the state, locally and nationally, as
well as to inter-state institutions or standards; and
 business performance as a responsible member of the society in
which it operates and the global community.

• The third perspective is multi-layered and may involve the company’s

relations with the people and environment in the communities in which it
operates, and those to which it exports.
 Corporate Environment Responsibility
• Corporate Environment Responsibility (CER) refers to the duty of the
company not to indulge in activities that may damage the natural
environment in any manner.

• This concept comes under the aegis of Corporate Social Responsibility.

• According to the European Union, “CSR (Corporate Social
Responsibility) is the process. Whereby enterprises integrate
social, environmental, ethical and human rights concerns into their
core.”

• CER defined as the duty to cover the environmental implications of

the company’s operations, products and facilities; eliminate waste
and emissions; maximize the efficiency and productivity of its
resources; and minimize practices that might adversely affect the
enjoyment of the country’s resources by future generations.
 Corporate Environment Responsibility
• CSR spending by a company is linked to the profits earned by it but
CER spending is related to the cost of the companies. Hence the
commitment in the CER is regardless of profit or loss endured by the
company.

• CSR is concerned with returning to society through a wide range of

activities in fields of education, development and creating skilled
manpower.

• CER, on the other hand, is concerned only with green solutions for the
area where the company left its footprint.
 Elements of Corporate Environment Responsibility
• Adopting sustainability models that ensure the availability of
resources for the future generations
• Optimal use of natural resources for productivity enhancement
• Elimination or zero wastage and reduction of pollution
• Protection of forest resources
 Driving forces of Corporate Environment Responsibility
Governments
• Governments can be planned and programmed in environmental management and
conservation.
• Government can stimulate the private sector by providing funding for research, or
by leading campaigns, collecting and disseminating information, training, and
raising awareness in environmental issues.
• Government can develop or support appropriate management tools and
mechanisms, including environmental agreements, voluntary product labelling
schemes, benchmarks, and guidelines for company management and reporting
systems.
• Government can also create incentives and by apply their public procurement and
investment leverage.
• Government can play is partnering in environmental initiatives
 Driving forces of Corporate Environment Responsibility
Company
1. Corporate Environmental Policy: Companies committed to reducing their environmental impact
usually create a set of environmental principles and standards, often including formal goals.
2. Environmental Audit: Before a company attempts to reduce its impact on the environment, it is
essential that it first gains a full understanding of it. The goal of audits is to understand the type and
amount of resources used by a company, product line or facility, and the types of waste and emissions
generated. This also helps to set priorities as to how a company can get the greatest return on its efforts.
3. Employee Involvement: Leadership companies recognize that to be effective, an environmental policy
needs to be embraced by employees throughout the organization, not just those whose work is related to
the environment. To do that, companies engage in a variety of activities, especially education, to help
employees understand the environmental impact of their jobs and to support their efforts to make
positive changes. Some companies go further, helping employees become more environmentally
responsible throughout their daily lives, helping them build a true environmental ethic. Besides
education, many companies create incentives, rewards and recognition programs for employees who
demonstrate their environmental commitment.
4. Green Procurement: To help ensure that their products and processes are environmentally responsible,
many companies seek to buy greener products and materials from their suppliers. Some companies
participate in buyers’ groups in which they leverage their collective buying clout to push suppliers to
consider alternative products or processes.
5. Green Products: Products themselves may be made more environmentally friendly, with regard to, for
example, the control of emissions, noise, reduced health and safety risks, and reduced energy
requirements.
 Environmental Problem
• Global Warming
• Ozone Layer Depletion
• Land Degradation
• Solid and Hazardous waste
• Water Pollution
• Air Pollution
• Deforestation
• Danger to biological diversity
 Environment Protection
1. Companies involved in the production of various utilities or products can
go for eco-friendly, low waste and clean technology for equipment used in
such industries.
2. Industrial wastes should be recycled every time so that it minimises the
chances of pollution.
3. The machinery should be upgraded so that it complies with the pollution
norms, which will be beneficial in reducing the levels of pollution.
4. Conduct quarterly/yearly audits for checking the effectiveness of the
pollution control programs and making changes so as to bring about more
success in pollution control programmes.
5. The companies and industries should comply with the rules laid down by
the government with respect to prevention of environmental pollution.
6. The businesses should take steps to save the environment by setting up
campaigns of planting trees, cleaning of rivers.
 Corporate Human Rights Responsibility
• The corporate responsibility to respect human rights in essence means “no
infringement” on the enjoyment of rights—or put simply, “doing no harm.” Doing no
harm may require companies to take positive steps. For example, a company that
wishes to respect the right to non-discrimination in the workplace will need to
adopt appropriate hiring policies and engage in employee training to be sure that
the right is honoured.

• The United Nations Guiding Principles on Business and Human Rights (UNGP)
(United Nations, 2011) has led to policy commitments from hundreds of
multinational corporations expressing acceptance of their responsibility to respect
human rights. Define Corporate Human Rights Responsibility as:
“The corporate responsibility to respect human rights means that
companies have to avoid, mitigate and remedy any negative impacts on human
rights that are caused by or related to their activities or the activities of their
business partners.”
 Corporate Human Rights Responsibility
• Protect, Respect and Remedy are the cornerstones of the Corporate Human
Rights Responsibility.

• U.N. “Protect, Respect, Remedy” framework (U.N. Framework):

 the state duty to protect against human rights abuses by third parties,
including business, through appropriate policies, regulation, and adjudication;
 the corporate responsibility to respect human rights, which means to act
with due diligence to avoid infringing on the rights of others; and
 greater access by victims to effective remedy, judicial and non-judicial.

• Companies can take responsibility towards human rights by Integrating human

rights into existing business systems and processes.

• Society expects companies to respect human rights.

 Corporate Human Rights Responsibility
Human Rights in business shall benefits in following ways:
• Reduce the risk of litigation or damage
• Reassure investors and the public
• Reduce the risk of violations and facilitate the fair and safe development of products
• Enhance reputation both as a company and an employer
 Corporate Human Rights Responsibility
International standards relating to Cororate human rights responsibilities are found in
the following sources:
• UN Guiding Principles on Business and Human Rights
• OECD Guidelines for Multinational Enterprises
• ILO Tripartite Declaration on Multinational Enterprises and Social Policy
• Voluntary Principles on Security and Human Rights
• UN Global Compact
• International Finance Corporation and its Human Rights Impact and Management
tool
 Corporate Human Rights Responsibility
OECD Guidelines for Multinational Enterprises on Responsible Business Conduct
States have the duty to protect human rights. Enterprises should, within the framework of
internationally recognised human rights, the international human rights obligations of the
countries in which they operate as well as relevant domestic laws and regulations:
1. Respect human rights, which means they should avoid infringing on the human rights
of others and should address adverse human rights impacts with which they are
involved.
2. Within the context of their own activities, avoid causing or contributing to adverse
human rights impacts and address such impacts when they occur.
3. Seek ways to prevent or mitigate adverse human rights impacts that are directly linked
to their business operations, products or services by a business relationship, even if
they do not contribute to those impacts.
4. Have a publicly available policy commitment to respect human rights.
5. Carry out human rights due diligence as appropriate to their size, the nature and
context of operations and the severity of the risks of adverse human rights impacts.
6. Provide for or co-operate through legitimate processes in the remediation of adverse
human rights impacts where they identify that they have caused or contributed to
these impacts.
 Legal Provision in Corporate Social Responsibility
In India
Section 135 of Companies Act, 2013
Corporate Social Responsibility.
(1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees
one thousand crore or more or a net profit of rupees five crore or more during shall constitute a
Corporate Social Responsibility Committee of the Board consisting of three or more directors, out
of which at least one director shall be an independent director.
(3) The Corporate Social Responsibility Committee shall,— (a) formulate and recommend to the Board,
a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the
company (b) recommend the amount of expenditure to be incurred on the activities referred to in
clause (a); and (c) monitor the Corporate Social Responsibility Policy of the company from time to
time.
(4) The Board of every company referred to in sub-section (1) shall,— (a) after taking into account the
recommendations made by the Corporate Social Responsibility Committee, approve the Corporate
Social Responsibility Policy for the company and disclose contents of such Policy in its report and
also place it on the company’s website, if any, in such manner as may be prescribed; and (b) ensure
that the activities as are included in Corporate Social Responsibility Policy of the company are
undertaken by the company.
(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in
every financial year, at least two per cent of the average net profits of the company made during
the three immediately preceding financial years,
 Legal Provision in Corporate Social Responsibility
UK
Section 172 of Companies Act, 2006
Duty to promote the success of the company
(1) A director of a company must act in the way he considers, in good faith, would be most likely to
promote the success of the company for the benefit of its members as a whole, and in doing so have
regard (amongst other matters) to—
(a) the likely consequences of any decision in the long term,
(b) the interests of the company’s employees,
(c) the need to foster the company’s business relationships with suppliers, customers and
others,
(d) the impact of the company’s operations on the community and the environment,
(e) the desirability of the company maintaining a reputation for high standards of business
conduct, and
(f) the need to act fairly as between members of the company.
(2) Where or to the extent that the purposes of the company consist of or include purposes other than
the benefit of its members, subsection (1) has effect as if the reference to promoting the success of
the company for the benefit of its members were to achieving those purposes.
(3) The duty imposed by this section has effect subject to any enactment or rule of law requiring
directors, in certain circumstances, to consider or act in the interests of creditors of the company.
 Legal Provision in Corporate Social Responsibility
Nepal
Constitution of Nepal
The fundamental rights which closely related to CSR are :
Section 29 - Right against exploitation
Section 30 – Right to clean environment
Section 33 – Right to Employment
Section 34 – Right to Labour
Section 35 – Right relating to Health
Section 39 – Right of Child
Section 42 - Right to Social Justice
Section – Right to Social Security
Section – Right of Consumer

Section 51of Policies of the State

Article 51(f)(2) - to develop balanced, environment friendly, quality and sustainable physical infrastructures, while
according priority to the regions lagging behind from development perspective,
Article 51(g)(7) - to adopt appropriate measures to abolish or mitigate existing or possible adverse environmental
impacts on the nature, environment or biological diversity,
Article 51(f)((8) - to pursue the principles of environmentally sustainable development such as the principles of
polluter pays, of precaution in environmental protection and of prior informed consent.
 Legal Provision in Corporate Social Responsibility
The Income Tax Act, 2058:
Tax payment is also the important element of CSR.
• Section 12(1), (2), (3) of the Income Tax Act, 2058 has exempted to the corporate bodies from paying tax which has
contributed donations to social welfare activities for non taxable institution.
• Section 17 provides the legal exemption of tax for pollution control expenditure. The amount of expenditure tax free for
maintaining the pollution control expenditure.

The Industrial Enterprises Act, 2076 (2020)

Section 7 - Adverse effects on environment to be mitigated:
(1) If an industry registered under section 5 is required to carry out environmental impact assessment or initial
environmental examination under the prevailing law, it shall commence its establishment, operation, commercial
production and transaction only after the approval of a report on such assessment or examination.
(2) Notwithstanding anything contained in subsection (1), environmental impact assessment or initial environmental
examination shall also be carried out if so required under the prevailing law when an industry needs to increase its
capital or capacity, add or change its objective, change its location or transfer it to another place.
(3) The concerned industry shall be responsible for mitigating adverse environmental effects caused or likely to be caused
on the environment in the course of its operation.
(4) The industry registration body may, as required, monitor whether environmental effects are mitigated under this
section and give a direction, take action or recommend the concerned body for action.
(5) An industry which is not required to carry out environmental impact assessment or initial environmental examination
when making application for its registration, shall make a self-declaration, accompanied by the reasons and grounds
for not requiring to carry out such assessment or examination, that it will take necessary measures to mitigate possible
adverse effects on the environment from the establishment and operation of the industry.
 Legal Provision in Corporate Social Responsibility
The Industrial Enterprises Act, 2076 (2020)
Section 54 - Provisions relating to corporate social responsibility:
(1) A medium or large industry or cottage or small industry with annual turnover of more than one hundred fifty
million rupees shall set aside at least one percent of its annual net profits in each fiscal year for the purpose of
performing the corporate social responsibility.
(2) The amount set aside under subsection (1) shall be spent in such areas as prescribed, upon making annual plans
and programmes.
(3) An industry shall submit details on the programmes completed in each fiscal year under subsection (2) and
amounts spent in such programmes to the concerned industry registration body within six months after the end
of the fiscal year.
(4) The amount set aside for the corporate social responsibility under subsection (1) may be deducted as expenses
for the purpose of income tax.

Labor Act, 2074:

Labor Act has various legal provisions to maintain the internal CSR such as, employment, security of services,
working hours, remuneration, health, safety and welfare etc.

Environment protection Act, 2076

The Act emphasizes environment conservation and management through internalization of the environment
assessment system, pollution control and prevention, Conservation of natural heritage sites, operation of
environmental funds, additional incentives to minimize pollution and compensation for environmental damages.
 Legal Provision in Corporate Social Responsibility
Companies Act, 2006 (2063)
Section 6(1)(b) – Rejection of name or objects of the proposed company is contrary to the prevailing law or appears
to be improper or undesirable in view of public interest, morality, decency, etiquette etc or reflects motive of a
criminal act
Section 105(1)(c) - Making a contribution, donation or gift
Section 166 and Section 167 –Profit Not Distributing Company
Section 183 - Investor protection fund

The Act Relating to Children, 2075 (2018)

Provided various rights and protection for children according to International convention and standards.
Restriction on use of Child as Labour.

Competition Promotion and Market Protection Act, 2063 (2007)

Preamble: Whereas, it is expedient to make legal provisions in order to further make national economy more open,
liberal, market-oriented and competitive by maintaining fair competition between or among the persons or
enterprises producing or distributing goods or services, to enhance national productivity by developing the
business capacity of producers or distributors by way of competition, to protect markets against undesirable
interference, to encourage to make the produced goods and services available to the consumers at a competitive
price by enhancing the quality of goods or services by way of controlling monopoly and restrictive trade practices,
and to maintain the economic interests and decency of the general public by doing away with possible unfair
competition in trade practices.
 Legal Provision in Corporate Social Responsibility
The Consumer Protection Act, 2075 (2018)
The consumer protection Act is concerned to external CSR.
It contains many legal provisions relating to consumer’s rights.
It Prohibits unfair trade practices and provides institutional arrangements for it.

The Bonus Act, 2030:

It has objective to provide law relating to bonus distributing to workers in companies. Every profit distributing
company should allocate 10 percent of its net profit to distribute its workers as bonus.

The Medicine Act, 1978 (2035)

It state medicine should be effective, qualitative and people’s health oriented. No one does such activities, he will be
punished with fine and imprisonment and victims will be compensated.

The Food Act, 2023

Preamble of this Act strictly prohibited selling, distributing, Storing and producing such food staple that is under
quality of food and public health are the main objectives. Likewise, section 5(1) provide that one who produces,
sells, exports and imports low quality of food, he/she will be fined up to Rs. 2000/- and up to 1 years
imprisonment.

The Trade Union Act, 2048:

This is made to establish trade union for the protection and promotion of employees rights working in enterprise,
industry, and factory and service sectors.
 Legal Provision in Corporate Social Responsibility
Motor Vehicles and Transport Management Act, 2049 (1993)
Section 23 - to test the vehicles according to the criteria prescribed, whether it is road
worthy or not.
Section 24 - the means of transport are to be operated keeping the pollution level
under control, which also empowers the relevant officers to refuse the registration of
vehicle if the above mentioned criteria are not met.
Section 168 - prohibited running transport business in syndicate system.
:
 Legal Provision in Corporate Social Responsibility
Rajendra Parajuli et. al. Vs. Shree Distillery Pvt. Ltd. et. al. (Writ No. 3259, 2053)
Fact:
• The Writ petition was filed to prohibit effluent and excrement of Shree Distillery from
mixing into Arun River and to stop the bad smell which had caused headache, eye
disease, Skin disease, paralysis etc.

Held:
• Industry cannot be operated which may cause natural imbalance.
• Industrial process should be operated in such ways that do not destroy the
environment. Every industry is to function to meet its aims & objective and liable to
balance the fulfillment and development of human wants without destroying the
environment. It also realized that the word environment is not matter of narrow
interpretation.
• Court issued mandamus order to the CDO of Nawalparasi to look & monitor the terms
and conditions prescribed to industry to protect the environment.
• Court also ordered to Shree Distillery to follow the terms and conditions for the control
of environmental pollution.
 Legal Provision in Corporate Social Responsibility
Surya Prasad Dhungel Vs. Godavari Marble Pvt. Ltd. et. al. (NKP, 2052, Golden Birth Anniversary Issue,
Decision No. 4)
Fact:
• The writ petition was filed for the stopping the environment pollution activities of the Godavari Marble
Industry.
• In this case, the writ petitioner pleaded that the mining activities of the Godavari Marble Industry is
causing environmental pollution to the area and has threatened the right to life to the people of that area.

Held:
• Supreme court held that getting clear environment or to have immunity from the polluted environment is
the right related with the life of the people which is enshrined and included in Article 12(1) of
Constitution, 2047. Article 26(4) declares protection of environment as one of the important state policy
and Directive Principles.
• Industries are the foundation stone of the development of any country and development is necessary for
both society and the state but the environmental balance is almost along with industrial development.
More or less industries adversely affect the environment to minimize such adverse effect.
• First, remedial and regulatory mechanism is to be developed and applied. As even if the environment
cannot be protected, then the polluting activities are to be closed. Unless a healthy and pure environment
is maintained, no man can be healthy and pure, and therefore environment protection is the end. Court
issued directive order to HMG for effectively enforce the Mines and Minerals Act, 2042 and enact necessary
initiatives for the affective conservation of Godavari area.
 Legal Provision in Corporate Social Responsibility
Yogi Narahari Nath et. al. Vs. Prime Minister Girija Prasad Koirala et .al. (NKP 2053,
Volume 1 Decision No. 6127)
Fact:
• This Writ petition was filed for the conservation of natural and cultural heritage of
Devaghat region of Chitwan District. The Government provided 42 Bigha land with forest to
the international society for Medical College on lease for 40 year.
• The Writ petitioners claimed that the land being provided to the college was situated in a
place of importance for environment protection.
Held:
• Supreme Court declared that the decision of the Gov. to provide the land to the Medical
College is invalid.
• It has brought positive impact for the environmental protection in the Devaghat region.
• It further explained that once the environment is damaged, it adverse effect would be seen
in human as well as animal life.
• The forest plays a vital role to maintain a good environment.
• Supreme Court has given its opinion that the establishment of Medical College at Devaghat
which is religiously, ecologically and socially not appropriate.
 Legal Provision in Corporate Social Responsibility
Tulkaman Lama Vs. Prime Minister et. al. (NKP 2061, Issue 6, Decision No. 7394)
Fact:
• The Writ Petitioner filed the case in Supreme Court demanding for quashing the
government’s decision of stopping the movement of three wheelers diesel engine tempos in
Katmandu Valley.

Held:
• In this case Supreme Court upheld that every person has inherent fundamental rights to life
and live in clean and healthy environment.
 Legal Provision in Corporate Social Responsibility
Thaneshwar Acharaya et.al. Vs. Bhrikuti Pulp and Paper Ltd. (Writ no 3092 of 2057)
Fact:
• Writ petitioners filed the case against the Bhrikuti Pulp and Paper factory and others. The
petitioners have claimed that to stop to make environment pollution from the emission and
waste matter which is discharged by Bhrikuti Pulp and Paper Factory.
Held:
• The Supreme Court issued directive order to the factory for installing the treatment plants
and dust room immediately for the treatment of the pollutants and makes the clean
environment.

Himal Cement Company Ltd. Vs. Dhruba Bd. Karki (NKP 2058, Falgun, Decision No.
7046)
Facts: Petition was filed in the Appellate court to get compensation from Himal Cement
Company. Petitioner had claimed that his roof of house has been cracked due to the poor
compressive strength of cement. Appellate court issued an order to compensate victim with
the amount of Rs. 148,640.00. Cement company challenged this verdict in the Supreme Court.
Held:
Supreme Court also issued its verdict in the favor of victim.
 Implications of Corporate Responsibility
• Corporate Responsibility not only can be impacting the society we live in and create a
healthier community.
• It builds a crucial ethical stand, in which members are accountable for fulfilling their public
duty.
• It reduces dependency on the government for social change.
• It encourage public-private partnership with well-defined controls and processes for the
best use of resources for social change.
• Encourage to use Resources judiciously and not waste, misutilise, damage or cause to
deteriorate the resources at its disposal.
• Protect the environment.
• Develop the culture of fair trade practice.
 Implications of Corporate Responsibility
• Innovation
• Employment and Industrial Relations
• Human Rights
• Environmental Protection
• Natural Resources Governance
• Transparency & Anti-Corruption
• Intellectual Property
• Economic Empowerment of Insiders Stakeholder
• Health and Social Welfare
• Investment