Profit is the main goal of any corporation, no matter it is Nepal or in any other country. However how responsible the corporations are in Nepal? is the major question for their stakeholders and how Nepalese corporation can improve their corporate responsibility? Is another one.
Corporate responsibility can be defined as the responsibility of corporations towards its stakeholders such as shareholders, employee, customers, government and environment. Each and every stakeholder has its own expectation and corporation should fulfill all the possible expectation of its stakeholders. For example corporation should provide dividend to the shareholders, quality product at reasonable price to the customer, safe and equal working environment to employees, fair tax to government and use of environment friendly technology for environment.
All above responsibilities can be divided in to three broad categories and these are: Corporate financial Responsibility, Corporate Social Responsibility and Corporate Environmental Responsibility. Are Nepalese corporations are performing all these responsibilities properly or not? We will discuss in following paragraphs and also how they can improve their responsibility toward stakeholders?
Being a profit oriented entity, business has obligation to provide return to its shareholders which is regarded as financial responsibility of the corporation. Further corporation should do all these activities to increase the value of share so that wealth of share holder will maximize. Let have a close financial market scenario of Nepal. Only a bunch of financial institutions are able to perform financial responsibility providing sufficient dividend annually and market price of share is also sky rocketing. Last year Standard Chartered Bank provided 120% dividend which is amazing to the shareholder and due to this share price standard chartered stock have been growing. Same is applicable for all A rated financial institutions but even some so called joint venture banks and financial institutions are failed to even maintain its growth and in the verse of bankruptcy. NB Bank, NCC Bank and Nepal Sri Lanka Merchant Bank are some example to take. These institutions have been suffering from loss since last some years. They do not only fail to provide dividend but also fail to maintain their market price of share. NCC stock even went down below its face value.
Further Nepal Bottlers Ltd and Uniliver ltd are some fine example of excellent financial performer. Uniliver also provided 400% cash dividend which is unbelievable and bottlers Nepal is also maintaining its share price. But at the same time other manufacturing company Birat Shoes Ltd. And Hari Siddi Brick and Tiles Ltd. Are in the verse of extinction. They are now days in ventilator and any time they could die sinking all the investment of shareholders. These are some example of poor performer of corporate financial responsibility.
Another important responsibility of corporations is social responsibility. Corporate social responsibility is the responsibility beyond profit. This is comparatively new phenomenon but almost all the reputed companies in the world are performing social responsibility. When a corporation make donation it is not regarded as social responsibility. It includes respect of human rights, labor right and consumer rights etc. When companies fail to perform these responsibilities they will be swiped out from the business arena. Human right and labor right have been always like a taboo in Nepal. Still in companies specially in manufacturing companies gender discrimination is exist. Discrimination in work, salary wage, and in other area women are suffering. Though the situation is satisfactory in financial institution but still they use ladies in front office and customer service centre to attract the customers. This is simply exploitation. One can easily see that in banks and finance companies ladies are serving for customers not gents. Why ? ladies are only showpiece. If the corporations publish , we are equal opportunity provider then why this kind of discrimination? Further in Nepalese corporations labor right is almost prohibited. Only one bank has labor union and that is NABIL Bank which respects human right as well as labor right. But in other banks either employees are transferred or sacked who wanted to form labor union is their organization. Again NB Banks labor union case in court can prove it. No labor union can find in other companies except government corporations. However in some manufacturing companies blue color employees are free to join labor union. This shows the clear performance of social responsibility of Nepalese corporations. Moreover consumer right is like “Hauguji” in Nepali which means no consumers knows that and companies are far behind to perform this responsibility. Some consumer right activists and organizations have been working toward this.
Third responsibility of the corporations is environmental responsibility. Every companies in developed countries are doing their best to perform this responsibility. For example Bank of America has planned to spend $20 billion towards environment protection. It does not spend all money to protect the environment but will lend money to these corporations who are really working for environment protection and using environment friendly technology. But in Nepal no company is doing such activity. All the manufacturing corporations are emitting their waste water to the nearest river polluting the ecosystem. Is it not possible for Nepalese bank?
Why Nepalese companies are failed to perform their responsibilities towards their stakeholders? The answer is lack of corporate governance, lack of investors’ protection act and negligence to the environment. In Nepal there is no corporate governance codex which is now a days common in other countries which ensures the authority and responsibility of different level of management in any organization. It ensures the delegation of authority and transparency which it ultimate goal of any corporation. Normally public do not know what is happening inside the corporation and minority shareholders are misguided by majority. No employee can represent him/herself in board of director. So government should initiate toward the formulation of corporate governance codex and should compel the companies to abide by this codex. Nepalese corporations are operating under company act which is not sufficient for internal control and investors protection. There should be special act or law for investors’ protection so that investor can invest their hard earned money without hesitation in their dream company. Like in US Sarbanes Oxley Act 2000, Nepal should also enact the same type of law. Though Nepal is a signing party of human right and labor right but why corporations are not following such rules? Are these laws coercive so? If then UN Global Compact may be another solution. This is voluntary initiation taken by former secretary general of UN, Kofi Annan shouting the attention of corporate world to respect human right , labor right and environment protection. This is not a law. It’s pure voluntary initiation and once joined this compact corporations should be obliged to the norms of Global compact.
Though Nepalese corporate world is not developed but it is the time to take such initiation to work for society and environment which in future turn to be fruitful not only for nation but also for the corporate world.
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