Industrial and commercial companies will not be able to spend the amount of corporate social responsibility (CSR) voluntarily. The Supreme Court has issued an order in the name of the government to use such amount for poverty alleviation. Industrial and commercial companies have been spending one percent of their profits on CSR.
The bench of judges Hari Prasad Phuyal and Nriphadwaj Niraula passed the order on 27th November last in a writ filed 5 years ago regarding the amount under CSR. The Supreme Court has also ordered the government to enact a law to spend such amount for the benefit of the poor and needy in the recently prepared plenary text.
"The amount allocated for the purpose of bearing social responsibility and the amount accumulated in the Institutional Social Responsibility Fund cannot be spent on large development projects but should be spent according to the values of Institutional Social Responsibility for the upliftment of the poor, disadvantaged and targeted groups" is mentioned in the full text of the 6 points issued by the Supreme Court.
"The respondents shall make necessary arrangements to use/make the funds collected in such a fund to alleviate the extreme poverty in the country and benefit the citizens who are below the poverty line," it is said in full.
According to the Fourth Nepal Living Standards Survey (2079/80), 20.27 percent of the population is below the poverty line. Citing the said data, the Supreme Court has asked to make a legal provision to spend the amount by selecting the communities living in extreme poverty among them. It is the order of the Supreme Court that the amount allocated in this way should be used for housing, education, health, children and women's upliftment of the said community.
If there is a certain place where such a community is living, it is mentioned in the order of the Supreme Court that arrangements should be made immediately for the development of its infrastructure, private toilets, bathing rooms and other areas that are necessary for minimum human life. It is also said in the order that such amount can be spent through social organizations established with the aim of protecting the rights of the people below the poverty line.
The Supreme Court has also ordered to amend the prevailing legal provisions regarding the institutional social responsibility of financial institutions including banks and microfinance so that Nepal Rastra Bank can take action if such funds are spent or used in areas other than achieving the purpose of poverty alleviation.
The Supreme Court has also asked the Ministry of Industry, Commerce and Supply to make necessary arrangements so that if such money is spent elsewhere, it can monitor and take action in the case of private industries. It has also asked the government to make an umbrella law within two years to use this amount for poverty reduction by addressing these orders in a long-term manner.
Advocate Shashi Basnet filed a petition saying that the amount collected by the private sector for social responsibility was made to be deposited in the national fund established by the government for the prevention of Covid, saying that it was illegal. Explaining that the state can spend the amount of social responsibility for the health and life of citizens during the epidemic crisis, the Supreme Court has rejected the writ.
