SECP approves introduction of corporate social responsibility guidelines

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has, in principle, granted approval to introduce corporate social responsibility (CSR) guidelines for public companies, which would be a significant step towards streamlining reporting requirements and corporate accountability of the CSR activities by public companies, a statement said on Monday.
The guidelines would be notified as “Corporate Social Responsibility Voluntary Guidelines, 2012” after consultation with the external stakeholders and the general public, it said.The draft guidelines have been placed on the website of the commission for public comments.
Furthermore, the guidelines have been circulated among prominent public companies engaged in the CSR activities, all stock exchanges, Pakistan Centre for Philanthropy, Pakistan Poverty Alleviation Fund, Institute of Cost and Management Accountants and Institute of Chartered Accountants of Pakistan, it said.
Although businesses have been involved in corporate philanthropy, lately leading companies in Pakistan have started integrating CSR into their strategic business goals and taking active part in implementing social and community development strategies, the statement said, adding that a range of tangible opportunities have been created in the rural areas, particularly, through responsible businesses seeking difference in the lives of ordinary people through corporate social responsibility initiatives and programmes.
While most businesses give charity and make donations for noble causes, the reporting and accounting mechanism for stakeholders is still vague, it said.In 2009, the SECP issued the Companies (Corporate Social Responsibility) General Order, applicable to all public companies.
According to the order, every company is required to provide descriptive, as well as monetary disclosures of the CSR activities undertaken during each financial year in the directors’ report to the shareholders annexed to the annual audited accounts.
The companies, however, were at liberty to choose the content and format of CSR report, if issued, generating a strong perception that most reports are public relation tools adopted by large companies and not a form of accountability, it added.
Stakeholders, therefore, are facing difficulty to assess the positioning of the company regarding CSR priority areas, evaluate the utilisation of resources and their implementation effects, it said.
Keeping in view the global learning and local market practices, a set of guidelines have been developed by the SECP to encourage adoption of voluntary measures ensuring transparency and corporate accountability in implementing the CSR activities, it said, adding that the guidelines would be applicable to all public companies and are expected to be take effect from July 1.
Through the guidelines, the commission has exerted upon two aspects, the governance practices and independent assurance. Thus, as a primary step, the policy related to the CSR activities are expected to be prominently disclosed by companies on appropriate medium of communication for stakeholders.
Thereafter, assurance from an independent external party is required for verification of reported activities, it said.The statement also said that nevertheless, companies would continue to enjoy the liberty of developing / implementing CSR projects as per their aspirations, however, the board of directors is expected to play a proactive role in formulating corporate social responsibility policy.
The implementation strategy so adopted is required to be embedded in policy and strategic framework of the companies duly disclosed to all stakeholders.The adoption of these guidelines will be a significant step towards strengthening the policy and implementation pyramid within reporting companies, it said.
Moreover, the proposed corporate social responsibility framework would create favourable environment for sustainable growth, responsible business behaviour and corporate accountability.