03.03.2008, 15:06
IBC Comments on Corporate Responsibility Suggested by Bishkek Mayor
OREANDA-NEWS. February 28, 2008. International Business Council (IBC) based in Bishkek IBC is not opposed to "Corporate Social Responsibility" as an ideal concept. This measure does have positive aspects, for example it draws attention to the plight of the needy - pensioners, veterans, invalids, etc. It identifies the individuals in most need, reported the press-centre of IBC.
However, we have doubts about this particular scheme or format. It is one thing for the authorities to draw attention to a good and worthy cause, in this case the plight of the least well off in society – but another if pressure is brought to bear on businesses to participate in the scheme.
Even if the emphasis has now changed to an "appeal to businessmen", rather than one of "requiring businesses" to participate in the scheme, there is still an element of "expectation" of participation in the scheme as the letter to Directors of Enterprises apparently already contains named individuals for whom assistance is requested. So, although the scheme may be described as voluntary - not compulsory, there is at least "moral pressure" being put on businesses.
IBC is not convinced that this is the right way to encourage "Corporate Social Responsibility" as a good business practice.
"Corporate Social Responsibility" should be a matter for each individual company to develop its own policy and practice. This should cover the sort of causes it will support, as well as the form and the level of support that it is able to offer. In this case the decisions seem to be taken away from the company. Recipients are nominated, a sum is nominated - 3500 som each month.
Bearing in mind that profit margins are typically 10%, then the suggested charitable contribution represents the profit from sales of approximately 35,000 som each month, or annual sales of 420,000 som.
According to Article 112 of the Tax Code of KR, an enterprise can set off a limited amount of charitable donations against profit tax - 5% of the taxable profit. This means that a small enterprise making an annual taxable profit of less than 70,000 som cannot set off all of the contribution against profit tax.
Neither of these statistics seems to be particularly encouraging for business development.
Some companies are already active in terms of "Corporate Social Responsibility", donating to charity and supporting worthy causes. But as their budget for such activities will be limited it will involve a choice - depriving other worthy causes of financial support. Of course, because this scheme is "voluntary" it should be possible for the enterprise to choose not to support this particular measure.
It seems strange that all enterprises are apparently treated equally regardless of their size (e.g. turnover), profitability or other economic factors although the number of people to help will depend on the size of the business and again this should be a matter for the company policy.
All in all, this seems a worthy cause - but not necessarily the best way to approach it.
However, we have doubts about this particular scheme or format. It is one thing for the authorities to draw attention to a good and worthy cause, in this case the plight of the least well off in society – but another if pressure is brought to bear on businesses to participate in the scheme.
Even if the emphasis has now changed to an "appeal to businessmen", rather than one of "requiring businesses" to participate in the scheme, there is still an element of "expectation" of participation in the scheme as the letter to Directors of Enterprises apparently already contains named individuals for whom assistance is requested. So, although the scheme may be described as voluntary - not compulsory, there is at least "moral pressure" being put on businesses.
IBC is not convinced that this is the right way to encourage "Corporate Social Responsibility" as a good business practice.
"Corporate Social Responsibility" should be a matter for each individual company to develop its own policy and practice. This should cover the sort of causes it will support, as well as the form and the level of support that it is able to offer. In this case the decisions seem to be taken away from the company. Recipients are nominated, a sum is nominated - 3500 som each month.
Bearing in mind that profit margins are typically 10%, then the suggested charitable contribution represents the profit from sales of approximately 35,000 som each month, or annual sales of 420,000 som.
According to Article 112 of the Tax Code of KR, an enterprise can set off a limited amount of charitable donations against profit tax - 5% of the taxable profit. This means that a small enterprise making an annual taxable profit of less than 70,000 som cannot set off all of the contribution against profit tax.
Neither of these statistics seems to be particularly encouraging for business development.
Some companies are already active in terms of "Corporate Social Responsibility", donating to charity and supporting worthy causes. But as their budget for such activities will be limited it will involve a choice - depriving other worthy causes of financial support. Of course, because this scheme is "voluntary" it should be possible for the enterprise to choose not to support this particular measure.
It seems strange that all enterprises are apparently treated equally regardless of their size (e.g. turnover), profitability or other economic factors although the number of people to help will depend on the size of the business and again this should be a matter for the company policy.
All in all, this seems a worthy cause - but not necessarily the best way to approach it.
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