Regulatory Developments on Corporate Social Responsibility

by Angel Grace D. Untalan, NOVEMBER 2021

The Doctrine of Corporate Social Responsibility (CSR) has been explained as a demonstration of awareness that corporations are not mere business organizations exclusively intended to serve the personal interests of shareholders or managers but are social institutions in which all sectors of society have an interest.

While it is not a direct mandate to perform specific social and civil obligations, it encourages and provides corporations with every means of becoming valuable social institutions.

In the Philippines, CSR was deeply rooted in the spirit of “bayanihan” which isabsorbed into the core functions and value systems of businesses.

CSR practices are mostly through donations or activities by a company unit or through corporate foundations’ activities. These activities also include the following:

  1. Charitable programs and projects;
  2. Scientific research;
  3. Youth and sports development;
  4. Cultural or educational promotion;
  5. Services to veterans and senior citizens;
  6. Social welfare;
  7. Environment sustainability;
  8. Health development;
  9. Disaster relief and assistance;
  10. Socialized and low-cost housing; and
  11. Employee and worker welfare-related CSR activities.

Existing Policies and Regulations on Corporate Social Responsibility

A study on the current status and implications of CSR in the Asia-Pacific Economic Cooperation (APEC) region stated that due to the slow growth of the Philippine economy and economic mismanagement, as well as political instability, corporations saw it fit to be involved in social development since businesses could not possibly thrive amidst an environment where the majority were poor.

The government’s issuance of policies and regulations to encourage CSR activities will help organizations, especially CSR practitioners in the private sector, to pinpoint the gaps where help is needed for CSR promotion.

The Local Government Code of the Philippines, on the other hand, mandates Local Government Units (LGUs) to increase their efforts and remind businesses to comply with laws and observe responsible CSR practices.

The Philippine Business for Social Progress (PBSP) gave emphasis to the tax reforms introduced to promote investment in CSR such as the extension of tax incentives to individual donors to compensate individual earners and prompting personal involvement in the promotion of the welfare of society.

Meanwhile, a study on sustainable CSR practices of business establishments in Region II, Philippines showed that philanthropic activities are less sustainable while scholarship for students is considered as best practice because it demonstrates a sustainable program, creates value for both business and society and gained impact to the social development of the community, as well as improves the standard of living of the citizens.

Generally, there is increasing growth in the trend of large companies including CSR information in their annual financial reports, as illustrated by the KPMG Survey of Corporate Responsibility Reporting in 2017.

To promote sustainability reporting in the Philippines, the Securities and Exchange Commission (SEC) in 2019 resolved to issue the Sustainability Reporting Guidelines for Publicly-Listed Companies.

It provides, among others, that the non-attachment of the said report to Annual Reports will subject any company to a penalty sanctioned under SEC Memorandum Circular No. 6, Series of 2005.

These local guidelines reflect globally accepted frameworks for reporting non-financial information, such as the Global Reporting Initiative (GRI) Sustainability Reporting Standards, which is aligned with the UN Global Compact.

The Corporate Social Responsibility Bill

Legislative initiatives towards the passage of the Corporate Social Responsibility Act started in 2010 through Senate Bill No. 1239.

The first bill reiterated that the full deductibility of contributions or gifts actually paid or made to accredited donee institutions in computing taxable income shall continue to be in force and effect.

However, in later versions of its counterpart bills in the House of Representatives such as House Bill (HB) 1225, HB 00698, and HB01198 which are now consolidated in HB 6137, salient provisions only included the following:

  • amendment to the Corporation Code of the Philippines allowing stock corporations to retain profits in excess of 100% of paid-in capital stock for the use of CSR projects;
  • recognition of outstanding, innovative, and world-class CSR-related services, projects and programs of all business organizations by the Department and Trade and Industry; and
  • assistance of the LGUs where CSR-related activities are conducted.

Aside from the reporting scheme already in place, the proposed bill mandates all business organizations to submit the list of their CSR activities as part of their annual or regular report to the SEC, DTI, or DOF, as the case may be.

The latest version has been approved on the third and final reading with 209 affirmative votes, zero negative votes, and no abstention.

Corporate Social Responsibility in Toll Road Industries

As for toll road projects, Rohman, Doloi, and Hewood observed in their 2015 study that there is obscurity in how social sustainability is applied in PPP toll road projects.

In India, road platforms led by companies such as Highway Concessions One Private Limited (HC1), implement CSR policy and programs in alignment with guidelines set forth by corporation laws in their country.

Key initiatives of CSR in other Asian countries that may be replicated in the Philippines within the same industry include the development of road safety platforms and resources, organization of seminars on road safety; implementation of programs to provide local youth training in life skills and road safety; infrastructure development for nearby villages; distribution of stationery to schools, plantation drive in schools, colleges and hospitals in our project areas; and graduated shift of economic activities to ‘non-fossil fuels’ and ‘renewable sources’ of energy to contribute in the global effort of reducing carbon footprint.

Photo by Jack Church on Unsplash

Sources:

https://www.alburolaw.com/understanding-the-doctrine-of-corporate-social-responsibility

Records of the Batasan, Second Regular Session, 1979-1980, Vol. III, pp. 1212-1213, hereinafter referred to as “III Record of the Batasan, pp. 1212-1213.

https://seatca.org/philippines-the-hypocrisy-of-csr-in-the-time-of-covid-19/

https://www.researchgate.net/publication/312913312_The_Community_Perspective_of_the_Social_Benefit_of_PPP_Toll_Road_Projects

https://www.icao.int/Meetings/greenairports/Documents/1.%20Bill%20Murphy.pdf

https://www.apec.org/docs/default-source/Publications/2005/12/Corporate-Social-Responsiblity-in-the-APEC-Region-Current-Status-and-Implications-December-2005/TOC/Philippines.pdf

http://www.jcreview.com/fulltext/197-1590727648.pdf

http://highwayconcessions.com/corporate-social-responsibility/

https://www.congress.gov.ph/legisdocs/third_18/HBT6137.pdf

https://www.congress.gov.ph/legisdocs/basic_18/HB01198.pdf

https://www.congress.gov.ph/legisdocs/basic_18/HB01225.pdf

https://www.congress.gov.ph/legisdocs/basic_17/HB00698.pdf

https://newsinfo.inquirer.net/1278308/house-approves-bill-encouraging-corporate-social-responsibility-among-companies-2#ixzz7DDH9K8zf

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About the writer:

Angel Grace D. Untalan. A Legal Management graduate with an inclination to pursue the field of higher arts. She is moderately comfortable with social interaction, but can also relish her time off from the crowd. Her works are influenced by distinguished screenwriters such as Gene Roddenberry, George R.R. Martin, and Quentin Tarantino. She aspires to become a law practitioner at The Hague, who has published papers in a Scopus-indexed journal at some point in the future.

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