Securities and Exchange Commission of Pakistan (SECP) has approved the Corporate Social Responsibility Voluntary Guidelines, 2013, aimed at encouraging body corporate to align their business strategies with their social responsibilities.
The CSR guidelines are a significant step towards streamlining reporting requirements and corporate accountability of the CSR activities by corporate entities. The guidelines, notified as ‘CSR Voluntary Guidelines, 2013’ after consultation with external stakeholders and general public are being published as guidance document for all companies.
Under the Guidelines, Board of Directors of registered entities are encouraged to take ownership for formulation, adoption and implementation of CSR policy of a company. The Guidelines recommend that CSR policy be fully endorsed by Board of Directors of Company and that such policy is embedded in the vision and strategy of the company. CSR governance benchmark table has been added at the end of Guidelines that shall facilitate companies to assess their performance and for peer review.
Presence of an effective CSR management system is emphasized in CSR Guidelines. The said systems are expected to provide a road map for implementation of CSR activities. Also, specific indicators reflecting effective governance and implementation of CSR policy have been provided in the Guidelines. The requirements of disclosure and reporting have been extended i.e the broad areas expected to be covered by CSR reports have been provided in the Guidelines.
Furthermore, companies have been encouraged to earmark specified financial or nonfinancial resources, specific criteria or a proportion of their profit (preferably 1-2%) for CSR initiatives. The method of allocation of resources or identified criteria must ideally be predetermined, duly endorsed by the board and form part of CSR Policy. The Guidelines also provides for forming a CSR consultative committee for purpose of ensuring transparent, specialized supervision and reporting progress. Recommendatory terms of reference of CSR committee have been added at the end of Guidelines for facilitation of Companies. Moreover, keeping in view the best practices, guidelines call for obtaining independent assurance regarding the CSR project undertaken by Companies and the report of assurer thereof forming part of CSR report of company.
Commission also approved the constitution of CSR Forum. The mandate of forum includes gap analysis, raising awareness amongst businesses regarding CSR issues, CSR reporting and assurance reporting framework in view of international best practices.
Commission is appreciative of the CSR initiatives taken by companies and is confident that these Guidelines shall facilitate in strategizing and reporting CSR framework for greater benefit of society and sustainability of business.
