Business Ethics and CSR

in Nepal

UNIT 6:
Learning objectives
Business ethics of Nepalese firms, ethical standards, Ethical issues and dilemmas in Nepalese
business organizations, Business Code of Conduct of FNCCI 2061
Consumer Protection of Nepal-unfair trading practices,
Consumer Protection Council's function and duties,
protection and promotion of consumer rights, prohibition to influence demand, supply and price,
power to systematize and control supply of consumer goods and services,
CSR in Nepal- history, Institutional arrangements, FNCCI/ NBI, types of CSR, outcomes of CSR
activities;
Business ethics approved by FNCCI, NBIs CSR Paper.
CSR problems and prospects in Nepal.
Business Ethics in Nepalese Firms:
• Cultural Influences: Nepal's diverse cultural and religious landscape plays a
significant role in shaping business ethics. Values such as respect for elders,
honesty, and integrity are highly regarded.
• Compliance with Laws and Regulations: Ethical firms in Nepal strive to comply
with local and international laws and regulations governing business
operations.
• Corporate Social Responsibility (CSR): Many Nepalese companies engage in
CSR activities, including philanthropy, community development projects, and
environmental conservation.
• Labor Practices: Ethical businesses aim to provide fair wages, safe working
conditions, and opportunities for professional growth to their employees.
Ethical Standards:
• Integrity and Honesty: Maintaining transparency, honesty in
transactions, and truthful representation of products or services are
considered essential.
• Respect for Stakeholders: This includes customers, employees,
suppliers, shareholders, and the community at large.
• Environmental Responsibility: Given Nepal's rich natural beauty, ethical
businesses may focus on sustainable practices and environmental
conservation.
• Avoidance of Corruption: Nepalese firms should refrain from engaging
in bribery, corruption, or other unethical practices.
Ethical Issues and Dilemmas:
• Corruption and Bribery: Despite legal frameworks, corruption can still be a
concern in Nepal. Firms may face dilemmas when navigating this issue.
• Labor Exploitation: Some firms might face dilemmas related to fair wages, working
conditions, and workers' rights.
• Environmental Impact: Balancing economic development with environmental
conservation can be a significant ethical dilemma, especially in industries like
tourism and hydropower.
• Supply Chain Ethics: Ensuring ethical practices throughout the supply chain,
including sourcing raw materials and dealing with suppliers, can be a challenge.
• Social Responsibility: Deciding how much and where to invest in CSR activities can
be a dilemma for many companies.
One thing to remember is
Specific ethical standards
and issues can vary widely
from one Nepalese firm to
another depending on the
industry, size, and
leadership values.
 • The FNCCI (Federation of
Business Nepalese Chambers of
Commerce and Industry, 1965)
Ethics in plays a crucial role in
representing the interests of

Nepalese businesses in Nepal.

• It's likely that they have a
Business Code of Conduct that
Firms and outlines ethical standards for
member businesses to follow.
FNCCI: • Such a code would typically cover
a range of topics including:
1. Integrity and Honesty: Encouraging members to conduct their business with integrity,
honesty, and transparency.
2. Compliance with Laws and Regulations: Ensuring that members adhere to all relevant
laws and regulations governing their operations.
3. Fair Competition: Promoting fair competition and discouraging anti-competitive
practices.
4. Respect for Stakeholders: Treating customers, employees, suppliers, shareholders, and
the community with respect and fairness.
5. Corporate Social Responsibility (CSR): Encouraging members to engage in socially
responsible activities that benefit the community and environment.
6. Conflict of Interest: Providing guidelines on how to handle situations where
personal interests may conflict with the interests of the business or stakeholders.

7. Environmental Responsibility: Encouraging sustainable and environmentally

responsible business practices.

8. Anti-Corruption and Bribery: Prohibiting members from engaging in corrupt or

unethical practices.

9. Labor Practices: Ensuring fair wages, safe working conditions, and respect for
workers' rights.
Consumer protection in Nepal (2075):
Unfair Trading Practices:
The Consumer Protection Act of Nepal addresses various unfair trading
practices that businesses might engage in, aiming to protect consumers
from such actions.
These practices include misleading advertisements, deceptive packaging,
false representation of goods or services, price manipulation, selling of
expired or defective products, etc.
The Act outlines provisions to penalize those involved in such practices.
Consumer Protection Council's Function and Duties:

The Consumer Protection Council in Nepal is responsible for overseeing and

implementing consumer protection laws and policies. Some of its primary
functions and duties include:
• Policy Formulation: Developing policies and guidelines related to consumer protection.
• Awareness and Education: Conducting awareness campaigns to educate consumers about their rights
& responsibilities, and showing them how to seek help if they have issue with products or services.
• Complaint Handling: Receiving and addressing consumer complaints related to unfair trade practices
or violations of consumer rights.
• Monitoring and Enforcement: Monitoring markets to ensure compliance with consumer protection
laws and taking appropriate enforcement actions against violators.
Protection and Promotion of Consumer Rights:

Nepal's consumer protection framework aims to protect and promote

various consumer rights, including but not limited to:
• Right to Safety: Ensuring the safety of goods and services provided to consumers.
• Right to Information: Ensuring consumers have accurate and complete information
about products or services, including their prices, ingredients, expiration dates, etc.
• Right to Redressal: Providing mechanisms for consumers to seek redressal and
compensation for any harm caused by defective products or unfair practices.
• Right to Choose: Ensuring consumers have access to a variety of goods and services at
competitive prices.
• Right to Consumer Education: Promoting consumer education and awareness to
empower consumers to make informed choices.
Prohibition to Influence Demand, Supply, and Price:
• Demand: Companies or entities may attempt to manipulate consumer demand
through deceptive marketing, false advertising, or other tactics that mislead
consumers into believing they need a product or service more than they actually
do.
• Supply: Unfair practices regarding the supply of goods or services might include
artificial shortages, hoarding, collusion among suppliers to restrict availability, or
engaging in anti-competitive behaviors that limit choices for consumers.
• Price: Manipulating prices by price fixing, collusion among sellers, or other unfair
tactics can harm consumers by eliminating competitive pricing or artificially
inflating prices.
Power to Systematize and Control the Supply of Consumer
Goods and Services:
• Governments or regulatory bodies may be granted the power to systematize
and control the supply of consumer goods and services to ensure fair practices
and protect consumer interests. This might involve:
• Regulating Imports and Exports: Controlling the flow of goods across borders
to ensure quality standards, prevent dumping of substandard products, or
protect local industries from unfair competition.
• Licensing and Certification: Requiring businesses to obtain licenses or
certifications to ensure compliance with quality standards, safety regulations,
and fair trade practices before supplying goods or services to consumers.
Market Surveillance and Enforcement: Monitoring markets, conducting inspections, and
enforcing regulations to prevent the sale of counterfeit or unsafe products, ensuring fair
competition, and protecting consumer rights.
Promoting Competition: Encouraging healthy competition among suppliers by preventing
monopolies, anti-competitive mergers, or other practices that might limit consumer choices or
inflate prices unfairly.
SUGGESTIONS FOR IMPROVING EXISTING
ETHICAL PRACTICES

1) Use of information technology (IT): This can bring in great transparency in systems and
can eliminate corruption at many levels

2) Comply with local laws: Every individual must respect these as employees and work
within prescribed limits as per guidelines or standard operating procedures.

3) Report breaches: It is the duty of every employee to ensure that they speak up against
any breach of law, regulations or code of ethics by themselves or by any other member of
their organization.
4) Reject bribery and corruption: The best employees are aware of
the risks associated with corruption. Unawareness of the pitfalls of
corrupt practices puts a business' reputation at serious risk.

5) Education: Education should not only be improved, but also

adapted in order to prepare students for participation as
responsible and caring members in their communities.
TYPES OF CSR

According to Geoffrey Lantos, There are three main types of CSR

1) Ethical CSR: It's about the responsibility to avoid harms or social injuries.
When organizations pursue a clearly defined sensorial responsibility in
managing their financial responsibilities shareholders, their legal responsibilities
to their local community society as a whole.

Example: Body shop mission statement states "We will operate ..business with
strong commitment to the well being of our fell humans and the preservation of
the planet"
2) Altruistic CSR: It's about contributing to the common good at possible
expenses of the business for altruistic, humanitarian philanthropic causes
When organizations engages into specific initiatives to give back to
company's local community. An act of altruistic CSR may not directly benefit
the company.

Example: Many companies in Nepal donated to recent earthquake with

donations for food and house.
3) Strategic CSR: It's about firm's social welfare responsibilities that benefit
both the corporation and stakeholders. Organizations targets programs that
will generate the most positive publicity or good will for the organization. It
is a carefully planned act of CSR that has a direct and expected impact on
the business.

Example: Good publicity brings more sales.

Government of Nepal shall issue necessary directives to
the Council in order to create an atmosphere favorable
for the protection and promotion of the rights of
consumers mentioned in Sub-Section (1).
• Prohibition to Influence Demand, Supply or Price. No one shall
influence the demand, supply and price of any of the consumer
goods or services by taking any of the following actions in collusion
with others:
(a) By fixing the quota of raw materials needed for any of the
consumer goods, or reducing the production of any of the
consumer goods, or taking any other similar actions.

(b) By hoarding any of the consumer goods or service or

otherwise creating an artificial shortage, or selling and
supplying such goods or services at specified times or places
only, or taking any other similar actions.
(1) For the purpose of protecting the rights and interests of consumers,
Government of Nepal shall exercise the following powers in order systematize,
control and regulate the supply of consumer goods and services:
(a) To formulate policies relating to the quality, price and the supply system of
consumer goods or services.
(b) To formulate action plans in connection with the monitoring, prevention and
control of unfair trade practices and monopolies which are likely to harm the
rights and interests of consumers, and implement such plans.
(c) To analyze and review the situation in respect to the demand and supply of
consumer goods consumed within the country.
(d) To make necessary arrangements for checking any undesirable increase in
prices by producers, vendors or distributors of consumer goods.
(e) To discourage unfair trade practices which are likely to create shortages
through artificial or other improper means.
(2) Government of Nepal shall make necessary arrangements in order to effectively implement
the provisions concerning the protection of the rights and interests of consumers, regulation of
the supply system and control of the prices and quality of consumer goods and services.

Unfair trading practices in Nepal

An unfair trade practice consists of using various deceptive, fraudulent or unethical methods to
obtain business. Unfair trade practices include misrepresentation, false advertising, tied selling
and other acts that are declared unlawful by state. It can also be referred to as deceptive trade
practices.
History of CSR in Nepal:
• Initial Stages: CSR initiatives in Nepal started gaining traction in the late
1990s and early 2000s. Initially, it was largely philanthropic, focusing on
charitable donations and sponsorships.
• Legislation and Policies: The government of Nepal introduced the
concept of CSR in its policies, emphasizing the social and environmental
responsibilities of businesses. The Companies Act in Nepal includes
provisions for CSR activities, making it mandatory for certain companies
to allocate a certain portion of their profits toward CSR.
Institutional Arrangements and Prominent Bodies:
• Federation of Nepalese Chambers of Commerce and Industry
(FNCCI): FNCCI plays a crucial role in promoting CSR activities among
businesses. It provides a platform for businesses to collaborate,
share experiences, and develop CSR strategies.
• Nepal Business Initiative (NBI): NBI is another influential institution
that focuses on promoting responsible business practices, including
CSR, among Nepalese companies. It works closely with various
stakeholders to create awareness and drive CSR initiatives.
Types of CSR Activities:
• Philanthropy: Traditional charitable donations to social causes, including education,
healthcare, and disaster relief.
• Environmental Sustainability: Initiatives aimed at reducing carbon footprint,
promoting sustainable practices, and conserving natural resources.
• Community Development: Projects focused on the upliftment of local communities
through infrastructure development, vocational training, and livelihood enhancement
programs.
• Employee Welfare: Programs and policies that ensure the well-being and
development of employees, including health benefits, education support, and skill-
building opportunities.
FNCCI's Role in Promoting Business Ethics and CSR:
• The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has
been actively involved in promoting responsible business practices and CSR
initiatives in Nepal. They have played a pivotal role in:
• Advocacy: FNCCI has advocated for ethical business conduct and CSR through
seminars, workshops, and policy dialogues, highlighting the importance of social
and environmental responsibilities for businesses.
• Guidelines and Recommendations: While there might not be an explicitly
approved set of business ethics, FNCCI has likely provided guidelines and
recommendations for businesses to align with ethical practices and engage in CSR
activities.
Nepal Business Initiative, 2005 (NBI) and CSR:
• Nepal Business Initiative (NBI) has also been a key player in advocating for CSR in
Nepal. They have likely published papers, reports, and guidelines focusing on CSR
practices for businesses. Some of their contributions include:
• Awareness and Capacity Building: NBI likely conducts programs to raise awareness
and build the capacity of businesses regarding CSR principles, emphasizing the
integration of social and environmental concerns into business operations.
• Collaboration and Networking: NBI might facilitate collaborations between
businesses, civil society organizations, and government bodies to foster an
environment conducive to CSR initiatives.
CSR Problems and Prospects in Nepal:

Challenges/Problems :
• Lack of Awareness: Many businesses in Nepal might not fully understand the
concept and benefits of CSR, leading to a lack of initiatives or limited
participation.
• Resource Constraints: Small and medium-sized enterprises (SMEs) might face
challenges in allocating resources for CSR activities due to financial limitations.
• Regulatory Compliance: Making sure businesses follow the rules set by the
government.
• Ethical ground: Doing the right thing based on fairness and responsibility, not just
following rules.
 Prospects:

Growing Consciousness: There is a growing consciousness among businesses about the

importance of CSR in contributing to sustainable development and long-term business
success.
Potential for Innovation: CSR activities provide opportunities for businesses to innovate
and develop new products or services that have a positive social or environmental
impact.
Partnerships and Collaboration: Collaboration between businesses, NGOs, and
government bodies presents prospects for scaling up CSR initiatives and addressing social
issues more effectively.
The end …