The Philippines: New CSR Legislation On The Way

A Philippine lawmaker recently filed a bill to foster sustainable economic and environment development and environment protection. The proposed law is set to institutionalise corporate social responsibility (CSR) in corporate businesses, whether in domestic or foreign partnership and other establishments performing business in the country.

First District Camarines Sur Representative, Diosdado “Dato” M. Arroyo, was reported to have said that many corporations and other business organizations have shown very little care for the welfare of society, the communities in which they operate and the natural environment around them.

He was quoted as saying:

Their sole purpose is to maximize their respective returns on investment, totally disregarding the impact of their activities on customers, employees, shareholders, communities and the environment.

Arroyo filed House Bill 6414 or the Corporate Social Responsibility Act of 2009 which, if becomes law, will require corporations to to consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations.

Under the bill, companies of all sizes have to come up with their own CSR programmes and use them as an effective tool in improving their public relations with concerned stakeholders. Arroyo was reported to have said:

The State recognizes the vital role of the private sector in nation building and shall encourage its active participation in fostering sustainable economic development and environmental protection in the Philippines.

According to Arroyo, the Philippine government will coordinate its various agencies and non-government organizations to work hand-in-hand for the integration, promotion, and strengthening of corporate social responsibility in all business organizations.

Under the bill, the Department of Trade and Industry (DTI) in coordination with the Securities and Exchange Commission (SEC), Department of Environment and Natural Resources (DENR) and the Department of Labor and Employment (DOLE) shall promulgate the rules and regulations and regularly monitor strict compliance.

Mallen Baker’s blog has questioned the need for the legislation, stating:

The difficulty of this kind of legislation comes in the detail. How do you ultimately decide whether a company is taking its responsibilities seriously? It involves far-reaching judgments on some pretty intangible issues.

Baker, however, said the proposed Philippine legislation appears a little more credible than its Nigerian counterpart, which, according to Baker, appears to be  “patently a grab for cash”. Baker continues:

It [legislation] needs a light touch, however. As soon as you become prescriptive about outcomes or processes, you simply slap a wave of bureaucracy at best, and rank political interference at worst, over the heads of business and use that process to discredit the term ‘CSR’.

According to Arroyo, compliant businesses shall be entitled to full deductions of expenses incurred.

In the southeast Asian region, Indonesia has also passed CSR legislation. The law is said to be a type of affirmative action.  However, the Indonesia Business Links (IBL) is lobbying for the legislation to be repealed or reviewed.◊

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