CSR is not so new in the history of Mauritius. A Mauritian company’s engagement in CSR initiatives dates back to 20 years ago, which took place at varying points in time. Some 25% of companies had recently engaged in CSR activities since less than 4 years only, thus confirming the belief that CSR is an emerging trend in Mauritius.
Legal Requirements for CSR
The Minister of Finance has established a legal policy in its 2007 financial budget that all registered companies would have to contribute a certain percentage of their book profit towards programmes, as approved by the Government of Mauritius, that contribute to the social and environmental development of the country. However, not all the firms were fully adhering to adopt this good corporate citizenship where one of the reasons for such non-compliance was that charitable donations were no longer tax deductible, thus, discouraging philanthropy by businesses and individuals. Also, there was a relatively low level of sophistication of Mauritian society in terms of demanding such good corporate practice.
Seemingly, recognising the poor level of corporate citizenship in Mauritius, in July 2009, the Ministry of Finance introduced the CSR Fund whereby companies need to mandatorily contribute 2% of their PAT (Profit after Tax) to the mentioned fund.
All companies need necessarily report their CSR contribution to the Mauritius Revenue Authority (MRA) at the time of submitting their Tax Returns. The companies have one year after the close of their financial accounts to fulfil this legal obligation pursuant to Section 50K and 50L of Income Tax Act. Companies, which fail to abide by this obligation, are required to remit any amount unspent to the MRA.
Â In compliance with prevailing legislation, the CSR Fund is used to finance CSR activities such as:
An overwhelming majority of organisations indulge in philanthropy by engaging in 3 major areas, namely, health and safety, education and community (including sports) whilst other companies prefer to sponsor educational and sports activities.
Reasons behind CSR
The specific objectives for firms to engage in CSR activities are:
Interestingly, it is noted that nearly 50% of firms in Mauritius partner up with other organisations, such as NGOs in their CSR activities on a long-term or short-term basis while the others indulge in one-off partnerships. It is also noticed that almost all companies that partner with NGOs have reported satisfaction with such partnerships.
Initially, engagement in CSR activities by most organisations was mainly image building vis-à-vis their internal and external community. Increasingly, internal and external stakeholders all expect business organisations to do more than making profit. Nowadays, “Society expects organisations to go beyond mere compliance with law and regulations. Business is expected to recognise and respect new or evolving ethical norms being institutionalised in society” (Carroll, 1999). Thus, this is why multinationals engage in CSR not only to enhance their image but also because they have to abide by their global policy.
Hence, the minister stressed that the levies should not be perceived as a tax on efficiency. They are instead a gesture of compassion and solidarity with those who cannot help themselves and with those who will have no means of livelihood if they lose their jobs.
CSR and Corporate Governance
CSR and Corporate Governance are collectively shaping the identity of organisations and are thus increasingly integrated into the business strategy of successful corporations. Subsequently, the field of responsible business strategy and practice is becoming one of the most dynamic and challenging subjects corporate leaders are facing today and possibly one of the most important ones for shaping the future of our world.
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Firms in the private sector in Mauritius as well as across the world do acknowledge that they have to balance, if not reconcile, their obligations to shareholders with explicit contributions to the external community. However, the way they contribute can differ considerably. Different firms reveal their contents of their strategy according to the different stages of awareness of and work on CSR they are. While some may agree on a “minimum necessary” stance to CSR involvement, others may adopt strategic ventures into particular areas to show their contribution to the investment and social communities.
To maintain uniformity, the way the companies should disclose their CSR involvement and compliance to law is laid out in the codes of ethics, codes of conduct and codes of corporate governance of the companies’ corporate ethics. These codes essentially and principally establish and put forward clear norms for corporate behaviour to be observed by each director and employee; set the rules for outlining the responsibilities of or proper practices for all in the organisation; and shape organisational behaviour towards employees and society at large.
Corporate governance hence mainstreams social and environment responsibility of corporations and brings awareness that firms’ off balance sheet environmental and social impacts can have tangible financial consequences. According to the economist and noble laureate Milton Friedman, “Corporate Governance is to conduct the business in accordance with owner or shareholders’ desires, which generally will be to make as much money as possible, while conforming to the basic rules of the society embodied in law and local customs”.
Nevertheless, nowadays this definition has been extended to include the interests of not only the shareholders but also of many stakeholders. There are many regulatory efforts put to identify and codify good governance practices to map out the social and environmental, non-financial boundaries among the different participants in the corporation itself and other stakeholders. To promote corporate fairness, transparency and accountability, the law of Mauritius has provided for the ‘Code of Corporate Governance’ under Section VII of the ‘Integrated Sustainability Reporting’ to converge the interests of individuals, corporations and society as nearly as possible through maintaining a balance between economic and social goals as pursued by Sir Adrian Cadbury’s definition of Corporate Governance. Also, Section 75 of the Financial Reporting Act (2004)  requires listed companies to present a corporate governance section in the annual report.
While CSR aims at extending the legal requirements promoting ethics, philanthropy and social reporting to satisfy stakeholder concerns, Corporate Governance sets the legal framework to protect a company’s shareholders, management, board and other stakeholders; the relative emphasis being dependent on national approaches. Effective corporate governance practices are essential to achieving and maintaining high levels of public trust and confidence in the company.
Recent surveys concerning CSR in Mauritius have revealed that the large organisations have a fair code of conduct/ethics/corporate governance showing their positive attitude and acceptance of the existing codes of adopting good CSR practices. Though some firms do not hold a formal approach to CSR, they do derive significant benefits in some way by, for instance, adopting good “people management” practices in terms of staff morale, productivity and employee retention.
According to the report reviewing CSR in Mauritius by Deloitte (2008), despite the fact that Mauritian organisations have been involved in one way or the other in CSR undertakings, Mauritius still lags behind the western countries when it comes to CSR being integrated in organisational strategy, structure and operations. Issues like as lack of information on CSR areas, absence of proper partnership, lack of audit after implementation and lack of coordination are deemed to hinder the organisations in their CSR actions. Nonetheless, there is always room for improvement to settle this practice among the local and multinational companies in Mauritius.
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