Corporate Governance Chapter 5 Chapter 5 to work contracts, working hours and remuneration. They emphasise also that more collective bargaining is necessary. 714. 715. Another new development regarding workers’ rights is the establishment of a new institution: the National Tripartite Forum36. This will examine all questions about, for example, remuneration and working conditions. Its exact role and governance structure are the subjects of discussions between trade unions, employers’ associations and the government of Mauritius. The CSAR does not mention whether employees are represented on the boards of directors of firms. Since employees play important roles in determining the long-term success and performance of corporations, it will be very useful to clarify this issue. Although performanceenhancing mechanisms for the participation of employees at all levels of the management hierarchy are crucial for modern firms, this form of employee participation at the board level does not exist in Mauritius. although both can improve the reputation of a company and bring social benefits to the community. Social responsibility, for example, could encompass corporate efforts to reduce emissions or energy usage in a company, while philanthropy relates to humanitarian, educational, scientific or other causes supported by the company. 720. CSR is an ad hoc activity in most firms. They do not integrate it with the company’s business strategy and operations. It may work alongside – but not feed into – the business. Three-quarters of the respondents do not have any clearly defined policy on CSR, while few reported they allocate budgets to CSR activities regularly. 721. The overwhelming majority of firms recognise that they are not doing enough for CSR. They claim that insufficient information about how to get involved and insufficient financial and human resources are the main barriers to participation in CSR activities. 722. The Finance Act of 2009 contains a very important new development in CSR legislation. It introduces a mandatory CSR fund: “Every company shall, in every year, set up a CSR Fund equivalent to 2 per cent of its book profit derived during the preceding year to (a) implement an approved programme by the company; (b) implement an approved programme under the National Employment Foundation, or (c) support an approved NGO.” It is obvious that implementing this law would yield benefits to some and bring costs to others. Questions about the ultimate winners and losers and the level of costs and benefits for the parties concerned can only be answered after the new law has been implemented for a few years. Nevertheless, the organisation of employers already sees the CSR fund as a new profit tax that goes against its own CSR fundamentals, as published in an MEF document. It defines CSR as “voluntary positive initiatives by businesses that look to go beyond legal compliance in a diverse range of social, economic and environmental areas”. 723. In summary, in the light of its discussions with stakeholders and the Finance Act of 2009 that imposes the CSR Fund, the CRM expects business involvement in social activities to increase in the near future. CSR 716. The CSAR mentions CSR generally, but does not define the concept clearly. In APRM terminology, CSR is seen as a strategic business objective where businesses care for, and are more involved in, the communities in which they operate. CSR is therefore not philanthropy. A CSR survey, conducted by the MEF in 2007/2008 gives some interesting insights. They are summarised below. 717. Most of the firms surveyed (90.5 per cent) are convinced that the primary goal of business is profit and ensuring an adequate return for shareholders. However, they also share the view that “pursuing economic interests needs to be balanced with social and environmental responsibility”. 718. Most of the firms surveyed (80 per cent) promote internal social initiatives like training, medical schemes, health and safety standards, leisure and recreational activities, and sponsorships in order to benefit their own employees. A smaller proportion (70 per cent) is also engaged in outside social activities. These are mostly donations and sponsorships for the wider community. 719. 258 It is worth emphasising that many of the firms surveyed confuse ‘social responsibility’ with ‘philanthropy’. They are two different things, 36 - Not to be confused with the Tripartite Committee. Corporate Governance Environmental sustainability 724. The body of evidence available to the CRM suggests that Mauritius’s achievements in maintaining a cleaner environment are unsatisfactory. The country is still battling to find proper ways of disposing of its 259