COMPANY GUIDELINES ON CORPORATE SOCIAL RESPONSIBILITY Druk Holding & Investments Ltd. 2013

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1 COMPANY GUIDELINES ON CORPORATE SOCIAL RESPONSIBILITY Druk Holding & Investments Ltd. 2013

2 TABLE OF CONTENTS Introduction... 1 CSR Guidelines... 2 Categories of CSR Activities... 2 CSR- Legal Compliance... 2 CSR Operational... 2 CSR Charitable Contributions... 3 CSR Basic Requirements... 3 Conditions for CSR Activities... 4 CSR Charitable Contribution Fund Allocation Guidelines... 4 Annual CSR Budget... 4 CSR Activities Considerations... 5 Application Process for CSR Charitable Contribution... 5 CSR Monitoring and Reporting Requirements... 6 Review... 6 Appendix I: Company Donation Application Format...7

3 1. INTRODUCTION Corporate Social Responsibility (CSR) represents the obligations of business to align its actions with the objectives and values of society as a whole. It considers the surrounding environment and the communities within and outside of its business premises. In recent times, a commitment to CSR has become an important part for doing businesses. More importantly, as the commercial arm of the government, DHI acknowledges its responsibility to deliver and set precedence for sustainable CSR guided by the country s development philosophy of Gross National Happiness (GNH). The Company Guidelines on CSR 2013 aims to create a more comprehensive approach to corporate social responsibility by focusing primarily on identifying what activities carried out by the companies fall under the definition of CSR. The guideline further creates a more systematic approach to CSR funding, categorized based on the activity as CSR Legal Compliance, CSR Operational, or CSR Charitable Contribution. As CSR evolves across the nation, DHI commits to lead by measuring and reporting on non-financial indicators to allow DHI and DOCs to be better stewards of the environment and responsible members of the communities and society in which they operate. In addition to creating added value through their core business activities, CSR requires that companies take additional efforts to minimize and mitigate existing and potential harm their activities could pose for society. For DHI and its portfolio companies, this will translate most importantly to the consideration of social and environmental issues while making decisions, and to maintain transparency in accepting and reporting the environmental and social impacts of its actions to all stakeholders. An important aspect to note however for DHI and its linked companies is that the dividends provided to the Ministry of Finance will ultimately enable the government to support social causes on a much larger scale. 2. CSR GUIDELINE APPLICABILITY This Company Guideline on CSR has been developed for DHI and its fully owned companies (DOCs) to guide their CSR activities. The section on CSR Charitable Contribution parameters in particular shall be adopted by all DHI owned and controlled companies. It is the responsibility of the company s management to ensure the implementation of the guidelines within this document. Other DHI subsidiary companies are strongly encouraged to utilize the guidelines provided within the document in forming their own CSR framework. The guidelines will be made available to the public to serve as a guide for other public and private companies adopting CSR. 1

3. CSR GUIDELINES Corporate Social Responsibility activities within the companies shall be divided primarily into three basic categories that determine the nature of the activities in relation to the

1 Categories of Corporate Social Responsibility: 3.1.1 CSR Legal Compliance Company business activities are subject to compliance of externally imposed social and environmental standards that are imposed by law.

4 3. CSR GUIDELINES Corporate Social Responsibility activities within the companies shall be divided primarily into three basic categories that determine the nature of the activities in relation to the core business activities of the company. Companies should report on all CSR activities by clearly differentiating which activities fall under the three categories. 3.1 Categories of Corporate Social Responsibility: CSR Legal Compliance Company business activities are subject to compliance of externally imposed social and environmental standards that are imposed by law. All CSR activities that are either social or environmental legal requirements are classified as CSR Legal Compliance activities. Activities in this category include for example land reclamation and tree planting for industrial companies. Certain companies may also maintain specific agreements with the government to meet certain social and environmental performance goals. Activities that are part of compliance with such relevant laws and regulations may be considered a part of the company s CSR but should clearly be reported as CSR legal compliance. 2

5 3.1.2 CSR Operational Companies may carry out activities that do not necessarily fall within the core business activities of the company, but in the long-run generate a return on investment for the company. It is important that proper analysis be carried out to determine the hurdle rate of any such investment before implementation. Activities may include, for instance, initiatives to reduce consumption of energy and water, reduce waste, or manage ecosystem services such as watersheds for the long term benefit of the company, etc. Any of these activities may require initial financial investment but will generate return on investment in the longer term shall be considered as CSR Operational. For both CSR activities that are carried out either as legal requirements or as operational activities of the company, the budget shall not be subject to the CSR Charitable Contribution budget allocation limits CSR Charitable Contributions Companies may provide funding to support proposals received for CSR activities. Specific guidelines have been provided within this document to outline the procedures companies should follow in order to create a more effective and systematic approach to CSR Charitable Contributions. i. Charitable contributions of the company are subject to the CSR Charitable Contribution budget limits as found in Section All funding requests for the following activities will be categorized under Charitable Contribution: - Philanthropic requests - NGO causes - Restoration and renovation of religious sites (lhakhangs, monasteries, temples, etc.) - Sponsoring cultural or sporting events - Donating to support schools, students, events, workshops, conferences, etc. - Medical emergencies - Financial support for print/publications ii. In addition to monetary charitable contributions, non-monetary contributions such as inkind donations, discounted or free services, etc. may also be carried out by the company. These activities are not subject to the CSR Charitable Contribution budget limit. 3.2 CSR Basic Requirements 3

6 Company management must prioritize CSR activities according to the most urgent needs of the stakeholders as identified under the four pillars of GNH. At a minimum, any CSR initiative must satisfy the basic conditions as follows: i. The project is deemed feasible and can be realistically achieved ii. The project will have a high impact on key stakeholders iii. The project proposal is sufficiently developed, including a budget and timeline. iv. The proposing individual/organization has submitted evidence of credibility and reputation. 3.3 Conditions for CSR Activities i. Employees and their families may not be the direct beneficiaries of the company s CSR funding. In the case where CSR funds that are directed to facilities or activities where employees and their families share in the benefit, the total proportion shall not exceed 25% of benefiters. ii. iii. iv. CSR funds may not be directed towards political parties or political causes. Activities that appear to support the vested interests of the company s management, board or individual employees is not allowed. Creating dependency or long lasting obligation to the charitable organization must be avoided. CSR activities must have a clear end result with no expectation of recurring funding beyond the initial agreement. v. CSR funding shall not duplicate projects or activities undertaken by the government. vi. CSR funds shall not be used to support normal commercial activities of any individual or organization. 4. CSR CHARITABLE CONTRIBUTION FUND ALLOCATION GUIDELINES 4.1 Annual CSR Budget An annual CSR budget for Charitable Contributions has been set by DHI for its owned and controlled companies. The annual CSR Charitable Contribution budget must be approved as a part of the company s overall budget for the fiscal year. This applies specifically to cash donations, but should not apply to in-kind, discounted services, volunteering, or better business operations which may provide a return on investment. 4

7 4.1.1 Maximum Annual CSR Budget Based on the size of the company, the CSR budget for charitable contributions category for DHI and its owned companies will be subjected to the investment and funding thresholds as allocated in the table below. The CSR budget for this category shall not exceed the limits allocated. However, it should be noted that under no circumstances are companies forced to spend the allocated budget. The budget is a guideline. Actual funding decisions are based on suitability of CSR funding proposals. CSR Charitable Company Contribution Budget allocation per year Druk Holding and Investments Ltd. 12,00, Druk Green Power Corporation Ltd. 10,00, Bhutan Power Corporation Ltd. 10,00, Natural Resource Development Corporation Ltd. 7,50, Druk Air Corporation Ltd. 7,50, Bhutan Telecom Ltd. 7,50, Bank of Bhutan Ltd. 7,50, CSR Activity Considerations i. For all companies, CSR charitable contributions towards events of national significance such as natural disaster relief and other state emergencies may be required from time to time. For this, a separate budget shall be allocated outside the annual CSR donation budget. DHI and the Board of Directors of the individual companies will decide on the approved amounts. In the event of such exigencies the activity will be coordinated by DHI. ii. In the event that the budgeted funds for the CSR Charitable Contribution category remains unused in a particular year, the unused funds will lapse and shall not be carried over to the following year s CSR budgeting. iii. Companies are required to clearly differentiate between activities that fall under Marketing and CSR. A cause-marketing activity of the company only generates PR and does not have direct social or environmental implication for communities. For instance, funding an event where the company gets recognition as the official sponsor shall be reported under marketing and not CSR. 4.2 Application Process to Avail the CSR Charitable Contribution Funds 5

8 i. Application should be submitted to the company as per the standard CSR Fund Application Form (see Appendix 1). ii. Every company shall have a designated management team of no less than two individuals who will screen CSR project proposals based on the criteria outlined in the CSR policy. The review panel must unanimously agree to endorse CSR project proposals. Only those proposals that pass screening will be submitted to the CEO or other designated company representative. iii. For CSR requests less than or equal to Nu 25K, the CEO/Chairman will prioritize and approve funding. For CSR projects requiring more than Nu 25K, the Board must approve the request. iv. In the case of events of national significance such as natural disaster relief, and other state emergencies, the proposal may be directly submitted to the DHI Board for approval. The Board shall decide on the appropriate amount of funding, which may go beyond the annual CSR budget in extreme cases. 5. CSR MONITORING AND REPORTING REQUIREMENTS i. It is the responsibility of the entity receiving funding to properly monitor and report the CSR activities undertaken using the company s funds. This information will be used to document CSR activities in the company s Annual Report. There will be a designated company official to coordinate with organizations receiving funding to ensure that this information is received in a timely manner. Entities not reporting will not be eligible for funding the following year. ii. iii. iv. Companies should also use proper media-publicity channels to report on the major CSR Charitable contributions they have made. Not only does this help the company build their brand image but also encourages transparency. The Annual Report shall include a specific section on CSR outlining all of the CSR initiatives undertaken by the company and the outcomes. In-kind and subsidies provided by a company shall also be reported as part of their CSR initiative. All CSR reporting must be made available online. Additional online documentation of CSR initiatives, outside of the Annual Report, is encouraged. 6. REVIEW The guidelines will be reviewed annually by the Board, and updated when required, to ensure it reflects the responsibilities to all stakeholders. 6

9 APPENDIX I CSR FUND APPLICATION FORM [INSERT NAME OF COMPANY] [Address Line 1] [Address Line 2] [Phone:.. Fax:.] [ ..] APPLICATION FOR SUPPORT I. Request 1. Name of Applicant/Organization: 2. Contact Person: Address: Telephone Number: 3. Total Amount Requested: 4. Request is for: 5. If you are applying on behalf of an organization, in the space provided below explain the mission of the organization and describe its most significant activities. 5a. Please describe past experiences/initiatives carried out that may be similar to the nature of this proposal. 6. Under which category does your project/program align with DHI s CSR strategy? 7

10 Philanthropy (Donation for individuals/groups) NGO causes Restoration and renovation of religious sites Cultural or Sporting Event Sponsor Support for schools, students, academic events, workshops, seminars, etc. Exigencies/Disaster Relief/National Events Others: 7. Have your received or anticipate receiving funding for this project/program from DHI or DHI portfolio companies in the past or in the near future?' If yes, please list the company: I. Project Information 1. Title of project/program: 2. Project/Program Summary: 3. Which stakeholders (community groups, environment groups, government departments, public/private schools, college/universities, youth groups, senior citizens, industry or business enterprises, residents) will your project support? How many people will benefit from your project and how? 4. Project/Program Schedule (you may provide date of commencement and intended date of completion of the project or program, however, if possible, a detailed project schedule with specific task timeframe is preferred) 8

11 5. Project/Program Line Item Budget Required (if possible, please provide specific breakdown of how the funds are going to be used) I affirm that the information provided herewith is accurate to the best of my knowledge, and should I be considered for a charitable contribution, the funds will be applied solely for the support of the specified project. REQUIRED SIGNATURES Applicant print name Date application submitted FOR CONSIDERATION, PLEASE SUBMIT: - Cover Letter addressed to the CEO/Chairman of [Insert Company Name] - Duly completed CSR Fund Application Form - (Optional) A detailed proposal of the program/project for which you are applying Please contact our media officer at [phone number] or visit our website at [website] for information regarding the company s donation application guidelines. Application forms and proposals should be addressed to the Chairman/CEO of [company], and be sent to the [company] office location. 9

Guidelines for applying for sponsorship

Guidelines for applying for sponsorship Updated Guideline for applying for sponsorship Page i Table of Contents Introduction 1 Purpose of this Document 1 Types of Sponsorship/Support Covered by this Document