We are Encouraging Private Sector to Embrace Responsible Business Practices

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We are Encouraging Private Sector to Embrace Responsible Business Practices

Kush Kumar Joshi is the President of National Business Initiative (NBI). He is also a fromer president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). In an interview with Madan Lamsal of New Business Age, Joshi talked about responsible business practices and host of other issues related to the Nepali business community. Excerpts:

Could you please tell us what NBI is and what it has been doing?
The National Business Initiative (NBI) was founded in Nepal in 2004, with the belief that businesses should be able to operate even in the most adverse situations. The organisation was established through a collaboration of various organisations, including the Federation of Nepalese Chambers of Commerce and Industry and the Nepal Chamber of Commerce. During its inception, the NBI played a crucial role in mitigating the impacts of the conflict on businesses by facilitating an understanding between the warring parties and the government. This played a key role in reducing the conflict and bringing them into mainstream politics. The NBI was inspired by a similar African model, where the business community played a significant role during conflicts. To that end, the NBI took initiatives to reach agreements with the government, put pressure on them, and facilitate the peace process. As a result of these efforts, the conflicting parties came to the negotiating table and today we have a federal system of governance. The NBI continues to undertake different responsibilities while continuing its core mandate of supporting businesses.

What were those responsibilities?
The primary responsibility of a businessman is to satisfy their customers by delivering what was promised. Additionally, businessmen should refrain from practising and promoting cartels, and should not seek excessive profits or create artificial scarcity. Businessmen also have a responsibility to society and the state. While the state may accuse businessmen of making excessive profits, not all businessmen engage in such practices. In fact, businessmen should conduct their business in a responsible manner and prioritise the betterment of society. The NBI recognises the importance of responsible business practices and works towards the objective of continuing business operations even during times of conflict. Therefore, responsible business practices should be the guiding principle for all businessmen.

You stated that NBI is working to discourage cartels, but in reality, they seem to be increasing. What is your response to this?
Your observation is correct to some extent. Although we may not always be visible, we are continuously working to address this issue. Raising awareness about responsible business practices is a continuous process. We have already taken the first step by making business people aware of their responsibility towards their customers and society. However, it is not necessary that everyone will comply with our recommendations. Nevertheless, we will continue to encourage responsible business practices.

NBI also organises various meetings and workshops on responsible business practices, and we are currently preparing for the 4th Responsible Business Summit. This summit will provide a platform for businessmen from all over the world to showcase examples of how they are conducting their businesses responsibly towards society, the environment, nature, government, and the nation. Based on the outcomes of the summit, we will develop a curriculum to raise awareness among youths about their responsibility. We believe that our future leaders will understand their responsibility and take action accordingly.

It is not that the NBI is remaining idle doing nothing. Transformation takes time, and we are committed to working towards responsible business practices.

You said that the NBI played a key role in the peace process. Could you please elaborate more on this?
During the conflict, it was challenging to communicate with the conflicting parties as building contact with them was illegal. At that time, foreign donor organisations supported us to understand how the business community could contribute to resolving conflicts. We worked to convince the conflicting parties to trust ballots rather than bullets and move forward. We informed them about successful conflict resolution models from African, Sri Lankan, and Swiss experiences, even though the conditions were not favourable.

Our efforts showed both parties that businesspeople can help in conflict resolution. We believed that a peaceful environment was necessary for conducting business, and so we worked as a bridge for continuous dialogue with both sides. We think that our role during that time was somehow fruitful for the peace achievements that the nation has gained.

Additionally, we also developed a code of conduct for business people in collaboration with the Commission for Investigation of Abuse of Authority or Transparency International Nepal. The government has also brought a code of conduct that prohibits corruption. Although these codes may not immediately eliminate corruption or promote responsible business practices, they raise awareness and promote ethical business practices. The FNCCI has also brought a similar code of conduct. But ours was made by the private sector as a whole which, we believe, is helping people practise responsible business. That is why we are actively working to discourage cartels, artificial scarcity, and other distortions that harm businesses and society as a whole.

There are widespread complaints that NBI members are violating the code of conduct. What is your opinion on this?
The best thing we can do is to remind these members of the code of conduct. Businesspeople are an integral part of our society and system and are similar to our politicians, bureaucrats, etc. However, we cannot ignore distortions and malpractices. That is why we have been requesting and pushing corporates to implement the code of conduct. The implementation of the code of conduct is a gradual process. It will take time.

Can membership for unscrupulous people be rejected by the NBI?
The NBI does not have an individual membership. Only companies are eligible to become members. If a company is blacklisted by the government, it is automatically removed from NBI membership.

You have also established the Responsible Business Alliance Nepal (RBAN). How is it different from NBI?
RBAN was founded on the principle that corporates should embrace responsible practices. Currently, we are implementing a program on human trafficking with the support of USAID, which addresses issues related to the employment and skills of workers.

The definition of human trafficking is extensive and covers not only the trafficking of women but also the coercion of people to work against their will. Forced labour is still prevalent today and it is a violation of human rights. It is crucial to identify those who create situations of human trafficking and understand the supply and demand dynamics at play. When consumers buy cheap products, they rarely question why the products are inexpensive. Company owners often exploit labour to reduce production costs and evade taxes. Their products may not meet necessary standards. If such products find markets easily, this encourages manufacturers to continue exploiting labourers to reduce costs.

While slavery has been eradicated, modern forms of slavery still exist. It is our responsibility to recognise this and take action to eradicate it.

Can you elaborate on how businesses promote modern slavery?
Modern slavery is a complex issue, and it is not just limited to the actions of businesses alone. However, businesses do play a significant role in promoting modern slavery. In order to meet the demands of consumers and sellers for cheap goods, businesses often exploit labourers by paying them low wages and denying them basic rights. This exploitation of labour is a violation of human rights, and it is a form of modern slavery.

To sell goods at a low price, some businesses bring in labour from countries with lower wages, such as India or Bangladesh, to produce goods at a lower cost. This practice of exploiting labour is prevalent not only in Nepal but also in other parts of the world.

To combat modern slavery, everyone needs to have a collective goal, and the efforts of the government, civil society, and the business community are equally important. Companies must pay their workers a reasonable wage on time and must have a written contract that adheres to the minimum wage and wage standards set by the government. This contract should apply to both formal and informal sectors, and the government must work towards bringing the informal sector into the formal sector.

It is important to note that if the standard is met, and a written agreement is signed between the workers and the company, then it cannot be called modern slavery. Therefore, it is crucial for businesses to take responsibility for their actions and to promote fair labour practices that respect the rights of workers.

How was the RBAN conceived?
In 2004, Australia and Indonesia jointly organised a large conference in Bali to address the issue of modern slavery. The conference, known as the Bali Process, aimed to create tools and recommendations to eliminate modern slavery, and resulted in the creation of the Triple A framework, which stands for Acknowledgement, Action, and Advancement. The NBI adopted these tools and established a network to end modern slavery, with 30 corporate companies committing to the cause.

However, modern slavery still exists in some businesses, and it is up to businesspeople to take the initiative to eliminate it. The use of these tools was a collective commitment to the cause. In the past, the Germans warned against buying carpets from Nepal that use child labour, and while there is much talk about human rights, little action has been taken. Therefore, the NBI, through RBAN, has taken the initiative to encourage businesses to make efforts to end modern slavery within their companies first. Many companies have already started their work to end such practices. However, it will not end overnight. When a company claims it has ended these practices, we conduct monitoring from our end. But the government is not concerned about this issue.

Is it possible for this campaign to make a difference in a society where faith and morality are in short supply?
This is a valid question. The effectiveness of the campaign remains to be seen. That is why we are starting with a small number of companies as a pilot project. This is not a quick fix, and it will take time to yield results. Even as I give this interview, I feel like I am doing something to raise awareness about this campaign. The government seems non-existent while businesses reel under high bank rates. However, ethical business practices cannot be compromised under any circumstance.

Nepali products need to meet the elements included in the Triple A to compete in the international market. It is difficult to move forward without them. International buyers are now looking for safety audits, a good working environment, low pollution levels, transparent salary sheets of workers, and adherence to labour laws, among others. Similarly, businesses also need to have ISO 41001 or ISO 9001 certifications. If companies don't meet these standards, it will be difficult for them to compete in the international market. If we want to export our products abroad, we must comply with these various standards. We should also be ready for global marketing. Therefore, we should not only promise to fulfil these standards, but we should also be able to show readiness to implement them in practice.

Are there any instances of Nepali goods being rejected by international buyers due to non-fulfillment of such standards?
So far, I do not have any specific examples of goods being unable to be exported due to non-fulfillment of standards. However, I have brought to light that such thoughts have started to emerge. As we are seeing less exports from Nepal, exporters may have faced such problems. For example, we export power transformers to Bhutan, and they ask for not only ISO 9001 but also ISO 41001, which is related to Occupational Health and Safety. This means that if a company does not have such a certificate, Bhutan may not buy their goods.

In addition, the European Union is trying to address the issue of human rights by ensuring that there is no child labour in production. This is just an effort to raise awareness that child labour is not allowed in production and is not meant to prevent Nepali production. Therefore, it is important for Nepali businesses to be alert and aware of these international standards. If we do not pay attention to these standards, it will be difficult to do business, and our businesses may not be sustainable.

If we can fulfil international commitments and implement good business practices, our businesses can be sustainable, and the international business community will view Nepali businesses differently. In addition, after fulfilling the commitment, the names of Responsible Business Network (RBN) members will be included in the international network, which currently includes 121 countries and multinational companies from Japan, China, America, Europe, and other parts of the world.

Is the problem of modern slavery more chronic in the formal or informal sector?
The problem of modern slavery is naturally more prevalent in the informal sector. This is because there is less accountability in this sector compared to the formal sector, where companies need to adhere to different rules and standards. For example, the problem is more severe in the agriculture sector, which is still largely traditional, and many people are not aware of the situation of workers in this sector. The prevalence of modern slavery also depends on Nepal's ranking in the human development index, as these issues are related to human rights.

It is important for the Nepali business community to understand that they should not exploit workers and not wait for the government to take action.

What are the trends of modern slavery in the formal sector?
There are different issues related to modern slavery in the formal sector. For example, if a company issues a job contract but fails to adhere to other requirements, this can be considered as exploitation. Workers need to be paid prescribed salaries and provided with facilities, and there are issues like overtime expenses, public holidays, and working environment, etc. Employers need to take initiatives to fulfil these standards, and our work is to remind them. The employers themselves should adopt ethical work practices.

How is the NBI or RBAN dealing with the issues raised by Ilam-based Prem Prasad Acharya who self-immolated a few months ago?
We consider Acharya a martyr of the business sector. The issues raised by him such as the government indifference, bank-related problems, market access issues, indifference by the business organisations, and problems created by larger companies are the common problems of small and medium-sized businesses. While suicide is never a solution, issues raised by him have become guidelines for the business community. We have formed a team to study what can be done to resolve the issues raised by him.

You mentioned that Acharya's issues are common problems of businesses. What has RBNA done to address them?
The RBNA recognises that there are problems with the bank loan process, interest rates, and value chains or supply chains. The government and the private sector need to work together to solve these problems. We are working to find solutions to address the issues raised by Acharya.

All the issues raised by him, including the bank rates, are genuine. Interest rates naturally increase when there is a lack of lendable funds, and banks cannot be blamed for this. However, if a bank signs an agreement with a company, it should be valid. Unfortunately, the bank did not seem to follow this as they unilaterally increase the interest rate from 7.5% to 9% within two months. As businesspeople conduct their businesses based on the agreed-upon interest rate, such unilateral changes can have significant impacts on their operations. Businesspeople cannot do the same with their clients. Banks themselves are increasing deposit rates from 8% to 12%. Sometimes, it feels better to keep money in fixed deposits than to invest in a business.

Before concluding, could you please tell us about the major initiatives of the NBI?
In addition to our work on modern slavery, the NBI is also focused on disaster preparedness and corporate social responsibility (CSR). We're exploring ways for businesses to minimise losses in the event of natural disasters such as floods and earthquakes. Additionally, we believe that CSR funds should be invested in sustainable projects, such as those focused on ending modern slavery, disaster preparedness, health, and education. By doing so, we can achieve tangible results that benefit both businesses and society as a whole.

Likewise, we are organising a Responsible Business Summit in September. The summit will bring together government officials, industry experts, and other stakeholders to discuss modern slavery, disaster preparedness, and other important topics related to corporate social responsibility.

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