Is Your Company Compliant with UAE Corporate Social Responsibility Laws?
Published on August 13th, 2018.
When starting a company in Dubai there are many things to consider. Corporate Social Responsibility (CSR) is an area that often gets looked over. Companies that are registered in the United Arab Emirates (UAE) ought to consider implementing a successful CSR policy within the workplace. For those companies that already have a CSR policy, we ask: Are you aware of and compliant with the UAE CSR Law?
As we are approaching Eid al Adha, in the spirit of appreciation, giving, and helping businesses, communities, and others we take a closer look at CSR. We outline what CSR Law contains, and the obligations it will place on UAE businesses and new company setups.
WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
Corporate Social Responsibility is how an organisation contributes toward improving and adding value to society in some shape or form. Examples of CSR vary such as: donating money to charities and non-profit organisations, volunteering time or resources towards causes to putting into practice environmentally-friendly procedures at a place of work.
Nowadays, consumers have even more access to information and more choice when deciding on the quality of goods and services. Many consumers are now placing increasing value on CSR and are holding organisations accountable for effecting social change along with business practices, beliefs and profits.
Some consumers will go as far as to stop purchasing goods or services from their preferred companies if they believe they are not taking action for societal and environmental issues.
63% of consumers are confident organisations will drive social and environmental change.
87% will buy from brands based on values.
76% will boycott brands based on values.
78% want organisations to address important social justice issues.
87% will purchase a product because a company advocated for an issue they cared about
76% will refuse to purchase a company’s products or services upon learning it supported an issue contrary to their beliefs.
WHAT ARE THE LAWS CONCERNING UAE CSR?
The UAE Council of Ministers published a new resolution – the CSR Law. The new resolution aims to develop organisational framework and guidelines for the management budget as part of their Social Responsibility Activities. CSR Law outlines reporting necessities for contributions to CSR activities and offerings, where it applies to certain UAE businesses on a compulsory basis, to those on a voluntary basis, and offers a range of incentives to contribute to CSR initiatives.
CSR Law Objectives:
Create a governing structure for CSR contributions for the UAE.
Record, monitor and direct CSR contributions in line with CSR initiatives.
Offer incentives to UAE businesses that back and contribute to CSR practices in the UAE.
Start the the Federal Social Responsibility Fund, a new body to be managed under the authority of the Ministry of Economy.
Sanction the fund to encourage a culture of social responsibility by the UAE businesses to CSR within the UAE.
HOW CAN THE UAE COMPANIES OFFER THEIR SUPPORT TOWARDS CSR?
Ministry of Economy has launched a website CSR UAE. The CSR framework will be delivered through the CSR Smart Platform. This is open to current businesses operating in the UAE and companies that are setting up a company in the UAE.
WHAT IS CSR SMART PLATFORM?
CSR Smart Platform brings all members or stakeholders that are involved in the sustainable development projects, programs, and development including establishments, businesses, non-profit organisations and government agencies. Its main purpose is to circulate information on the strategy of government for development and related initiatives and coordinate the communication between the state and private sector entities. The CSR Smart Platform also grants corporations control over their contributions to the CSR agenda by enabling them to:
Glance through current initiatives, programs and projects.
Select their preferred activities.
Suggest alternative development channels and concepts.
WHO MUST COMPLY WITH THE UAE CSR LAW?
Registration on the CSR platform will be applicable to the below entities:
Commercial Companies of all legal forms including companies exempted from the provisions of Federal Law 02/2015 on Commercial Companies.
Branches of Foreign Companies carrying out activities in the UAE.
Companies directly or indirectly owned in full or part by Federal or local government.
However, registration will be optional for:
Civil and professional companies, individual firms, free zone companies, as well as cooperative society.
HOW CAN COMPANIES CONTRIBUTE TO CSR?
Some of the smart portal contributions are:
Helping social development by monetary or in-kind support to aid development programmes.
Applying environmentally friendly policies in the workplace.
Supporting innovation and scientific research.
Participating in problem solving for issues found by society.
Creating a culture of social responsibility though opportunities for humanitarian, community campaigns and engaging in voluntary programs.
IS CSR MANDATORY FOR UAE COMPANIES?
Currently, CSR Law mentions that social responsibility is on a voluntary bases for established and new Dubai company start-ups.Reporting and listing social responsibility on CSR Smart Platform will become compulsory for all UAE business that come under the scope of CSR Law.
ARE THERE ANY FEES ASSOCIATED WITH CSR?
There is a compulsory annual contribution into the Fund, as part of a UAE business’s contribution to social responsibility. Organisations that want to acquire the Social Responsibility Mark the contribution of AED10,000 plus an additional AED15,000 is required to obtain the Social Responsibility Permission.
CONCLUSION
CSR law outlines the requirements for organisations to report their CSR contributions and activities. In the not too distant future these requirements could become mandatory and may involve reporting the appropriate disclosures in order for trade licenses to be renewed.
We, therefore, recommend that all UAE companies take the time to review their CSR policy and reporting procedures as this will be applicable tonew company setups in Dubai and throughout the Emirates.
CSR has significant importance for businesses, non-profit organisations and employees. At the essence of CSR is teamwork: together everyone can achieve more and make a difference.
Contact a member of our team to learn more about setting up a company in the UAE and Saudi Arabia, email us on info@creationbc.com or call UAE +971 4 878 6240.
