7pc firms pursuing ethical business practices

KATHMANDU:

Only seven per cent of companies operating in the country have so far been successful in mitigating challenges that come in the way of pursuing ethical business practices, a latest survey has shown, exposing difficulties faced by private firms in cleansing the business sector where corruption and practice of cutting corners are common.

Some of the major problems that are hindering firms from conducting businesses ethically are tax-related issues, unhealthy competition, corruption and labour-related issues, according to the baseline study report titled ‘Ethical Business Practice in Nepal’ made public on Sunday by Chairman of interim election government Khil Raj Regmi.

A staggering 59 per cent of the respondents said tax-related issues and failure to ensure free competition posed severe challenges in carrying out business ethically. Similarly, 55 per cent of respondents saw corruption and labour-related issues as the second pressing issue, said the survey conducted among 29 domestic companies by Nepal Business Initiative, an NGO established in 2005 with the objective of strengthening the role of the private sector.

“Unethical practices tend to increase when economy is in a downturn and economic opportunities are constrained,” said the survey. “The current situation in Nepal, characterised by political deadlock, lack of rule of law and accountability, high corruption levels, unhealthy business environment and rigid policies, is a breeding ground for unethical business practices.”

To arrest the situation, 73 per cent of respondents said corruption must be controlled. Similarly, 62 per cent said issues on tax transparency and accountability, and labour management should be areas of intervention, while 55 per cent of the respondents identified consumer protection and environment related issues as hindrances coming in the way of promoting ethical business practice. Another problem hindering promotion of ethical business practices, as mentioned by the report, is lack of knowledge and understanding on ethical business approach among the private sector.

Although 100 per cent of respondents said they were willing to join a collaborative initiative to pursue ethical practices, only 79 per cent said they had basic understanding and knowledge of ethical business practice.

“Many here view scandalous events such as tax evasion of embezzlement as unethical business practice but fail to realise the smaller day-to-day management decisions such as maintaining transparent financial records, discouraging child labour, avoiding situations of conflict of interest and providing fair employment opportunities,” the survey report said. “Furthermore, business ethics is confused with charitable and philanthropic activities such as building hospitals and providing financial support to educate children.”

Source: THT