Is Your Company Compliant with UAE Corporate Social Responsibility Laws?

This article was updated on April 15th, 2024

This article has been researched and written by Scott Greaves and the team at Creation Business Consultants and has not used AI in generating this article.

Corporate Social Responsibility (CSR) is an area that is often overlooked. 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?

We outline what CSR Law contains, and the obligations it will place on UAE businesses and new company setups.

WHAT IS CORPORATE SOCIAL RESPONSIBILITY?

CSR 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.

WHY IS CORPORATE SOCIAL RESPONSIBILITY IMPORTANT?

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 acting for societal and environmental issues.

2023 Corporate Social Responsibility (CSR) Statistics include:

• 92% of consumers prefer to buy products that promote causes.
• 72% of consumers think businesses ought to be held accountable legally for their actions against people and the environment.
• Respondents prefer to work for social enterprises, 67% of them.
• Participating in socially beneficial projects can cut staff turnover by roughly 50%.
• The average percentage of corporate volunteers is 30%.
• Microsoft has promised to assist in the reduction of operational emissions by 2030 as part of their CSR commitment.

WHAT ARE THE LAWS CONCERNING UAE CSR?

The UAE Council of Ministers published a resolution in February 2018 – the CSR Law. The 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 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?

In 2019, the Ministry of Economy launched a website CSR UAE. The CSR framework is 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.

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.

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 AED 10,000 plus an additional AED 15,000 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 for trade licenses to be renewed.

Creation Business Consultants recommend that all UAE companies take the time to review their CSR policy and reporting procedures as this will be applicable to new company setups in Dubai and the UAE.

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 at [email protected] or call UAE at +971 4 878 6240.

Scott Cairns,
Managing Director