Corporate Social Responsibility (CSR)

Introduction

Business houses, right from the inception of human race, have been regarded as constructive partners in the communities in which they operate. Though they have been instrumental in creating employment, wealth, products and services, yet the pressure on business to play a role in social issues involving employees, stakeholders, society, environment, government etc. is continuously increasing. The society is questioning the existence of business houses, especially in the wake of the scandals and scams conducted by the business houses like UTI, Enron, and WorldCom. In response to it, the organizations around the globe are forced to wake up to the need for being committed towards Corporate Social Responsibility.

Over the years this concept of Corporate Social Responsibility (CSR) has gained unprecedent momentum in business and public debate and has become a strategic issue crossing the departmental boundaries, and affecting the way in which a company does business. It has become so important that many organizations have rebranded their core values to include social responsibility. Almost all corporate websites/ policies/reports talk about their endeavors for CSR which has become a way of ensuring that the organization is fulfilling all the obligations towards society and thus is eligible for the license to operate. It assures that the organization can grow on sustainable basis.

 

These activities of CSR ranging from small donations to bigger projects for social welfare sustainable practices differ from organization to organization depending on the resources available to an organization for undertaking sustainable practices. Business practices of big and successful companies, with plenty of resources at their end, have set the trend for being committed to sustainable practices. Such business houses around the globe show their commitment to social responsibility. In India, the initiatives of Dabur India Limited, for example, which commenced 'Sundesh' in 1993, a non-profit organization, with an aim to promote research and welfare activities in rural areas are appreciable. On the same track to fulfill its urge to do something for community, Bharat Petroleum Corporation Limited has adopted 37 villages as their responsibility to develop in all walks of life. It has made efforts to make them self-reliant, provided them fresh drinking water, sanitation facilities, medical facilities, vocational training and literacy camps. Around its industrial facilities, Tata Group has created towns and cities like Jamshedpur, Mithapur, Babrala for the benefit of its employees. Cadbury India, Glaxo and Richardson Hindustan are some of the companies which are helping farmers to grow crops which in turn shall serve as raw materials for them (Tripathi & Reddy, 2006).

Although the implementation of such activities involves time, effort and resources yet the business houses have realized that it (CSR) is one of the important ways in which an organization can distinguish itself from its competitors. The tangible and intangible benefits associated with for organization are immense. A powerful tool like CSR not only enhances the brand image and reputation of the business but also leads to improvement in sales and customer loyalty, and increased ability to attract and retain employees. By capitalizing on it, the organizations can improve their financial performance and attract more investment with immense economic value. The word CSR has, as a result, occupied very important place in the plans and strategies of the organizations in the present era.⁽¹⁾

 

Definition of Corporate Social Responsibility

Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance- is a form of corporate
self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms. Business would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, business would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profits. The practice of CSR is subject to much debate and criticism. Proponents argue that there is a strong business case for CSR, in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits. Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others yet argue that it is an attempt to preempt the role of governments as a watchdog over powerful multinational corporations. Corporate Social Responsibility has been redefined throughout the years. However, it essentially is titled to aid to an organization's mission as well as a guide to what the company stands for and will uphold to its consumers.⁽²⁾

Other definitions of CSR:

The notion of companies looking beyond profits to their role in society is generally termed corporate social responsibility (CSR)….It refers to a company linking itself with ethical values, transparency, employee relations, compliance with legal requirements and overall respect for the communities in which they operate. It goes beyond the occasional community service action, however, as CSR is a corporate philosophy that drives strategic decision-making, partner selection, hiring practices and, ultimately, brand development.⁽³⁾

South China Morning Post, 2002)

The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time.⁽⁴⁾

Archie B. Carroll, 1979

CSR is about businesses and other organizations going beyond the legal obligations to manage the impact they have on the environment and society. In particular, this could include how organizations interact with their employees, suppliers, customers and the communities in which they operate, as well as the extent they attempt to protect the environment.⁽⁵⁾

The Institute of Directors, UK, 2002

CSR is a means of analyzing the inter-dependent relationships that exist between businesses and economic systems, and the communities within which they are based. CSR is a means of discussing the extent of any obligations a business has to its immediate society; a way of proposing policy ideas on how those obligations can be met; as well as a tool by which the benefits to a business for meeting those obligations can be identified.

 

Corporate Social Responsibility: Unlocking the value

According to the results of a global survey in 2002 by Ernst & Young, 94 per cent of companies believe the development of a Corporate Social Responsibility (CSR) strategy can deliver real business benefits, however only 11 per cent have made significant progress in implementing the strategy in their organization. Senior executives from 147 companies in a range of industry sectors across Europe, North America and Australasia were interviewed for the survey. The survey concluded that CEOs are failing to recognize the benefits of implementing Corporate Social Responsibility strategies, despite increased pressure to include ethical, social and environmental issues into their decision-making processes. Research found that company CSR programs influence 70 per cent of all consumer purchasing decisions, with many investors and employees also being swayed in their choice of companies. "While companies recognize the value of an integrated CSR strategy, the majority are failing to maximize the associated business opportunities," said Andrew Grant, Ernst & Young Environment and Sustainability Services Principal. "Corporate Social Responsibility is now a determining factor in consumer and client choice which companies cannot afford to ignore. Companies who fail to maximize their adoption of a CSR strategy will be left behind."⁽⁶⁾

 

Arguments Against Business Performing Social Responsibility Activities

The best-known argument against business performing social responsibility activities has been advanced Milton Friedman, one of America's most distinguished economists. Friedman argues that making business managers simultaneously responsible to business owners for reaching profit objectives and to society for enhancing social welfare sets up a conflict of interest that could potentially cause the demise of business as it is known today. According to Friedman, this demise will almost certainly occur if business is continually forced to perform socially responsible actions that directly conflict with private organizational objectives."

Friedman also argues that to require business managers to pursue socially responsible objectives may, in fact, be unethical, because it compels managers to spend money on some individuals that rightfully belongs to other individuals.

In a free enterprise, private property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom. Insofar as his actions reduce returns to stockholder, he is spending their money. Insofar as his actions raise the price to customers, he is spending the customer's money.

An example that Friedman could use to illustrate his argument is the Control Data Corporation. Former chairman William Norris involved Control Data in many Social responsible programs that cost the company millions of dollars- from building plants in the inner city and employing a minority workforce to researching farming on the Alaskan tundra. When Control Data began to incur net losses of millions of dollars in the mid-1980s, critics blamed Norris's "do-gooder" mentality. Eventually, a new chairman was installed to restructure the company and return it to profitability.⁽⁷⁾

 

Corporate Social Responsibility in Bangladesh

CSR concepts and practices in Bangladesh have a long history of philanthropic activities from time immemorial. These philanthropic activities included donations to different charitable organizations, poor people and religious institutions. Till now, most of the businesses in Bangladesh are family owned and first generation businesses. They are involved in community development work in the form of charity without having any definite policy regarding the expenses or any concrete motive regarding financial gains in many instances. Moreover, most of the SMEs fall under the informal sector having low management structure and resources to address the social and environmental issues. These limitations drive the top management of local companies to think only about the profit maximization rather than doing business considering the triple bottom line: profit, planet and people (CSR definition of Lotus Holdings).

The discussions on CSR practices in Bangladesh in its modern global terms, are relatively new, but not so for the concept itself. Because, being a part of the global market, it is difficult to ignore CSR standard specifically in the export sector.   In general, it is true that in Bangladesh, the status of labor rights practices, environmental management and transparency in corporate governance are not satisfactory, largely due to poor enforcement of existing laws and inadequate pressure from civil society and interest groups like Consumer Forums.  Globally, as CSR practices are gradually being integrated into international business practices and hence is becoming one of the determining factors for market accesses, it is becoming equally instrumental for local acceptability. A focus on CSR in Bangladesh would be useful, not only for improving corporate governance, labor rights, work place safety, fair treatment of workers, community development and environment management, but also for industrialization and ensuring global market access.

Since, CSR entails working with stakeholders it is important to work from within and diagnose the stakeholders; concerns so that CSR is truly embedded in the companies.  By now, many CSR dimensions are practiced in Bangladesh. The SMEs largely depend upon export. The US and EU buyers set guidelines to Readymade Garment (RMG) industry to ensure the standards. The 1992 Harkin's Bill and subsequent consumer and industry boycott of RMG products by USA and the consequent remedial moves by local RMG sector is one example. Moreover, some buyers from EU visited the sites of recently collapsed garments factories. A temporary ban was also imposed on shrimp export to the EU on health and hygienic standard and appropriate remedial action followed in that instance too. But, some of the exporters found difficulty in convincing the US/EU buyers to have positive attitude towards Bangladesh due to inadequate CSR practices.

Businessmen need to recognize the implications of CSR for business activities. Companies are facing the challenges of adapting effectively to the changing environment in the context of globalization and in particular in the export sector. Although Consumer Rights Movement, enforcement of government  regulations and a structured view regarding the economic importance of CRS are not yet so widespread in the corporate world in Bangladesh, companies have gradually been attaching more importance to CSR in the local market as well. They are increasingly aware that CSR can be of direct economic value.  Companies can contribute to social and environmental objectives, through integrating CSR as a strategic investment into their core business strategy, management instruments and operations.  This is an investment, not a cost, much like quality management. So, business organizations can thereby have an inclusive financial, commercial and social approach, leading to a long term strategy minimizing risks linked to uncertainty.

CSR in Bangladesh can also contribute a lot to community development. The corporate house can develop the community by creating employment, providing primary education, contribution to infrastructure development like road and high-ways and addressing environmental concerns. This is more relevant for a country like Bangladesh where the government interventions in these fields augmented by corporate alliance can go a long way in developing the economy, society and environment.

Lack of enforcement of Industrial Laws and Regulations, weak unions, absence of consumer rights groups and high level of corruption within the regulatory bodies make CSR violation rampant in Bangladesh. Two most significant foreign exchange sources is the RMG sector and the overseas manpower export. Unbelievably low compensation, working hours, health/hygiene/sanitation conditions, fire safety and various types of abuse are so common and to the extent of inhumanity that will shock any conscientious individual to the core. Recently, the RMG sector employees have embarked on a industry wide movement to establish their rights.

Overseas workers are mostly exploited by recruiting agencies whereas these rural and mostly illiterate people have to sell all their belongings becoming paupers and borrow money at very high interest. Owing to cheating by the recruiters and unlawful behavior by the overseas employers, many of them are compelled to come back as beggars, some after long confinement in overseas jails. Hardly any remedy is available from the law enforcing agencies.  Many industrial units run with half-century old machinery producing fatal air, soil and water pollutions. More modern factories also don't care to install Effluent Treatment Plants. Starting from FMCGs, vegetables, fruits and all other consumable goods, adulteration, abnormal ripening at times with poisonous elements, keeping fish fresh with applying deadly formalin and all other malpractice is rampant and carefree. Good governance and efficient law enforcing agencies can only solve these plights.

Although a developing country, because of global competitiveness and demand, the CSR practices and standards are being gradually implemented in Bangladesh. But there is a long way to go. There are challenges to implement CSR properly in Bangladesh. Ultimately CSR practices should be better practiced in Bangladesh for better and enhanced performance. In the publication "Good Governance and Market-Based Reforms: A Study of Bangladesh, Fara Azmat and Ken Coghill relates Good Governance with CSR by discussing the good governance indicators of regulatory quality, rule of law and control of corruption in the context of Bangladesh and analyses how lack of good governance indicators affects the success and sustainability of reforms and contributes to the lack of business ethics and CSR in Bangladesh.⁽⁸⁾

 

Some Example of Performing Corporate Social Responsibility Activities

Corporate Social Responsibility of IBM:

# Education- IBM realizes the worldwide power and importance of education. Through major initiatives such as Reinvestment Education, KidSmart, and project FIRST, the company hopes to promote knowledge and skills that will ensure that communities thrive around the globe.

# Adult training and workforce development- IBM invests in helping others to use technology as a powerful tool in education and job training programs for adults. There is a special focus on using technology to broaden opportunities and strengthen programs available to adults in need of new skills and employment.

# Arts and Culture- IBM's support of the arts steam from its strong commitment to bettering its communities. By joining with libraries, museums, and other cultural institutions in exciting partnerships that leverage IBM expertise, the company demonstrates the critical role of technology plays in enhancing the arts.⁽⁹⁾

 

 

Corporate Social Responsibility of GRAMMENPHONE:

# Safe Motherhood and Infant Care Project-
Grameenphone Safe Motherhood & Infant Care Project is thus designed to ensure free, yet quality, safe motherhood and infant care services to poor mothers and their infants throughout the country. It also aims to assist in necessary infrastructure development and extension of basic healthcare services, especially in the hard-to-reach and remote areas.

# Education- In collaboration with Grameen Shikkha, an organization of the Grameen Bank family, Grameenphone provides scholarship to some 100 bright but underprivileged students at different academic levels through a scholarship fund annually. It also provides educational support to a number of special schools - Tauri Foundation, HANS, CDC, and SEID Trust – with an objective to aid in the learning process of the gifted children in our society. Grameenphone is also a proud partner of the Enrichment Program of Bishsho Shahitto Kendro through which free books are distributed. It recently initiated a CSR project to publish and distribute illustrated publications on the Liberation War for school-going children, with the objective to inspire them with the heroics of our freedom-fighters.

# Fight against HIV/AIDS- One of the eight Millennium Development Goals for Bangladesh is to halt the spread of HIV and AIDS by 2015. Hence, Grameenphone is committed to work closely with Bangladesh Government and concerned development agencies to achieve that target, with the aim to raise awareness and advocate for necessary policy reforms on HIV/AIDS through different communication channels.⁽¹⁰⁾

 

Corporate Social Responsibility of AKTEL:

# Aktel in Bishwa Estema- Aktel had taken initiative of executing various activities in Bishwa Estema, the 2nd largest Muslim gathering in the world after Holy Hajj in which millions of people came from different parts of the world to participate in this pilgrimage. Among the initiatives, are to provide instant primary aids to the pilgrims through free medical check-up by a team of certified doctors' at the Aktel voluntary medical service point from morning to night. Aktel also served free pure drinking water for the pilgrims of Bishwa Estema.

# Aktel stands besides cold affected underprivileged people- On a CSR campaign Aktel has distributed blankets to the underprivileged people of the country.⁽¹¹⁾

Corporate Social Responsibility of Dutch-Bangla Bank:

# Education- Dutch-Bangla Bank provides a lot of scholarship to underprivileged students for their education. It has given support many students for higher education. It also arranges Olympiad of Mathematics to develop students' mathematical knowledge.

# Environmental Development- To develop environment of Bangladesh it has taken tree plantation programs across the country.

# Social Development- It has taken some necessary steps against dowry and drugs which are the curse of Bangladesh.⁽¹²⁾

Corporate Social Responsibility of UNILEVER BANGLADESH

# Public Health- Unilever Bangladesh (pvt.) limited implements many programs on public health. They already have taken initiative for free dental check up. They create consciousness among the rural people about Health by their many activities.

# Arts and Cultural development- In Bangladesh for cultural development Unilever Bangladesh (pvt.) limited has done many things giving sponsor to many cultural organization.⁽¹³⁾

 

 

References

1. Business Intelligence Journal - January,2009
   
2. Wikipedia,
   
3. Michael McComb, 'Profit to be found in companies that care,' South China Morning Post, April 14, 2002, p. 5.
   
4. Archie B. Carroll, 'A Three-Dimensional Conceptual Model of Corporate Performance,' Academy of Management Review, 1979, Vol. 4, No. 4, p. 500.
   
5. Ruth Lea, 'Corporate Social Responsibility: IoD Member Opinion Survey,' The Institute of Directors, UK, November, 2002, p10.
   
6. Corporate Social Responsibility, ASOCIO Policy Paper June 2004
   
7. Samuel C. Certo & S. Trevis Certo, Modern Management, 10^th edition.
   
8. www.ammado.com, Website of Ammado Foundation.
   
9. Report on Corporate Social Responsibility of IBM, 2009
   
10. Annual CSR publications of Grameenphone, 2009
    
11. Aktel CSR Campaign, 2009
    
12. CSR activities of Dutch-Bangla Bank,2009
    

Report on Corporate Social Responsibility of Unilever Bangladesh, 2009