2.5 Corporate Social Responsibility (CSR) in Historical Perspective

Corporate Social Responsibility (CSR) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis. (Green Paper, 2001) Socially responsibility means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and in rapport-building with stakeholders.  It is relevant in all types of companies and in all sectors of activity, from MSMEs to Multinational Enterprises (MNEs).  “A number of companies with good social and environmental records indicate that these activities can result in better performance and can generate more profit and growth.  (Green Paper, 2001)  Research (Industry week, 15 January 2001) has shown that about one half of the above average performance of socially responsible companies can be attributed to their CSR image while the other half is explained by their performance. Socially responsible companies are expected to deliver above-average financial returns. (Green Paper, 2001)  CSR has some internal dimensions such as: human resources management, health and safety at work, adaptation to change and management of environmental impact and natural resources. The external dimensions include local communities, business, partners, suppliers and consumers, human rights and global environmental concerns. Again, CSR may be as simple as sponsoring social service oriented entertainment events. In essence, ‘CSR is positive rapport with the society’.  In a Bangladesh context, several multinational companies and local companies practice CSR. While the multinationals are influenced by their own ESRB disposition, most of the business concerns in Bangladesh do not rate high in practicing CSR unless being pressured by the foreign buyers in case of export oriented business.

2.6 Corporate Social Responsibility (CSR) Implications to 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 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. 

2.7 Corporate Social Responsibility (CSR) as Community Development

Corporate Social Responsibility (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 being augmented by corporate alliance can go a long way in developing the economy, society and environment.

2.8 CSR Applications and Realities in Bangladesh

Corporate Social Responsibility (CSR) concepts and practices in Bangladesh have a long history of philanthropic activities from the 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 the 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 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.

But, some of the exporters found difficulty in convincing the US/EU buyers to have positive attitude towards Bangladesh due to inadequate CSR practices, 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 wild 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 of lend money at very high interest. Owing to cheating by the recruiters and unlawful behavior by the overseas employers, many of them get 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 conveyable 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.

2.9 Prospects and Future of CSR in Bangladesh

Bangladesh is a developing country. Because of global competitiveness and demand, the CSR practices and standards are being implemented in Bangladesh. But we are yet go a long way. There are challenges to implement CSR properly in Bangladesh. Ultimately Corporate Social Responsibility (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.

2.10 Good Governance and CSR in Bangladesh
 
Corporate Social Responsibility (CSR) has been defined in general terms as ‘the obligation of the firm to use its resources in ways to benefit society, through committed participation as a member of society, taking into account the society at large and improving the welfare of society at large independent of direct gains of the company’ (Weile et al., 2001: 288). In this article, CSR, as related to the problems of the agricultural input sector of Bangladesh, is used to explain the need of the businesses to be socially responsible and focus on economic, social, legal, ethical and environmental issues. Farmers are being cheated into buying underweight, low quality inputs sometimes at higher prices, which do not benefit yields. The contaminated inputs also cause damage to soil fertility, which eventually results in decreased yields. While the economic aspect is represented by the resultant effect of a price hike on the farmers, the social impact is due to the decrease in farmers’ income. The legal and ethical components are represented by the private sector not complying with the laws and rules and not meeting the obligations placed on them by the state and the society. Finally, the environmental consideration is also important because of the effect of contaminated and unbalanced inputs on the soil and on soil fertility.

As discussed above, lack of effective good governance in Bangladesh has resulted significantly in lack of business ethics and poor CSR culture. According to Wilson (cited in McIntosh and Thomas, 2002: 7), the key idea behind CSR and corporate citizenship is that responsible behavior makes good business sense. In Bangladesh the private sector seems to focus on earning profits in the short term, ignoring the issue of responsible behavior and the desirability of earning the trust of consumers which are important for the long-run success of their operations. The incidence of selling adulterated low quality products at high prices and with underweight and above all, hoarding to reap dishonest profit, all confirm this. In the absence of a socially responsible behaviors in the private sector, there is need to enhance capacity-building on the part of the state to intervene and implement sanctions effectively to enforce compliance. CSR does not develop and is not sustained independently of the context in which business operates. Importantly, the context includes the legal infrastructure created by the state and the enforcement effort imposed by the state. In the absence of an effective state intervention in the public interest, private entrepreneurs are less constrained to behave in the public interest and in conformity with CSR. Thus lack of capacity or lack of will, or both, by the state weakens the incentives for private sector entrepreneurs to practice CSR.

In addition, private sector entrepreneurs lack expertise and are not efficient and competent enough to take advantage of the open economy. The government has recognized the need for educating the private sector and is undertaking some programmes. However, this is not done on a large scale and nor is the potential exploited sufficiently for NGOs to be involved to educate the private sector on business ethics and issues of corporate social responsibility.    

2.11 Corporate Social Responsibility (CSR) Perceptions of Business Community in Bangladesh

At a Roundtable organized by CSR Center of Bangladesh Enterprise Institute, held on Thursday, 23 February, 2006, speakers identified dearth of expertise, poor accountability as major obstacles to obstacles to practicing CSR in Bangladesh. They elaborated that lack of expertise and poor accountability of corporate houses are obstacles to implementation of CSR in Bangladesh. The speakers also said many CSR activities by Bangladeshi corporate houses are centered mainly on publicity and short-term implications. The BEI roundtable on CSR titled 'Corporate Social Responsibility Practices and Challenges in Bangladesh' was a part of its 'Dialogue Series on CSR in Action'.BEI President Farooq Sobhan said corporate entities should understand what CSR is and why it is important. The private sector enterprises will remain weak unless and until they practice CSR in their ventures, the BEI president said, adding that when it comes to adopting good corporate governance, Bangladeshi companies are lagging far behind those in India, Pakistan and Sri Lanka. "Properly implemented CSR programmes help the companies meet legal and societal expectations and benefit governments, employees, citizens and businesses," noted Farooq. On the other hand, poorly implemented CSR programmes are nothing but public relations exercises, he mentioned. Representatives of Unilever Bangladesh, Dhaka Bank and BRAC briefed the roundtable about their CSR activities. Around 20 high-level executives from local and international corporate houses and donor agencies participated in the roundtable.