Corporate Social Responsibility

Corporate Social Responsibility is a management concept where profit making corporates contribute to the society and to the welfare of employees for sustainable development in many developed countries. Corporate social responsibility (CSR) is the idea that a company, though they are obviously driven primarily by a profit motive, have the duty to think about how their business impacts the environment and to minimize harm and maximize positive societal outcomes for sustainable development. CSR can boost brand recognition and help improve a company’s reputation as well as company’s positive portrayal in the media and the public.

If we summarize companies spent voluntarily in terms of CSR in Bangladesh, we find activities in the fields of environment, health care, education, technology as well as food charity, funding countless get-togethers, reunions of various alumni associations or sponsorship etc.

Bangladesh Bank has issued guideline of CSR under Bangladesh Bank Order 1972 to regulate and supervise CSR in the banking and financial institutions. Now time has come that CSR needs to be mandated for both private and public companies too.

In some cases, labor law compels industries to spend CSR for the welfare of the labor. At the same time, CSR activities are undertaken for the welfare of people outside the industry. Many developing countries including Bangladesh has been putting effort to establish a national CSR policy and a national focal point to monitor the implementation of CSR. Until now only Bangladesh Bank plays a significant role in CSR promotion to the banking sectors. In Bangladesh many banks and non-bank financial institutions including big businesses have been spending CSR fund to philanthropic activities including the welfare of their employees. The Ministry of Commerce is encouraging private industry to engage in CSR activities. Most of the BBA and MBA programs of the public and private universities have incorporated CSR study in their curriculum for the students to know CSR policy and their practice in Bangladesh.

In addition to that, institutions like the Bangladesh Enterprise Institute (BEI) and the CSR Center Bangladesh have been trying to facilitate CSR policy and guidelines for the enterprises. The aim of the CSR policy is to enhance corporate governance, transparent business practices, establish ethical values and respect for employees, communities and the environment.

The CSR fund needs to be designed for improving the quality of life of the community, industry’s workforce and their family as well. Corporate should owe to its employees for creating value and profit. Some business experts say the philosophy of CSR fund is for inward expenditure than outward and more on business process oriented than philanthropic. According to their views, CSR is directly related to welfare of the employees and their family more than philanthropic works in communities. They believe that CSR needs to be focused on the workforce and their health and safety, creating congenial atmosphere inside industry and motivating workers etc.

Again, in many countries, CSR is a business model that incorporates social benefits and contributes for solving various social problems and a strategic initiative that contributes to a company’s brand’s reputation.  It also includes community volunteering, socially-responsible business practices, and company-funded advocacy campaign, donations, charity through cash, goods, and services, sometimes via a corporate foundation.

Despite Bangladesh has no comprehensive CSR policy, the Bangladesh Bank has instructed commercial banks to support community at their need as part of their corporate social responsibility (CSR). The central bank has issued an indicative guideline for bank’s CSR spending but not like the case of India that at least 2 per cent spending of company’s net profit after tax deduction is mandatory. The central Bank’s broad guideline for CSR spending is that, out of total CSR money, the corporate is authorized to spend 60 per cent of their CSR money for health care, 30 per cent for education and 10 per cent on climate change resilience and disaster management.

The Indian government has taken steps recently and has become the first country in the world to statutorily require companies to undertake CSR in every financial year, at least 2 per cent of the average net profits of the company.

In Bangladesh increasing enrollment and quality education in higher studies, some universities have reduced their tuition fees to retain old students and attract new students. One study found that due to Covid 19 impact, poverty level has gone down to 40 per cent. Therefore, students from poverty-stricken family needs to be provided stipend to continue their study. Internet data providers may reduce price of data for the students. Business, trade and commerce may provide scholarship or stipend in their company’s name to the poor brilliant students who need financial support to continue their studies.

Customers, suppliers, investors and workers have been playing vital role for making profit in business. Thus, CSR expenditure should be framed in a way so that it touches all of classes of profit makers. Company may optimize operational costs through resource sharing and process improvements for making profit and CSR provision. A national CSR policy needs to be formed to cover whole profit-making areas of the banks, business, industry, commerce, trade and so on. A pool fund within the same business association, may be created to spend CSR fund to avoid overlapping and duplication of expenditures in the same field.

The business associations may be given responsibility to create framework for CSR expenditure within their business community. Public and private universities may scale- up a comprehensive curriculum of CSR in their study modules in BBA and MBA programs. Innovation and research need to be given high priority for distribution of CSR fund in educational institutions.

It is vital to make a legal provision on CSR for improving corporate governance, labor welfare and work place safety and for environment, disaster management and sustainable development. Companies need to be encouraged to integrate CSR into their core values and articulate a specific CSR strategy that should be made public. The exact percentage of their profits goes into CSR activities needs to be published in their Annual Report for ensuring better transparency and creating societal values of the businesses.

The writer is a former Senior Secretary and currently teaching as an Adjunct Faculty at the Bangladesh Institute of Governance and Management (BIGM). He can be contacted at s22arefin@gmail.com