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 unprecedented 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,2010

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, 10th edition.
8. www.ammado.com, Website of Ammado Foundation.
9. Report on Corporate Social Responsibility of IBM, 2010
10. Annual CSR publications of Grameenphone, 2010
11. Robi CSR Campaign, 2010
12. CSR activities of Dutch-Bangla Bank,2010

Report on Corporate Social Responsibility of Unilever Bangladesh, 2010