A study of Corporate Social Disclosure in the Finance Sector in Bangladesh

Mohammad I. Azim*

* Correspondence should be send to: Dr Mohammad Azim, CPA, CMA Accounting and Finance Swinburne University of Technology Room Number: BA1222 (Internal Mail Number: H23) Faculty of Business and Enterprise Hawthorn VIC 3122 AUSTRALIA Tel: +61 3 9214 4500 Fax: +61 3 9819 2117 Email: mazim@swin.edu.au

A study of Corporate Social Disclosure in the Finance Sector in Bangladesh

Abstract Purpose: This paper investigates finance companies’ corporate social reporting in Bangladesh, a developing country. A favorable investment climate is one of the preconditions for a country to prosper economically. This can be ensured by good corporate social reporting by finance sector companies. In Bangladesh, finance sector companies together hold 43.82% of total market capitalization on the Dhaka Stock Exchange and 26.54% of GDP, which is proportionately large for a country like Bangladesh. No studies have previously explored the commitment to environmental and social disclosure by finance sector companies operating in Bangladesh. Design/methodology/approach: Content analysis instruments are used to analyse corporate social reporting by listed finance companies in Bangladesh. Findings: Analysis of annual reports published in 2007-2008 reveals that 41% of listed finance sector companies made some kind of CSR disclosures. As a developing country, this figure is quite impressive compared to CSR disclosures in other sectors, like ceramics, engineering, IT, paper and printing. However, extensive survey of the contents, form, nature and extent of corporate social reporting of finance companies reveals that three quarters of all disclosures are generalized qualitative statements without any attempt at quantification. More than half of disclosures are located in the director’s report, and the average length of disclosures amounted to less than half a page. Originality/value: This paper contributes to the literature as no previous studies have reported on finance sector companies and their record in corporate social reporting in developing countries, such as Bangladesh. Keywords: Corporate social reporting, Corporate social responsibility (CSR), Finance sector, Developing country, Bangladesh. Paper type: Research paper


2008). Corporate social responsibilities are not the only ethical dilemma that financial institutions face in an atmosphere of corrupt corporate practice. A well-functioning finance sector in any country can contribute directly to a healthy economy. producing costsavings. Although not all benefits can be quantified in monetary terms (Evans. By disclosing information on social and environmental issues. They are also concerned with a level of commitment for sustainable development. Pakistan. From initially using a section in the annual report. or loss of customers (Deegan and Gordon. increased regulation. Worldwide there is a trend indicating rising levels of CSR reporting. CSR is a matter of self interest for the corporate sector (Azim. 1995). The reason for selecting such companies is to build our knowledge of corporate social responsibility (CSR) in banking. failing to report on social responsibility also has costs—in terms of fines.A study of Corporate Social Disclosure in the Finance sector in Bangladesh 1. insurance. South East Asian countries such as India. and China have a small number of companies that report corporate environmental and social disclosure. companies can minimize the risk of powerful consumer boycotts (Adams. 2002. 2008). companies are moving to stand-alone reports (KPMG. Before making investment decisions many investors are concerned with social and environmental disclosures by finance companies as their day-to-day correspondence with this sector is important for their sustainability and growth. Ethics and transparency are important themes in the finance sector. 2002): having better internal control and decision-making systems. investment and leasing companies. public disfavor. There were 8 and 13 percentage point increases in stand-alone reports in Japan and the UK 3 . communicate with the community and stakeholders (Anand. voluntary disclosure demonstrates a commitment to society (Mathews. the two top countries in terms of separate CSR reporting are Japan (88% in 2008. Practicing social responsibility costs money. However. Likewise. By disclosing information on social and environmental issues. Currently in Bangladesh. 1996). In the absence of legislative requirements. 2002). 2002). Ahmed and Islam. Simms. Nevertheless. Introduction This exploratory study investigates the extent of corporate social reporting by finance companies listed on the stock exchange in Bangladesh. and continuously improving products and services (Adams. 2009). 71% in 2005). This sector plays an important role in country’s economic condition. The recent escalation in CSR disclosures by corporations worldwide signals the significance of CSR for sustainable development (KPMG. 2002) and construct a competitive advantage (King. 80% in 2005) and the United Kingdom (84% in 2008. companies that report on social responsibility and account for social and environment impacts may gain specific benefits by: attracting and retaining talented people (Adams. At the national level. 2003). There is a need for an in-depth study of the quality vs. An international survey of corporate sustainability reporting conducted by KPMG in 2008 found that 70 per cent of the world’s 250 largest companies issued separate reports on corporate social responsibility (CSR) compared to 52 per cent in 2005. quantity aspect of such reporting and also where future improvements can be made. 2002). negative publicity. finance companies can improve their image and obtain a competitive advantage. changes are occurring in the way companies report CSR.

is a form of corporate self regulation integrated into the business culture. 2006). However. Halabi and Samy (2009) collected annual reports of 20 selected banking companies. Many companies use this guideline as a framework to build their social reports (Raman. but also the interests of society and the environment by taking responsibility for the impact of their activities on stakeholders. customers and employees. 4 . Section 2 discusses the literature on corporate social responsibility. Section 4 outlines the data and research design. Hossain. 2. Banks must take on new responsibilities that go beyond a simple policy of “paternalism” vis-a-vis their suppliers. Previous studies mainly focused on the overall disclosure by listed companies. 2008). The results are presented in Section 5 and the final section highlights the implications of results obtained. Khan. political and ecological environments. The current study focuses on the corporate social reporting used by all such companies listed as being part of the finance sector on the DSE. Islam and Andrew (2006) use a sample of 150 companies for 2002–2003. McKenna and Brown. In recent years there is a pressure from various agencies for companies to act responsibly and be accountable for the impacts they have on the social. this represents 19. Section 3 documents the regulatory environment and disclosure rules in Bangladesh. 2001). those studies failed to come to a unified conclusion that is applicable to all listed companies. The concept of CSR is still very new in Bangladesh. There is no known research that examines the corporate social disclosure in the finance sector in Bangladesh or how to improve it. In the last five years. which are listed on the Dhaka Stock Exchange (DSE) and also use a questionnaire to investigate the level of users' understanding and their perceptions of CSR reporting. Wiele. such as that practiced up until recent times (Noyer . employees. Conclusions reached in these studies may not be representative of the listed companies of the Dhaka Stock Exchange (DSE). and civil society represented by NGOs. this study uses selected banks only. CSR is defined as CSR is a concept whereby financial institutions not only consider their profitability and growth. Furthermore it analyzes the type and extent of such reporting in annual reports and suggests future improvement. however.30% of companies. and Belal (2000) samples 30 companies (from both private and public sector). suppliers.respectively during the last 3 years. customers. such as poverty and infrastructure (Kok. The remainder of this paper is organized as follows. For instance. which is also known as corporate citizenship or sustainable responsible business (SRB). Imam (2000) takes a sample of 40 listed companies (out of 207 listed companies for 1996–1997). Their study shows that the selected banking companies did some (albeit little) CSR reporting on a voluntary basis and the user groups favoured CSR reporting. institutions such as the Global Reporting Initiative (GRI) have elaborated guidelines for preparing social or sustainability reports. Literature Review Corporate Social Responsibility (CSR). shareholders. and would like to see more disclosure. Companies are also expected to participate in solving social problems.

Some companies do not because they: (i) do not have the information. proper. stockholders) and immediately beyond the company (customers. 25). FIGURE 1: Stakeholders of an organization. Organizations will be penalized if they do not operate in a manner consistent with community expectations. Previous studies have used either legitimacy theory or stakeholder theory to develop themes of disclosure measurement and to analyse the extent to which companies disclose their corporate social responsibility. (Source: Foster and Jonker. managers. or appropriate within some socially constructed system of norms. 2004). From an analytical perspective. how its standard operating procedures affect stakeholders in the company (employees. 573). The contemporary stakeholder literature can be traced back to the seminal work of Freeman (1984). p. suppliers. These themes are illustrated in Figure 1.There are many theoretical reasons (such as political economy. values. financiers). and definition (Suchman. beliefs. Legitimacy is defined as: a generalized perception or assumption that the actions of an entity are desirable. Legitimacy theory has been used by several researchers as their framework to examine corporate social disclosure practices. He drew attention to the role of external stakeholders which were defined as “any group who can affect. This theory has been used to support the reasoning of such disclosures. (ii) do not want to disclose this information since it signals bad performance. or is affected by. 2007) 5 . the accomplishment of organisational purpose” (p. legitimacy and stakeholder theories) why companies should engage in social responsibility reporting. Stakeholders are the central focus of stakeholder theory. Deegan (2002) suggests that organizations need to take community expectations into account if they want to be successful. and (iii) this is an expensive process. 1995. This study focuses on two important theories that explain the extent of corporate social disclosure: legitimacy theory and stakeholder theory. Stakeholders include a wide range of people and interest groups who are involved in some capacity with organizations (Price. a stakeholder approach can assist managers by promoting an analysis of how the company fits into its larger environment or social context.

Research on voluntary disclosure has attempted to examine the nature and patterns of CSR and investigate the determinants of CSR such as size. and competitors would augment more specific stakeholders. 2002. 1998b) and between developed and developing countries (Imam. the specific stakeholder map will vary. 64 companies reported human resource issues and 22 companies disclosed community involvement issues. In the context of emerging economies. social and cultural differences it would not be appropriate to generalize the results of studies of developed nations to newly developed countries. and employee training (Gray et al.70 pages were used in the UK and Australia respectively. This is because the stage of economic development is likely to be an important factor affecting CSR practices. economic. Mathews (1995) classifies the above arguments into three categories: (i) social disclosures having a positive impact on how an organization performs. Companies in the US used 1. the rational manager would not make major corporate disclosure decisions for his or her organization without considering the impact on each of these specific stakeholders. 1995) over the last decade. This study indicated that more than 40% of these companies reported human resource issues. employees. 2001). the finance community. A study of 100 public companies in Malaysia showed that 66% of companies did some kind of social reporting (Kin. customers. which is represented by stakeholders. Little disclosure exists in sensitive areas such as trade union activities. and (iii) voluntary disclosure signifies the recognition of that organization’s accountability to society. a few studies have focused on companies in countries such as Malaysia. activist groups. 2000). environmental. regulatory. 6 . Due to geographical. and 7% reported energy and product related issues. and as decisions change.. 98% of UK. Surveys of CSR practices in Western countries reveal that companies place the greatest emphasis on disclosing human resources such as employee numbers and remuneration. pay awards. 2001). Of these. Hong Kong). 2002. trade associations. equal opportunities. 1990). Wilson (2001) argues the importance of stakeholder theory as a concept whereby companies are able to integrate social and environmental information in their business operations and in their interaction with stakeholders. 13% reported environmental activities. suppliers. political..Freeman suggests that each firm should have a "generic stakeholder map" with specific stakeholders. governments. and costs (Adams et al. political groups. Guthrie and Parker (1990) found that 85% of US. This view is supported by Carroll (1999) who explains that corporate social disclosure relates to the wider society. (ii) disclosure may legitimate the organization’s behavior by influencing other stakeholders.. Stakeholder theory has become important for companies that want to secure their relationship with stakeholders through corporate social disclosure. Thailand and China (specifically. disability policies. Mathews. unions. Corporate social responsibility has attracted considerable academic research (Deegan. 31% reported community involvement.. 1998a. 2003). and 56% of Australian companies made some social disclosures in their annual reports.89 and . General categories such as owners. redundancy schemes. Furthermore the nature and patterns of CSR vary between types of industry (Gray et al. Gray. In a comparative study on 150 companies in the US. As the organization changes over time. Moreover. the vast majority of disclosures are qualitative in nature. and industry affiliation (Cormier and Magnan. In turn. UK and Australia. 1998b). profits. It also revealed the average number of pages that organizations in these countries allotted in their reports for social disclosures.26 pages while 0. The literature recognizes that CSR practices differ from country to country (Adams et al. employee share ownership.

GRI develops these reporting guidelines using a global consensus-seeking process that involves reporting organizations such as companies. they found that the level of corporate social reporting is increasing. A number of broadly recognized standards are particularly relevant to CSR.bangladesh-bank. insurance companies. 1 The following is based on: http://www.pdf 7 . As expectations for disclosure of information on environmental and social performance have grown. Such disclosures were general statements indicating company support for environmental protection and describing projects to reduce pollution and save energy and resources. and 29 non-bank financial institutions (NBFIs) as of 2008.25 to 3 pages. They analyzed the extent and nature of corporate social reporting of 40 Thai companies over a 3-year period. 5 state-owned specialized banks. non-bank financial institutions. the second in 2002 (known as the G2 guideline) and the third in late 2006 (G3 Guideline) (KPMG. A focus on processes. microfinance institutions (MFIs). In addition to the Central Bank of Bangladesh there are 4 state-owned banks (SCBs). no company disclosed financial data concerning environmental performance. with Thai companies reporting more on human resources. Over and above the institutions cited above. 1992). in particular. A similar study in Hong Kong revealed that 6% of companies disclosed social activities with an emphasis on staff development and community relations (Lynn. co-operative banks. and. and the ISO 14001 Series. (2006) examined corporate social reporting in Thailand. The GRI Guidelines focus on issues that should be reported (Maitland. the involvement of stakeholders through a robust process of dialogue. These are all state owned. 2004). Ansar-VDP Unnayan Bank and Karma Shangsthan Bank are operating in Bangladesh. A brief overview of the finance sector in Bangladesh Corporate disclosure is said to be a function of the finance sector and plays an important role in a country’s development.b). and non-governmental organizations. is likely to result in a company properly discharging accountability rather than simply complying with a list of disclosure items (Adams. credit rating agencies and the stock exchange. as well as report readers and users like employees. 30 domestic private commercial banks. and (iii) microfinance. Disclosures appeared in the director’s report or chairperson’s statement. Ng (2000) found that 9% of the 200 HK listed companies reported environmental information in published accounts. Accountability Assurance Standard 1000 & 1000S. Money market1: The financial system in Bangladesh includes Bangladesh Bank (the Central Bank).Ratanajongkol et al. so have demands that companies provide information in a standardized way that allow readers to compare company performance. 3. (ii) insurance and pensions schemes. there are three development financial institutions operating in Bangladesh. The finance sector in Bangladesh comprises the: (i) money and capital markets. investors. 2002a.org/mediaroom/tenders/fsectorinbb. namely House Building Finance Corporation (HBFC). 9 foreign commercial banks. However. scheduled banks. Figure 2 illustrates the nature of the finance sector in Bangladesh. AAS 1000 and 1000S focus on the processes of reporting and auditing. Overall. GRI issued its first set of guidelines in 2000. including the GRI Sustainability Reporting Guidelines. 2008). The number of pages dedicated to such disclosures ranged from 0.

A total of 68 insurance companies operate in Bangladesh. established a regulatory framework which culminated in the enactment of the Microcredit Regulatory Authority Act. The authority’s main responsibilities include issuance and cancellation of the license for microcredit. supervising and facilitating all MFI activities. while the Chittagong Stock Exchange (CSE) was established in April 1995. 1993. A total of 44 insurance companies are listed in the capital market. Muhammad Yunus. six government officials nominated by the government and one executive vice-president who serves as the board’s member secretary. Insurance3 The insurance sector is regulated by the Insurance Act. Regarding the general insurance companies. Bangladesh Shilpa Rin Sangstha (BSRS).bangladesh-bank. provides substantial bridge financing programs. and overseeing. of which 273 are listed companies. The member-owned Microfinance Institutions (MFIs) have an explicit social agenda to help the poorer sections of population.the rest are privately owned. Its objective is to encourage and broaden the base of industrial investment.org/mediaroom/tenders/fsectorinbb. Microfinance Institutions 4 Microfinance Institutions (MFI) in Bangladesh have been unregulated since their inception. In recognition of the robust poverty eradication program through microfinance activities. At the end of 2008 the total number of enlisted securities with DSE stood at 328. dealing in the secondary capital market. Among these life insurance companies. such as Bangladesh Shilpa bank (BSB). The Board consists of the Governor of Bangladesh Bank as ex-officio chairperson. Grameen Bank was established in 1983 under a special law with the 245 The following is based on: http://www. 2006. stateowned Shadharan Bima Corporation (SBC) is the most active in the insurance sector. Now it has been recognised globally that microfinance can be easily implemented and thus replicated in many regions of the world. The Dhaka Stock Exchange (DSE) was established as a public limited company in April 1954. National [Commercial Bank?] and some foreign banks are engaged in long-term industrial financing. The Investment Corporation of Bangladesh (ICB) monitors the capital market and it was established in 1976. the Grameen Bank and its founder. Bangladesh Small Industries and Commerce (BASIC) Bank Ltd. It does this to ensure the supply of securities as well as generate demand for securities. floats and manages closedend and open-end mutual funds and closed-end unit funds. Other than the capital market. An Executive Board consisting of eight members is responsible for executing the management’s general and administrative tasks. 1938 with regulatory oversight provided by the Controller of Insurance with authority granted by the Ministry of Commerce. and maintains investment accounts. some scheduled banks. 8 debentures and 34 treasury bonds. of which 21 provide life insurance and 47 are in the general insurance field. and particularly focus on rural women as clients. except for the state-owned Jiban Bima Corporation (GBC) –a foreign owned American Life Insurance Company . The SEC so far has issued licenses to 27 nonbank institutions to participate in the capital market of which 19 institutions are Merchant Banker and Portfolio Manager while 7 are Issue Managers and l (one) acts as Issue Manager and Underwriter.pdf 8 .Capital Market2 The capital market in Bangladesh is regulated and supervised by the Securities and Exchange Commission (SEC) under the SEC Act. ICB underwrites issues of securities. 13 mutual funds. ICB also operates in both DSE and CSE as a dealer. Dr. were awarded the 2006 Nobel Peace Prize. The government. with the close cooperation of Bangladesh Bank.

Finance sector in Bangladesh Money Market Capital Market Microfinance Securities Market Insurance and pension and Provident Funds • Bangladesh Bank • All banks • Non-bank financial institutions • Money changers • Credit rating agencies • Securities and Exchange Commission • Stock exchanges: Dhaka Stock Exchange and Chittagong Stock Exchange • Investment Corporation of Bangladesh • Merchant bank[s?] • Controller of Insurance • General and life insurance companies • Government Pension Scheme • Central Provident Fund • Private sector pension funds • Nongovernmental organizations affairs bureau • Palli Karma Shahayak Foundation • Grameen Bank • Bangladesh Rural Development Board and other non-governmental organizations. BRAC. Of these. 9 . Bangladesh Bank) It is appropriate to provide a brief overview of the importance of CSR in Bangladesh. 2001). Secondly. The typically landless borrowers of Grameen Bank are mostly women who are owners of the bank and it is a pioneering organization. awareness of corporate social reporting has rapidly increased. The following figure shows how the finance industry in Bangladesh is organized. Besides Grameen Bank. FIGURE 2: Finance sector in Bangladesh (Source: Policy Analysis Unit. Firstly.initial support from the Bangladesh Bank. there are more than 1000 semi-formal institutions operating mostly in the rural sector of the country. microfinance institutions. because it makes sound business sense. and PROSHIKA are considered the three largest NGO-MFIs. there is intensifying pressure from stakeholders to do so (Belal. Although a relatively new concept in Bangladeshi corporate culture. All companies need to consider their CSR for two basic reasons. ASA. Any company that does not develop and promote its CSR policy to all stakeholders will face increasing threats to its reputation.

Therefore. it brings in new business and improves stakeholder return (Kabir. showing that: an average 8. 2003). 2000. The nature of disclosure is mainly descriptive (Belal.enhances reputation. Though some progressive companies disclosed some information on community. Since corporate social reporting disclosure is voluntary in Bangladesh. environmental and consumer related disclosure. 2003). the quality of information disclosed is very low. if management believes they will assist users in making economic decisions. In the absence of independent verification.. since the adoption of International Financial Reporting Standards (IFRS) in Bangladesh on 5 July 20065. Until recently. 2001. 1997). it is not surprising that in previous research only a few companies did disclose their CSR. p. Imam conclude that …. for the financial year 2002–2003. The government of Bangladesh has not imposed or proposed requirements for disclosure of social and environmental performance. Belal’s (2001) study represents 30 annual reports collected on an ad hoc basis directly by contracting the company source or collected from Dhaka Stock Exchange. However. Imam (2000) found that in 1996–97 annual reports: …. Hossain et al. 136). that information was not at all adequate in discharging social responsibilities. 10). The Bangladesh Companies Act 1994 sets the general framework for corporate financial reporting. p. Belal (2001) concluded that …although a number of companies are making social disclosures. The disclosures mostly comprise narrative qualitative information (Imam. In this study listed companies dominate the survey (28 out of 30) representing 15 percent of the total listed companies in Bangladesh (196 at June.5 per cent environmental disclosure. Only 10 percent of companies provide consumer related disclosure (Imam. p. CSR is still voluntary with the exception of disclosure of expenditures on energy usage required under the Companies Act of 1994 and the Securities and Exchange Rules of 1987. (2006) also used the annual reports of 107 non-finance companies. a total of 25 per cent of the sample companies made community and 22. 2000. the credibility of information disclosed is questionable.286).. 10 . 5 International Accounting Standard (IAS) came into effect on 1 January 2005. in Bangladesh. 2006.33% of Bangladeshi companies disclose social and environmental information in their corporate annual report (Hossain et al. However.. 2001). 140). 1994). the sample listed companies tend to represent a relatively minor quantity of disclosure when compared with corporate financial disclosures. neither is there a separate Bangladesh Accounting Standard (BAS) regarding social and environmental reporting (IASCF. Presentation of Financial Statements (BAS 1) encourages companies listed on the Stock Exchange of Bangladesh to publish additional statements on their non-financial activities. Using annual reports of 40 companies listed on the DSE. These conclusions echo that of Imam (2000). which require the total amount spent on energy to be shown as a separate expenditure in the notes to the financial statements (Belal. no provisions regarding CSR exist in the Companies Act 1994 (GoB. p.

Again. 2006). Unerman. 1983. 1995a. Raman (2006) argues that pages are preferred since they can be easily counted and involve less 11 .. p. 1999. This industry grouping is done by the Securities and Exchange Commission in Bangladesh and it includes 30 banks. 2006). To analyze the extent of social responsibility reporting by Bangladesh companies. Three companies (Fidelity Assets & Securities Company Ltd.. separate sections of annual reports and separate sustainability reports were selected. section 189 (1 & 2) (GoB. Taking 2007-2008 as the target year. Raman. Methodology and data collection In order to understand CSR disclosure by finance sector companies. annual reports constituted the main primary source. Results show that 18 companies or 41% made disclosures relating to corporate social performance. 1990. 11 finance and investment companies and 6 leasing companies. 21). For example. annual reports are considered appropriate documents for analysis. regarding pages. Others argue that words would have no meaning unless they are part of a sentence (see Raman. 2000). This technique has been used in other studies (Guthrie and Parker. Content analysis employs a three-step process (Raman. director’s reports. line spacing. Milne and Adler. the reports should be signed by the chairperson or other authorized person(s) as mentioned in Company Act 1994. 2006). 1995a. For example. chairperson’s reports. (1995b) the number of pages. 1980. Gray et al. Directors are responsible for preparing financial reports and according to the Company Act 1994 directors should forward the 'statutory report' to shareholders (members) at least 21 days before the day of the annual general meeting (AGM). some researchers do not consider font size. 2006). Indeed there has been considerable debate about these different measures (Gray et al. Singh and Ahuja. We were able to collect information of another 44 finance companies (highlighted in bold in the Appendix). Gray. Hackston and Milne (1996) the number of sentences. Separate corporate social disclosure reports by publicly listed limited companies in the finance sector published between 1 July 2007 and 30 June 2008 were also reviewed. First. Different researchers use different units of measure. the disclosure of social and environmental information made by the listed companies in their corporate annual reports in Bangladesh is “very disappointing” (Hossain et al. 4. and page margins. This technique is defined ‘as a method of copying the text (or content) of a piece of written work into various categories on the basis of selection criteria’ (Krippendorf. Annual report is a common and popular means of communication to stakeholders and they command credibility (Guthrie and Parker. Zeghal and Ahmed (1990) used the number of words. 2004.. an appropriate document is chosen. 1994). 47 finance companies were listed on the Dhaka Stock Exchange (see Appendix for full list). Raman. 2006). 1990. Owen and Adams (1996). For this study. Adams. 1995b.Hossain et al. The second step is to determine the unit for measuring contents. and Gray et al. (2006) conclude that these disclosures were voluntary in nature and largely qualitative. Guthrie and Parker (1990). These 18 reporting companies were systematically analyzed using content analysis. First Security Islami Bank Limited and ICB Islamic Bank Limited) are excluded because these companies are listed in 2007–2008 and there is no annual report published in this study period. Deegan and Rankin (1997) and other scholars studied corporate social disclosure practices using annual reports as the key source of information. They also mentioned that if we compare the findings between developed and some developing countries.

started doing this) It is difficult therefore to prepare a corporate social responsibility worksheet according to a standard breakdown such as GRI performance indicators or Global Compact principles. for example Standard Chartered Bank. Ernst and Ernst’s analysis of annual reports of Fortune 500 companies revealed specific indicators of different categories of social involvement. 2000. community involvement. Amount and Location.90 Finance companies For the purpose of this study. and Gray et al. 2000. Amount measures the proportion of pages devoted to social responsibility issues. human resources. The form of disclosure includes quantified data. The lack of a widely accepted definition of ‘social responsibility’. Products and Miscellaneous. line spacing. and page margins. Belal. Currently. (1995a) is used to organize information into four categories: Theme. The earlier work of Ernst and Ernst (1978). Human Resources. Probably the most well-known studies in this area are by Ernst and Ernst (1978). 5. Fair Business Practices. separate sections of annual reports and separate or stand alone reports.judgment. Energy. to be consistent with the measurement we typed them in a Word file and measured the portion of pages used by them. Location refers to directors’ and/or chairpersons’ reports. Previous CSR studies (Imam. products. Guthrie and Parker (1990). a corporate social responsibility worksheet was constructed with the following headings: Environment. does hamper this exercise and allows for the possibility of multiple interpretations. Community Involvement. Table 2 below indicates the theme of CSR presented in our social responsibility worksheet. energy.. (1995a). Ernst and Ernst (1978) claimed. Guthrie and Parker (1990). Empirical findings of the study The findings from annual reports are shown in Table 1 below. either monetary or non-monetary. the amount of disclosure reported in the survey is understated because of the selective approach employed in identifying and categorizing disclosures and the possibility of human error”. none of the listed companies implemented GRI G3 disclosure in their annual report (only a few nonlisted companies. In this study the unit of measure is number of pages. TABLE 1: CSR by the Listed Companies in 2007 -2008 Number of sample Companies companies listed on the disclosures DSE Number of companies Number companies 44 18 making CSR Sector of % 40. Hossain et al. 12 . “If anything. Since different companies use different measurements. Form. and miscellaneous. 2006) did not take this fact into consideration. and qualitative or declarative data. 2001. Theme was based on variables such as environment. and Gray et al. or agreement of what constitutes a socially responsible corporate activity. The third phase in content analysis involves identifying themes or categories into which blocks of content can be classified. Attempting to reduce the degree of subjectivity and bias.

Additional information 0 9 0 0 0 0 0 B C 0 1 3 0 0 1 0 5 1 17 7 15 14 16 0 0 0 0 0 0 D E F G In Table 2. Health related activities 21. a number of banks devoted considerable space to community involvement activities such as tree plantation. Conservation 6. Other environmental disclosures Energy 5. Socially responsible practices abroad 15. Employment of women 11. Other disclosures 27. Conservation of natural resources 4. Advancement of minorities 10. Reducing pollution from product use 25. Environment and fair business practices are a distant third. Support for minority [businesses?] 14. Employee health and safety 17. Energy efficiency of products 7. Other human resource disclosures Community involvement 19. Pollution control 2. Other energy related disclosures Fair business practices 8. art competitions.TABLE 2: Theme of Corporate Social Disclosures Number of companies disclosing A. Other community activity disclosures Product Safety 23. Employment of minorities 9. city beautification. Prevention or repair of environmental damage 3. and concerts. the top two themes of corporate social responsibility disclosure in annual reports are: (i) community involvement. Employee training 18. Environment 1. Education and the arts 22. Interestingly. environmental factors were included as were photographs of social activities. Safety 24. Although employees feature prominently. Other statements on fair business practices Human resources 16. health care. Employment of other special interest groups 13. sponsoring sports tournaments. scholarships. Other product related disclosures Other social responsibility disclosures 26. Advancement of women 12. 13 . Most information disclosed in annual reports relates to employees and their interests. Community activities 20. and (ii) human resources.

56% of disclosures are generalized qualitative statements without supporting evidence.11 100 In Table 5. of companies preparing CSR 5 1 2 10 18 Percentage 27. Around twenty-eight percent of reports contained monetary or non-monetary quantification.11 55. 5.11%).55% used both directors’ reports and separate section of the annual report. of companies reporting 11 2 2 1 2 18 Percentage 61.55 5.11%). To be consistent for comparison reason we typed all the social and environmental disclosure sections from the annual report into a separate Word file using 14 . 5.78 5. while 16. with 61.11 5. As per Table 4.11% disclosing more than one page. Chairperson’s report.55% provided only monetary disclosures.55 11. TABLE 5: Number of Pages Devoted to Corporate Social Responsibility Disclosures Pages devoted One sentence – one quarter of a page Quarter of a page – half a page Half page – three quarters of a page Three quarters of a page – one page More than 1 page Total No. Eleven percent of companies used non-monetary quantification. the mean amount of disclosure varied between one quarter of a page and half a page. the most popular place for locating social responsibility disclosures are the Director’s report (61.TABLE 3: Form of Corporate Social Responsibility Disclosures Quantification categories Both monetary and non-monetary quantification Monetary quantification Non –monetary quantification Qualitative (declarative) Total No.67 11. separate section of annual report and separate or stand alone report) or a combination of different formats.11% of companies disclosing less than one quarter of a page.55 100 The locations of disclosures are shown in Table 4. Finally. and none used the Chairperson’s report. and 5. Content analysis revealed that 55. of companies reporting 11 0 3 2 1 1 18 Percentage 61. Some companies use both Directors’ and Chairpersons’ reports (11. and 11. Alternative formats include a separate report (Director’s report.55 11.11 11.11 0 16.11 5.67% used a specific section of the annual report.56 100 Table 3 outlines the results of the degree of quantification.11 11. TABLE 4: Location of Corporate Social Responsibility Disclosures Locations Directors’ report Chairpersons’ report Separate section of annual report Both in Directors' and Chairpersons’ report Both in Directors’ and separate section Both in Directors’ and separate report Total No.55% used directors’ and separate (stand alone) reports.

5 cm. Owing to the presence of a unionized labor force and the Government Labor Policy’s emphasis on a well trained workforce. and the average length of disclosures amounts to less than half a page. The need for finance institutions to conduct sustainable development in Bangladesh is urgent and banks. 2006). Furthermore it has been demonstrated that almost half the total number of finance companies provide social disclosure. margins: top -2. and setting up facilities that provide healthcare services (Sobhan. 2001). an unstable political situation. consumers and the wider community. Again the government of Bangladesh appears to be more committed to protecting the environment. 2006). 6. These conclusions are similar to Imam (2000) and Belal (2001) who find that quantification of CSR disclosure is limited when they examine selected listed companies in Bangladesh. pressure groups in recent times are evolving and they can put pressure on industries for more social disclosure to benefit consumers (Belal. 2001). Finance companies in Bangladesh emphasize the disclosure of human resources factors.an A4 format. community activities. Internationally this trend has improved over last few years. and health related activities. left and right . deteriorating law enforcement and the influence wielded by the country’s social elite. increase in public awareness and the government’s emphasis on social welfare. non-compliance with the legal requirements often encourages companies to not engage in social and environmental commitments or at least disclose them very inadequately. i. An increasing number of companies and businesses in Bangladesh are engaged in corporate social responsibility (Sobhan. It is a major source of long-term funds for the economy. However. in particular.With a re-activated capital market. evident in the creation of the Environment Protection Act. most corporate social disclosures are qualitative in nature. can help by playing a meaningful and practical role. 1995. As far as Bangladesh is concerned. a large number of companies are engaged in philanthropic activities. Given this standard paper size the measurement of ‘pages’ attributed to a particular form of disclosure can be expected to remain reasonably constant. Moreover. Additionally more companies are playing a major part in providing relief and rehabilitation in the aftermath of natural disasters. the government. Conclusion Finance institutions are now considered to be an integral part of the Bangladeshi economy. Corporate social responsibility can act as a strategic tool to facilitate the private sector’s active involvement in activities to maximize benefits for all stakeholders. However. such as. rising foreign investment. 12pt Times New Roman.e. Again there is no independent verification of this information. employee disclosures can occur to a greater extent in Bangladesh than in other developing countries. social and environmental disclosure is still at a minimum level compared to other countries. employees’ health and safety. It creates 15 . Three quarters of disclosures are generalized qualitative statements without any attempt to convert this qualitative information into quantitative terms: more than half of CSR is located in the director’s report. social and community development. Companies operating in the finance sector in Bangladesh are expected to acknowledge their wider obligations to investors and other stakeholders such as employees. A number of local entrepreneurs have formed their own philanthropic foundations or trusts. bottom. finance companies are expected to provide more and more social disclosure (Belal. Given the presence of widespread corruption.2 cm each. They act as a medium for the transfer of resources from net savers to net borrowers. employees’ training needs. so the credibility of the information is questionable.

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?] Industrial Prom. City Bank Dhaka Bank Dutch-Bangla Bank Eastern Bank Export Import (EXIM) Bank of BD 1st Lease International IDLC IFIC Bank International Leasing & Financial Serv. Ltd. Bangladesh Industrial Fin. & Dev. MIDAS Financing Ltd. 20 . Jamuna Bank Ltd. [Islamic?] Bank Islamic Finance & Investment Ltd. LankaBangla Finance Ltd. Co. Pubali Bank Rupali Bank Shahjalal Islami Bank Ltd. of BD Ltd. Services Ltd. Social Investment Bank Southeast Bank Standard Bank Limited Trust Bank Limited UCBL United Leasing Union Capital Limited Uttara Bank Uttara Finance Fidelity Assets & Securities Company Ltd* First Security Islami Bank Limited* ICB Islamic Bank Limited* Note: * These companies were listed on the Bangladesh Stock Exchange during the 2007-2008 financial year. Ltd. Mercantile Bank Ltd. The Premier Bank Ltd. Mutual Trust Bank Ltd. BD Finance and Investment Co. Premier Leasing International Ltd. [Ltd. Therefore they did not publish annual reports during this period.47 Listed Finance Institutions (listed on the Dhaka Stock Exchange) at June 2008: AB Bank Al-Arafah Islami Bank Bank Asia Ltd. Prime Bank Prime Finance & Investment Ltd. BRAC Bank Ltd. Peoples Leasing and Fin. Co. NBL NCCBL One Bank Limited Phoenix Finance and Investments Ltd.

2 .