All about corporate social responsibility

Corporate social responsibility (CSR) is the responsibility recognised by the companies for acting in socially responsible manner. There is no single universally accepted definition of CSR. It has generally come to mean business decision-making linked to ethical values, legal compliance, and respect for people, community, and environment. CSR implies a company's acceptance to go further than required by law so as to treat employees fairly and with respect, operate with integrity and in an ethical manner in all its business dealings with customer, suppliers, lenders, and others, respect human rights, sustain the environment for future generations and to be a responsible neighbour in the community as well as a good 'corporate citizen'. Occupational welfare and corporate community welfare or corporate social responsibility (CSR) are of growing importance to governments and service-providers as they promise to meet challenges of social problems within changing welfare environments. The modern governments have increasingly encouraged corporate involvement in local services and the expansion of occupational welfare. Despite its growing importance, CSR remains an under-researched area even as business organisations have faced new demands for increasing levels of occupational provision and involvement in local partnerships with public services. Over the last twenty years an increasingly large number of business houses across the world have responded positively to the banner of CSR. This has perhaps been partly due to their aspiration to make their operations more ethical. While for the government, the role the businesses can play in the development of society is quite crucial, the activist community might like to take credit for the growing importance of CSR as a clear victory for their efforts in pressurizing the activities of companies. To put the same in other words, companies introduced CSR reports and programmes as a response to damage inflicted on their sale and reputation by attacks from activist groups aided by 24 hour news media in which corporate wrongdoings were especially highlighted. While this makes compelling news on one hand, it puts, on the other, an ethical pressure on the companies to give back at least a part to society in return what they have gained from it. It is therefore, no longer important for companies to just make profit, the way this profit is generated is deeply investigated by the activists. A company must not be seen violating ethics or law in any of the areas like market behaviour, trade policies, employment relations, sourcing of raw materials, human rights, environmental laws or the activists would put pressure on them through media or the other channels. This analysis, however, fails to appreciate much of the social contributions businesses have been making since long. We have the example of Joseph Rowntree and others and the way they developed their workforces. In 1980s, a network of companies in the UK came together to establish Business in the Community (BITC). Later, they launched Per Cent Club whose members donate 1.0 per cent of pre-tax profits to the community. BITC is a very widely acknowledged and influential force within business and in CSR arena. A set of indicators for the companies wanting to measure and report CSR has been developed by the BITC. The indicators that count addresses four impact areas: workplace, market place, environment and community. The indicators have been classed into two groups. The core indicators consist of 27 basic indicators on which all the companies are expected to report. The six advanced indicators are judged more difficult to measure. The other group, made up of 17 specific indicators, may not be relevant to all companies. There are also specific projects for the measurement and reporting of particular aspects of responsible business, as for example, Human Capital and Disability. Human capital management and disability will have growing importance in CSR reporting. In the UK, Accounting For People Taskforce stands for a reporting framework for human capital management (HCM). This taskforce, appointed by the UK government was represented by Denise Kingsmill as chairman, and a number of other business leaders. According to the Taskforce report, even as people typically account for up to 65 per cent of a company's costs, there has been, however, little reporting on how companies develop their people. The companies may either include CSR report in their annual report and accounts or may publish their separate corporate responsibility report which may be called a 'social and environmental report' or a 'sustainability report'. These reports indicate a company's commitment toward ethical behaviour and highlight their progress towards achieving their strategic CSR objectives. Increasingly more and more companies have begun to incorporate ethics and CSR in their strategic planning and objectives. Many large companies have adopted formal environmental policies with the objectives of creating a sustainable business and being environment friendly. For instance, a company that uses large quantities of timber as raw material might adopt a policy of re-forestation to replace the trees they have cut down. CSR is a relatively new concept in Bangladesh. But businesses here are fast catching on the idea. Specially the banks and particularly the private banks seem to be on the forefront of CSR activities. According available reports, the spending on CSR by the banks is fast increasing. CSR activities were counted in only 27 out of the country's 48 scheduled banks in 2008. But 46 were found involved only after a year in 2009. The banks' expenditure on CSR also jumped by some 35 per cent to Taka 550 million in 2009 from Taka 410 million in 2008. This figure slowed a further rise in 2010. CSR projects of banks in Bangladesh include awarding of scholarships to meritorious students to even building health care facilities to be accessed at preferential or nominal costs by the poor. However, it needs careful consideration by the central bank about how far the expanded CSR activities are having a positive social impact, particularly in terms of sustainability. No underlying selfish motives should be there, behind ramping up CSR plans. Bangladesh Bank has been reported to have underlined that the CSR performance of the banks would be included in their credit rating. Spending more on CSR by the banks for priority areas and that too on a sustainable basis should be considered here by the rating agencies for evaluating the performance of the banks of getting higher rating by the banks. However, the rating of a bank will need to reflect essentially its actual health in terms of deposits and lending, classified loans, customers' profiles, risks of even non-classified loans, fulfillment or not of different criteria set by the Bangladesh Bank, etc. No bank should look forward to getting a better rating mainly on the strength of its CSR and that too undertaken in a manner which is not sustainable.