Let CSR activities be on the right track

The World Business Council defines Corporate Social Responsibility (CSR) as "the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of the life of the workforce and their families as well as of the local community and society at large." It has been further stated that CSR means open and transparent business practices that are based on ethical values and respect for employees and environment. It is designed to deliver sustainable value to the society at large as well as to the shareholders. Here the word 'ethics' is the most pertinent issue. In this connection, we may quote the famous saying of Mahatma Gandhi: "Commerce without ethics is a deadly sin."
The Rana Plaza incident was the climax of disasters which had been happening in the garment sector for decades. Several hundred workers were burnt alive when the factories caught fire. Owners did not take  minimum measures against possible fire. Only adequate provision for emergency exit could have saved these lives. Lives of human being were less costly than small scissors and thread.
US Senator Robert Menendez`s statement on the occasion of the first anniversary of the Rana Plaza disaster has probably hurt both the government and the  Bangladesh Garments Manufacturers & Exporters Association (BGMEA). The Finance Minister, after returning from his two-week long visit to the US and Mexico, said that  the US is not allowing Bangladesh duty- and quota-free access (DQFA) to its market on political grounds.  In such a situation, the US Senator got the chance to talk loudly when it was found that the affected persons did not get adequate compensation/reparation even after long one year. In the preset-day context, one year is a pretty long period. So the authorities cannot absolve themselves of the responsibility for making payment of compensation in time, under any plea.
Garment owners are still reluctant to allow trade union activities. Trade unions can definitely play a positive role in smooth running of factories provided these are not politicised and the partisan people do not join the unions. This will require the sincere co-operation among three parties, viz, the government, factory owners and workers. Once the Prime Minister made a very important comment that the garment factories would have to be run in a manner that suits the interest of workers more than that of the owners. Of course, the BGMEA is also very serious so that the factories remain on the right track. But unfortunately, the last one year's lackadaisical approach to the problem led to the present criticism both at home and abroad.
Back to the discussion of CSR, according to the new thinking, a company is a social institution having duties and responsibilities towards the community in which it functions. The generally accepted view is that if a company has the resources and has come a long way in its business operations, it owes a debt to the society and the community in which it has progressed. If a company has caused some loss to its surrounding areas, it is its legal responsibility to make up for that loss whether technical or environmental. This is not synonymous with its CSR activities which are voluntary in nature, supported by its post-tax profit funds, must not be related to its profitability in the short-run and are not allowable tax-exempted charged expenditure.
However, much emphasis is being laid on CSR in the recent years for different reasons also. Free market economy has been glorified around the globe without any impediment for decades. Yet surplus wealth of the rich has not trickled down to the poor. Rather, the rich-poor divide has been widened.
So the importance of CSR activities by the businesses is now drawing attention of all concerned, for reducing the gap. Furthermore, such activities are purported to promoting sustainable socio-economic conditions in areas, communities or countries where the businesses operate. CSR funds are now being utilised for financing poverty alleviation programmes and also for education, health and environment-related projects through a proper strategy for the deprived and less   fortunate people of the society. In the long run, the CSR activities, if properly executed in consultation with various stake-holder groups, can lay the foundation for sustainable and more expanding activities of businesses themselves.
In Bangladesh, corporate houses seem to be more or less engaged in CSR activities. But the banking sector has made much headway. This is due to the constant supervision and guidance by the central bank, that is, Bangladesh Bank. It officially publishes an annual report on the CSR activities of the banking sector. Naturally, an undeclared competition exists among the banks and also for other non-banking financial institutions for securing better position in the report. Such activities are also taken into consideration for rating of banks and other related institutions.
But there is the dark side of the picture also. On some occasions, expenditure is incurred in the name of CSR which in no way comes within its conceptual and contextual purview. This is largely because of the absence of a properly designed CSR strategy in cases with many corporate houses or business entities. Construction of a city gate, decoration of VIP roads, expenditure in correction with grand opening of sports, arrangement of golf tournament etc., can never fall within the ambit of, what can be termed as, CSR activities.
There is no compulsion under the law to carry out CSR activities by a company because it involves a voluntary process. However, income tax rebate on CSR activities is given in Bangladesh, possibly for incentivising the companies to embrace CSR as a strategy of their sustainable business operations. But India has made it mandatory for certain types of companies to perform CSR activities and these have been included in the Indian Companies Act. In some cases, such CSR activities are considered by the tax authorities in India as charged expenditure. As far the question of income tax rebate is concerned, the authorities in Bangladesh do need to take care so that the term 'CSR' is not misinterpreted. CSR fund must not be misused for fulfilling narrow business motive of any company. Probably, watching some bad examples in the horizon of CSR, the Dhaka Chamber of Commerce and Industry pleaded for imposition of corporate tax rate at 10 per cent, instead of granting any rebate. The DCCI made the proposal while submitting its pre-budget proposals before the National Board of Revenue.
Let us hope that CSR will be on the right track. The movement has gained a new momentum around the globe. CSR activity has virtually become a dictum and one should follow that. There is no scope to deviate from the principles that are being followed around the world. In Bangladesh, we believe that other corporate sectors would get themselves involved in CSR-related activities on a larger scale. At the moment, CSR seems to be the Bangladesh Bank's baby.
In this connection, we may particularly mention the case about the pharmaceutical sector. It is a flourishing business sector and exporting medicines abroad. But people are not getting adequate medical facilities in the country. The services of private sector diagnostic centres are highly costly and beyond the reach of the common people. The pharmaceutical sector can think seriously about setting up of specialised hospitals where medical treatment will be available at a cheaper rate. Some medicines for treatment of kidney diseases and cancer are extremely costly. This issue may also be considered by the pharmaceutical sector. The government may also think of making CSR mandatory for some companies, as is done in India.
 rezaulparvaz@live.com