The role of consumers and trade bodies in practising CSR
Wednesday, 20 January 2010
Hafeejul Alam
CORPORATE Social Responsibility (CSR) is currently a key concept of the corporate world. The subject is still a nascent one. As a concept, CSR is being defined and debated in business and academic circles around the globe. One definition that seems to be gaining credence is that "CSR is the practice of a corporation internalising the externalities it creates through its business practices." In simple terms, CSR means corporations taking responsibilities for their actions and doing something about improving them.
There is a growing consensus amongst both the academics and development activists regarding the crucial significance and topicality of business organisations acting in a more socially and environmentally responsive manner. As voluntary reporting initiatives often fail to generate the required responses amongst the companies, one can very rightly argue in favour of mandatory reporting of social, ethical and environmental information as the way forward.
Research and practical demonstration on the possible ways and means of ensuring more effective social and environmental disclosures remain generally limited in Bangladesh. This interesting area of study deserves immediate attention from the policy planners, academics, business executives and development practitioners.
Of late, the government has, however, started, taking an active interest in CSR, embracing the concept by considering tax exemption for corporate spending on CSR. The very fact that the business community and the government are now talking about doing things to assist the society is a welcome development.
With that in mind, it is important to differentiate CSR from corporate philanthropy or charitable work that is unrelated to the corporation's business. CSR is not the same as the work done by a corporation's foundation wing. CSR involves a conscious effort by the corporation to essentially operate differently to change its practices for improving their impact on society, or to actively seek to ameliorate any negative impact they might have effected. Put it rather simply, CSR should reflect the social, ethical and environmental aspects of a business organisation. It is essentially concerned with the process of communicating the social, ethical and environmental effects of business organisations' economic actions to particular interest groups within the society and also to the society at large. It involves extending the accountability of firms beyond the traditional role of providing a financial account to the owners of capital or shareholders. Such an extension of responsibility rests upon the assumption that companies do have wider responsibilities than simply making money for their shareholders.
Further, it should be emphasised that the corporate attitude should not be mere rhetorically loaded but should involve a planned and substantiated approach. For example, when a company says that it has taken environmental issues seriously, its sincerity may be questioned if there is no appropriate long-term corporate environmental policy and quantitative indicators to measure performance against the policy. Here the trade bodies may play a crucial role. The trade bodies, particularly the apex trade body FBCCI, may arrange more and more workshops and seminar so that most of the affiliated companies adopt not a rhetorically bold but practically feasible approach to the wider issues of community reinforcement, social compliance, acting responsibly inside factory, protecting the environment and the society. The corporate attitude, particularly towards environmental issues, should not be of interim in nature but of long-term commitment.
It is believed that rather than giving tax breaks to corporations for practising CSR, the government should set policies in place or empower the FBCCI to monitor and publish CSR practices of corporations. If a corporation embraces genuine CSR practices, if there is true transparency in the system, and if consumers have a say in the matter, then there is no doubt that the corporations will be rewarded by the market system.
The consumers, on their part, should be more vocal and take responsibility for encouraging companies to embrace CSR and ethical practices. They should demand that businesses set in CSR in the core of their operations. The companies should succeed and do good deeds at the same time. After all, it is the consumers who possess the ultimate purchasing power to make the company a success.
(The author is a former civil servant. He can be reached at e-mail: hafeej2002@yahyoo.com)
CORPORATE Social Responsibility (CSR) is currently a key concept of the corporate world. The subject is still a nascent one. As a concept, CSR is being defined and debated in business and academic circles around the globe. One definition that seems to be gaining credence is that "CSR is the practice of a corporation internalising the externalities it creates through its business practices." In simple terms, CSR means corporations taking responsibilities for their actions and doing something about improving them.
There is a growing consensus amongst both the academics and development activists regarding the crucial significance and topicality of business organisations acting in a more socially and environmentally responsive manner. As voluntary reporting initiatives often fail to generate the required responses amongst the companies, one can very rightly argue in favour of mandatory reporting of social, ethical and environmental information as the way forward.
Research and practical demonstration on the possible ways and means of ensuring more effective social and environmental disclosures remain generally limited in Bangladesh. This interesting area of study deserves immediate attention from the policy planners, academics, business executives and development practitioners.
Of late, the government has, however, started, taking an active interest in CSR, embracing the concept by considering tax exemption for corporate spending on CSR. The very fact that the business community and the government are now talking about doing things to assist the society is a welcome development.
With that in mind, it is important to differentiate CSR from corporate philanthropy or charitable work that is unrelated to the corporation's business. CSR is not the same as the work done by a corporation's foundation wing. CSR involves a conscious effort by the corporation to essentially operate differently to change its practices for improving their impact on society, or to actively seek to ameliorate any negative impact they might have effected. Put it rather simply, CSR should reflect the social, ethical and environmental aspects of a business organisation. It is essentially concerned with the process of communicating the social, ethical and environmental effects of business organisations' economic actions to particular interest groups within the society and also to the society at large. It involves extending the accountability of firms beyond the traditional role of providing a financial account to the owners of capital or shareholders. Such an extension of responsibility rests upon the assumption that companies do have wider responsibilities than simply making money for their shareholders.
Further, it should be emphasised that the corporate attitude should not be mere rhetorically loaded but should involve a planned and substantiated approach. For example, when a company says that it has taken environmental issues seriously, its sincerity may be questioned if there is no appropriate long-term corporate environmental policy and quantitative indicators to measure performance against the policy. Here the trade bodies may play a crucial role. The trade bodies, particularly the apex trade body FBCCI, may arrange more and more workshops and seminar so that most of the affiliated companies adopt not a rhetorically bold but practically feasible approach to the wider issues of community reinforcement, social compliance, acting responsibly inside factory, protecting the environment and the society. The corporate attitude, particularly towards environmental issues, should not be of interim in nature but of long-term commitment.
It is believed that rather than giving tax breaks to corporations for practising CSR, the government should set policies in place or empower the FBCCI to monitor and publish CSR practices of corporations. If a corporation embraces genuine CSR practices, if there is true transparency in the system, and if consumers have a say in the matter, then there is no doubt that the corporations will be rewarded by the market system.
The consumers, on their part, should be more vocal and take responsibility for encouraging companies to embrace CSR and ethical practices. They should demand that businesses set in CSR in the core of their operations. The companies should succeed and do good deeds at the same time. After all, it is the consumers who possess the ultimate purchasing power to make the company a success.
(The author is a former civil servant. He can be reached at e-mail: hafeej2002@yahyoo.com)