CSR in the banking sector

The concept of corporate social responsibility (CSR) is gaining increasing importance. The driving force behind it is the pressure from various stakeholders (importers, environmentalists, etc.) while the impediments are lack of good governance, absence of strong labour unions and consumer forums. There is also a lack of understanding of business houses, particularly non-exporting ones, that CSR is not charity but is a public relations (PR) instrument for investment.

CSR is gaining acceptance globally as a standard for ensuring environmentally sustainable and socially equitable business practices. The role of business world-wide and especially in the developed economies has evolved from classical 'profit maximising' approach to a 'socially responsible' approach, where businesses are not only responsible to its stockholders but also to all of its stakeholders in a broader sense. With increasing globalisation, local businesses are increasingly being integrated with the global economy and hence pressure is mounting on local businesses to pursue international standards of socially responsible business. Bangladesh is also aware of the need to take positive initiatives to establish an image of environmentally and socially responsible business for itself. CSR as a concept is being gradually interwoven into the psyche of local business.

The banking sector of Bangladesh has been actively participating in various social activities. However, these efforts were hardly recognised and labelled as CSR activities since most of the financial institutions have not integrated CSR in their routine operation; rather these were in the form of occasional charity or promotional activities. Bangladesh Bank (BB) has taken initiatives in respect of formalising CSR in the banking sector of Bangladesh and issued a directive to the banks and, financial institutions on June 01, 2008 in this regard. The directive has defined the strategic objective for CSR engagement, provided some priority areas with a suggestion to foster CSR in their client businesses. Bangladesh Bank will monitor CSR adoption and CSR performance of banks and financial institutions, as an additional dimension of their management performance. This will provide a sense of direction to the CSR agenda of the banking sector. The directive of the central bank has suggested that, banks which take measures for rehabilitating, agriculture, fisheries, livestock, and protecting environment, besides providing relief to the people affected in natural calamities like 'Sidr', 'Aila', 'Nargis', 'Komen' and 'Roanu', will be considered as more compliant of CSR.

The banking community has responded positively to the BB directive on CSR. Out of 57 scheduled banks in the country, 55 were engaged in CSR practices in some form or other in 2017. In terms of direct monetary expenditure, engagements of banks in CSR initiatives are increasing, particularly following issuance of BB guidance.

 CSR expenditures of banks have thus far largely been in the form of passive grants and donations. Banks were particularly responsive to emergency support for population groups affected in natural and manmade disasters.

Apart from one-off grants and giveaways, some banks have engagements in longer-term continuing support commitments, in areas of education and healthcare.

Besides the passive engagements by way of grants/donations, banks are now getting actively engaged in socially responsible business operations, by way of increased lending to under- served economic sectors like agriculture and SMEs, towards fuller financial inclusion and faster poverty eradication.

The banks are yet to adopt practices of prior stakeholder consultations (an important element indicated in BB's guidance circular) in drawing up their CSR programmes.

Some banks have reported embracing commitment for environmental sustainability in their own and client businesses. Their actions have not however gone beyond compliance with relevant government laws and regulations. Proactive initiatives of helping arrest environmental degradation, like adoption of more energy efficient, and harmful emission/effluence reducing internal practices and processes have been largely absent in the CSR initiatives, even of branches of foreign banks with such practices in their home offices.

But the banks in Bangladesh are yet to adopt separate reporting of their CSR activities in comprehensive formats such as the GRI (Global Reporting Initiative).

CSR is neither an objective nor an option, but an environment offering challenges and opportunities that can also be shaped. Because CSR is based on philanthropy or voluntary activities in Bangladesh, it is critically important that this must not be a means for business to redefine or reinterpret its existing responsibilities.

The writer is an Assistant Officer in Standard Bank Limited, Karwan Bazar Branch.

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