Corporate Social Responsibility

Corporate Social Responsibility (CSR) related activities are increasingly

gaining ground across the globe.
In the developed countries CSR activities are considered to be
indispensable for the business houses.
CSR is recognized globally as a strong process for the corporate
entities to serve the mankind. .
 In 2010, the International Organization for Standards released ISO
26000, a set of voluntary standards meant to help companies implement
corporate social responsibility.
In our country also CSR has become a much talked issue for last few
years.
Bangladesh Bank has taken some proactive measures to promote &
to mainstream and enhance the CSR activities in the Banking Sector.
Government considers tax relief on the expenditure incurred on account
of CSR (Philanthropic portion).
It is expected that CSR practice will help balanced growth, social
equity and environmental protection of the country

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 Corporate Social
Responsibility
Man is a social being. He cannot live alone.

 Everybody in the society is dependent on others.

 Man and all other creatures are the members of global society.

All creatures/resources are made subservient to human being. He is

to use them properly.

Man gets service of others. So he has got some

responsibilities/obligations to them. It is reciprocal both in case of
animate and inanimate.
 WHAT IS CSR

The entirety of CSR can be

recognized by the three
words :
a. corporate
b. social
c. responsibility

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 WHAT IS CSR (Contd.)

 Corporate: CSR covers the relationship between

corporations (or other large organizations).

 Social: CSR covers the relationship between

organization and the societies with which they interact

 Responsibility: CSR also includes the

responsibilities that are inherent on both sides of these
relationships.

 CSR defines society in widest sense, and on many

levels, to include all stakeholders. constituent groups
that maintain an ongoing interest in the organization's
operations

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Definitions of Corporate Social Responsibility

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World Business Council for Sustainable Development views CSR
as “The continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life
of the workforce and their families as well as of the local community
and society at large.”
Business of Social Responsibility defines CSR as the “Operating a
business in a manner that meets or exceeds the ethical, legal,
commercial and public expectations that society has on business.”
According to Accounting and Auditing Organization for Islamic
Financial Institutions (AAOIFI), Corporate Social Responsibility
(CSR) for IFIs refers to all activities carried out by an IFI to fulfill its
religious, economic, legal, ethical and discretionary responsibilities as
financial intermediaries for individuals and institutions..

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Major Theories

The major theories that underpin the practice of CSR in the

literature are:

(1) Classical view,

(2) Social contract theory,

(3) Instrumental theory,

(4) Legitimacy theory and

.

(5)Stakeholders theory.
 CSR HAS TWO MAIN PERSPECTIVES

Corporate Social Responsibility has two main

perspectives—internal and external.

 Internal: the internal aspect involves behavior

within the business that refers to employees,
management, directors and unions and
shareholders.

 External: the external one relates to its

commitment and dealings with stakeholders that
include legislators, investors, consumers/customers
distributors, suppliers, creditors, NGOs, community
and finally, the media. 9
 CSR Customizes three broad aspects

 First: Compliance with legal responsibilities and industry
standards (e.g. tax, health and safety, workers rights,
consumer rights, environmental regulations).

 Second: Minimizing or eliminating the negative

effects of business on society and managing risk (for
example of human rights abuses and environmental
pollution).

 Third: Increasing the positive effects of business and

creating value through innovation, investment and
partnership aligned towards social and environmental
issues (for example job creation, social and economic
development and conflict resolution).

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 Corporate Social Responsibility Hierarchy

A distinction between different kinds of organizational

responsibilities can be made through "pyramid of
corporate social responsibility".
i. To produce an acceptable return on its owners'
investment.

ii. To act within the legal framework drawn up by

the government and judiciary.

iii. Ethical responsibility to do no harm to its

stakeholders and within its acceptable operating
environment.

iv. Discretionary responsibility represents more

proactive, strategic behaviors that can benefit the
firm and society, or both.
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 Importance of CSR
The idea of CSR has been originated from the concept that
business houses can not run alone. They have got
responsibility/obligations to those stakeholders.
In the backdrop of globalization etc. CSR has developed a
strong international dimension.
CSR concept has a purpose to encourage a corporation to
consider the interests of society by taking responsibility
for the impact of the organization's activities on
customer, employees, shareholders, communities and
the environment in all aspects.
CSR now is seen as a concept in which companies
voluntarily integrate social and environmental
concerns into their business operations.

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 WHY IS CSR RELEVANT TODAY?
CSR as an element of strategy is becoming
increasingly relevant for businesses today,
because of four identifiable trends— which are
getting importance in the 21st century:

1. Increasing Affluence
2. Changing Social Expectations

3. Globalization and the Free Flow of Information

4. Ecological Sustainability

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 CSR : A form of corporate philanthropy ?

 There is a debate if CSR is nothing but corporate

philanthropy

 CSR evokes the moral responsibility of the firms towards

the society in terms of ensuring social and economic
benefits for the people.

 A business may continue with philanthropy and

corporate social responsibility at the same time.

 Corporate philanthropy has been emerging as a great

force for uplift of poor rural societies in many countries.

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 CSR is no more a Charity today

CSR today, no more refers to charity or philanthropic activity only. The

corporations recognize other responsibilities beyond profit maximization

It is a fact that no business can run without the help and support of the
society and the community. The latter might expect the former to operate
in a socially responsible manner, for corporations control a large amount
of economic and productive resources eg, technology, finances, raw
materials and labour that may affect the society in which they operate.

In short, business houses owe to their all stakeholders viz. their

employees, shareholders, customers, creditors, distributors, suppliers,
communities,. government, regulators and also to environment, for
necessary services and contributions.

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 Responsibilities for all Organizations

 have a range of key relationships of

stakeholders;

 are faced with ethical dilemmas, whether they

recognize them as such or not;

 have statutory requirements;

 have to compete for markets or funding;

 are affected by the quality and excellence

revolution, even if they are not directly involved.

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 Models of social responsibility
Four models of social responsibility

1 Business is amoral

2 Business is a moral activity

3 A business is a community

4 A business is a network

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 Models of social responsibility (Contd.)
1. The amoral or responsive business
 has no responsibilities other than economic and legal
obligations;
 sees social responsibility issues as problems for
reputation and public relations management;
 believes that its only stakeholders are its
shareholders;
 has directors which act as trustees for shareholders;
 does not believe in, stakeholders, but instead has
key relationships, because stakeholder theory implies
some ownership of the company;
 is managerial and action oriented;
 bases action on empirical research;
 is essentially responsive/reactive to changes in
values of society;
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 2. Business as a moral and responsible activity
 Business has an obligation to strive for social
betterment;

Business should act beyond compliance with

economic and legal obligations;

Business should have philanthropic

responsibilities;

Business is the engine of society;

Business has economic, political and social

power;
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 Models of social responsibility (Contd.)
3. A Business is a community,

This Business:
 Is based on a set of values which include
economic and legal obligations;

 Is often based on some concept of business

supporting social justice, equity and public
service;

 Includes for-profit, not-just-for-profit and not-for-

profit organizations;

 Is often family or co-operatively owned. 21

 Models of social responsibility (Contd.)
4. The network or partnership business

This business:
 is often based on the management of a
specific piece of work or project;
 has virtual organization;
 does not necessarily have any
corporate identity;
 recognizes diverse values within the
network and aims for commonality of
purpose, not a commonality of values;
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 The network or partnership business (Contd.)

This business:
 often operates on trust and love rather than
formal contracts;
 unlike the other models of business, does not
necessarily have a unified, clear view of the
future – apart from completing the project in
hand;
 encourages social entrepreneurs;
 is often cross-border and international in nature,
and does not recognize national boundaries or
regional differences;

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 Every organization must interact with society, government
and other stakeholders.
Stakeholders:
A firm's stakeholders include those who affect or are
affected by the firm's goals.
They include those groups that have a stake in the firm’s
operation
A stakeholder is one who has any kind of interest (stake)
direct or indirect in the company’s operations. The
stakeholders are directly or indirectly either benefited or
affected adversely. The UN defines `stakeholder' as "any
group or individual which is affected by the operations of
the Company". The stakeholders of a company may be
grouped as under :
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 A firm has three kinds of stakeholders
Organizational Economic stakeholders Societal stakeholders
Structure
(external to the firm): (external to the firm)
Employees Customers Communities
Directors Creditors Governments &
Regulators
Shareholders Distributors Non-Profits and NGOs
Unions Suppliers Environment

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26
Owners (shareholders, directors)
They expect optimum utilization of resources, maximum profits/dividends,
transparency, disclosure of information by the company, holding of AGM in
time etc.
Management:
Management expects better performance and achievement of targets of
business growth in different areas through effective and efficient operations
of the business house.
Employees:
Employees expect better compensation packages, job security, good
behavior, equal treatment & avoidance of discrimination in respect of pay,
posting, increment, promotion, training , freedom of association, freedom of
desertion, elimination of class and race barriers between higher and lower
ranking groups, safe working condition, family welfare etc.

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Trade Union:
They expect freedom of association & bargaining on staff matters/facilities,
wages, working conditions, human rights etc.
Customers/Consumers:
They expect organization to offer customer care and ethical and quality,
pure & adulteration free products at a lower price.
Creditors/Supplies:
They expect organizations to have good credit scores, secure new
contracts and have more liquidity, fulfillment of terms of contracts etc.
Community
Community from which organizations taps its resources expect the
organizations to offer them jobs, proper utilization of resources & to
produce/ manufacture environment friendly products and take
environmental issues seriously.
Govt & Regulators
They expect that their instructions and laws of the land and international
laws where applicable are complied with properly. Tax, etc. are paid
honestly & timely.
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 Corporate Social Responsibility can best be understood in terms of
the changing relationship between business and society.

 It is impossible to draw up a definite list of issues and policies,

which constitute CSR.

 It is possible to map out CSR in terms of a number of key

interlocking dimensions, which can each range from the most
narrow, compliance-based modes to the potentially most significant
major social and environmental problems.

 CSR is the need for companies to protect and build their reputation
and to manage risk across a diverse set of countries, cultures and
socio-political situations.

 “A coherent corporate social responsibility strategy based on

integrity, sound values and a long-term approach, offers clear
business benefits to companies and a positive contribution to the
well-being of society"
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 Corporate Governance and CSR

Corporate Governance: any structured system of

allocating power in a corporation that determines how
and by whom the company is to be governed.
 Many are confused if it also means same or similar to
corporate social responsibility.
 There is a difference between the two.
 Corporate governance is concerned with holding the balance
between economic and social goals and between
individual and community goals.
 It basically stresses on efficient use of resources and equally
to require accountability for the stewardship of those
resources.
 There is no single model or framework for corporate
governance. It varies from country to country, from sector to
sector.
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 Corporate Governance and CSR (Contd.)
 Corporate Social Responsibility is concerned
with treating the stakeholders of the firm
ethically or in a socially responsible manner.
These stakeholders exist both within and
outside. It is said that behaving socially and
ethically will enhance human development of
the stakeholders.

 While CSR is having a number of definitions,

corporate governance has a more established
definition.

 Corporate governance has set an array of

standards while CSR is yet to evolve any
measurable yardstick.
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Corporate Governance and CSR (Contd.)

 Corporate governance is recognized as a

key to strengthen investors confidence in
the management.

 To assess corporate programs and

actions with regard to environmental and
social matters, the framework of corporate
governance can be used.

 One of the core elements of corporate

governance is stakeholders engagement.
It influences policy and implementation
scheme of any company. 32
Corporate Governance and CSR (Contd.)

 On the other hand, environmental and social policy

significantly promotes practice of CSR initiatives.
However, this may not accrue a well deserving
performance.

 With elements like disclosure, stakeholder

engagement, environmental and social policy and
good board governance, Corporate Governance and
CSR can make a good mix.

 Within the ambit of CSR, a company can contribute

much to social performance by imparting training and
education, occupational health and safety measures
etc
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 SRO No. 270-Ain/2010, dated 01.07.2010 focuses on 22 areas of CSR
activities for enjoying 10% tax rebate.

1) Engaged in clean water management

2) Engaged in a forestation
3) Beautifications of cities
4) Waste management
5) Natural calamities
6) Old persons homes
7) Mentally or physically handicapped
8) Education of rootless children
9) Accommodation for the slum dwellers
10) Women's rights and anti-dowry practices
11) Rehabilitation of orphan/rootless children
12) In research on independence war, regaining and expansion of
the consciousness of the independence war and honorable
living of the freedom fighters
13) Health and sanitation in Chittagong Hill Tracts, char areas and
areas surrounding breaking up of bank of rivers
14) Engaged in treating cleft lips, cataract, cancer, and leprosy
15) Engaged in treating acid victims
16) Hospitals engaged in providing free medical treatment to
poor patients
17) Birth control products with a view to solving the population
problem
18) Grants to Public Universities
19) Technical and vocational education for meritorious poor
students
20) Training on computer or information technology and in
establishing infrastructure or in purchasing educational
materials for implementing English education in public
/private educational institutions (under Monthly Pay Order
or MPO)
21) Technical and vocational training to unskilled or semiskilled
labor for export of human resources
22) Sports and provision of training at national level
 MAJOR CSR ACTIVITIES OF SIX BANKS AT A GLANCE

IBBL EXIM SJIBL DBBL NCC MBL

Education Health Culture and Education Education Education

Social Awareness

Health Education Humanitarian & Health Health Health

Disasters Relief

Natural Natural Disasters Sports Disaster Sports Disaster

Disaster
relief

Sports Slum Duelers Education Culture& Sports Culture and Management &
Social Awareness Sports

Women Beautification of - Humanitarian & Art & culture

powerizatio Dhaka City Disasters Relief
n
Communication

Donation - Miscellaneous - Others

 YEARLY CSR EXPENDITURE OF SELECTED
BANKS FROM 2009-2014 (MILLION TAKA)

Year 2009 2010 2011 2012 2013 2014 Total

2072
IBBL 116.27 232.63 412.90 309.1 476.4 524.5
736.4
EXIM 8 18.5 22.8 39.9 322.6 324.6
241.4
SJIBL 10.23 18.56 17 79.0 47.0 69.6
10751
DBBL 159.20 125.43 339.44 7527.6 785.4 1813.6
578.3
MBL 9.27 65.91 49.40 85.9 143.5 73
170.3
NCC 4.38 21 53 17.4 33.3 41.2
Yearly CSR Expenditure of Selected
Banks from 2007-2011 (Million taka)
THE HIGHEST CSR EXPENDITURE BANK
AMONG SELECTED SIX BANKS
Selected Banks 2009 to 2014 (Million Taka)

DBBL 10751

IBBL 2072

SJIBL 736.4

MBL 578.3

EBL 241.4

NCC 170.3

Total
14549.4
 COMPARATIVE ANALYSIS
COMPLIANCE WITH REGULATORY FRAMEWORK OF SIX BANKS

There are 22 prescribed areas of CSR activities but only 16 areas participated by
selected six banks (72.8%). There are 6 areas (27.2%) where there is no contribution
from any selected banks. There are only 4 areas (100%) where each bank has
participation. Among the 6 banks DBBL has the highest participation areas (13) and
then IBBL (11). It is clear that participation in welfare areas by different banks is
considerably limited because many areas where the bank has no CSR contribution that
is very concerning issue.
Conclusion:
Man has been created as Vicegerent (representative) of Allah
on earth. He is superior to all other creatures and the latter have
been made subservient to him (man). Man has been given
necessary knowledge, strength and power to use the
things/creatures -animate or inanimate. But at the same time, it
has been made clear that man is not the sole owner of the
thing placed under his control/possession. He has been
given the authority to use the things as trustee of the Creator of
those things. Everything/ everyone has been given some rights
and obligations and each is to fulfill the same. This is correct in
case of individual man or their group, corporation, etc. Man is at
liberty to earn/own/acquire property/assets make enjoyment by
means at his own capacity, capability, intelligence, competence,
experience, expertise etc but none has been given the authority
to realize any sort of his own interest ignoring others’ legitimate
right. Otherwise, it will be transgression for which he will be
accountable to the Creator.

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 Conclusion(contd)
Transgressions by individuals, groups, organizations,
community, nations etc by dint of any power
whatsoever is the root cause of suppression and
oppression and miseries of the people on earth.
The business people/houses, as most influential
section in the economic and political factors of a
country can contribute a lot in establishing peace
and tranquility by way of recognizing/allowing rights
of fulfilling obligations to different segments of the
society connected to them in various capacities. It is
also an underlying fact that business houses
directly or indirectly are major contributors to
pollution of environment. As such, they are to play
pro active role in creating pollution free world.