Beyond the buzz of CSR

Corporate Social Responsibility (CSR) is currently the 'buzz' of Dhaka's business sector. Thus, it was no surprise during my recent trip to Dhaka to hear various interesting uses (and abuses) of the term. It was also interesting to hear that the government is taking an active interest in CSR, embracing the concept by considering a tax exemption for corporate spending on CSR. The fact that Bangladeshi business and government are even talking about doing things to assist the society is a good thing. However, the question I found myself asking each time CSR was mentioned, is whether the initiatives being discussed can really be considered CSR, or if what is passing as CSR is just a public relations gimmick that will ultimately tarnish the whole concept of CSR in Bangladesh.

The subject of CSR 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 layman terms, CSR means corporations taking responsibilities for their actions and doing something about improving them.

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 arm. CSR involves a conscious effort by the corporation to essentially operate differently to change its practices to improve their impact on society, or to actively seek to ameliorate any negative impacts they may have.

In Bangladesh I noticed that the philanthropic work of corporations was being labeled as CSR. Mislabeling philanthropic work as CSR does little to improve unsavoury business practices of a corporation. As a matter of fact, such mislabeling may give corporations a green light to behave as they wish without regard to their impact on society and then try to whitewash their bad behaviour by merely making a donation to an unrelated cause.

Don't get me wrong, I am not against corporate philanthropy; the more the better! What I am asking for is clear labeling; which leads to clear thinking. While corporate philanthropy is not CSR, it is still a good thing. Philanthropy can be (and is) used as a form of public relations or advertising. As Michael Porter and Mark Kramer argue in their Harvard Business Review article, a company can and should think of philanthropic acts in a strategic way. Such acts can improve the corporation's image and thus their standing in the competitive landscape. The key here is transparency.

Companies can make best use of their philanthropic contributions if they come out clear about what they are doing and how they are doing it and make clear that these contributions have nothing to do with their business practices.

Two examples from Bangladesh may help to illustrate the difference between corporate philanthropy and true CSR. British American Tobacco Bangladesh (BATB) has an extensive “CSR” programme; however, its CSR efforts seem to be out of sync with its business practices. British American Tobacco Bangladesh's website highlights its responsible business practices, which include supporting IT education and afforestation programs. While these may be laudable charitable programs, they have little to do with BATB's business. Sadly, nowhere on its website does BATB mention the ill effects (social, economic and health-related) of smoking or what BATB is doing about them.

By contrast, recently a Danish TV documentary showed that child workers were employed by a subcontractor for Grameenphone (another company touting its CSR programs in Bangladesh) and were handling dangerous heavy metals and chemicals with practically no protection. Following this disclosure, Grameenphone took steps to rectify the problems (related to this case). This is an example of modifying the corporation's business practices to improve its impact on society (albeit in a reactive manner).

It is a shame that Grameenphone took action to change its business practice only in response to pressure from the foreign media. How much better it would have been if Grameenphone had taken the initiative based on its own ethical principals; or even if the pressure had come from within Bangladesh. In the west, CSR is being driven by demands from consumers, employees, shareholders and other stakeholders for better business practices. Why shouldn't Bangladeshi consumers and citizens stand up and press our corporations to live up to standards that we dictate?

Rather than giving tax breaks to corporations for practicing CSR in Bangladesh, the government should set policies in place or empower entities to monitor and publish CSR practices of corporations. If a corporation embraces true CSR practices, if there is true transparency in the system, and if consumers have a say in the matter, then the corporation will be rewarded by the market system. These corporations then should have no qualms about publicising their good deeds and reaping the rewards of greater market share.

We as consumers in Bangladesh need to exercise more of a voice and we need to take responsibility in encouraging companies to embrace CSR and ethical practices. We have to demand that businesses 'embed' CSR in the core of their operations, making it part of their corporate DNA so that it influences decisions across the corporation.

We want our companies to succeed and do good deeds at the same time, and why shouldn't we? After all, we possess the ultimate purchasing power to make the company a success. It is about time we Bangladeshi consumers exercised our rights.


The writer is the regional managing director of Asia City Publishing Group and adjunct associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore.

This article was published in Daily Star on Aug 21, 2008