Corporate helping hand | The Daily Star
12:00 AM, January 04, 2011 / LAST MODIFIED: 12:00 AM, January 04, 2011

Corporate helping hand

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The role of the private sector in the global economy has increased over the years. In Bangladesh, the private sector's involvement in the economy has steadily increased over the last two decades. According to some estimates, the sector accounted for more than 99% of the exports, 93% of the employment, and 75%, 73% and 89% of the investment, fixed assets and value added, respectively, in 2004, against 26%, 71%, 29%, 66% and 44% respectively in 1980. The situation has not changed radically since then.
These figures highlight the necessity of the role that the private sector should play in conducting socially responsible business as an integral part of its corporate social responsibility. The simple logic is that, with the enormous share in the economy, a sector's passive role in worker and social welfare would not allow the country's major development indicators attain the expected level to compete in the global arena.
More importantly, the sector with overwhelming share of employment, income generation and investment should proceed with ethical business and strive to make a positive contribution to the society. Integrated in the business, the obligation of corporate social responsibility (CSR) is the pathway to attaining a sustainable positive impact of business on society through socially responsible business.
Although CSR as a concept came into being in the 1980s, with the recognition of business's social and environmental responsibilities, it can be traced back to the 1800s as part of business model. At least three similar initiatives by Sir Titus Salt (1853), Joseph Rowntree (1879), and Lever Brothers (1888) serve as examples of CSR. Today, the CSR issue combines a set of well-recognised principles that govern the manner a business should maintain in dealing with the stakeholders.
CSR has been defined by contemporary social scientists, business communities and international agencies in various ways. The UK government defines CSR as “the business contribution to sustainable development goals (” Others define CSR as the “acknowledgement by companies that they should be accountable not only for their financial performance, but also for the impact of their activities on society and/or the environment.” Such “acknowledgement” must be translated into action. Some definitions place corporate citizenship and corporate governance synonymous to CSR, which is debatable.
Some definitions are misleading, as they ignore the compliance factor essential for CSR implementation. The European Commission's Green Paper of 2001 defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (Commission Green Paper 2001, Promoting a European Framework for Corporate Social Responsibility, COM (2001) 366 Final).
The concept of voluntarism in CSR is also ubiquitous in ILO definition that sees CSR as “a voluntary, enterprise-driven initiative and refers to activities that are considered to exceed compliance with the la.” A responsibility cannot be explained in terms of voluntarism. Rather, responsibility is a duty to be performed; and any non-compliance with that needs to be blamed.
In most, if not all, countries, and predominantly in the developing ones, CSR remains as a philanthropic gesture. Bangladesh is no exception. Ideally, corporate social responsibility should be a package of compulsory activities of the business that would ensure its complete compliance to ethical business defined by domestic or international rules and standards, and would benefit all stakeholders: employees, consumers and the general people at large.
CSR needs to address in a sustained manner and in a complete form some very specific responsibilities of the business on nature and natural resources and with employees and the community, since the benefits that the companies generate for themselves come via exploitation and use of the natural and human resources. It should, therefore, be their prime responsibility to preserve and develop further those resources in their own interest and from ethical and human rights points of view.
In fact, for CSR to be useful for the society and instrumental in protecting the rights of the consumers and also in order for that to be helpful in conducting business in an ethical manner, it should certainly be perceived as an obligatory package of activities of the business. The companies should follow triple-bottom-line (TBL or 3BL) approach in CSR implementation and performance reporting, which implies that the business should provide utmost importance to stakeholder interests rather than acting solely as a profit making machine.
In implementing the TBL concept the level playing ground in business may be destroyed if TBL is not followed by the whole business community in a uniform manner. For keeping the business free, fair and competitive, it is essential that TBL be practiced by all companies. Here lies the responsibility of the governments, international agencies and the society through social monitoring (if any) to make CSR an obligation for all businesses.
Corporate social responsibility is firmly linked to human rights in general. Any human rights violation in business represents violation of CSR principles. For businesses, Amnesty International (AI) has suggested human rights principles that ask businesses to introduce human rights policy and procedures to examine HR impact of operations, prevent employee abuse, monitor compliance, independent verification of compliance reports, etc. “The business community has a moral and legal responsibility to use its influence to promote human rights within society,” says AI.
In addition, AI's Human Rights Principles for Business, published in 1998, underline that the silence of business interest in the face of injustice is not neutral, meaning that business has a great responsibility in combating injustice even if it goes against the business interest. However, the seven principles that the AI suggested: security, community engagement, discrimination, freedom from slavery, health and safety, freedom of association and fair working conditions issues, do not cover the minimum wage rate enforcement, which is especially relevant for the developing economies.
The private sector is invariably a consumer dependent sector. In an ideal free market, consumer satisfaction acts as the vital factor for the sustainable business of a private sector entity. Consumer satisfaction in turn is dependent on the highest quality of products or services that the private sector can offer at minimum costs. While the above is the fundamental law of economics, it is no less important to take into account the demand of the consumers related to ethical business.
The modern world's consumer expectations may not fully be confined within the limits of sheer exchange of products and payments. Social, humanitarian, legal, ethical and rights-based considerations play an important role in consumer choice in the market nowadays. The implication is that highest quality products at lowest prices may not be the only choice of many consumers, unless they are satisfied with the production process and the social and rights-based approaches of the producers.

Zahurul Alam, Ph. D is President, Governance and Rights Centre (GRC).

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