Analyzing CSR in the Bangladesh context

Publish: 8:49 PM, August 6, 2022 | Update: 8:49:PM, August 6, 2022

Corporate social responsibility (CSR) is the responsibility recognized by the companies for acting in socially responsible manner. There is no single universally accepted definition of corporate social responsibility, it has generally come to mean business decision making linked to ethical values, legal compliance, and respect for people, community, and environment.
Occupational welfare or corporate community welfare or corporate social responsibility(CSR) –whatever the name given to the concept-is of growing importance to governments and service providers as they promise to meet challenges of social problems within changing welfare environments.
The modern governments have increasingly resorted to corporate involvement in local services and have also encouraged expansion of occupational welfare activities of corporate bodies. Despite its growing importance, CSR remains an under developed area as business organizations face new demands for increasing levels of occupational provision and involvement in local partnerships with public services.
Over the last twenty years an increasingly large number of business houses across the world have responded positively to the call of CSR. This has perhaps been partly due to their aspiration to make their operations more ethical. While for the government, the role the businesses can play in the development of society is quite crucial, the activist community might like to take credit for the growing importance of CSR as a clear victory for their efforts in pressurizing the activities of companies.
Increasingly more and more companies have begun to incorporate ethics and CSR in their strategic planning and objectives. Many large companies have adopted formal environmental policies with the objectives of creating a sustainable business and being environment friendly. For instance, a company that uses large quantities of timber as raw material might adopt a policy of re-forestation to replace the trees they have cut down.
CSR is a relatively new concept in Bangladesh. But businesses here are fast catching on the idea. Specially the banks and particularly the private banks seem to be on the forefront of CSR activities.
According to a report by the Bangladesh Bank , the spending on CSR by the banks is fast increasing. CSR activities were counted in only 27 out of the country’s 48 scheduled banks in 2008. But 46 were found involved only after a year in 2009. The banks’ expenditure on CSR also jumped by some 35 per cent to Taka 550 million in 2010 from Taka 410 million in 2008. Our banks’ spending on CSR has only grown since that time. CSR projects of banks in Bangladesh for instance include awarding of scholarships to meritorious students to even building health care facilities to be accessed at preferential or nominal costs by the poor.
However, it needs careful consideration by the central bank also whether the banks have some underlying motives in ramping up CSR plans. As it is Bangladesh Bank has been insisting on credit rating of the scheduled banks and underlined that the CSR performance of the banks would also be included in the rating. Thus, it could be that spending more on CSR is a way of getting higher rating by the banks.
But the rating of a bank should be strictly done to reflect its actual health in terms of deposits and lending, classified loans, customers’ profiles, risks of even non classified loans, fulfillment or not of different criterion set by the Bangladesh Bank, etc. If a bank succeeds in getting a better rating mainly on the strength of its CSR while separately scoring not so satisfactorily in the other vital areas, then such an overall rating would be a camouflaged one not showing its actual conditions.
It is also speculated that stepped up spending on CSR or charity or welfare activities could mean the denial of funds to borrowers who would otherwise invest in productive ventures. Furthermore, there is also concern that on the plea of CSR the banks could ask the central bank to waive tax on a greater part of banking resources although the resources benefiting from waiver may not all go to CSR projects. There are also allegations that some of the big bosses of the banks have their political commitments and extend CSR funds to their favourites, locally, to contest election and for related purposes.
Therefore, Bangladesh Bank will have to also explore all these angles while encouraging CSR activities by the banks.