The Financial Express

There is no legal standing for CSR

| Updated: October 23, 2017 11:49:44

Evaly and Fianancial Express Evaly and Fianancial Express
There is no legal standing for CSR

A conference titled Business and Economics: Reinventing Business for the 21st Century was held at Dhaka University on October 25-26. There Dr. Syed Abu Hasnath and Iqbal Yusuf, fellow researchers at the International Sustainable Development Institute (ISDI) in Boston, United States, presented a paper - Corporate Social Responsibility: An Introduction to inclusive Growth and Sustainable Development in Bangladesh .
CSR has been a buzz word around the globe for more than two decades. It is now an admitted fact that the rich-poor divide has widened throughout the word notwithstanding the fact that the global economy has developed as a whole. CSR is now considered as a weapon for reducing the gap among the different stakeholders of the corporate world and also to supplant the social safety network for the less fortunate people of society carried out by the government.
In the paper the authors have mentioned two views about CSR. Business Ecosystem School gives more emphasis on a combination of social and environmental responsibilities and less on profit maximisation of share holders. On the other hand, the Chicago School favours business maximisation of the shareholders.
None of these two opinions gives the complete view regarding CSR. A company is to earn profit and then it may contribute to CSR activities - of course, there shall have to be a bottom line for earning profit. It cannot degenerate into greed. The prime function of an entrepreneur is to set up an enterprise, be it manufacturing or service providing. He will do it out of his personal ambition/zeal. It is not feasible and it can never happen that an entrepreneur will have a plan for conducting CSR activities and then he will go ahead with the project. Business is run not only for CSR activities but for other functions. It is multidimensional. Moreover CSR activities have been spreading since the corporate world is paying more and more attention to various segments of society. So there should be a synthesis of the above two views.
CSR is not absolutely western conception. TATA group of India ever since its inception has been taking care of its employees and also people living around the establishment. The authors' observation that CSR means that corporations have an obligation to constitute groups in society other than stakeholders and beyond what is prescribed by law or union contract is the main theme of the paper.
The authors have discussed about the CSR activities of various companies of Bangladesh. The discussion has not been in-depth, may be due to non-availability of proper data. They have quoted a few sentences from the report of a pharmaceutical company of Bangladesh. These are mere rhetoric and there have been no mention about their activities in the field.
The authors have stated that some guidelines have been issued by concerned authorities likely to be followed by the companies. However, guidelines are always taken lackadaisically.
The paper begins with the view that corporate social responsibilities (CSR) in Bangladesh should take more ethical and legal responsibility towards society other than making above-normal profit for the shareholders. But in Bangladesh there is no legal standing for CSR. No law has been passed. At the early stage the companies enjoyed free rides on CSR. Subsequently guidelines from the Bangladesh Bank and the Securities and Exchange Commission (SEC) have brought some controls. The laws relating to CSR activities must be included in the Companies Act which will compel the companies to reflect all CSR activities in the annual report. In such a situation both the SEC and Stock Exchange will be able to monitor CSR activities as part of the report on good governance.
Ethics is a very old social subject. But its influence upon society is very much negligible. Almost a decade ago Bangladesh Insurance Association framed a code of conduct to be observed by its members. The main object was to get rid of unethical business activities in the insurance sector. But these rules of the code of conduct were much honoured in breach than observance. So it will be a futile exercise in looking for ethics in CSR activities. Emphasis should be laid on framing and implementing CSR laws with the penal provisions.
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