Over the last couple of decades, the spirit of Corporate Social Responsibility (CSR) has gone viral around the world. Initially practiced by few big companies in the developed economies, it has now become an integral part of business management in tens of thousands of companies worldwide with many of them in a chase to prove that they are operating in a socially responsible way. This is certainly progressive but there exists a wide spectrum of confusion about the ideals, management, effectiveness and above all, the real value of CSR.
The trend in the wide and almost sporadic expansion of CSR around the world has not happened in its own stream but due to several factors that have had numerous compelling influences. From slavery to human rights, from consumer benefits to market obligations, from environmental degradation to sustainability concerns etc.; everything played well to streamline corporate behavior. An unprecedented development in communication technology and a shift in political thoughts since the Second World War focused towards democratic mindsets have also accelerated the CSR movement.
Today, CSR has innumerable definitions. No matter what those may be, its underlying spirit was deeply anchored in philanthropy which in common words equate to “giving away”. Yes, in the early days of the industrial age, industrialists used to make donations for the welfare of the neighboring communities. Those were absolutely sympathetic and charitable actions with no prospect or expectation of monetary gains. However, with the passage of time and the rise of environmentalism, consumerism, human rights campaign and more particularly, stakeholders’ interest, things began to change to ensure that the industries and corporate organizations operate properly and contribute to the development of the society. The necessity of CSR has been brought to light by unfortunate incidents such as Bhopal Union Carbide gas leakage tragedy in India, the Enron and Worldtel accounting frauds in the USA, Shell oil spillage in Nigeria, fire in readymade garment factories in Bangladesh including the Rana Plaza collapse killing over thousand workers.
While CSR today is a broad-based code of conduct for running a business effectively with consideration of environmental, labor and human rights, consumer protection issues; it is now more focused on sustainability. CSR now encompasses transparency, accountability and shareholder’s character and stakeholder’s views as well.
It is undeniable that as CSR is going through unabated evolutions, it is also stipulating widespread controversies. In the initial stages, CSR was thought to be a barrier for profit or shareholder’s expectations. There have been a plethora of discussions and debates on CSR. Economists, academics, and investors argued fiercely for the need of CSR since the 1950’s when on one side the capitalist economy was in its springboard while the other concerns for harmonious balance among shareholders, employees, customers and society at large began to breed. It is common knowledge that leading economist and Nobel laureate Milton Friedman espoused, “there is only one responsibility of business, namely to use its resources and engage in activities designed to increase its profits”. This was deflected by economists like Peter Ducker, Archie Carrol and Marcel van Marrewijk who researched into the obligations of businesses towards the society. In the 1970’s, there were serious academic engagements to establish an agreeable model for CSR.
“As confusions on defining CSR are still debated, there is a continued trend of abusing the concept and its real value.”
By the mid-eighties, there was almost a consensus on defining CSR and outlining its parameters which mainly related to profit, people, and the planet. It was tacitly accepted that CSR would be a business system that enables the production and distribution of wealth for the betterment of its stakeholders through the implementation and integration of ethical systems and sustainable management practices. Nevertheless, the evolution continued with new parameters being added such as the ISO 26000 stipulated by the International Standards Organization. The ISO 26000 spans over seven core subjects –organizational governance, community involvement and development, human rights, labor practices, environment, fair operating practices and consumer issues.
Interestingly, the UN Millennium Development Goals (MDGs) and the subsequent Sustainable Development Goals (SDGs) seem to have impacted the CSR concept and practices as well. With more focus on using clean energy for lesser carbon footprint and better use of natural resources, the CSR advocates are also in a new spate of campaigns urging for redrawing strategies by businesses.
In the wake of all these realities, it is obvious that the concept and practice of CSR are passing through some serious trials. The changing environment within which businesses are operating and the growing demand of the stakeholders are definitely making it difficult for businesses to draw up any sustainable CSR strategies and implementation policies. Moreover, political commitments of the government are also distracting the businesses in formulating useful CSR practices. For example, a housing project for low-income groups in India’s Andhra Pradesh ran into controversy when they asked for cement at lower prices. The cement companies wanted to sell the cement taking advantage of the article of The Companies Act which stipulates companies must allow 2% of their profit for CSR works. This led to a serious debate as to whether it was an ethical business or a CSR activity.
As confusions on defining CSR are still debated, there is a continued trend of abusing the concept and its real value. It is still being regarded as an image building tool or compensating means to overshadow wrong doings. The belief of giving away the fish instead of teaching how to fish or enabling opportunities to grow fish still exist in good strength. The problem is the dearth in understanding the long-term value of CSR.
While the CSR camp is still struggling to sketch a universal but holistic definition, there is a noticeable progression in adopting “sustainability” as the new driver for social development, environmental upkeep, employee and customer satisfaction, stakeholder management and above all, business success.
The writer is the Former Secretary General of the International Chamber of Commerce (ICC) in Bangladesh. He can be reached at mohicsr@gmail.com.
