Bangladesh newspapers frequently carry reports of companies and commercial banks making donations of cash, clothes, micro buses, medical equipment and the like to worthy causes in the community. The commercial banks are evidently the largest contributor of this cash based CSR and their largess extends to support for poor but meritorious school and university students in the form of bursaries and other educational gifts and grants. It is rare however to find reports in the media of business houses and banks investing in their workers through training or through the improvement of their working environments or through schemes to provide education for the children of their workers or health care for their employees families. This under-reporting, or perhaps this absence of reporting does not necessarily prove that companies and banks do not provide good support to their employees. It does however seem to show that the CSR currently practised in Bangladesh is focussed on the community outside of the institutions providing the funding. This Bangladeshi CSR can be perceived to be peripheral to the actual business of the organisation making the donation. It can be seen to be uneconomic because it does not directly contribute to the commercial success of the business making the donation. It is also piece-meal and incremental, meaning that it is not CSR practised in response to identified need because these donations usually made at the personal discretion of a Company Chairman or Directors. It is incremental because it is not a consistent and sustainable activity. In this article for The Executive Times, Senior Columnist Rodney Reed introduces CSR2 to Bangladesh - 'Corporate Sustainability and Responsibility'.
Wayne Visser writing about 'The evolution and revolution of Corporate Social Responsibility' believes the existing form of CSR, which he terms CSR1, is significantly flawed in three ways: 1) it is incremental 2) it is peripheral and 3) it is uneconomic.
Visser's chapter in 'Responsible Business: How to Manage a CSR Strategy Successfully' raises a possible new future for CSR which he terms CSR2. His use of the initials CSR makes them Corporate Sustainability and Responsibility and he believes this new CSR will be evidence of Connectedness, Scalability and Responsiveness.
CSR2 has five principles: Connectedness, Scalability, Responsiveness, Duality and Circularity.
Principle 1: Connectedness - Joined up and working together
The only way is to move from subservience to connectedness and so business has to start to institutionalise (and thereby legitimise) multi-stakeholder relationships. The emergence of various multi-stakeholder initiatives in the 1990s, such as the Forest Stewardship Council and AccountAbility 1000, give a glimpse of how the connectedness principle of CSR2 may be demonstrated.
Principle 2: Scalability
The CSR literature is full of case studies of truly responsible and sustainable projects. The problem is that so few of them ever develop to full scale. They become shining pilot projects and best practice examples, tarnished only by the fact that they are endlessly repeated on the CSR conference circuits of the world, without any vision for how they might transform the core business of their founder. The sustainability problems we face, including climate change and poverty, are massive and urgent, and because of this any CSR solutions that cannot match that scale and urgency are distractions at best and unhelpful diversions at worst.
Principle 3: Responsiveness
Industry and Commerce has a long track-record of responding to community needs but this responsiveness is usually on their own terms. It is relatively easy to respond to an appeal for support when giving is easy and cheque-writing does nothing to compromise the company's commercial profit generating imperatives. However, the severity of the global problems demands that companies go much further in their reply. CSR2 requires uncomfortable, transformative responsiveness and this questions whether manufacturing industry, or the business model itself, is part of the solution or part of the problem. CSR2 responsiveness also means greater transparency, not only through reporting mechanisms like the Global Reporting Initiative and Carbon Disclosure Project, but also by sharing critical intellectual resources.
Principle 4: Winners without losers – Duality
Much of the debate on CSR in the past has focused on whether or not a company is responsible. This approach fails to recognise that most CSR issues show up as dilemmas, rather than easy choices. In a complex, interconnected CSR2 world, companies (and their critics) will have to become far more sophisticated in understanding local settings and the appropriate local solutions they demand, without forsaking universal principles. CSR2 replaces 'either/or' with 'both/and' thinking.
Principle 5: Nothing wasted –Circularity
The reason CSR1 has failed according to Visser is not through lack of good intent, nor even through lack of effort. The old CSR has failed because our global economic system is based on a fundamentally flawed design. For all the miraculous energy unleashed by Adam Smith's 'invisible hand' of the free market, Visser believes that our modern capitalist system is faulty at its very core.
CSR2 would create buildings that, like trees, produce more energy than they consume and purify their own waste water. CSR2 would have factories that produce drinking water as effluent and products that decompose and become food and nutrients. CSR2 would have materials that can feed into industrial cycles as high quality raw materials for new products. Circularity need not only apply to the environment. Business would also be constantly feeding and replenishing its social and human capital, not only through education and training, but also by nourishing community and employee wellbeing. CSR2 raises the importance of meaning in work and life to equal status alongside ecological integrity and financial viability.
CSR2 'Corporate Sustainability and Responsibility' presents challenges and solutions, vision and responses, it has strategy and management aspects, it can identify goals and set out the necessary actions. It is CSR as 'Connectedness, Scalability and Responsiveness.
As Corporate Sustainability and Responsibility' CSR will no longer be only luxury products and services as with current 'green' and 'fairtrade' options, but it will deliver affordable solutions for those who most need quality of life improvements. Investment in self-sustaining social enterprises will be favoured over cheque-book charity. CSR indexes, which rank the same large companies over and over will make way for CSR rating systems, which turn social, environmental, ethical and economic performance into corporate scores (A+, B-, etc., not dissimilar to credit ratings). Analysts and others will be able to use these CSR Ratings to compare and integrate into their decision making.
Reliance on CSR departments will disappear or disperse in CSR2, as performance across responsibility and sustainability dimensions are increasingly built into corporate performance appraisal and market incentive systems. Self-selecting ethical consumers will become irrelevant, as CSR2 companies begin to choice-edit, i.e. cease offering implicitly 'less ethical' product ranges, thus allowing guilt-free shopping. Annual CSR reporting will be replaced by online, real-time CSR performance data flows and typical CSR1 management systems standards such as ISO 14001 will be less credible than new performance standards, such as those emerging in climate change, which set absolute limits and thresholds.
Corporate Sustainability and Responsibility in Bangladesh
Bangladeshi Corporate Social Responsibility as 'cash to projects' has limited usefulness for the reasons that all CSR1 activities are limited i.e. because it is: - 'Incremental CSR'; 'Peripheral CSR'; and 'Uneconomic CSR'. The insights and opportunities afforded for CSR development in Bangladesh by the paradigm shift into CSR2 described by Wayne Visser and others are worthy of further consideration by the Commercial Banks in Bangladesh, who are by far the largest of the CSR donors in the country at present, and also by the corporate sector generally.
Because CSR2 brings the duty to be responsible into the core activities of the business it also engages industry in the duty to be responsible for its use of energy, raw materials and water. The climate change now being experienced world-wide and in Bangladesh has not been caused by heavy coal burning industry in Bangladesh emitting carbon dioxide and other green house causing gases because the industrial revolution that caused most of this pollution was something that happened in Northern and Western countries. The rapid industrialization of Bangladesh neighbours i.e. India and China is reported to be a significant cause of the emission of green house gas as these countries industrialize and develop.
Again Bangladesh is a victim rather than a perpetrator of the pollution and global warming caused by industrial processes over the last centuries but with the effects now accelerating in this one. CSR2 Corporate Sustainability and Responsibility makes it clear that the too fast consumption of Bangladesh natural gas, the too quick lowering of the Bangladesh water table and the frighteningly high level of pollution in our major rivers is the responsibility of Bangladesh manufacturing industry and also that the remedy for this pollution and overuse of resources lies with Bangladesh industry.
That there are climate change funds available to Bangladesh from Northern and Western countries is an encouragement for Bangladesh to create and adapt and adopt amelioration measures but the duty to responsibly reduce the pollution of our rivers and land by our industrial processes lies with Bangladesh. This responsibility lies with the polluting industries e.g. textile, tannery, engineering, pesticide, chemical but there is also the pollution we human beings cause as our liquid and solid wastes flow untreated into our major rivers. The Government has a duty to set and to enforce acceptable standards about what may be discharged into the rivers and also a duty to insist on river clean up including the reversing of the river bank encroachment. Adopting the principles of CSR2 in every sector - Government, Non-Government and Manufacturing will enable Bangladesh to have a sustainable, responsible manufacturing sector and a country where our people can live without suffering the effects of pollution or where our future generations risk living without access to sufficient clean drinking water.
CSR2 brings environmental sustainability, moral responsibility, commercial responsibility, social responsibility, human sustainability, labour responsibility, financial responsibility and economic sustainability in from the margins of CSR to the very centre of Corporate and Government activity. CSR1 as philanthropy i.e. cash for projects is able only to deliver short-term solutions by funding a relatively number of small projects. Bangladesh needs to move from incremental, peripheral, un-economic CSR to a place where factory managers, entrepreneurs, leaders of civil society organisations and Government Ministers recognize the need for CSR in Bangladesh to be taken to a new level i.e. from CSR1 to CSR2 and from Corporate Social Responsible to Corporate Sustainability and Responsibility.
A Senior Columnist and a regular contributor to The Executive Times Rodney J Reed M.Soc.Sc (Birmingham) is the Managing Director of Reed Consulting (BD) Ltd. The author is resident in Dhaka. Reed Consulting Bangladesh Ltd www.reedconsultingbd.com is Incorporated in Bangladesh and specialises in developing the policy and practice of Social Responsibility in Bangladesh and in neighbouring countries. The Reed Consulting (BD) Ltd 'mission statement' is 'Enabling businesses in Bangladesh to be socially responsible, sustainable and profitable'.
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