Human Rights and Corporate Social Responsibility: A Comparative Discourse

- Muhammad Rezaur Rahman

CSR Corporate Social Responsibility_grün3

Published On - December 26, 2016 [Vol. 5, Jul - Dec, 2016]

‘‘Business corporations are created and survive only as a special privilege of the state. It is absurd to regard the corporation simply as an enterprise established for the sole purpose of allowing profit making. One has simply to ask: Why should citizens, through their government, grant special rights, powers, privileges, and protections to any firm except on the understanding that its activities are to fulfill their purposes? Corporations exist because we allow them to do so.’’[1]

Introduction

‘Corporations exist because we allow them to do so’ this statement may sound a bit harsh and coercive but in its implication, lays the very essence to adopt sustainable business through corporate social responsibility. It is this threshold, which has pressurized corporate to think outside the profit maximization regime. It is true that as a notion, CSR has long term legacy. However, it was mostly confined within the periphery of charity or philanthropy. Of course, Philanthropy or financial aid still exists but modes of obligation have changed. In more simpler words, CSR cannot be judged as normative directives rather it is well established obligation of corporate under national and international legal framework. In particular, corporate have wide range of obligation to promote, protect, safeguard, develop human rights together with ensuring safe environment and sustainable development. Now the question is-how far the Corporate are realizing these obligations. In particular, the question is how far the Corporate of Bangladesh are realizing the obligation in comparison to others countries. In this article in order to realize the present situation of the CSR in Bangladesh, I will make a comparative analysis taking the example of the countries and their corporate that have developed strong paradigm in corporate social responsibility (CSR). The purposes of the article is two folded, one is to show the CSR policies through illustration and secondly to show the existing business and legal mechanism of CSR in Bangladesh. Consequently, these two folded pictures will guide the stakeholders to frame the picture of the importance of CSR in promotion of human rights in Bangladesh.

 Corporate Social Responsibility Practice in Developed Countries

As a concept, CSR has emerged recently. In other words, it was in early 60s the term gets its academic recognition and from early 90s the concept started to shape into modern CSR. However, as a definite obligation its advent is fairly a new concept. For the corporate it took a while to recognize it as a two sided transaction i.e. CSR as a demand of people from corporate. Although, this proposition still considered as an academic debate because it has not been accepted by all the corporate around the world. The good news is this proposition has been becoming more and more acceptable. This is because, though, many countries have not enacted any particular law for regulating CSR but in this modern age, it is practically impossible to commence business without considering the interest of stakeholders and communities vis-à-vis people. As such, this force has pressurized corporations to adopt sustainable business policy by including issues like environment, labor rights, community development and most recently human rights mandates. In particular, MNEs or TNCs are increasing their investment in CSR. Through CSR report or sustainability report or CSR in Annual Report companies are showing their willingness towards social responsibilities. Now whether it is properly channelled or not it a different question, nonetheless, for the purpose of this chapter we will look into some of this report to obtain an idea of CSR activities of corporate. We mentioned we will assess CSR of developed countries, but that is, of course, will be limited to the corporate of Europe, US and Asia.

Corporate Social Responsibility Practice in Europe

CSR practiced in Europe has differences from the CSR of other developing countries and least developed countries (LDCs) like Bangladesh. The point is that socially responsible corporate behavior may mean different things in different places to different people and at different times.[2] That is because of overall socio-economic condition of these countries. Moreover, CSR policy may differ because of the attitude of particular country. For example, CSR in UK is to some extent different from US. Nevertheless, we need to stop depicting all the countries of Europe rather we will give emphasis on countries like United Kingdom, Canada. This is because these countries have initiated state oriented policy to regulate CSR. Besides that, within the scope of this research it redundant to depict omnibus of policies which has been adopted by different European countries.

Corporate Social Responsibility Practice in United Kingdom

As mentioned above, CSR in UK is different from others. The CSR policies mainly put emphasis, inter alia, on legal and ethical responsibility. UK’s CSR priorities includes: consumer protection, fair trade, green marketing, climate change concerns, or socially responsible investments. The legal framework in the UK highly influences the philanthropic responsibility, which is contrary to discretionary acts of successful companies or rich capitalists as in the United States.[3] Apart from these priorities, as a new phenomenon human rights are also considered as important issues for CSR in UK. UK government is one of the first in its kind to address CSR as separate issues and even managed to propound a separate definition for CSR. From the Government update on CSR we will have idea on the CSR policy in UK. In its preface it enunciates that,

‘‘To see UK businesses taking account of their economic, social and environmental impacts, and acting to address the key sustainable development challenges based on their core competences wherever they operate – locally, regionally and internationally.’’

The vision and extent of CSR as understood and expected by the Government has reflected in the word of Gordon Brown[4],

“Today, corporate social responsibility goes far beyond the old philanthropy of the past – donating money to good causes at the end of the financial year – and is instead an all year round responsibility that companies accept for the environment around them, for the best working practices, for their engagement in their local communities and for their recognition that brand names depend not only on quality, price and uniqueness but on how, cumulatively, they interact with companies’ workforce, community and environment. Now we need to move towards a challenging measure of corporate responsibility, where we judge results not just by the input but by its outcomes: the difference we make to the world in which we live, and the contribution we make to poverty reduction.’’

The point we raised from the very beginning of the research that CSR is not some so-called charity that point is also reflected in consonance in the UK’s CSR approach. In fact, these policies[5] taken by the Government have been effective in recent past. Like- the priority policy taken from the last report on CSR include: Raising the profile and highlight the importance of social and environmental responsibility; Make responsible behaviour a consideration of core business; Assist the involvement of small and medium sized enterprises; Promote transparency in CSR reporting and awareness in the marketplace; promote good practice in CSR internationally as well as in UK. [6] It will become clearer when we will see some of the companies paying heeds to these normative expectations through government policies. Moreover, the government policies shed light on the future of CSR. For example, total integration of CSR in business policies and introducing corporate to ensure bigger socio-economic responsibilities. While UK is approaching towards more intricate amalgamation of CSR we can take a look at policies of Canada to have different pictures.

Corporate Social Responsibility Practice in Canada

Canada, as a developed country has a mindset on the corporate social responsibility much like UK. Moreover, the business industry believe in order to take the challenge of maintaining business and social responsibility on the same line it is required to promote policies like CSR, corporate accountability, sustainable business policies etc. One of the most innovative side of this realization is that corporates understand there is a business case by promoting CSR. It is not like via CSR they consider earning profit but they found promoting responsible business policies to be much more worthwhile. To quote one of the manifesto of the Government of Canada in relation to Canada Industry,

 “Industry Canada promotes CSR principles and practices to Canadian businesses because it makes companies more innovative, productive, and competitive. CSR helps make Canadian business more competitive by supporting operational efficiency gains; improved risk management; favourable relations with the investment community and improved access to capital; enhanced employee relations; stronger relationships with communities and an enhanced licence to operate; and improved reputation and branding.[7]”

The above remark clearly showed that the industries of Canada have found a way to utilize CSR to ensure both sustainable business and greater benefits for the society. Moreover norms and standards followed for CSR is also something to be considered. The Canadian government in coalition with prominent business associations, NGOs, and international organizations has developed a body of global standards for CSR. These emerging standards are of four types, which include stakeholder engagement standards; Substantive standards; Management process standards and Reporting standards.[8] For the guiding principles the legal frameworks includes the entire major international instrument like OECD guidelines, ILO declaration etc. Besides that, A Consumer’s Guide to Understanding Green Claims and Labels in Canada for environmental issues can also be addressed. The point we are trying to make through these example is to show that CSR as a concept has come a long way from so called voluntary charity. Thus, rather then considering the needs of the people and their rights as a new Actor of the State, corporate of Bangladesh need to reconsider their present approach towards CSR. But for the CSR Policies to be effective for Bangladeshi people more time is required and an effective study on other countries’ CSR policies.

Corporate Social Responsibility Practice in United States  

In United States, the extent of benefits by using CSR has transcended the national border. Generally, the concept itself is global because of the common business operation of MNCs. However, by the State authority CSR is considered as a mechanism that can be utilized for the greater good within a state. Nevertheless, for a developed State like USA, the concept has wider utilization. To make it clear, a quotation of the former Secretary of State Hillary Rodham Clinton is pertinent. To quote her,

“The core tenets of corporate social responsibility complement both our diplomatic and development efforts. Our history has shown that we are most effective when we see the harmony between our interests abroad and our values at home.”

By considering CSR to facilitate diplomatic and development efforts shows the value of the mechanism to ensure greater good. If we draw our attention to these syntaxes, our quest to find the contextuality of CSR equipped with HRs mandates to grater good in any country are partially answered. Moreover, it will help us to understand that how CSR can be used for the greater purposes, like protecting and promoting human rights of a country. For that purpose, the manifesto of the corporate social responsibility team of the Bureau of Economic and Business (EB) Affairs can be addressed. This is because the Corporate Social Responsibility (CSR) team in the U.S. Department of State’s Bureau of Economic and Business Affairs (EB) plays a leading role in the Department’s engagement with U.S. business in the promotion of responsible and ethical business practices.

As a concept, CSR has developed very much like other sectors of the developed country. There is a point of differences as to how it is considered. Despite of these differences, one thing becomes fairly assured that the policy makers have taken the concept under a wider connotation and has abounded the so called charity concept of company. It seems like CSR can be a way to build not an utopia but at least an Arcadia. From this point, CSR becomes much more relevant for countries like Bangladesh. However, before we state our scenario we should look to our neighboring country India. This is because the socio-economic and political pictures of these two countries are identical.

Corporate Social Responsibility in India

The good news is CSR has also been developing as a wider concept in some of the developing countries as well; India for example. By the expansion of industries, foreign investment and willingness of the policy makers, India starts becoming a role model in every sector, which includes sustainable business, committed to benefits of human rights and community at large. The CSR has evolved in India in certain phases. Unlike, other countries, it was the sporadic voluntary initiative of some corporate to start with. Nevertheless, for last two decades the concept has started to take shape of the modern CSR. Globalization has transformed India into an important destination in terms of production and manufacturing bases of TNCs. As Western markets are becoming more and more concerned about labor and environmental standards in the developing countries, Indian companies who export and produce goods for the developed world need to pay a close attention to compliance with the international standards.[9] This is why local as well as MNCs operating in India has started to take initiatives to adopt sustainable business through CSR. The Indian corporate understand that CSR, which is limited to philanthropy and donation, is not good enough to ensure greater success unless same is to be embedded in business policy. In fact, it has already begun. Like publishing separate CSR or sustainability report, wide range community development, including human rights issues in the company policy are no way trivial development. Indian is competing neck to neck with other developed countries. However, in one particular point India have exceeded all other developed countries. That is by inserting mandatory CSR provision[10] in the Companies Act.[11] Apart from that, India has gone long way to ensure the rights of indigenous people and environmental issues as well. These rights are constitutionally and statutorily entrenched rights. Therefore, the government is also able to make the corporations accountable when they violate any such rights. In order to avoid these, corporate are also taking initiative through CSR to minimize risks and maximize their interest by switching to sustainable business. Now, the question is where Bangladesh is standing in relation to CSR and adopting sustainable business. Here the answer is mixtures of enthusiasm and pessimism. Enthusiasm in the sense that corporations of Bangladesh are now promoting CSR. Pessimism in the sense, that CSR activities in Bangladesh are still very limited. Of course, some of the MNCs have adopted CSR for wider prospect and community development but issues like human rights, sustainable development and economic development are still not considered within the periphery of CSR in Bangladesh.

Aspects of Corporate Social Responsibility in Bangladesh

Development of CSR in Bangladesh, in its modern sense in Bangladesh is still in its infancy. The question is why in this era of economic advancement CSR is not developing like other countries. It may be because that our economy has yet to become global. In other words, foreign investment is limited to some of industries like garments, energy etc. Therefore, we do not have the outer force to ensure sustainable people oriented business. In addition to that, there are other reasons like absence of legal framework, government policies, unwillingness of corporations, voluntary nature and absence of pressure group (read people).

Rhetoric and Reality of Corporate Social Responsibility of Bangladesh

Even though philanthropy is considered as part of CSR but in Bangladesh, it has acquired substantive part of the policy. However, philanthropy may make some mark in the short-run but it does not make much difference in the long-run, eventhough some companies donate money to community, organizations or sponsor sports as a part of sustainable CSR approach.

In fact, though in minimal range but different dimensions of CSR like social, economic, environment, human rights and some social activities are also evident. Especially, the common CSR activities education, health care, cultural promotions are common. Now one may question “what else we expect from them?” We admit that these activities theoretically do cover some important socio-economic issues but we need to see the impact. We need to see change in the socio economic condition of the country. Therefore, some ‘here and there’ social investments in a grab of big names are not good enough to avoid bigger social responsibility of corporate. This is because at the end of the day a condition of a State depends on its overall economic, social and human rights conditions. Can we claim that we able to overcome that? Of course, the first obligation remains with the State Actor but in present world corporate is no more a mere player, and thus, not detached from overall development policy of the state. Therefore, it is not the corporate to decide that particular CSR is fair enough rather it is standard norms and people to decide that.

Conclusion

CSR goes a long way from its conventional notion. In fact, CSR is now considered and utilized as a module to achieve greater objectives like promoting, safeguarding human rights and even as a tool for diplomatic benefits. Although, there are, objections from corporate on this issue that wider extension CSR has commingled the private interest with public rights. However, as we already stated, the people and policy makers’ decisions will force corporate to adopt people oriented business. Through wider research, corporate now able to develop such a way through which they can do business with profit along with healthy, wealthy and humanely developed community and country. The secret lies with the understanding the concept i.e. if corporate can understand how to utilize CSR then they cannot only be profited economically but also socially. However, the corporate of Bangladesh started to realize the benefits but not spirit. They still don’t believe that CSR is a just expenditure to minimize risk, promote branding and helping community effected by their business policy. They have yet to take it as a definite obligation towards the society. For that reason, CSR in Bangladesh, though not new but has remained as an unused apparatus. Corporate may not agree with this particular proposition because they will raise their expenses on CSR. But in counter it can be said that as to why CSR is recognized as philanthropy or good corporate citizenship or risk minimization policy when the global trends considering CSR as a mechanism to ensure greater objectives like protecting, promoting and safeguarding human rights along with other factors, ensure development of community and others. Unlike corporate of developed countries or some developing countries, most corporate of Bangladesh do not recognize these wider aspects within their CSR policy. For that reason, CSR is still at its growing stage and require readdressing to start making differences. As such, it has become clear that corporate social responsibility can be a ‘term card’ for promoting human rights and other socio-economic deficiency. What is required to make some change and intensify the present initiatives of the corporate in Bangladesh is taking examples of the Countries who understood the spirit of CSR.

[1] Subhabrata Bobby Banerjee, ‘Corporate Social Responsibility’, Critical Sociology, Sage Publication, Volume 34:51, 2008, p.57.

[2] John l. Campbell, ‘Why would Corporations Behave in Socially Responsible Ways? An Institutional Theory of Corporate Social Responsibility’, Academy of Management Review, Volume 32, Issue No. 3, 2007, p.950.

[3] Brian-Vincent Ikejiaku, ‘Consideration of Ethical and Legal Aspects of Corporate Social Responsibility: The Issue of Multi-National Corporations and Sustainable Development’, Nordic Journal of Commercial Law, Issue 1, 2012, p.18.

[4] Gordon Brown is the Chancellor of the Exchequer of United Kingdom.

[5] These policies are divided into three groups’: priorities, recent trends and future directions.

[6] Government of United Kingdom, Corporate Social Responsibility: A Government Update, from <www.csr.gov.uk> accessed 12 March 2013, p.6.

[7] Government of Canada, Corporate Social Responsibility, from <http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/home> accessed 13 March 2013.

[8] Paul M. Lalonde and Igor Abramov, ‘The Canadian Government CSR Strategy for the Extractive Sector: Just Another Standard or Pioneering Step?’, International Law News, Volume 39, Issue 1, 2010, p.29.

[9] Tatjana Chahoud et el, Corporate Social and Environmental Responsibility in India – Assessing the UN Global Compac’s Role, German Development Institution, Bonn, 2007.

[10] Manu Kapoor, ‘The Changing perception of CSR in India’, The Economic Times, published 12 March 2013, from < http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/the-changing-perception-of-csr-in-india/articleshow/18951906.cms> accessed 17 March 2013

[11] The Ministry of Company Affairs (MCA), which is finalizing the new Companies Bill, has accepted a Parliamentary Standing Committee’s recommendation on the issue. The standing committee on finance headed by former finance minister Yashwant Sinha has proposed that companies with a turnover of Rs 1,000 crore or net profit of Rs 5 crore or more earmark 2% of their net profit for the preceding three years on CSR; Sidhartha, ‘Companies law set to mandate 2% CSR spend’, The Times of India, published 10 February 2011, from <http://articles.timesofindia.indiatimes.com/2011-02-10/india/28545097_1_csr-companies-bill-coal-ministry> accessed 17 March 2013.

About The Writer

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Muhammad Rezaur Rahman

Lecturer, Department of Law,

Northern University Bangladesh

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