Corporate Social Responsibility in an Organization of Bangladesh A case study on Limited Unilever Bangladesh

Assignment Submitted by: Abdullah Al Mahmud - 1301010601

Assignment Submitted to: Wahida Akethar, Lecturer Department of Business Administration Leading University, Sylhet

April 2013
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Contents

Abstract I. II. III. IV. V. VI. VII. VIII. IX. Introduction CSR in Historical Perspective CSR Implications to Business Activities CSR as Community Development CSR in Bangladesh CSR in MNCs

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A case study of an MNS in Bangladesh: Unilever Bangladesh Limited 11 CSR in Bangladesh: where do we stand? Conclusion References 17 18 15

Abstract

Apart from the social services by some business firms, the new concept of CSR is an emerging one. Businesses are driven by government, labor unions, and consumer groups. In the context of Bangladesh, it is more relevant for the export-oriented industry. Globalization has made CSR practice an imperative for Bangladesh business. CSR concentrates on benefits of all stakeholders rather than just the stockholders. Awareness and sense of necessity for practicing CSR is becoming more and more pronounced as the country has to adapt itself to the process of globalization. But the overall status of CSR in Bangladesh is still very inadequate. Lack of Good Governance, absence of strong labor unions or consumer rights groups, and inability of the business community to perceive CSR as a survival pre-condition in export, local market constitute some of elements undermining the evolution of CSR practices. Some annoying incident like boycott from the importer has taught the local business community about the immense importance of CSR and adoption of this modern and competitive practice is gradually increasing in Bangladesh.

I.

Introduction Corporate Social Responsibility or CSR for short is a relatively new

term that has suddenly gained currency. Hundreds, indeed thousands, of companies are adopting ethical policies or codes of conduct saying how they intend to behave. More and more companies are signing up to such initiatives as the United Nations Global Compact or the Fair Labor Association. Around the world there are conferences and initiatives, where corporate CSR Executives meet up with campaigns, NGOs and trade unions. Take the example of the oil company Unocal, which was severely criticized for using forced labor to construct a pipeline in Burma, a country run by a tyrant regime and subject to an international boycott. Labor rights groups in the US took Unocal through the courts. Unocal now has a huge area on its website devoted to CSR. In fact, CSR means different things to different people. However, certain ideas are becoming commonly accepted. One is that CSR is not about philanthropy or charitable work. It refers to something much more fundamental. It is about how companies take responsibility for their actions in the world at large. CSR monitoring groups such as Labor Unions, Consumer Groups, Environmentalists, NGOs and all Stakeholders are watching over their interest as opposed to Stockholders only. The role of business worldwide and specifically in the developed countries has developed over the last few decades from classical profit maximizing approach to a social responsibly approach, where businesses are not only responsible to its stockholders but also to all of its stakeholders in a broader inclusive sense. One can identify so many reasons for shifting the role of business from classical concept to a responsible business concept, but negative impression of stakeholders on the enterprise would get a higher priority among others. In one hand, enterprises create wealth and job opportunities for the society and on the other hand, they pollute and destroy environment and ecology with devastating impact on human health and biodiversity worldwide. To address the social problems or the problems of the
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stakeholders, the business community evolved a new approach in their business strategies named CSR and through CSR enterprises are intent to strike a balance between economic and social goals, where resources are used in a rational manner and social needs are be addressed responsibly. CSR can be viewed as a comprehensive set of policies, practices, and programs that are integrated into business operations, supply chains, and decision making processes throughout the company and include responsibilities for current and past actions as well as adequate attention to future impacts. CSR focuses vary by business, by size, by sector and even by geographic region. The umbrella of CSR is quite big and it includes all the good practices that increase the business profitability and can preserve interest of all stakeholders. However, Lotus Holdings defines CSR as The integration of the interests of the stakeholders all those affected by a companys conduct into the companys business policies and actions, with a focus on the social, environmental, and financial success of a company, the so-called triple bottom-line with the goal being to positively impact society while achieving business success. Thus, the whole range of stakeholders is considered as integral parts of CSR. One important aspect of CSR is that it is not legal obligation but rather voluntary social and environmental positive initiative to establish an image of environmentally and Socially Responsible Business (SRB) that also encompasses (Small and Medium Enterprises) SMEs as well as giant corporations. The motivation and drive to pursue is primarily a result of pressure from well organized Consumer Rights movement, specifically in developed world that acts as a watchdog and hardly hesitates to impose Consumer Boycott against a company that violated established CSR practices. An Ideal example is the consumer boycott imposed on purchasing Bangladesh Readymade Garments on the ground that these are produced by under-aged child labor. Despite the fact that in the not so distant past, CSR was more of a charity by affluent or socially responsible business
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organizations without expecting any financial return, today, it very much a planned investment in creating positive image to enhance profitability. Under CSR concept, companies decide voluntarily to contribute to a better society and a more sustainable environment. As evolved primarily in the western world, most of the rising companies there practice CSR to enhance the image and acceptability in the community (Green Paper, 2001).

II.

CSR in Historical Perspective CSR is a concept whereby companies integrate social and

environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis. (Green Paper, 2001) Socially responsibility means not only fulfilling legal expectations, but also going beyond compliance and investing more into human capital, the environment and in building with stakeholders. It is relevant in all types of companies and in all sectors of activity, from SMEs to Multinational Companies (MNCs). A number of companies with good social and environmental records indicate that these activities can result in better performance and can generate more profit and growth. (Green Paper, 2001) Research (Industry week, 15 January 2001) has shown that about one half of the above average performance of socially responsible companies can be attributed to their CSR image while the other half is explained by their performance. Socially responsible companies are expected to deliver aboveaverage financial returns. (Green Paper, 2001) CSR has some internal dimensions such as: human resources management, health and safety at work, adaptation to change and management of environmental impact and natural resources. The external dimensions include local communities, business, partners, suppliers and consumers, human rights and global environmental concerns. Again, CSR may be as simple as sponsoring social service oriented entertainment events. In essence, CSR is positive relationship with the society. In a Bangladesh context, several multinational companies and local companies practice CSR. While the multinationals are influenced by their own social responsible business (SRB) disposition, most of the business concerns in Bangladesh do not rate high in practicing CSR unless being pressured by the foreign buyers in case of export oriented business.

III.

CSR Implications to Business Activities Companies are facing the challenges of adapting effectively to the

changing environment in the context of globalization and in particular in the export sector. Although Consumer Rights Movement, enforcement of government regulations and a structured view regarding the economic importance of CRS are not yet so widespread in the corporate world in Bangladesh, companies have gradually attaching more importance to CSR in the local market as well. They are increasingly aware that CSR can be of direct economic value. Companies can contribute to social and environmental objectives, through integrating CSR as a strategic investment into their core business strategy, management instruments and operations. This is an investment, not a cost, much like quality management. So, business organizations can thereby have an inclusive financial, commercial and social approach, leading to a long term strategy minimizing risks linked to uncertainty.

IV.

CSR as Community Development CSR in Bangladesh providing can also contribute a lot to community

development. The corporate house can develop the community by creating employment, primary/vocational education, basic treatment, contribution to infrastructure development like road and high-ways and addressing emergency responses, environmental concerns. This is more relevant for a country like Bangladesh where the government interventions in these fields being increased by corporate alliance can go a long way in developing the economy, society and environment.

V.

CSR in Bangladesh CSR concepts and practices in Bangladesh have a long history of

philanthropic activities from the time immemorial. These philanthropic activities included donations to different charitable organizations, poor people and religious institutions. Till now, most of the businesses in Bangladesh are family owned and first generation businesses. They are involved in the community development work in the form of charity without having any definite policy regarding the expenses or any concrete motive regarding financial gains in many instances. Moreover, most of the SMEs fall under the informal sector having low management structure and resources to address the social and environmental issues. These limitations drive the top management of local companies to think only about the profit maximization rather than doing business considering the triple bottom line: profit, planet and people (CSR definition of Lotus Holdings). The discussions on CSR practices in Bangladesh in its modern global terms, are relatively new, but not so for the concept itself. Because, being a part of the global market, it is difficult to ignore CSR standard specifically in the export sector. In general, it is true that in Bangladesh, the status of labor rights practices, environmental management and transparency in corporate governance are not satisfactory, largely due to poor enforcement of existing laws and inadequate pressure from civil society and interest groups like Consumer Forums. Globally, as CSR practices are gradually being integrated into international business practices and hence is becoming one of the determining factors for market accesses, it is becoming equally instrumental for local acceptability. A focus on CSR in Bangladesh would be useful, not only for improving corporate governance, labor rights, work place safety, fair treatment of workers, community development and environment management, but also for industrialization and ensuring global market access. Since, CSR entails working with stakeholders it is important to work from within and diagnose the stakeholders; concerns so that CSR is truly

embedded in the companies. By now, many CSR dimensions are practiced in Bangladesh. The SMEs largely depend upon export. The US and EU buyers set guidelines to RMG industry to ensure the standards. The 1992 Hrkins Bill and subsequent consumer and industry boycott of RMG products by USA and the consequent remedial moves by local RMG sector is one example. Moreover, some buyers from EU visited the sites of recently collapsed garments factories. A temporary ban was also imposed on Shrimp export to the EU on health and hygienic standard and appropriate remedial action followed in that instance too. But, some of the exporters found difficulty in convincing the US/EU buyers to have positive attitude towards Bangladesh due to inadequate CSR practices. Lack of enforcement of Industrial Laws and Regulations, weak unions, absence of consumer rights groups and high level of corruption within the regulatory bodies make CSR violation rampant in Bangladesh. Two most significant foreign exchange sources are the RMG sector and the overseas manpower export. Unbelievably low compensation, working hours, health/hygiene/sanitation conditions, fire safety and various types of abuse are so common and to the extent of inhumanity that wild shock any conscientious individual to the core. Recently, the RMG sector employees have embarked on an industry wide movement to establish their rights. However, a number of corporations are now following an increased commitment to CSR beyond just profit making and compliance with regulation. Organizations such as CARE Bangladesh, Katalyst and Bangladesh Enterprises (BEI) are working at the forefront of CSR activities in Bangladesh. These organizations are preparing Corporate Social Audit catering to small/Medium enterprises. While these initiatives are more discretionary in their nature, they have resulted in the creation of jobs and value-added services to communities that BATA, Unilerver, GrameenPhone and CARE are showcasing as CSR programs in action.

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It is also found that initiatives in CSR activities in Bangladesh are pioneered by MNCs. Since Bangladesh is now exposed to global standards, it can be anticipated that the CSR activities in Bangladesh will continue to be extended. Firms are now trying to uphold their corporate image of socially responsible firms and consequently influence consumer buying decisions in favor of the goods and services marketed by them.

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VI.

CSR in MNCs In recent times, there has been an acceleration of multinational

corporate activity, generating wide attention and criticism. In the era of globalization, Multinational corporations (MNCs) that conduct business across national boundaries in many countries are no longer able to conduct destructive and unethical practices under protective radar. With a dramatic propagation of media attention, propagation of nongovernmental organizations (NGOs) and global information sharing, there is a surging demand from civil society, consumers, governments and shareholders for corporations to conduct sustainable business practices. The corporate response has often meant an adoption of a new consciousness. (Anupama Mohan, 2006) The corporate response has often meant an adoption of a new consciousness and this has been known as Corporate Social Responsibility (CSR) since the 1970s. their MNCs are faced with diverse This stakeholder has several CSR environments multiple across and international contexts of operations. its

implications for MNCs management of stakeholder relations across the levels diverse operations. Global management also involves cross-border transfer and management of CSR practices, from one part of the MNC to another, as well as the management of local CSR practices suited to the local context of the subsidiary units. The MNCs are faced with wider CSR expectations, and MNCs are under increasing pressure for socially responsible behaviour in their global operations. The complex legitimacy issues faced by MNCs across these diverse political, economic, institutional and sociological environments are also discontinuous and marked with uncertainty and preclude universal corporate policies because what may be acceptable in one country or at a time may run counter to public policies or acceptable norms elsewhere or at other times (Logsdon and Wood, 2002).

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Common CSR practices in Bangladesh by MNCs are centered around namely poverty alleviation, healthcare, education, charity activities, cultural enrichment, youth development, women empowerment, patronizing sports and music etc. these activities are devised to be the partners in development as responsible citizen.

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VII. A case study of CSR of an MNS in Bangladesh: Unilever Bangladesh Limited In describing CSR policy, Unilever Bangladesh Limited states that, We seek to make a positive impact on society through the brands we produce and sell, through our commercial operations and relationships, through the voluntary contributions we make to the community and through our wider engagement with society. We are also committed to making continuous improvements in the management of our environmental impacts and to working towards our longer-term goal of developing a sustainable business. Unilever Bangladesh set itself at an exemplary position in the country as an imitable leader in the area of corporate engagement in social development. In 2006, Unilever Bangladesh was honored with a national level CSR award organized by Standard Chartered Bank and the Daily Financial Express. Some of the key CSR activities carrying out by UBL are explained shortly below: Pepsodent Dentibus: The Dentibus is a modified bus sponsored and managed by Pepsodent, that goes around the country carrying free dental check up facilities and expert advice of good oral care. As part of the program, Dr. Tanjin, a dental surgeon of Pepsodent Dentibus, gave free checkups to over a 100 students of Bangladesh Agricultural Research Institute (BARI) high school in Gazipur. The Dentibus checkups start in the mornings, while general people outside the school are also encouraged to receive these free checkups in the afternoon. The Dentibus usually spends an entire day in an area amid much announcements and hype so that everyone can be benefited from the Dentibus Visit.
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 Fair

and

Lovely across

Foundation the

scholarship through

Program:

The

Scholarship Program invites applications from undergraduate female students from country, various newspaper advertisements. The participants go through a preliminary screening process conducted by the biweekly magazine The Anannya, while a specialized panel of judges from relevant fields interviewed the final nominees. Fair & Lovely Foundation is a social initiative of Unilever Bangladesh Ltd. that is involved in projects in the areas of education, carrier and enterprise. Nurse Training Program on Ma o Shishu General Hospital: On 1st November, 2006 Unilever inaugurated a 2-month training program for the nurses of Maa O Shishu General Hospital to help upgrade the skills and capabilities of the nursing staff at the hospital. A specialist team of consultants from the Tata Institute of Social Science and Wockhardt Hospital, India are conducting the training workshop, which is being attended by 25 nurses from the hospital. Unilever Bangladesh has had a long association with Maa O Shishu General Hospital in Chittagong. In 2004, UBL sponsored the setting up of a modern operation facility at the Hospital. This included the modernization of the existing operation theatre and setting up of a new one together with an advanced Intensive Care Unit. This has provided Chittagong with facilities for high quality medical care for mothers and children from economically weaker sections of the society. Unilever helps support underprivileged children: Unilever

Bangladesh Limited (UBL) and Shathi Shamaj Kalyan Samity (SSKS) signed an agreement on 3rd May 2007 to continue Unilevers support to the operation of a school for underprivileged children. The school is for underprivileged children living in slum areas of Banani and UBL has supported the school and its activities since 2005 and apart from
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giving financial support, Unilever managers have also personally helped by teaching students of the school. Unilever helps to rehabilitate the Sidr victims: Unilever

Bangladesh Limited (UBL) has taken up a project to rebuild the SIDR affected village of Char Nazir under the Galachipa Thana. As part of this project, housing will be built for approximately 75 families. Additionally a cow or goat will also be provided to them for income generation. The total cost of this project is estimated to be Tk 80 Lakh. Other initiatives under this project include the installation of deep tube wells and the rebuilding of retail outlets in the village. UBL will work in close collaboration with the Bangladesh Army to make this project happen. The managers of UBL have also donated an additional Tk 3.5 Lakh from their salary the proceeds of which will go towards funding this initiative. In another initiative, Unilever Managers distributed about Tk 1.5 Lack worth of relief to SIDR victims. The distribution was done in Patharghata in Barguna District. Relief material included lanterns, common utensils like bowls, gas lighters and biscuits and clothing such as shawls and sweaters. A further Tk 24 Lakh has also been distributed among the distributors staffs who were affected by the cyclone and another Tk 25 Lakh has been donated to the British Business Group (BBG) for rebuilding a school in Majher Char. Unilever managers distribute relief materials to flood affected people: Unilever Bangladesh managers have contributed from their salary to provide relief materials to the flood affected people of the country. This relief material was in the form of five kg relief packs containing Chal, Dal, Salt, Dry Biscuits, Orsaline and Water purifying tablets. Using the distribution strength of the Company, Unilever Bangladesh managers distributed these packs in fourteen areas across the country through their regional offices in Dhaka, Sylhet, Bogra and
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Khulna. Recently, Unilever Bangladesh also handed over a cheque for Taka 20 lakhs to the Chief Advisor, Dr. Fakhruddin Ahmed, towards the flood relief fund at his office. Unilever Bangladesh and CARE to create business

opportunities for Rural Women: Unilever Bangladesh Limited and CARE Bangladesh signed an agreement on 3rd December 2006 to create sustainable business opportunities for a thousand rural women of Bangladesh Unilever Bangladesh already has an existing project called Joyeeta, an initiative through which opportunities are currently provided to nearly 2000 women in rural Bangladesh for sustainable self employment. While CARE Bangladesh has experience of working with rural women in different areas of the country through Rural Sales Program in order to create income and employment opportunity for the rural poor women through linking them with market. With the support from CARE, this rural sales project named "Aparajita", UBL will be able to expand this initiative to reach 20 more Upazillas of the countrys northern and eastern districts. This is a unique initiative of an international NGO and a global private partner coming together to facilitate the empowerment of under privileged women of the country. Unilever gives support to Asian University in Chittagong: Unilever Bangladesh Limited (UBL) signed an agreement with the Asian University for Women Support Foundation (AUWSF) on 27 th May 2007 to create a fund for two scholarships titled the Unilever Bangladesh Scholarships. Mr. Rakesh Mohan, Chairman and Managing Director of Unilever Bangladesh Ltd and Mr. Kamal Ahmad, President and CEO, AUWSF signed the agreement on behalf of their respective organizations. This scholarship fund will enable two Bangladeshi nationals to study on full scholarship for five years at the Asian University for Women (AUW), a premier and state-of-the-art higher
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education institution for women that is scheduled to be inaugurated in Chittagong, Bangladesh. AUW is a residential university designed to offer 2,500 high potential young women from across Asia high international level higher education to help prepare them to be change agents in society. Unilevers scholarship programme starts with AUWs first incoming class of freshmen in September 2009 and runs up till 2014. Unilever Jointly Sponsors a Chevening Scholarship: Unilever Bangladesh Limited and the British High Commission signed an agreement on 11th September 2006 to jointly fund a Chevening Scholarship titled the Unilever Chevening Scholarship for a Bangladeshi national wishing to study in a University in the United Kingdom. The fields of study included for the Unilever Chevening Scholarship are the areas of Health, Education and Womens Empowerment. Chevening Scholarships are prestigious scholarships awarded by the UKs Foreign and Commonwealth Office, aimed at providing opportunities for post-graduate study in the UK for young professionals in early or mid-careers who demonstrate both academic excellence and the potential to become leaders, decision-makers and opinion-formers in their own countries.

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VIII. Future of CSR in Bangladesh: As part of CPDs publication activity, CPD held a Roundtable at CIRDAP auditorium on August 4, 2002, on the theme of Corporate Social Responsibility: Where do we stand?. Based on the study, the keynote speaker Dr Ananya Raihan advocated the following policy options for the corporate stakeholders: For the Companies 1 a. As both the civil society group and workers hold negative opinions about the corporate responsibility, companies have to seriously consider how to restore their image. 2 b. The variability of perceptions indicates specific areas where to intervene and set priorities. All the controversial issues including the overtime issue should be taken note of and settled through a multistakeholder initiative. 3 c. Environmental concerns should receive greater attention by the companies. 4 d. Gender aspects should be more carefully addressed and monitored for their implementation. 5 e. Corporate-community relations are found to be strained. The corporate owners and executives should consult and communicate with the local communities on a regular basis. 6 f. Health and safety issues deserve greater attention given that failure in these areas impact negatively on the productivity and endanger human life. 7 g. More consultation should take place between the employers and the employees so that a team spirit is restored in the corporate. For the Civil Society 1 a. Should enhance their participation as a stakeholder in the corporate affairs for holding the corporate entities accountable to the greater segment of the populace

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2 b. Should contribute to the process of awareness building of all the stakeholders so that the corporate do not function in an exploitative condition. 3 c. Should contribute to the process of multi-stakeholder exchange of views and ideas in terms of both initiating and organizing multistakeholder forums 4 d. Policy advocacy For the Government 1 a. Provide policy guidelines for smooth functioning of the corporate entities 2 b. Monitor and enforce laws related to labour issues, environment protection, health and safety issues c. Provide the logistic support for enhancing the overall corporate standard and stay and carefully monitor the initiatives of the global trade partners and regimes so as to ensure that the corporate responsibility issue is not used as a pretext for market access barrier. At another Roundtable Corporate Social Responsibilities (CSR)

Practices and Challenges in Bangladesh, organized by CSR Center of Bangladesh Enterprise Institute (BEI), held on Thursday, 23 February, 2006, speakers identified dearth of expertise, poor accountability as major obstacles to obstacles to practicing CSR in Bangladesh. They elaborated that lack of expertise and poor accountability of corporate houses are obstacles to implementation of CSR in Bangladesh. The speakers also said many CSR activities by Bangladeshi corporate houses are centered mainly on publicity and short-term implications. The BEI roundtable on CSR titled 'Corporate Social Responsibility Practices and Challenges in Bangladesh' was a part of its 'Dialogue Series on CSR in Action'. Sanjiv S Mehta, chairman and managing director of Unilever

Bangladesh Ltd, Mohammad Abu Musa, deputy managing director of

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Dhaka Bank Ltd, and Mohin Khan, executive assistant (Board Affairs) of BRAC, spoke at the discussion. BEI President Farooq Sobhan said corporate entities should understand what CSR is and why it is important. The private sector enterprises will remain weak unless and until they practice CSR in their ventures, the BEI president said, adding that when it comes to adopting good corporate governance, Bangladeshi companies are lagging far behind those in India, Pakistan and Sri Lanka. "Properly implemented CSR programs help the companies meet legal and societal expectations and benefit governments, employees, citizens and businesses," noted Farooq. On the other hand, poorly implemented CSR programs are nothing but public relations exercises, he mentioned.

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IX.

Conclusion The modern concept of Corporate Social Responsibility (CSR) is

evolving gradually despite several hindrances. Driving forces behind this evolution is pressure from various stakeholders (Importers, Environmentalists) while slow progress is attributed to lack of Good Governance, absence of strong labor unions, consumer forums and above all lack of unders tanding by business houses, specifically non-exporting ones, that CSR is not charity but is rather an instrumental investment. The global competitiveness and demand is driving the CSR practices and standards in Bangladesh, a developing country. But we are yet go a long way. There are challenges to implement CSR properly in Bangladesh. Ultimately CSR practices should be better practiced in Bangladesh for better and enhanced performance. In the publication Good Governance and Market-Based Reforms: A Study of Bangladesh, Fara Azmat and Ken Coghill relates Good Governance with CSR by discussing the good governance indicators of regulatory quality, rule of law and control of corruption in the context of Bangladesh and analyses how lack of good governance indicators affects the success and sustainability of reforms and contributes to the lack of business ethics and CSR in Bangladesh.

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References: 1. Green Paper on CSR, Asia Link Program, The European Union 2. Corporate Social Responsibilities: Practices and Challenges in Bangladesh, Roundtable by Bangladesh Enterprise Institute (BEI), Dhaka 3. Corporate Social Responsibility: Where do we stand? Roundtable by Centre for Policy Dialogue (CPD), Dhaka 4. Good governance and market-based reforms: a study of Bangladesh, Fara Azmat and Ken Coghill
5. www.unilever.com.bd 6. www.csrbangladesh.org

7. Anupama Mohan, Global corporate social responsibilities management in MNCs, Journal of Business Strategies, Huntsville: Spring 2006. Vol. 23, Issue 1 8. Logsdon, J. M. & Wood, D. J. (2002). Business Citizenship: From Domestic to Global Level of Analysis. Business Ethics Quarterly, 12, 155-187.

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