Do you get confused? Is there any difference between CSR, Corporate Philanthropy, Social Compliance, Corporate Governance and Social Responsibility?

In recent years many technical terms have been introduced to the Bangladesh business community. These include Corporate Governance, Corporate Philanthropy, Social Responsibility, Social Compliance, and Corporate Culture. This article aims to summarise these concepts and to compare and contrast them with 'full-blown' Corporate Social Responsibility (CSR).

So what is Corporate Social Responsibility?

Corporate Social Responsibility (CSR) is the heart of a business; it should be integrated into the company's Human Resource Policy and its ethical business practice and define how it complies with environmental regulations and respects the local community. Most CSR choices involve balancing competing values, interests and costs. CSR also involves decisions about sustainability-invoking the 'triple bottom line' of economic, social and environmental performance.

CSR is a source of opportunity, innovation and competitive advantage particularly in relation to international sales. Advocates of CSR often offer four arguments as to why it should be given attention: (1) Moral Obligation-companies have a duty to be good citizens and to "do the right thing" (2) Sustainability-emphasising environmental and community stewardship (3) Licence to Operate-because every company needs permission from Governments, communities and other stakeholders to do business and (4) Reputation-to improve a businesses image and strengthen its brand.

We have come to a time in Bangladesh when a new approach is needed in order to integrate social and environmental considerations more effectively into core business operations and strategy. This will be 'strategic CSR' integrating company CSR 'inside out and outside in', where the company's employment practice and factory conditions will receive as much attention as its donations to good causes and its environmental enhancement projects. Typically the more closely tied a social issue is to a business, the greater the opportunity to leverage the firm's resources-and to benefit society.

Implementing 'full-blown' CSR will improve the image of the business both locally and internationally and will prepare businesses for ISO 26000 (the CSR 'standard) recognition in 2009. This will assist the producers of Bangladesh products to penetrate deeper into European and North American markets and keep Bangladesh ahead of its South Asian Regional competitors.

CSR is interdependence between society and business and each successful business needs a healthy society. Education, health care and equal opportunity are essential to the development of a productive workforce. Safe products and safe working conditions not only attract customers but lower the internal costs of accidents. Efficient use of land, water, energy and other natural resources makes business more productive. Ultimately, a healthy society creates expanding demand for business, as more human needs are met and aspirations grow. At the same time a healthy society needs successful companies. No social program can rival the business sector when it comes to creating the jobs, wealth and innovation that improve standards of living and social conditions over time.

Transparency may be said to be more "sustainable" than corruption. Good employment practices are more "sustainable" than sweatshops. Philanthropy may be said to contribute to the "sustainability" of a society. However true these assertions are, they offer little basis for balancing long-term objectives against the short-term costs they incur. Managers without a strategic understanding of CSR are prone to postpone these costs, which can lead to far greater costs when the business is later judged to have violated its social obligations. Bangladesh specific examples of CSR include AKTEL which won the Standard Chartered Financial Express CSR Award 2006 for its significant contribution to business and service sectors.

What is Corporate Philanthropy? (Is this Corporate the same Corporate as CSR?)

Yes, the word Corporate 'translates' into business, the same word used in CSR. Corporate Philanthropy can be described as engaging charitably with the community at any level. It usually means giving back to the community in some sense whether it is through funding or personal involvement. The term Corporate Philanthropy describes companies of all sizes and sectors making charitable contributions to address a variety of social, economic and other issues as part of their overall corporate citizenship strategy. Recent examples of Corporate Philanthropy have been the donations given to flood victims from a large number of businesses including Grameen Phone.

What is Social Responsibility? (Is this Social the same Social as CSR?)

The term Social Responsibility refers to "community duty" which is identical to the term Social Responsibility in CSR. It makes it clear that there are obligations for Sectors besides business, for example Government, Education, the Military and N.G.O.'s. The need for organisations in both public and private sectors to behave in a socially responsible way is becoming a generalised requirement of society. A recent example is the Southern University Bangladesh Award 2007 which was made to the Dutch-Bangla Bank Ltd (to quote the news reports) "for its immense contribution to different fields in society".

What is Social Compliance? (Is this 'Social' the same as the Social in CSR?)

Yes, the word social is used in the same context as in CSR, approximately 'translated' into Bangla meaning 'community'. In this instance, the community is the employees and the environment in which they work. If the employees are treated fairly for example regularly paid an appropriate wage so they can feed, clothe, educate and provide adequate housing for their families, then the whole community will benefit by improved health, education and general well-being.

Social Compliance is a requirement imposed by buyers of goods for the export market for example in garments and knitwear. Social Compliance aims for better productivity through improved morale. Key focus areas of Social Compliance include: Child Labor, Health and Safety, Working Hours, Discrimination, Disciplinary Practices, Remuneration, Freedom of Association, the Right of Collective Bargaining and Security of Employment. Consumers in North America and Europe of products made in Bangladesh have started basing their purchasing decisions on conditions surrounding the production process of goods they purchase with a preference for lawful, ethical and humane manufacturing. These consumers want the workforce who manufactures their products to have good working conditions and a fair wage. Investors want employers to train and retain committed productive employees who will produce quality goods which will enhance their corporate success. At a time when corporate ethics face fresh questions from consumers and activists and when the media is voicing objections to the poor treatment of workers, the benefits of being able to demonstrate good behavior can only grow in value. Buyers in Bangladesh from overseas companies for ready made garments include:- Walmart, Gap, Marks and Spencers and H&M, Nike, Levis, FLA, VF-ASIA, PVH, LI & Fung, and Oxford Products. Some 'Buyers' often show an 'external commitment to CSR' requiring it in their suppliers factories but showing little of it in their own procurement processes and financial negotiations-bearing down on price and requiring CSR as 'added value' at no additional cost. These buying companies show a readiness to move their procurement from country to country in this Region in order to maximise their buying power but to the detriment of socially compliant Bangladeshi factories. There is an evident need for the buying companies 'internal CSR' to demonstrate its 'linkage' with the CSR and Social Compliance they demand from their producers. This is matched by the equally urgent need for factory owners to demonstrate their CSR convictions rather than their convenient ccompliance.

What is Corporate Governance? (Is this 'corporate' the same as the Corporate in CSR?)

Yes, this 'Corporate' is also used in the same context as the Corporate in CSR meaning Business. Corporat e Governance (CG) is the structure through which Corporate Objectives are set. It is the means by which these Objectives are delivered, performance is monitored, and resources used efficiently and profitably. CG is the process by which Organisations are directed and controlled. CG enhances long-term value for the Owners and the financial viability of the business. CG structure specifies the distribution of rights and responsibilities between the Board, Managers and Shareholders. CG spells out the rules and procedures for making decisions on the business's affairs. The Bangladesh Enterprise Institute has promoted Corporate Governance by holding workshops, roundtable discussions, conferences and specialised training programmes in a variety of Sectors.

What is Corporate Culture? (Is this the same 'corporate' as in CSR?)

Again the word 'Corporate' has the same meaning as the 'Corporate' in Corporate Governance and CSR. Corporate Culture (CC) refers to a business's values, beliefs, business principles, traditions, and ways of operating, internal work environment, attitudes, norms and customs. CC is the 'personality' of an organization. It is the way a company does business and how it conducts itself. A company that is able to identify its CC is one that should be working in an ethical way. It exemplifies the employees' beliefs and expectations of work. CC describes and governs the ways a company's owners and employees think, feel and act. CC plays a significant role in determining how well a business performs. CC grows a professional atmosphere and facilitates significant improvements in work behaviour and performance.

CC is about values based leadership and enables management to specify appropriate behaviors for staff at all levels in order to achieve corporate goals through meeting customers' expectations, by shared values, traditions, philosophy, and policies. A Bangladesh example of a company evidencing its CC is H.S.B.C. Bank because it emphasises the value of each staff member and the importance of staff development.

In Summary

The Challenge for the Bangladesh business community is that many companies now realize why CSR is important to their business, but they do not know how to do it, how to integrate it into the business and then how to measure and report it. The temptation is to have 'externalised' CSR, making gifts and awards rather than the more difficult process of internalising CSR into all of the company's working practices and factory premises. The business community who have so generously given to the flood victims in Bangladesh as part of their CSR programme will have received publicity. These same businesses will probably not report on how they employ their workforce or whether they pay appropriate wages on time in order that their workers can provide food, education and health care for their families. During Ramadan the companies who receive publicity as they give zakat to good causes will probably not refer to their 'day by day' activities as CSR.

Five of the topics which are covered by this article are components of CSR and each one is good business practice which organisations in all Sectors of Bangladesh society should be encouraged to develop. However CSR is not demonstrated in a 'stand alone' CSR Department or a high profile CSR project or CSR Award; rather it is evident when it is integrated into every area of the work of the organisation.