Poverty alleviation as a CSR activity

Edward Probir Mondol

CORPORATE social responsibility (CSR) is where organisations consider the interests of society by taking responsibility for the impact of their operational activities on customers, suppliers, employees, shareholders and other stakeholders, including the environmentalists and the regulators. It has been stated that companies are facing increasing pressure to both maintain profitability and behave in socially responsible ways. The application and recognition of CSR is relatively new in Bangladesh.

As we understand it, CSR is not only about protecting the environment and stakeholders, complying with anti-corruption action policies and a range of other activities, but it also aims at eradicating poverty. Poverty, which has a close link with the environment, remains the primary social problem in Bangladesh. According to a survey, currently, there are 37 million people living under the poverty line and there has been no significant poverty alleviation since 2001.

Poverty alleviation as a CSR activity is one of the major objectives of every nation, international organisation, non-governmental organisation, and local community. Furthermore, it states that lately, the business community has increasingly used the concept of CSR to establish a framework for wider private sector involvement in poverty alleviation. However, is has been stated that meeting development challenges in reducing poverty is as important as maintaining economic growth of the company. The government and business communities see CSR as a bridge connecting business and development, and increasingly CSR programmes are discussed in terms of their contribution to development. Overall, however, corporate contributions through social initiatives, targeting the disadvantaged or the marginalised, remain minimal.

Environment and poverty alleviation initiatives in Bangladesh are conducive to finding the best solution for social problems. Since handling environmental problems itself is very costly, there is a strong requirement for corporations to participate in poverty alleviation. Since poverty directly creates many social problems (crimes, low level of education, low productivity, malnutrition etc.), this issue must be solved quickly and strategically especially when United Nation's Millennium Development Goal (MDG) has indicated that global poverty should be reduced significantly by 2015. Therefore, there is a need to have broader corporate involvement in addressing the issues of slum settlements, health, education, unemployment, and meeting basic needs.

According to reports, current CSR approaches do not warrant claims that CSR gives benefits to the poor and marginalised in developing countries. These are discussed both in motivational and behavioural theories. A company's motivations are driven by system-oriented theories. System-oriented theories which consist of legitimacy, stakeholder and institutional theories, are discussed to acknowledge the role of information and disclosure in the relationships between reporting entity (the preparers), the government bodies (regulators), individuals and capital market where entity is influenced by, and influences, the society in which they operate. Secondly, to whom to report is the next stage of a company's reporting, which is linked to stakeholder theory as the companies need to define who their stakeholders are. In relation to motivational theory, if managers are motivated by the overwhelming desire to increase shareholder value then those who have the power to change the share price will benefit more because disclosure will be for powerful stakeholders rather than the less powerful ones. The third stage will cover what to report, which will involve communications with identified stakeholders. The last stage will be the format for the disclosures of the report.

Now, we have to see whether the current CSR initiatives taken by the Bangladeshi companies make enough contribution to poor and marginalised people. Are they meeting development challenges (reducing poverty) as important as meeting the economic/financial growth for a company? Is CSR important in connecting the arenas of business and corporate sustainability?

Are there differences in perceptions and expectations on social performance indicators (especially on poverty alleviation) between different parties (i.e. reporting entity, stakeholders, professionals and regulatory bodies)?

Are there differences in perceptions on poverty alleviation amongst different corporate features (company and industry characteristics)?

What are the components and ranking in social performance indicators for each category of research question? What are the motivations and behaviours between respondents with their perceptions on poverty alleviation?

There are key social performance indicators which are believed to be effective in minimising the legitimacy gap. A case study concludes: there are unique aspects of poverty and sustainability in the developing world which demands different solutions to developed economies. Furthermore, CSR has a powerful potential to make positive contributions to addressing the needs of disadvantaged or marginalised communities in developing countries whilst not compromising their political, social and economic integrity. This case study, therefore, is unique as it applies to a developing nation, Bangladesh, and investigates the determinant indicators to identify leading corporations which are implementing corporate social initiatives in alleviating poverty.

Most companies have difficulties in identifying and implementing CSR projects and performing corporate initiatives directly related to their core business, and do not have enough funds earmarked for materialisation.

(The writer is Executive Director of CSR Bangladesh and President, Bangladesh Institute of Sustainability Leadership. He can be reached at e-mail: epmondol@csrbangladesh.org)