Corporate Social Responsibility Idea Essay

Question:

Discuss about the Present the Conditions of Corporate Social Responsibility and Idea.

Answer:

Introduction

Corporate Social Responsibility can be defined as a form of self regulation by corporate organizations. This self regulatory mechanism is integrated into the business model. Corporate social responsibility entails several aspects such as active compliance with the law, adherence to ethical standards, as well as national and international norms. There are different models of corporate social responsibility depending on the organization. Some organizations go beyond simple compliance and engages in actions that further promote the interest of the society and which is not a requirement of the law. Corporate social responsibility is becoming increasingly popular globally and especially in developed countries. The motives or the reasons why most of the corporate organizations are becoming more generous and contributing more to corporate social responsibility may include contributing to corporate giving to raise their profile among potential customers. A research conducted in the United States in the year 2016 among consumers concluded that more than 63% of the participants would rather purchase from an organization contributing to social good than the one not involved in corporate giving/(Simpson& Taylor, 2013).

This research seeks to establish the extent to which state owned banks and private commercial banks are involved in corporate social responsibility in Bangladesh. The study also seeks to establish the factors that influence the state owned banks and the private owned banks to get involved in corporate social responsibility. This report also contains and analysis of literature on the research subject from previous researches both in Bangladesh and other countries. This research is conducted using both qualititative research methods and quantitative research methods. Data analysis is conducted using content investigation technique and the qualitative data is analyzed by comparing the outcomes of this research with those of other researches done in the past. The final part of the report is the summary of findings and recommendations.

Background and definition of the problem

Corporate social responsibility is now an important part of the accounting function of any organization. The issues that are addressed in corporate social responsibility of any business include assessment of the environment effect of the company’s activities. Corporate organizations are increasingly expected to be wary of the surroundings in which they operate in (Shin, 2014). This may involve the social aspect, economic and environmental aspect. These things have an impact on the organizations and therefore they need to be involved in contributing positively to this environment. Nowadays, most organizations have the corporate social responsibility section in the financial report. This report explains the social role of the corporate organization to the shareholders of the companies.It explains the actions and programs the company has undertaken in the community to promote social good. Therefore due to this reason, it is important that the corporate organizations account for their involvement in corporate social responsibility. This study is therefore conducted so as to establish the importance of corporate social responsibility to an organization and evaluate to what extent the public owned banks and the private banks are involved in corporate social responsibility. Bangladesh was chosen as the case study for this research because of various reasons. One of these reasons is that in Bangladesh, corporate social responsibility is not a very popular practice. Most corporate organizations in Bangladesh play the roles that are only outlined in the law and very few companies are willing to spend on corporate social responsibility. This therefore presents a perfect opportunity to study the involvement of private sector in corporate social responsibility and compare it with the involvement of the private sector (Szabo?, 2016).The choice of banking institutions is motivated by the fact that am in the accounting profession and therefore it is more prudent to evaluate ways in which banks are involved in corporate social responsibility.

Aims and objectives of the research

The main aim of this study is to clear and elaborate the corporate social responsibility idea.

The other objectives of the research study is to present the conditions of corporate social responsibility in SoCB`s in Bangladesh.

To asses and examines the activities and exercises of State-Owned commercial banks in Bangladesh.

Finding out the corporate social responsibility area from the banks chosen to conduct this study

Literature review

All business organizations have a responsibility towards the society in which it is operating. This is in regard to a variety of issues. Some of these issues include environmental and sustainability issues that affect the society as a result of the company’s operations(Werther & Chandler, 2011). Arising social issues in the society also needs to be addressed by the companies operating in this society. Business elements need to address sustainable utilization of natural resources in the environment in which it operates since these resources need to benefit future generations. However, corporate social responsibility is seen in Different aspects depending on the organization and the needs of the society in question.

This paper investigates the level of corporate social responsibility in Bangladesh banking sector. This is done by undertaking a statistical analysis of State owned corporations and the private commercial banks. Eight banks are selected as the sample for this study due to the time constraints of this study.

World Business Council for Sustainability Development (WBCSD) indicates that CSR is the business substance confirmation that corporate activities and exercises will be approachable with monetary growth and be in good working relationship with the society. The CSR announcing practices are different from one country to the other and there are no set international standards of corporate social responsibility. CSR is expected to have a positive impact on the business objectives and to contribute significantly to the welfare of the society both financially and through any other means that may be deemed necessary(In Jamali, 2016). The banking companies in Bangladesh have a reputation of engaging in social non-formal gatherings which can be referred to as CSR. The activities that take place in these gatherings include contributing financial aid, engaging in state beatification and environmental cleaning, and social occasion regarded highly in the society(Ahmad, 2010).

Since the year 2008, the regulations and guidelines of Bangladesh banks required banks to include these activities and occasions in a clear and verifiable manner. CSR is one of the organizations duties to the stakeholders and therefore it is important that the management of the banks explains to the stakeholders the contributions that the bank has made on the society on a yearly basis (Tong & University of Hong Kong, 2014). These guidelines were meant to curb the rising shameless and unaccounted corporate giving. The guidelines were developed from the reasoning that a sound working fund fragment can give in a straightforward manner to a solid economy. Apart from CSR recording of financial part, the society in Bangladesh is developing and its stressed over the issue and increasingly protected in the yearly financial reports(Okpara & Idowu, 2013). Accomplishment of steady CSR in Bangladesh needs corporate organizations to attend exhibitions on CSR globally. Organizations have an obligation to convey sustainable money related developments by cooperating with social units such as families, clans and the workforce. This helps to enhance employment levels and promote ideal exchanges and collaborations between the society and the corporate organizations. In a World Bank report of the year2013,it indicated that the biggest banks in Bangladesh are not aware of corporate recording and reporting(Idowu & Louche, 2011). No adequate research has been done to establish the negative consequences of this issue so that necessary action can be taken.

Literature review on the other countries mostly the developed nations is taken very seriously. In most of the countries.CSR reporting is mandatory especially for the public companies. Most of the companies include corporate report section in their annual financial reports. The significance of corporate social responsibility has grown over the years. In the 1970s, very few organizations were involved in corporate social responsibility. Most managers saw the role that is currently played by corporate social responsibility as being reserved for the government. They reasoned that undertaking these responsibilities would result to overlap of duties and therefore they neglected this role. In the 1990s and the beginning of the twenty first century, corporate giving has increased by more than 70%. Every very small private company is engaging in corporate social responsibility. Increased corporate social responsibility activities has been fueled with realization of the role played by the society in growth of the businesses. Some organizations have also realized that engaging in corporate social responsibility creates a good image for the company which strengthens its brand(Rumana, S., & Safety and Rights, 2014). Eventually this may result to increased sales and revenues for these business organizations. The increase in corporate social responsibility activities and programs has raised alarm among stakeholders. Some companies are spending more than 30% of their profits on corporate social responsibility programs (Hoskins, 2012). This has prompted people to ask the question the motivation of corporate social giving by organizations. Due to these concerns, in some countries, it has been made mandatory that corporate organizations must declare their corporate social responsibility activities and spending.

The literature review on Bangladesh corporate social responsibility among the state owned commercial banks has revealed that very few publicly owned banks engage in documented corporate social responsibility. Most of the banking organizations in this economy engage in CSR at a very low level and do not donate any substantial resources to social courses.

Methodology

This study is conducted using a combination of quantitative and qualitative research design. Quantitative research design helps to collect and interpret statistical data that is needed to answer the research questions posed at the beginning of this report. Quantitative research design results in data that is numerical in nature and it can be compared to draw conclusions (Cuvilceva, 2012). The sources of data for this research are secondary sources of data. Most of the data is from annual financial reports of all the eight commercial banks being used for the purpose of this study. It is important to use factual information to analyze the situation and fulfill the research objectives. The secondary sources that are used for this study include; Bangladesh Banks publications, Bank websites, Banks annual reports, journal articles, previous research papers, thesis and dissertations. Online sources were also an important source of information for this study. Websites such as www.bb.org were used to provide valuable data on the Bangladesh banking industry (Boubaker & Nguyen, 2012). The websites of individual banks identified for this study will also be an important source of reference. The information of the banks listed in Dhaka stock exchange market can be found in the organizations websites. The quantitative data that is collected in this study is analyzed using qualitative techniques. The data is compared with that collected in past research and analyzed in the literature review. This helps to identify the difference between the current situation in the Bangladesh case and that of other countries. The comparison also helps to identify if any progress has been made in CRS by the publicly owned commercial banks and the private banks between the times the previous studies were conducted and when this study was concluded.(Sophastienphong & Kulathunga, 2010)

Data analysis

Content analysis tools have been used to analyze the data collected in this study. Content investigation is used as an exploration method for the objectives of the research and quantitative comparison of the items being researched(Lee & Kotler, 2013). The data analyzed is presented in form of reports, tables and graphs depending on the nature of the variable being compared and the data that has been analyzed.

Findings from the research

The data collected from the websites of various banks in Bangladesh indicate that most of the banks do not declare their corporate social responsibility in their financial statements. A look at the financial statements of Janata bank which is one of the largest publicly owned commercial bank in Bangladesh indicates that the bank does not report its corporate social responsibility spending or activities. It can therefore be assumed that the bank does not engage itself in corporate social responsibility and is completely focused on profit making objective of the business(Author, n.d.).

Rupali Bank limited has a very elaborate CSR integrated into the banks business model. The financial report of the year 2016 indicates that the focus of Rupali Bank Limited CSR initiatives is to respond to the huge unmet demand in the society. The banks aims at making its business more committed to the social needs and national development through legal and commercial conduct. Rupali Bank Limited partners with customers and corporate organizations to advance its corporate social responsibility agenda (Ooi & University of Essex. 2012).The bank offers contemporary financial products and services to the community without hidden costs. Rupali being a responsible corporate body, it conforms to all the stringent regulations issued by the Government of Bangladesh and the Bangladesh bank.

The human resource aspect of CSR is the distinctive and the true capital of RBL. The bank treats its officers and staff as human resources rather than as employees. The bank encourages excellence in performance and also rewards and recognizes good performance. The bank ensures gender equity in terms of promotion and offering new job opportunities(In Barth, In Lin & In Wihlborg, 2012). The bank also operates a death Relief Grant Scheme. The scheme applies to all the employees and the payments are made to the successor of the employees. Two retirement schemes are operated by the bank. They include Contributory Provident Fund (CPF) and General Provident Fund (GPF()Hollender& Breen,2010). Other CSR related programs and products by the bank include Staff Welfare Fund, Children Education Allowance. The bank also engages in environmental conservation. The bank has a policy that in order to get a credit/loan from the bank, one needs to obtain clearance from Department of Environment. The bank also opens account with Tk.10.00 for freedom fighters, extreme poor, insolvent and handicapped(Tawsif, 2016). The bank also donates to the Hindu Religious Welfare Trust, Social Safety Net Program and other rural and urban social organizations(Bowen, 2013).

Rupali Bank`s CSR initiatives in 2016 and 2015 expenditure

S1

Area

2016

2015

1

Day Care Development

12.60

40.07

2

Distributing Blankets among the Cold Wave Hit Distressed People

50.96

47.32

3

Education, Health and Research

0.50

4

Poverty reduction and rehabilitation

2.30

5

Institutions

0.43

6

Natural disaster

50.00

Total

116.80

87.39

Agrani Bank Limited is also heavily involved in corporate social responsibility. Some of the activities undertaken by the bank include environmental conservation efforts through its environmental conservation fund, needy children sponsorship, supporting freedom fighters and donating to partner charity organizations(International Monetary Fund, 2010).The bank also has welfare programs for its employees. These programs aim at securing the social life of its employees. The bank has a special medical cover for its retired employees, Death Benefit scheme to help families after their loved ones have passed away. The following is a table showing the spending of Agrani bank for the year 2015 and 2016.

S1

Area

2016

2015

1

Natural disaster contributions

13.87

10.60

2

Education fund

76.50

80.50

3

Poverty reduction and rehabilitation

24.63

4

Employee emergencies contributions

17.90

5

Environmental program funding

9.45

10.24

6

Contributions to charity organizations

18.45

18.45

Total

160.8

119.79

Analysis and discussion

From the data that has been obtained on Corporate social responsibility in corporate organizations, it is clear that most of the publicly owned commercial banks do not engage in CSR or their CSR activities are very insignificant hence do not represent a significant spending for the business. Out of the four publicly owned commercial banks, only two of them reported their CSR activities and programs. These include the Agrani Bank and Rupali Bank Limited. Janata bank and Sonali Bank did not record any CSR activities or spending.

The data collected on Rupali Bank CSR spending indicates that the bank is committed to corporate social responsibility. The bank is very committed to the environment and also to the social welfare of the people living around. The total spending for the bank in CSR increased from $87.39 in the year 2015 to $116.80 I the year 2016. This represents a 29 % increase. There are some sectors that the bank did not donate to in2015 but contributed in 2016. The data from Agrani Bank limited also indicates that the bank is involved in many CSR programs. The CSR spending for the bank increased from 119.79 in 2015 to 160.8 in 2016. This is 34% increase (Choy & Universiti Malaya. 2013).From this analysis therefore, it is clear that more publicly owned commercial banks are getting involved in CSR.

Conclusion

CSR is a self regulatory mechanism that is integrated in the business model. This paper introduces the significance of CSR in accounting. It also elaborates the need for research on CSR in publicly owned banks in Bangladesh where CSR has been lagging behind. The objectives of this study is to establish the state of CSR in publicly owned banks in Bangladesh (CHENG, 2017). The report also contains a literature review which discusses past research done on the subject. The methodology used in this study is the quantitative research design and the data analysis method used is the content investigation method

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