1.1 Origin of the Report This Thesis report is a requirement of BBA Program and it is a research based report.

This thesis report is about Corporate Social responsibility and its disclosures practices of Bangladeshi companies. Most of the corporate social responsibility (CSR) studies conducted so far have been in the context of developed countries. Very few studies are available on the CSR practices in developing countries. Given the different socio-economic context of developing countries it is argued that it is important to learn about the CSR practices in those countries. Corporate Social Reporting (CSR) assumes that the companies are socially conscious to discharge their social obligations for the well being of the society. Now business enterprises are under pressure from stakeholders to report to them, as to what extent they have been successful in protecting their interests. Thus, it is essential for them to adopt social accounting practices and report to interested parties as to what extent they have discharged the social responsibilities delegated to them.

1.2 Objectives The main objective of this report is to find out the present state of reporting on CSR issues by the Bangladeshi Companies in the annual reports. The secondary objective of this report is that in addition to measuring the extent and volume of disclosures by using content analysis, to explore the socio-economic context in which these disclosures take place. To achieve the main objective, the following specific objectives have been covered in this study. i) ii) iii) iv) v) vi) vii) viii) ix) x) To study core issues of CSR To study why companies engage in CSR To assess the importance of Corporate Social Reporting. To observe the position of social information in the Annual Report. To analyze the reporting practices of listed companies in Bangladesh To analyze the volume and content of the listed companies in Bangladesh To study the context in which CSR reporting is made by Bangladeshi Companies To identifying the corporate principles and values which key stakeholders and the wider society expect from the company; To understand the OECD guidelines and compare with practices of Bangladeshi companies. To put forward necessary suggestions to overcome the problems.

1.3 Methodology To write this report information were collected from secondary sources. This report has been prepared on the basis of annual reports of the listed companies in Bangladesh. I also review existing literature relating to corporate social responsibility. This report is mainly based on the information extracted from annual reports, various published books, documents, study reports, articles & journals relating to corporate social responsibility and their disclosures, speeches in various seminars and various reports available in internet. In preparing this report I select 10 companies out of 416 companies listed on the Dhaka Stock Exchange (DSE) on June 2009. Among them five are pharmaceuticals industries, four are textiles industry and one is food & alliance especially in tobacco because these industries operations have more impact on the environment and society. Convenient sampling is used to determine the sample of the study. The reason for selecting only the listed companies is that these companies have a greater stakeholder orientation as a result they try to make quality disclosures. The main sources of data are the annual reports of the selected samples. The data from the annual reports are collected as volumes of disclosures which are categorized by subject of disclosure. All the annual reports in the sample were of the year 2008-09 as this was the most recent year for which annual reports were available.

After studying those CSR models and OECD guidelines I identified some important yardsticks of CSR which particularly applicable for Bangladesh. Those are: Separate Corporate Social Responsibility disclosures, sustainable development, shareholders relations, management systems and certification schemes, Employee relations, community relations, compliance of Corporate Governance, Environmental Responsibilities, Welfare Activities & other Socio-economic issues, Technology, Contribution to National Exchequer, Labor Standards, Fair employments, Health & Safety, Human Rights etc.

1.4 Scope To limit the scope of the study, the financial reporting part of the annual report was not considered. Means, this study has concentrated only on the disclosures that were made out side the financial statements (including notes to account).if these issues were discussed even in the Chairmans/ Directors report under separate heading in annual report, that company was considered as a reporter of that issue. This study makes a review finding out the percentage of the companies in the total sample reporting on several issues of CSR. 1.5 Limitations This report has following limitations:

Lack of availability of data. Though annual reports of reputed companies were

available for current year, not available for previous years which are very much necessary for trend analysis.

Again, while collecting data from secondary sources, annual reports of all types of
companies were not available for the current period. These limits to conduct the study on based on available data. However the sample frame of this study is very small. Therefore, the result of this study may not reflect the actual picture of the companies reporting practices.

Confidentiality of data was another important barrier that was confronted during the
conduct of this study. Every organization has their own secrecy that is not revealed to others. Many companies are reluctant to engage or disclose information regarding CSR practices.

1.6 Report Preview The report contains six parts. Part one is the Introduction part, which includes objective of the report, scope, limitations, and methodology. Part two the nature & concept of CSR. This part gives the idea about CSR, evolution of CSR, why companies engage & report of CSR practices etc. Third part contains an overview of CSR in Bangladesh. This includes current state of CSR, stake holders perception on CSR, state of environmental reporting and Corporate Governance practices in Bangladesh. Fourth part represents the OECD guidelines for multinational companies which can be applicable by our companies. The fifth part contains the findings and analysis of the study on the basis of some yardsticks. And at lat the sixth part contains future prospects of CSR in Bangladesh, conclusion and recommendations for better practice and reporting CSR issues.

2.0 Nature, Concept and Extent of CSR 2.1 Introduction:

The type and ownership of the business, the economic, social and cultural environment in society differs, but the determination of businesses to play a role in the development of their home country and in others where they trade, is manifest. Companies are expected to play a role as good citizens in making a contribution to the maintenance of the fabric of society that sustains the framework of law and civilisation, within which they do business. Companies are society's great wealth creators. They create jobs, train employees and provide healthcare for their families, transfer technology around the world and produce a vast array of goods and services which enhance and even save many lives. They collect and pay huge sums in taxes, making government possible in many parts of the developing world. Business operations have an economic, social, and/or environmental impact on a wide range of stakeholders. The impact a particular business has on some of these stakeholders might be so indirect that it is not fully aware of the consequences of its actions. Nevertheless, these actions might have a significant detrimental impact on these stakeholders lives. Today business is perhaps the critical factor in the economic, social and cultural development of industrial and non-industrial countries alike. It creates jobs, pays taxes, large companies support an immense number of small and medium sized businesses in the value chain, and business contributions to education, social services civic and cultural development are of increasing importance. In addition, business activity is perhaps the main focus of local, national and global environmental debates as well. To address the social problems or the problems of the stakeholders, the business community evolved a new approach in their business strategies named Corporate Social Responsibility (CSR) and through CSR enterprises are intent to strike a balance between economic and 8

social goals, where resources are used in a rational manner and social needs are be addressed responsibly. Now, business organizations are considered as Corporate Citizens. They are now emphasizing on adopting social, ethical and environmentally responsible approaches to business activity. Now it is said that business are accountable not only to the shareholders but also to wide range stakeholders, including business partners, employees, customers, suppliers and the overall community. This kind of social view gave birth to the concept of Corporate Social Responsibility (CSR). CSR has become the mainstream prescription by business for dealing with social and environmental ills. It is a voluntary form of selfregulation that aims to society welfare. Today CSR is not about philanthropy or charitable work. It refers to something more fundamental. It is about how companies take responsibility for their actions in the world at large. Corporate Social Responsibility (CSR) assumes that the companies are socially conscious to discharge their social obligations for the well being of the society. Now business enterprises are under pressure from stakeholders to report to them, as to what extent they have been successful in protecting their interests because social attitude and expectation towards the business is changing. As the business had work in the society, business people become more alert about ethical issues. Moral obligations towards the society started to get importance. Societys new vision towards the corporate world begot some new thoughts like Corporate Social Responsibility, Social Responsibility Accounting, that demand Corporate impact reporting and Corporate Social Responsibility Reporting. Thus, it is essential for them to adopt social accounting practices and report to interested parties as to what extent they have discharged the social responsibilities delegated to them. Now a days, so many companies all over the world are reporting on their Corporate Social Responsibility activities in their annual reports and in most of the

cases this are voluntary disclosure. This tendency can be noticed in case of Bangladeshi companies also. Most of the corporate social reporting (CSR) studies conducted so far have been in the context of developed countries. Very few studies are available on the CSR practices in developing countries. Given the different socio-economic context of developing countries it is argued that it is important to learn about the CSR practices in those countries. Asia faces many critical issues in the context of globalization, varying from regional conflicts and terrorism, corruption, growing gaps between rich and poor, environmental pressures and access to infrastructure and basic services such as health, clean water, education and housing. Companies, can play key roles as corporate citizens in contributing to human resource development, technology access, sensitive and creative industrial restructuring and inclusive economic development as well as respecting human rights. The smart companies are those that will take a proactive approach and see corporate social responsibility as a feature of mainstream business practice, employee engagement and a competitive advantage (Davies 2002). Bangladesh is one of the poorest and most corrupted economies in the world. Human rights violation, child labor, gender discrimination, and environmental pollution- these are considered as very common phenomena in this country. These irregularities can be noticed in the business sector of the country also. For this reason, asserting on these CSR factors by the companies to its stakeholders can be considered very significant for sustainable development. Ensuring improved and safer working environment, alleviating corruption, focusing on human rights and environmental sustainability are recognized as constitutive factors for social development (Raihan et al, 2002). A very few studies were done related to the developing countries and especially in Bangladeshi context, the number of studies is much inadequate.

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2.2 Literature Review:

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 rapport-building with stakeholders. 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 has shown that about one half of the above average performance of socially responsible companies can be attributed to their CSR image. Socially responsible companies are expected to deliver above-average 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 rapport with the society. In a Bangladesh context, several multinational companies and local companies practice CSR. Although best-practice CSR in Asia may not be as well developed as it is in Europe, it is important to recognize that considerable differences exist between different countries and that stakeholder expectations and demands are culturally specific and require CSR solutions that reflect that difference and cultural specificity. Roger Cowe (2001) has noted the fuzziness of the boundary between government responsibility and corporate responsibility. Cowe feels that corporate boardrooms are a poor place to plan social policies, but says that as business allows itself to be drawn closer to government; it needs to accept criticism about social responsibility concerns that was irrelevant when the only corporate concern was making money. 11

Simon Caulkin (April 2002) cited the example of Enron as social responsibility gone amuck. While still solvent, the energy giant made large contributions to the arts, sports and medicine, but those donations in retrospect seem only to have been intended to purchase reputation. Unilever has been awarded the Association of Certified Accountants award for their environmental report, yet Unilever failed to disclose a significant accident in India regarding mercury poisoning that took place during that same reporting year. A very few studies were done related to the developing countries and especially in Bangladeshi context, the number of studies is much inadequate. Bala and Habib (1998) made a study on the practice of financial reporting to the employees. They concluded that the extent of disclosure is at minimum scale and even the mandatory disclosure under the Security and Exchange Rules was violated. Belal (1999) made a very short study on Corporate Social Responsibility (CSR) practices in Bangladesh. In which he found that 90% of the companies studied made some environmental disclosures, 97% made employee disclosures and 77% made ethical disclosures. The study lacks detailed findings on the CSR practices in Bangladesh. Imam (2000) has performed a study on 40 companies listed in the Dhaka Stock Exchange (DSE) and concluded that most of the companies did not make any corporate social performance reporting in 1996-97. Belal (2001) made a survey of CSR practices in Bangladesh. On one hand this study made a content analysis in respect of these disclosures, on the other hand it also tried to emphasize on the socio- political and economic context in which these disclosures take place. The study was made on the basis on annual reports of 30 companies among which 28 were listed companies. He summarized that all companies included in the survey made at least some social disclosures. The main weakness of this study is, this study covered only 15% of the total listed companies.

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Al-Amin, Hossain and Salat (2005) made an extensive study on voluntary disclosure on corporate social responsibility on the annual reports of Bangladeshi companies. They selected 75 listed companies of DSE on a sample basis and conclude that though some of the companies have been reporting on some corporate social responsibility issues in spite of having no mandatory requirements, the disclosure is not adequate. Khan and Hossain (2003) made a very short study on the environmental reporting practices in the annual reports of manufacturing companies of Bangladesh. The study was made on the annual reports of 15 companies listed in the DSE from the year of 1999 to 2002. they found that Bangladeshi manufacturing companies are mostly doing the environmental reporting in non financial manner and this reporting is mainly done in the Directors / Chairmans statement in the annual report. Bala and Yusuf (2003) have made an extensive study on corporate environmental reporting in Bangladesh taking all the listed companies in DSE under consideration. They found that only 10.4% of the companies included an environmental report in their annual report. They did an opinion survey in which they found that one reason for not disclosing the information related to this issue is the absence of compulsion on environmental reporting. Khan, Siddiqui and Hossain (2004) the status of voluntary disclosure on corporate governance through a case study on the BEXIMCO group annual reports. Thaey found that BEXIMCO makes some disclosures on corporate governance on a voluntary basis. They also found (in a questionnaire survey) BEXIMCOs user groups are in favour of such disclosures. They concludedthat the disclosures are not adequate in meeting the goals of corporate governance. This is mainly a case study and the result of this study cannot be generalized. Hossain (2008) made a research on Social Responsibility Practices of business organizations in Bangladesh. Through analysis, two opposite pictures came under light. The analysis of these cases identified that on one hand, the corporate sector of Bangladesh is performing corporate social responsibility activities with issues like health,

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education, natural environment, women empowerment, disabled people, cultural development and infrastructural development of the country. On the other hand there are evidences of child labor, human rights violation, low wage, poor working environment, violation of governmental rules and regulations and others. Salat and Haider (2008) made a study on the nature and extent of disclosures on corporate social responsibility in the annual reports of some selected companies in Bangladesh. They selected 75 listed companies of DSE on a sample basis. Among 75 companies the level of disclosure is very high in the service sectors especially in bank and financial institutions sector. Besides the likelihood of a firm making a CSR disclosure is higher in industries associated with visible social issues, firms performance, size of the firm, firm's media exposure, dispersion of share ownership, degree of firm leverage, non executive directors. A strong case may also be made in favor of regulation by drawing attention to the limits of voluntary initiatives in developing countries, where pressure groups are not yet organized to the level of developed countries. In a recent study of corporate social responsibility and reporting in Singapore and Malaysia Perry & Singh (2001) concluded that voluntarism could not be a substitute for effective government regulation. Other authors also favored regulation prescribing a minimum disclosure requirement, as leaving it to the demands of market forces would only serve the self-interest of business. Most previous studies of CSR in Bangladesh are descriptive in nature, mainly measuring the volume of disclosures (Belal, 2000; 2001; Belal, 1997; forthcoming; Imam, 1999; 2000). Most of these studies show that the volume of disclosure is low and poor in quality compared to developed countries. None of this earlier research has examined managerial or stakeholder perceptions of CSR in Bangladesh, although recent work by Belal and Owen (2004) did examine managerial perceptions of CSR in Bangladesh. They found that current CSR processes are mainly driven by outside forces, such as parent companies, international buyers and international agencies. The imposition of

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international social accounting standards and codes is likely, they suggest, but in such a way that due consideration of the needs of local stakeholders is not likely to be significant. They consider it unlikely that such a passive compliance strategy will achieve the fundamental purpose of social accounting, which is to achieve corporate transparency and accountability (Medawar, 1976) by empowering stakeholders.

2.3 Evolution of CSR:

Corporate social responsibility is not a new issue. The social responsibility of business was not widely considered to be a significant problem from Adam Smiths time to the Great Depression. Social responsibility, in one form or another, has been on the minds of American business for over 100 years. In the late nineteenth century, US pharmaceutical companies established codes of conduct that stressed their need to serve public health while making profits. But since the 1930s, and increasingly since the 1960s, social responsibility has become an important issue not only for business but in the theory and practice of law, politics and economics. Until the 1970s, despite regulation and legislation, business continued largely along an autonomous path, ignoring its critics and listening only to its shareholders, to whom it felt somewhat responsible. But the decade of the 1960s was to be a period of enlightenment for many. Citizens were distrustful of government, business and the undefined establishment. Consumers had grown suspicious of adulterants in their food and dangerous defects in the products they bought. People were becoming aware of the fragile nature of the earths ecology, while simultaneously becoming more cognizant of human rights. In 1977, the Reverend Leon Sullivan proposed a human rights code - later expanded into the Global Sullivan Principles of Social Responsibility - for companies doing business in South Africa. By the 1980s, over one hundred mutual funds and investment funds were screening investments for human rights or environmental records.

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Introduced in the early 1930s (Berle, 1931; Dodd, 1932), corporate social responsibility was initially concerned with the role of corporate managers and their ability to consider interests other than those of their shareholders. The tradition within Anglo- American models of regulation has been to demand that directors prioritize the interests of shareholders above all others, constituted by the pursuit of profit maximization (Parkinson, 1996; Roach, 2001; Wedderburn, 1985). The opportunity to expand the range of interests capable of recognition within the decision-making processes of management, however, was first recognized by Berle and Means (1936) who, in identifying and analyzing the implications of the separation of ownership and control within large companies, opened up the boundaries of managerial discretion. As Stokes explains, once the link between property ownership and control is severed there no longer seems to be any compelling reason why the shareholders should receive all the profits of the company or why corporate managers should run the company in their interests alone. (Stokes, 1986: 178) In response to these concerns and in an attempt to make companies accountable to those affected by their decisions, academics and policy makers alike sought, during the 1970s, to reinvigorate the corporate social responsibility debate. Carroll (1979, 2000), for example, offered a four-part definition of corporate social responsibility which encompassed, being profitable, obeying the law, being ethical, and giving back to the community (Carroll, 2000: 37). Writers such as Dahl (1972), Stone (1975), Nader et al. (1976) were more forthright in their mistrust of big business and promoted a view of the company as a public, rather than private entity, capable of affecting individuals and groups other than their shareholders: it makes no meaningful difference to those who lose their inalienable rights to freedom of speech or due process of law that they were victimized by a giant corporation rather than by a giant government (Nader et al., 1976: 183).

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The past twenty years have seen an unprecedented period of deregulation of business and the opening of global markets. The number of private companies and the scale of their operations have expanded massively. As a result, public attention has increasingly turned to the role of business in society and of the need for corporate social responsibility (CSR). This issue is rapidly rising up the agenda for business and particularly so for leading brandbased companies trading at home and around the world. An important driver for companies to manage their corporate social responsibility better and more comprehensively is a growing demand for greater transparency about how private firms make decisions that impact the lives of millions around the world. Customers, governments, employees, communities, non-profit organizations, the media and wider society are all asking companies to give an open and well-substantiated account about how they operate and what is their impact on society. Over the last few years, several major companies, often UK-based, have taken a lead in creating a new generation of social reports which go beyond free-standing environmental or community reports. These are valuable innovations because there is a growing worldwide demand for greater transparency in the management of private companies, large and small. Much has been learnt from them, particularly identifying issues of social responsibility and how to measure them. More recently a wider group of stakeholders, notably governments and employees but increasingly others in society too, have sought information from companies on a wide range of non-financial performance issues. Some firms have responded by producing an ever more elaborate Annual Report and Accounts, others by issuing separate documents such as an environment report or a report on community contributions. Indeed over the last decade environmental reporting has become a well-developed discipline. Now a few companies have progressed as far as attempting to produce a holistic social report, covering economic, social and environmental impacts, although the formats vary greatly.

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Efforts such as the Global Reporting Initiative (GRI) to develop a commonly agreed methodology for environmental and social reporting are welcome, provided they do not become straight-jackets requiring conformity and hindering good communication. Meanwhile the Internet is opening up many possibilities for flexible, near real-time reporting, with immediate feedback from stakeholders the potential has barely been explored. But the current idea of social activists telling large corporations how to run their businesses - and companies listening - is much newer. Nevertheless, responding to the demands of activists over issues of corporate social responsibility (CSR) has today become integral to the way many large businesses operate. Despite this recent progress in social reporting, most current examples are still long on assertion with descriptions of good intentions and examples of best practice case studies; but they are short on hard measures of actual performance and of embedded management systems to give effect to the stated company mission and policies. Some are so detailed as to make it virtually impossible to see the big picture; others are so short as to beg serious questions. Few reports yet truly succeed in integrating economic, social and environmental performance, instead pragmatically combining the traditional community and environment reports. Companies must now answer to a diverse group of stakeholders ranging from consumer advocates to human rights groups. Public expectations for business behavior have changed due to the need for environmental safety, and a desire for fairness and honesty in reporting. Global pressures and competition, as well as the demand for a scandal free, ethical business community are further revolutionizing business practices. Institutional reinforcement such as the Sarbanes Oxley Act and other regulations are providing an impetus for increased reporting on a voluntary basis. The work of socially responsible investment (SRI) institutions continues to have powerful impacts on the definition and practice of corporate social responsibility (CSR). The SRI community has been rightly hailed as having raised awareness about the importance of CSR issues. This has led to changes in company approaches to a number of

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environmental, social and business issues that enhance the bottom line. With annual shareholder resolutions with an environmental or social focus numbering in the hundreds each year, and a growing body of research supporting connections between CSR and strong performance, the SRI community has been the vanguard of many important changes. These include the desire to improve corporate reputation and brand management; a proliferation of high profile indices that rate corporate citizenship performance; pressure on companies from NGOs, particularly in relation to environmental and human rights issues; greater public sophistication and awareness with respect to corporate social responsibility; the rise of socially responsible or ethical investment funds; new governance structures that place greater emphasis on cross-sectoral partnerships between governments, NGOs and business; the need for companies to improve stakeholder relations; and the desire to improve governmental relations in order to avoid longer term regulation. A number of authors also identify drivers internal to the firm: in particular, the purported positive impact of CSR on motivation, commitment, loyalty, training, recruitment and turnover, improving employee morale is often cited as a driver for CSR activities.

2.4 Nature and Concept of CSR:

There is no single accepted definition of CSR, although most assume that there is an inherent compatibility with profit-making and fulfilling the needs of society. For example, the World Banks definition is that: Corporate Social Responsibility is a term describing a companys obligations to be accountable to all of its stakeholders in all its operations and activities. Socially responsible companies consider the full scope of their impact on communities and the environment when making decisions, balancing the needs of stakeholders with their need to make a profit. The European Union definition states that CSR is behavior by business over and above legal requirements. The concept of CSR is evolving in response to the changing business environment, globalization and varying customer expectations. As the term is associated with the social

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responsibility of businesses, it has been a subject of intense debate and controversy over the last few decades (Jamali, 2008). Consequently socially responsible corporate behavior has become difficult to define as it means different things in different places to different people and at different times (Campbell, 2007: 950). CSR focuses vary by business, by size, by sector and even by geographic region. CSR increase the business profitability and can preserve interest of all stakeholders. CSR was more of a charity by affluent or socially responsible business organizations without expecting any financial return. The driving forces of CSR are new concerns and expectations from citizens, consumers and as investors. Increased concern about the damages caused to the environment by economic activities; transparency of business activities brought about by the media and modern information and communication technologies are all contributing to the changing scenario regarding CSR. Corporate social responsibility (CSR) has emerged as a significant subject of public policy, in many countries as well as internationally. Considered by some to be the business issue for the twenty-first century, CSR is assuming an increasing part of the larger debates over both globalization and sustainable development. There is no universally agreed definition of CSR. Differing perceptions of CSR have resulted in many misunderstandings and have created obstacles in addressing the opportunities and challenges of CSR. Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large.

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The extent of a corporations responsibilities is the subject of much debate. On a narrow view, a corporations responsibility extends only to profit maximization. The broader view is that corporations owe a responsibility to not just their shareholders but to other stakeholders because of their capacity to shape domestic and international policy agendas and their impact on the wider community. This broader view is affiliated with the notion of Corporate Social Responsibility (CSR). CSR is concerned with treating the stakeholders of the firm ethically or in a responsible manner. Ethically or responsible means treating stakeholders in a manner deemed acceptable in civilized societies. Social includes economic responsibility. Stakeholders exist both within a firm and outside. The natural environment is a stakeholder. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation. CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. At its heart, corporate social responsibility is concerned with the relationship between companies and society and in particular, with constraining the adverse impact of corporate activity on individuals and communities as a whole. While it has become an increasingly familiar term within sociopolitical debate, consensus as to its specific meaning and the methods by which to implement it remains elusive. A review of the relevant literature, for example, reveals a multitude of different meanings ascribed to the concept ranging from the implementation by companies of philanthropic ventures (Blumberg, 1972; Henning, 1973; Sheikh, 1996), to an obligation to take proper legal, moral-ethical, and philanthropic actions that will protect and improve the welfare of both society and business as a whole (Anderson, 1989: 9). The ambiguity that currently surrounds the concept is perhaps best described by Votaw: it means something, but not always the same thing to everybody. To some it conveys the idea of legal

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responsibility or liability; to others, it means socially responsible behavior in an ethical sense; to still others, the meaning transmitted is that of responsible for, in a causal mode; many simply equate it with a charitable donation; some take it to mean socially conscious; many of those who embrace it most fervently see it as a mere synonym for legitimacy, in the context of belonging or being proper or valid; a few see it as a sort of fiduciary duty imposing higher standards of behavior on businessmen than on citizens at large (Votaw, 1973: 11). A strategy of corporate social responsibility is defined as the internalization by the company of the social and environmental effects of its operations through proactive pollution prevention and social impact assessment so that harm is anticipated and avoided and benefits are optimized (Warhurst 2000b). The concept is about companies seizing opportunities and targeting capabilities that they have built up for competitive advantage to contribute to sustainable development goals in ways that go beyond traditional responsibilities to shareholders, employees and the law, and that internalize indirect socioeconomic and biogeochemical effects as well as direct impacts. CSR advocates maintain that businesses should assume the major role in making the world a better place. In general CSR activists ask corporations to adopt socially responsible policies on labor, environmental and human rights issues, but there may also be special interest demands, e.g., animal rights, women's rights, technology transfer, rainforest conservation, etc., that a company may be called upon to address. An article in The Observer in 2003 suggested that the reason social responsibility campaigns had been taken up by the antiglobal movement was that by imposing environmental and social obligations on multinational firms, the diminished benefits of doing business offshore, e.g., cheap labor, loose environmental laws, profit repatriation and tax avoidance, might cause companies to remain at home. The World Business Council for Sustainable Development (WBCSD) has defined corporate social responsibility as the commitment of business to contribute to

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sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life. Corporate social responsibility is at heart a process of managing the costs and benefits of business activity to both internal (for example, workers, shareholders, investors) and external (institutions of public governance, community members, civil society groups, other enterprises) stakeholders. Setting the boundaries for how those costs and benefits are managed is partly a question of business policy and strategy and partly a question of public governance. By contrast, economist Milton Friedman has argued that the social responsibility of business is simply to maximize the rate of return to the general shareholders, consistent with the law. According to William A. Niskanen, "A business has no responsibility to any other group, although it may serve the business objectives of some firms to be perceived to promote some social objective." Matthew Bishop, (editor of The Economist), said company social responsibility initiatives could diminish shareholder returns, distract business leaders from their focus, and often allow companies to continue bad behavior in the shadows. Key dimensions or criteria of CSR or corporate citizenship include social and environmental responsibility, corporate governance, social and environmental reporting, ethics sponsorship, stakeholder relations and partnerships. While the terms CSR and corporate citizenship are regarded by some authors as synonymous, others insist that they have different connotations. CSR is about companies assessing and managing risks, pursuing opportunities and creating corporate value, in areas beyond what would traditionally be regarded as a companys core business. It is also about companies taking an enlightened self-interest approach to considering the legitimate interests of a companys stakeholders. Because of the sheer diversity of modern corporations in terms of size, sectors, stakeholders,

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structures and strategies the concept of corporate responsibility can have a different meaning to different people and different organizations. Although the term CSR has evolved in the past few decades, the two main school of thoughts lie between two extremes- CSR having an economic focus and ensuring only shareholder interest, and the focus of CSR evolving to include a number of additional dimensions which emphasis on economic, legal, ethical and discretionary responsibilities (Carroll, 1999). Jamali ( 2008: 213) argues that these variations in the different conceptions of CSR result from differing fundamental assumptions about what CSR entails, varying from conceptions of minimal legal and economic obligations and accountability to stockholders to broader responsibilities to the wider social system in which a corporation is embedded.

2.5 Why Companies Report CSR?

The underlying reason behind CSR include that voluntary reporting improves performance; codes and management systems change corporate behavior; the consumer will drive change and that the investment community will provide the best incentive for business to perform in a more sustainable manner. Efforts such as the Global Reporting Initiative (GRI) to develop a commonly agreed methodology for environmental and social reporting are welcome, provided they do not become straight-jackets requiring conformity and hindering good communication. CSR, as a prescription for ethical business has taken on a life of its own over the past few years and seems unlikely to disappear at any point in the near future. In a few short years, a new generation of non-financial reporting has moved from the extraordinary to the exceptional to the expected, and in the process will establish a new standard of transparency unimaginable even a decade ago. For forward-looking companies, opportunities abound to stake out leadership positions among investors, customers, communities, activists and other stakeholders, while reaping the benefits associated with trust and integrity in global markets. Leading companies are increasingly

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going beyond their financial Annual Report and publishing reports on environmental impact and community contributions. Some go further and produce combined social reports that try to describe the all-round economic, social and environmental impact of the business. These reports are really valuable in the debate about the role of business in society and some audiences find them helpful. Over the last twenty years, corporate social and environmental reporting has become an issue of interest for researchers. In the decade of 1980, the focus switched over from corporate social disclosure to corporate disclosure and reporting of environmental information and the trend continued in the 1990s as well as beyond. It has been argued that corporate social and environmental disclosure may not apply universally to all countries which are in various stages of economic development and with corporations having differing levels of awareness and attitudes towards corporate environmental disclosure. Non-financial reporting has succeeded not because of specific indicators, measurement techniques, formatting or communications strategies. Instead, it has succeeded because it offers stakeholders what financial reporting alone fails to offer: a window on the character and competency of the reporting company. Financial & Non-Financial Performance Data included are standard financial accounts of the company juxtaposed with non-financial data such as Current Risk Profile, Competition and Business Ethics, and People. Within this non-financial reporting too, is the Global Reporting Initiative (GRI) content index, signifying where GRI indicators are available either within the Annual Report or on the company website. Following the performance section, the report concludes with sections on the Challenging Workplace and Values in Action, including a discussion of An Industry under Fire. Integration of financial and non-financial disclosure will accelerate, exemplified by the few leading firms that already see the logic and efficiency of such practice. With environmental, social and economic indicators moving steadily toward a set of generally

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accepted standards applicable to all companies. Concurrently, sectoral initiatives will be key instruments for ensuring that disclosed information is in fact material information to stakeholders. Finally, the use of technology to communicate and access information will experience a quantum leap as companies deploy the full range of media and mechanisms to disseminate their non-financial performance information. In a matter of a few years, indices and ratings of non-financial performance will become as commonplace as financial performance indices and ratings are today. One argument for increased social responsibility reporting on the part of transnational companies is that because these companies have reaped the benefits of globalization, including privatization, deregulation, and freeing of international trade and investment flows, they should assume more of the burdens of social responsibility. As economist David Henderson wrote in Misguided Virtue: False Notions of Corporate Social Responsibility, "CSR is a radical doctrine. It embodies a new and wider conception of the role of private business and the way in which it should be conducted." In spite of CSR's apparently radical nature, many corporate executives have argued that social responsibility is just a public relations exercise that companies sign up to because their competitors have. And some activists apparently agree that, "CSR is a public relations device designed to throw sand in our eyes." Some activists have argued that adopting CSR standards allows companies to build brand value by imbuing their brands with ideas, emotions and beliefs that appeal to consumers. And, they have argued, the cost of building brand value with social responsibility initiatives is usually cheaper than trying to achieve the same effect through advertising and public relations. Yet because the incentives for managing social and environmental impacts must always be based on economic decisions, business tends only to innovate and provide solutions in this arena where there is a reasonable profit to be made. Various government attempts have attempted to provide a framework which would ensure businesses consider their wider social and environmental risks.

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Even assuming it is possible to reach an agreement on the desirability of CSR standards, there is still no fundamental agreement on what constitutes economic, social and environmental development. And monitoring compliance may pose special problems. Social reporting is still in its infancy, there are no generally accepted auditing practices to check on such issues. As companies realize the significance of corporate citizenship reporting, they are looking for ways to incorporate social and environmental information into their communities. An early pioneer in this field, John Elkington (www.sustainability.com) coined the phrase triple bottom line accounting. This type of accounting refers to the economic, social and environmental dimensions of a company. In its broadest sense, economic reporting goes beyond the financial statements required by law. It includes the impact of corporate activities on creating human capital, investing in much-needed infrastructure and generally creating value to the community and economy. The environmental part of the report communicates the impact of production activities on the environment, emissions and wastes generated and any effect on climate and other natural conditions. The social aspect covers human rights, labor and employment issues employee diversity, and investment in social and community activities. The triple bottom line accounting model is not meant to replace, but rather supplement the more traditional financial information required by publicly held companies. Reporting on corporate citizenship is an attempt to bring three interconnected concepts economic, social and environmental considerations - together in order to present a balanced view of overall corporate performance. Business organizations however, face a significant challenge ahead in bridging financial and sustainability reporting. Economic indicators are typically presented in financial terms, but many environmental and social performance indicators are not expressed in financial terms. New methodologies are needed to line economic, environmental and social dimensions to financial performance. At present, the content of sustainability

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reports tends to appear in forms and units that are not readily convertible into financial terms. But rapid advances in areas such as environmental management accounting, valuation of intangible assets, and value reporting, promise to make sustainability useful to the financial community. There are four key drivers that would impel a company to adopt a CSR programmed: managing risk and reputation; protecting human capital assets; responding to consumer demands; and avoiding regulation.

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3.0 Overview of the state of CSR in Bangladesh

3.1 Current State of CSR
CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. Also, debating whether companies should go beyond their legal obligations and voluntarily adopt CSR initiatives makes little sense in many developing countries. In some countries, for example India, Pakistan and Bangladesh it is the rule rather than the exception that companies do not comply with existing legal frameworks related to corruption, payment of taxes, fair trade practices, respect for human rights, customer services, environmental protection, etc. Bangladesh has always held great promise. The people of Bangladesh fought a historic War of Liberation in 1971, one of the bloodiest wars in the history of mankind, against Pakistan with an aim to establishing a socio-economically just and equitable society where each citizen would have all the opportunities to flourish his/her future in a conducive environment. It is very interesting to note that some companies in Bangladesh are making efforts to provide social and environmental information on a voluntary basis in their corporate annual reports. These disclosures are voluntary in nature and largely qualitative. Contrary to the developed and some developing countries, the disclosure of environmental information made by the listed companies in their corporate annual reports in Bangladesh is very disappointing. The current practice of CSR in Bangladesh is far from being satisfactory and does not promote the desired transparency and accountability. The primary motive behind CSR appears to be the management of stakeholders, without giving them an effective voice in the CSR process, for the economic advancement of corporations. In the absence of

30

independent third party verification, credibility of information provided is substantially reduced. The principal employee-related issues of concern, particularly in the garments and textile sector, and also in other export-oriented companies, are health and safety at work, child labour, human rights, and equal opportunity. Since 1990 there have been 115 factory fires killing 300 people and resulting in over 2500 injuries. A massive incidence of fire in Dhaka on 11th April, 2005 renewed the focus of commentators on adverse factory working conditions in Bangladesh (Frost, 2005). Under international pressure, child labour is being eliminated but the rehabilitation and welfare of these ex-child labourers has been ignored (Murshed, 2005; The Daily Star, 2004). The media regularly report violations of human rights in factories, particularly in the export oriented units, related to the abnormal length of working hours, unpaid wages, mandatory pregnancy tests, and harsh working conditions (Afrin, 2002; Milne, 2001).

Women workers are deprived from receiving fair wages (Afrin, 2002). The neglect of health and safety at workplace is starkly evident from the fact that hundreds of employees have been killed at work due to several fire incidents in recent times. In the absence of any consumer protection law, consumers rights are ignored (Aziz, 2002) They are being provided with sub-standard poor quality goods, with allegations of companies providing adulterated food products to the market which can cause serious public health hazards. Industrial pollution is a major environmental concern in Bangladesh (Belal, Khan & Alam, 1998). Tannery companies in the Hazaribagh areas of Dhaka (Khan & Hasan, 2005), and other industrial units (Nurunnabi, 2002), seriously pollute nearby communities and rivers on a daily basis with industrial waste. In addition to these employee and environmental issues, issues of corruption and consumer rights have raised significant concerns in the society. Bangladesh was ranked as the most corrupt country in the world according to the 2002 Transparency Internationals Ranking (Mir & Rahaman, 2005). Business communities involvement in unethical and corrupt activities, such as 31

bribery (Khaleque, 2005) and tax evasion (Hasan, 2002), have been widely reported in the media. In the absence of any consumer protection law, consumers rights are frequently violated by the provision of sub-standard and poor quality goods (The Independent, 2001), causing significant public health hazards (Roy, 2005). However the number of businesses which are taking advantage of the existing weak legal and regulatory system and are engaging in socially irresponsible business practices is increasing. In the last decade, irresponsible business practices demonstrated by businesses across different industries that range from food, retail, garments, and manufacturing have become widespread in Bangladesh. For example the incidences of sale of low quality, underweight, contaminated fertilizers, sometimes at high prices have become frequent.

In addition, businesses are also ignorant of the importance of having mutual trust and a committed relationship with the consumers. The problem is further aggravated by outdated laws and lack of a consumer protection law in place. A comprehensive law for protecting the rights of the consumers was drafted in 1992 but even after 16 years, the law has not been enacted (The Daily Star, 20.01.2008). As a result, consumers rights are frequently abused as the market favors the suppliers. Consequently there are incidences of sale of unsatisfactory goods and services, price hikes, lack of necessary information for consumers to make informed decision, deceptive advertising, power abuse, little after sales service and very little concern for environmental protection. Given the weaknesses of law enforcement in Bangladesh it is now being argued by some that payment of taxes, repayment of loans, payment of public utility bills should be considered as integral part of CSR activities in the context of Bangladesh as they are voluntary in nature and can be easily avoided by businesses (Sobhan, 2006).

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There is considerable evidence that suggests that CSR is culture-bound (Dunning 2005; Waldman et al 2006). Being a Muslim state and with a high proportion of the population (88%) being Muslim, there is a strong culture of philanthropy and businesses -large and small- engage in donations and charities. The influence of culture on an individuals ethical perception has been supported by a number of studies. For example Joyner et al. (2002) argue that values, ethics and CSR are not mutually exclusive but are interrelated. In addition to religious beliefs and informal rules and norms, the culture of the society is also influenced by corruption, low level of education and awareness of the members of the society, that together influence an individuals perception of moral and social responsibility. In the context of Bangladesh factors like corruption, weak regulatory environment and lack of awareness has influenced its culture which influence values, beliefs and behaviors of individuals, which in turn shape culture to evolve. Employees working in public sector organizations are much more powerful because of the presence of established trade unions which have affiliations with the mainstream political parties. Similarly, skilled professional employees working in the multinational companies hold significant power in the sense that their skills are in short supply in Bangladesh and it is not easy to replace them. Therefore, it is not surprising that public sector companies and multinational companies would disclose more employee related information. On the other hand, poor women employees working in the textile sector are unskilled, cheap and abundant in supply. Garment factory owners do not find any difficulty in replacing them whenever needed. As a result, employees rights in this sector are generally neglected.

3.2 Stakeholders Perceptions about CSR

In keeping with global movement, CSR is being seen as the source of new competitive edge for the companies operating in Bangladesh. Across the globe, there are many examples of companies that have used CSR not only to improve community relations but also as a source of significant commercial benefit. The national development can be

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promoted with transparency, good governance, concern for the environment and good relations with all stakeholders of a company by adopting principles and practices consistent with CSR. From this perspective, it may be beneficial to learn from companies in different sectors like Ready Made Garments (RMG) and Shrimp sub sector who practice CSR in exemplary ways. The motivations behind the current practice of CSR in Bangladesh and interpreted those motivations as largely cosmetic response, marketing strategy and response to pressures from international market, which can be explained by drawing insights from the managerial perspective of stakeholders (Deegan & Unerman, 2006). They found that CSR practices are highly skeptical about the corporate motives behind CSR. In their opinion, public relations concerns appear to be the primary motive. According to them, as opposed to discharging accountability, the basic motive is to maintain and further the economic interests of the business. Questions were raised about the genuine intentions of corporations with regard to CSR. Another study of corporate responsibility in Bangladesh found that 65.5% of the pressure groups surveyed expressed dissatisfaction over corporate responsibility practices (CPD, 2002). The desired form of CSR in Bangladesh should be aimed at the promotion of transparency and accountability to stakeholders. However, it is observed that current disclosure practice has largely failed to meet the expectations of stakeholders. The lack of stakeholder dialogue, absence of external verification and ad hoc disclosure systems as opposed to a comprehensive disclosure system, which covers all aspects of social, ethical and environmental performance including the crucial encaustic issues, make this apparent (Belal, forthcoming). There are variations in stakeholders perceptions towards the CSR process in Bangladesh. While they broadly agreed on the need for CSR, variations were found in their information requirements. Although respective groups were found to be asking for

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disclosures related to their specific interests (for example, the employee group requiring disclosure on working conditions and the consumer group requiring disclosure on product quality), on a number of broader societal issues such as child labor, health and safety, equal opportunity and poverty alleviation, disclosures are demanded by more than one group. It is argued that organizations in Bangladesh would attach more importance to the dominant economic stakeholders (e.g. shareholders, employees and customers) who control the critical resources (such as capital, labor and buying power) required by the organization. This argument is in line with the managerial model of stakeholder theory, which maintains that firms would adopt management strategies (including CSR) to legitimize relationships with powerful economic stakeholders (Belal, 2002). Thus, it could be expected that the more powerful the stakeholders are, the more attention they would receive from the firm. As opposed to the managerial model, the normative model of stakeholder theory argues that corporations should be accountable to all stakeholders (including the social stakeholders) who are affected by corporate activities. This should be true irrespective of their (stakeholders) power. The companies have undertaken a range of social welfare activities by establishing schools, colleges, hospitals and physiotherapy and disabled rehabilitation centers. In addition, the company disclosed those activities in its annual report and website. However, in the absence of any form of external verification the credibility of these disclosures is not beyond question. Further, the companys motivation can also be questioned when the organization admitted the publicity motive behind these disclosures. In the absence of any consumer protection law in the country the rights of domestic consumers are being neglected whilst international buyers are highly influential in compelling export-oriented domestic firms to comply with SA standards/codes. While employees were found to be an influential stakeholder group in the multinational companies and in public sector companies, in the private sector, particularly in the

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garments and textile sector, they appear to be less powerful and vulnerable to exploitation due to the abundant supply of cheap unskilled labor in Bangladesh. Similarly, expectations of the social stakeholders, like local communities and the natural environment, are not being met.

3.3 Status of Environmental Reporting in Bangladesh

Bangladesh is experiencing a fast degradation of environment. Some examples of this degradation are Dhakas terrible air pollution, the clinically dead river Buriganga as most of the industries are either on its banks or the industrial waste ultimately flows in it and widespread arsenic pollution in the underground water (Belal, 2000). The pollution caused by industries and their reluctance to take appropriate measures is creating serious environmental concerns in the country. For example, amongst others, the tannery companies in the Hazaribagh areas are blamed for causing serious pollution in the nearby communities (Khan, 2001; Khan, 2001). Due to industrialization, industries occupy cultivable fertile lands and industries dispose of wastes to the nearby fertile lands (causing the loss of fertility) and the waterways. However, there are neither active external pressure groups nor regulations requiring firms to make such disclosure. Foreign investors may not consider investing in Bangladesh companies that are not socially and ethically responsible (Belal, 2001). The Government of Bangladesh started paying attention to the environmental management of Bangladesh since the 1990s and in order to improve the environmental condition, the Bangladesh Environmental Protection Act, 1995 was passed. Presently, corporate environmental reporting is not mandatory in Bangladesh. But under the Bangladesh Environmental Protection Act, 1995, companies may be asked to disclose environmental information as and when required (Belal, 2000). The only mandatory environmental disclosure requirement in Bangladesh is the disclosure of expenditures on energy use. Under Schedule-XI, Part-II of the Companies Act 1994 and under Schedule,

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Part-II of the Securities and Exchange Rules, 1987, the total amount spent on the use of energy is to be shown in notes to the financial statements under a separate head of expenditure.

3.4 Corporate Governance and CSR in Bangladesh

As discussed above, lack of effective good governance in Bangladesh has resulted significantly in lack of business ethics and poor CSR culture. According to Wilson (cited in McIntosh and Thomas, 2002: 7), the key idea behind CSR and corporate citizenship is that responsible behavior makes good business sense. In Bangladesh the private sector seems to focus on earning profits in the short term, ignoring the issue of responsible behavior and the desirability of earning the trust of consumers which are important for the long-run success of their operations. The incidence of selling adulterated low quality products at high prices and with underweight and above all, hoarding to reap dishonest profit, all confirm this. In the absence of a socially responsible behaviour in the private sector, there is need to enhance capacity-building on the part of the state to intervene and implement sanctions effectively to enforce compliance. In the absence of an effective state intervention in the public interest, private entrepreneurs are less constrained to behave in the public interest and in conformity with CSR. Thus lack of capacity or lack of will, or both, by the state weakens the incentives for private sector entrepreneurs to practice CSR. Corporate governance suffers from being a multi-level concept which differs between country (or economy) and individual levels. However, following on the high degree of corporate collapses and scandals around the world over this decade, the corporate watchdog, the Securities and Exchange Commission of Bangladesh (SECB) announced the "Corporate Governance Notification 2006" for the listed firms on the Bangladeshi Stock Exchanges. This notification is probably the first published comprehensive set of corporate best practices governance guidelines in Bangladesh, and is a milestone of the corporate sector in Bangladesh.

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Following the announcement of "Corporate Governance Notification 2006" for Bangladeshi firms, 21 companies immediately adopted (either fully or partly) such practices to maintain their images. However, such a notification does not require companies to report CSD. Even the Companies Act 1994, which guides corporate financial reporting in Bangladesh, does not require CSD to be reported in the disclosure document or corporate annual reports. Companies which adopted the notification to change the board structure they made most of CSDs through the Reports from the Board of Directors. No other form of disclosures, such as brochures, press releases, reporting on the web pages and separate social reports are to be found in the Bangladesh corporate sector. Most of the CSD reports are in the form of qualitative statements. Although the "Corporate Governance Notification 2006" does not require companies to make social disclosures in Bangladesh, it can be assumed that the firms which adopted the corporate governance best practices are also making CSD to maintain their organizational legitimacy.

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4.0 OECD Guidelines one tool for corporate social accountability

The OECD Guidelines for Multinational Corporations can help to ensure corporate social accountability. Governments should boost them and unions should use them. The Guidelines are governmental recommendations for good corporate behavior. The OECD Guidelines for Multinational Enterprises were first agreed upon in 1976, following public concern that multinational enterprises were becoming too powerful and unaccountable. The OECD Guidelines for Multinational Enterprises, adopted in 1976 and substantially revised in 2000, are the most comprehensive government-supported corporate responsibility instrument in existence today. More countries are now in the process of adhering to them. Preface The OECD Guidelines for Multinational Enterprises (the Guidelines) are recommendations addressed by governments to multinational enterprises. They provide voluntary principles and standards for responsible business conduct consistent with applicable laws. The Guidelines aim to ensure that the operations of these enterprises are in harmony with government policies, to strengthen the basis of mutual confidence between enterprises and the societies in which they operate, to help improve the foreign investment climate and to enhance the contribution to sustainable development made by multinational enterprises and the other elements of which relate to national treatment, conflicting requirements on enterprises, and international investment incentives and disincentives. The activities of MNEs bring substantial benefits to home and host countries. These benefits accrue when multinational enterprises supply the products and services that consumers want to buy at competitive prices and when they provide fair returns to

suppliers of capital. Their trade and investment activities contribute to the efficient use of capital, technology and human and natural resources. They facilitate the transfer of

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technology among the regions of the world and the development of technologies that reflect local conditions. Through both formal training and on-the-job learning enterprises also promote the development of human capital in host countries. Multinational enterprises have the opportunity to implement best practice policies for sustainable development that seek to ensure coherence between social, economic and environmental objectives. The ability of multinational enterprises to promote sustainable development is greatly enhanced when trade and investment are conducted in a context of open, competitive and appropriately regulated markets. Many enterprises have responded to these public concerns by developing internal programmers, guidance and management systems that underpin their commitment to good corporate citizenship, good practices and good business and employee conduct. Some of them have called upon consulting, auditing and certification services, contributing to the accumulation of expertise in these areas. These efforts have also promoted social dialogue on what constitutes good business conduct. The Guidelines clarify the shared expectations for business conduct of the governments The common aim of the governments adhering to the Guidelines is to encourage the positive contributions that multinational enterprises can make to economic, environmental and social progress and to minimize the difficulties to which their various operations may give rise. In working towards this goal, governments find themselves in partnership with the many businesses, trade unions and other non-governmental organizations that are working in their own ways toward the same end.

4.1.1 Concepts and Principles

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The Guidelines are recommendations jointly addressed by governments to multinational enterprises. They provide principles and standards of good practice consistent with applicable laws. Observance of the Guidelines by enterprises is voluntary and not legally enforceable. Since the operations of multinational enterprises extend throughout the world, international co-operation in this field should extend to all countries. Governments adhering to the Guidelines encourage the enterprises operating on their territories to observe the Guidelines wherever they operate, while taking into account the particular circumstances of each host country. Governments adhering to the Guidelines set them forth with the understanding that they will fulfill their responsibilities to treat enterprises equitably and in accordance with international law and with their contractual obligations. The use of appropriate international dispute settlement mechanisms, including arbitration, is encouraged as a means of facilitating the resolution of legal problems arising between enterprises and host country governments.

4.1.2 General Policies

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Enterprises should take fully into account established policies in the countries in which they operate, and consider the views of other stakeholders. In this regard, enterprises should: 1. Contribute to economic, social and environmental progress with a view to achieving sustainable development. 2. Respect the human rights of those affected by their activities consistent with the host governments international obligations and commitments. 3. Encourage local capacity building through close co-operation with the local community, including business interests, as well as developing the enterprises activities in domestic and foreign markets, consistent with the need for sound commercial practice. 4. Encourage human capital formation, in particular by creating employment opportunities and facilitating training opportunities for employees. 5. Refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to environmental, health, safety, labor, taxation, financial incentives, or other issues. 6. Support and uphold good corporate governance principles and develop and apply good corporate governance practices. 7. Develop and apply effective self-regulatory practices and management systems that foster a relationship of confidence and mutual trust between enterprises and the societies in which they operate. 8. Promote employee awareness of, and compliance with, company policies through appropriate dissemination of these policies, including through training programmers.

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9. Refrain from discriminatory or disciplinary action against employees who make bona fide reports to management or, as appropriate, to the competent public authorities, on practices that contravene the law, the Guidelines or the enterprises policies. 10. Encourage, where practicable, business partners, including suppliers and subcontractors, to apply principles of corporate conduct compatible with the Guidelines. 11. Abstain from any improper involvement in local political activities.

4.1.3 Disclosure
1. Enterprises should ensure that timely, regular, reliable and relevant information is disclosed regarding their activities, structure, financial situation and performance. This information should be disclosed for the enterprise as whole and, where appropriate, along business lines or geographic areas. Disclosure policies of enterprises should be tailored to the nature, size and location of the enterprise, with due regard taken of costs, business confidentiality and other competitive concerns. 2. Enterprises should apply high quality standards for disclosure, accounting, and audit. Enterprises are also encouraged to apply high quality standards for non-financial information including environmental and social reporting where they exist. The standards or policies under which both financial and non-financial information are compiled and published should be reported. 3. Enterprises should disclose basic information showing their name, location, and structure, the name, address and telephone number of the parent enterprise and its main

affiliates, its percentage ownership, direct and indirect in these affiliates, including shareholdings between them. 44

4. Enterprises should also disclose material information on: a) The financial and operating results of the company. b) Company objectives. c) Major share ownership and voting rights. d) Members of the board and key executives, and their remuneration. e) Material foreseeable risk factors. f) Material issues regarding employees and other stakeholders. g) Governance structures and policies. 5. Enterprises are encouraged to communicate additional information that could include: a) Value statements or statements of business conduct intended for public disclosure including information on the social, ethical and environmental policies of the enterprise and other codes of conduct to which the company subscribes. In addition, the date of adoption, the countries and entities to which such statements apply and its performance in relation to these statements may be communicated. b) Information on systems for managing risks and complying with laws, and on statements or codes of business conduct. c) Information on relationships with employees and other stakeholders.

4.1.4 Employment and Industrial Relations

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Enterprises should, within the framework of applicable law, regulations and prevailing labor relations and employment practices: 1. a) Respect the right of their employees to be represented by trade unions and other bona fide representatives of employees, and engage in constructive negotiations, either individually or through employers associations, with such representatives with a view to reaching agreements on employment conditions. b) Contribute to the effective abolition of child labor. c) Contribute to the elimination of all forms of forced or compulsory labor. d) Not discriminate against their employees with respect to employment or occupation on such grounds as race, color, sex, religion, political opinion, national extraction or social origin, unless selectivity concerning employee characteristics furthers established governmental policies which specifically promote greater equality of employment opportunity or relates to the inherent requirements of a job. 2. a) Provide facilities to employee representatives as may be necessary to assist in the development of effective collective agreements. b) Provide information to employee representatives which are needed for meaningful negotiations on conditions of employment. c) Promote consultation and co-operation between employers and employees and their representatives on matters of mutual concern. 3. Provide information to employees and their representatives which enables them to obtain a true and fair view of the performance of the entity or, where appropriate, the enterprise as a whole.

4.

a) Observe standards of employment and industrial relations not less favourable than those observed by comparable employers in the host country. b) Take adequate steps to ensure occupational health and safety in their operations.

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5. In their operations, to the greatest extent practicable, employ local personnel and provide training with a view to improving skill levels, in co-operation with employee representatives and, where appropriate, relevant governmental authorities. 6. In considering changes in their operations which would have major effects upon the livelihood of their employees, in particular in the case of the closure of an entity involving collective lay-offs or dismissals, provide reasonable notice of such changes to representatives of their employees, and, where appropriate, to the relevant governmental authorities, and co-operate with the employee representatives and appropriate governmental authorities so as to mitigate to the maximum extent practicable adverse effects. In light of the specific circumstances of each case, it would be appropriate if management were able to give such notice prior to the final decision being taken. Other means may also be employed to provide meaningful cooperation to mitigate the effects of such decisions. 7. In the context of bona fide negotiations with representatives of employees on conditions of employment, or while employees are exercising a right to organize, not threaten to transfer the whole or part of an operating unit from the country concerned nor transfer employees from the enterprises component entities in other countries in order to influence unfairly those negotiations or to hinder the exercise of a right to organize. 8. Enable authorized representatives of their employees to negotiate on collective bargaining or labor-management relations issues and allow the parties to consult on matters of mutual concern with representatives of management who are authorized to take decisions on these matters.

4.1.5 Environment
Enterprises should, within the framework of laws, regulations and administrative practices in the countries in which they operate, and in consideration of relevant international agreements, principles, objectives, and standards, take due account of the need to protect 47

the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development. In particular, enterprises should: 1. Establish and maintain a system of environmental management appropriate to the enterprise, including: a) Collection and evaluation of adequate and timely information regarding the environmental, health, and safety impacts of their activities; b) Establishment of measurable objectives and, where appropriate, targets for improved environmental performance, including periodically reviewing the continuing relevance of these objectives; and c) Regular monitoring and verification of progress toward environmental, health, and safety objectives or targets. 2. Taking into account concerns about cost, business confidentiality, and the protection of intellectual property rights: a) provide the public and employees with adequate and timely information on the potential environment, health and safety impacts of the activities of the enterprise, which could include reporting on progress in improving environmental performance; and b) Engage in adequate and timely communication and consultation with the communities directly affected by the environmental, health and safety policies of the enterprise and by their implementation.

3. Assess, and address in decision-making, the foreseeable environmental, health, and safety-related impacts associated with the processes, goods and services of the enterprise over their full life cycle. Where these proposed activities may have significant

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environmental, health, or safety impacts, and where they are subject to a decision of a competent authority, prepare an appropriate environmental impact assessment. 4. Consistent with the scientific and technical understanding of the risks, where there are threats of serious damage to the environment, taking also into account human health and safety, not use the lack of full scientific certainty as a reason for postponing cost-effective measures to prevent or minimize such damage. 5. Maintain contingency plans for preventing, mitigating, and controlling serious environmental and health damage from their operations, including accidents and emergencies; and mechanisms for immediate reporting to the competent authorities. 6. Continually seek to improve corporate environmental performance, by encouraging, where appropriate, such activities as: a) Adoption of technologies and operating procedures in all parts of the enterprise that reflect standards concerning environmental performance in the best performing part of the enterprise; b) Development and provision of products or services that have no undue environmental impacts; are safe in their intended use; are efficient in their consumption of energy and natural resources; can be reused, recycled, or disposed of safely; c) Promoting higher levels of awareness among customers of the environmental of using the products and services of the enterprise; and d) Research on ways of improving the environmental performance of the enterprise over the longer term.

7. Provide adequate education and training to employees in environmental health and safety matters, including the handling of hazardous materials and the prevention of environmental accidents, as well as more general environmental management areas, such

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as environmental impact assessment procedures, public relations, and environmental technologies. 8. Contribute to the development of environmentally meaningful and economically efficient public policy, for example, by means of partnerships or initiatives that will enhance environmental awareness and protection.

4.1.6 Combating Bribery

Enterprises should not, directly or indirectly, offer, promise, give, or demand a bribe or other undue advantage to obtain or retain business or other improper advantage. Nor should enterprises be solicited or expected to render a bribe or other undue advantage. In particular, enterprises should: 1. Not offer, nor give in to demands, to pay public officials or the employees of business partners any portion of a contract payment. They should not use subcontracts, purchase orders or consulting agreements as means of channeling payments to public officials, to employees of business partners or to their relatives or business associates. 2. Ensure that remuneration of agents is appropriate and for legitimate services only. Where relevant, a list of agents employed in connection with transactions with public bodies and state-owned enterprises should be kept and made available to competent authorities.

3. Enhance the transparency of their activities in the fight against bribery and extortion. Measures could include making public commitments against bribery and extortion and disclosing the management systems the company has adopted in order to honor these 50

commitments. The enterprise should also foster openness and dialogue with the public so as to promote its awareness of and co-operation with the fight against bribery and extortion. 4. Promote employee awareness of and compliance with company policies against bribery and extortion through appropriate dissemination of these policies and through training programmers and disciplinary procedures. 5. Adopt management control systems that discourage bribery and corrupt practices, and adopt financial and tax accounting and auditing practices that prevent the establishment of off the books or secret accounts or the creation of documents which do not properly and fairly record the transactions to which they relate. 6. Not make illegal contributions to candidates for public office or to political parties or to other political organizations. Contributions should fully comply with public disclosure requirements and should be reported to senior management.

4.1.7 Consumer Interests

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When dealing with consumers, enterprises should act in accordance with fair business, marketing and advertising practices and should take all reasonable steps to ensure the safety and quality of the goods or services they provide. In particular, they should: 1. Ensure that the goods or services they provide meet all agreed or legally required standards for consumer health and safety, including health warnings and product safety and information labels. 2. As appropriate to the goods or services, provide accurate and clear information regarding their content, safe use, maintenance, storage, and disposal sufficient to enable consumers to make informed decisions. 3. Provide transparent and effective procedures that address consumer complaints and contribute to fair and timely resolution of consumer disputes without undue cost or burden. 4. Not make representations or omissions, nor engage in any other practices, that are deceptive, misleading, fraudulent, or unfair. 5. Respect consumer privacy and provide protection for personal data. 6. Co-operate fully and in a transparent manner with public authorities in the prevention or removal of serious threats to public health and safety deriving from the consumption or use of their products.

4.1.8 Science and Technology

Enterprises should:

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1. Endeavour to ensure that their activities are compatible with the science and technology (S&T) policies and plans of the countries in which they operate and as appropriate contribute to the development of local and national innovative capacity. 2. Adopt, where practicable in the course of their business activities, practices that permit the transfer and rapid diffusion of technologies and know-how, with due regard to the protection of intellectual property rights. 3. When appropriate, perform science and technology development work in host countries to address local market needs, as well as employ host country personnel in an S&T capacity and encourage their training, taking into account commercial needs. 4. When granting licenses for the use of intellectual property rights or when otherwise transferring technology, do so on reasonable terms and conditions and in a manner that contributes to the long term development prospects of the host country. 5. Where relevant to commercial objectives, develop ties with local universities, public research institutions, and participate in co-operative research projects with local industry or industry associations.

4.1.9 Competition

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Enterprises should, within the framework of applicable laws and regulations, conduct their activities in a competitive manner. In particular, enterprises should: 1. Refrain from entering into or carrying out anti-competitive agreements among competitors: a) to fix prices; b) to make rigged bids (collusive tenders); c) to establish output restrictions or quotas; or d) to share or divide markets by allocating customers, suppliers, territories or lines of commerce. 2. Conduct all of their activities in a manner consistent with all applicable competition laws, taking into account the applicability of the competition laws of jurisdictions whose economies would be likely to be harmed by anti-competitive activity on their part. 3. Co-operate with the competition authorities of such jurisdictions by, among other things and subject to applicable law and appropriate safeguards, providing as prompt and complete responses as practicable to requests for information. 4. Promote employee awareness of the importance of compliance with all applicable competition laws and policies.

4.1.10 Taxation

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It is important that enterprises contribute to the public finances of host countries by making timely payment of their tax liabilities. In particular, enterprises should comply with the tax laws and regulations in all countries in which they operate and should exert every effort to act in accordance with both the letter and spirit of those laws and regulations. This would include such measures as providing to the relevant authorities the information necessary for the correct determination of taxes to be assessed in connection with their operations and conforming transfer pricing practices to the arms length principle. These guidelines were rapidly followed by the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and negotiations opened at the UN in New York to establish a UN Code on Transnational Corporations. The UN Code did not survive the political shift to deregulation in the 1980s, and the OECD Guidelines themselves fell into partial disuse as most OECD governments showed little political will to enforce them. The collapse of negotiations on the Multilateral Agreement on Investment at the OECD in 1999, and the appearance of company codes and other initiatives of corporate social responsibility in the late 1990s, led to a swing back in the political climate on company responsibility. 4.2 What is the institutional Mechanism for implementing the Guidelines? The institutional set-up for promoting and implementing the Guidelines is described in the OECD Council Decision and its Procedural Guidance. It consists of three main elements: the National Contact Points; the OECD Committee on International Investment and Multinational Enterprises (CIME); and the advisory Committees to the OECD of business and labor federations, the Business and Industry Advisory Committee and the Trade Union Advisory Committee respectively. Other parties may also be involved. The National Contact Point often a government office is responsible for encouraging observance of the Guidelines in its national context and for ensuring that the Guidelines are well known and under stood by the national business community and by

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other interested parties. The National Contact Point: Handles enquiries about the Guidelines; Discusses matters related to the Guidelines and assists in solving problems that may arise in this connection; Gathers information on national experiences with the Guidelines and reports annually to the CIME. Because of the central role it plays, the effectiveness of the National Contact Point is a crucial factor in determining how influential the Guidelines are in each national context. While it is recognized that governments should be accorded flexibility in the way they Organize National Contact Points, it is nevertheless expected that al l National Contact Points should function in a visible, accessible, transparent and accountable manner. These four criteria should guide National Contact Points in carrying out their activities. The recently concluded Review has enhanced the accountability of National Contact Points by calling for annual reports of their activity, which will serve as a basis for exchanges of view on the functioning of the National Contact Points among the adhering governments. The CIME, comprising all OECD Member countries and observers, is the OECD body responsible for overseeing the functioning of the Guidelines and it is expected to take steps to enhance their effectiveness. This responsibility applies not only to the Guidelines but to all the elements of the Declaration on International Investment and Multinational Enterprises. Regarding the Guidelines, its responsibilities include: Responding to requests from adhering countries on specific or general aspects of the Guidelines;

Organizing exchanges of views on matters relating to the Guidelines with social partners and nonmembers;

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 Issuing clarifications as necessary Reviewing the Guidelines and/or the procedural Decisions so as to ensure their relevance and effectiveness; Reporting to the OECD Council on the Guidelines. The non-binding nature of the Guidelines precludes the CIME from acting as a judicial or quasi-judicial body. Nor should the findings or statements made by a National Contact Point (other than interpretations of the Guidelines) be questioned through a referral to the CIME. The CIME has also established a Working Party on the Declaration. It meets two to three times a year to consider questions relating to the Guidelines, and makes recommendations to the CIME. As the Guidelines are addressed to enterprises, business and labor input is especially important. The CIME regularly consults with the Business and Industry Advisory Committee (BIAC) and the Trade Union Advisory Committee (TUAC) on matters relating to the Guidelines and on other issues concerning international investment and multinational enterprises. BIAC and TUAC are accredited to the OECD as official advisory bodies and have as their members business and labour federations in each of the adhering countries. BIAC and TUAC both have secretariats in Paris that are in regular contact with the OECD and Member country delegations. BIAC and TUAC may request consultations with the National Contact Points on issues related to the Guidelines.

BIAC and TUAC can also raise such issues directly with the CIME. In addition, they are responsible for informing their member federations about developments in the Guidelines and for seeking their members inputs in Guidelines implementation procedures. They may

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also participate in promotional activities organized by the National Contact Points or by the CIME on a national, regional or multilateral basis. Non-governmental organizations (NGOs) were first involved in the 2000 Guidelines review. They may request consultations with the National Contact Points on issues related to Guidelines. They may also participate in promotional activities organized by the National Contact Points or by the CIME on a national, regional or multilateral basis. The OECD has committed itself to periodically inviting BIAC, TUAC, and other NGOs to express their views on matters covered by the Guidelines in the future.

Figure: 1

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4.3 A Pyramid of Global CSR as a Framework

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Having a framework and context for businesss social and ethical responsibilities to global stakeholders is an initial best practice. The Pyramid of Global Corporate Social Responsibility (see Figure 1) is presented as a helpful way to graphically depict the four kinds of social responsibility that business has with respect to global business stakeholders. The pyramid portrays the four components of global CSR, beginning with the basic building block of economic performance. At the same time, business is expected to obey the law because law is every countrys codification of acceptable and unacceptable practices. Business also is expected to be ethical. At its most basic level, this is the obligation to do what is right, just, and fair and to avoid or minimize harm to stakeholders. Finally, business is expected to be a good corporate citizen through its philanthropy. Firms today are expected to contribute financial and human resources to the global community and to give back so that the quality of life may be enhanced and sustained. No metaphor is perfect, and the Global Pyramid of CSR is no exception. It is intended to illustrate that the global social responsibility of business is composed of four definite components that, when taken together, define what business should be doing in the international sphere. These four components are not mutually exclusive. They are treated separately for discussion purposes and are overlapping to some extent and in frequent tension with one another. A brief explanation of each CSR component is appropriate because these categories dictate corporate actions.

FIGURE 2 Pyramid of Global Corporate Social Responsibility and Performance

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The economic responsibilities of the firm, whether domestic or global, remain the bedrock foundation for business. Global companies are expected to produce goods and services and sell them at a profit. Sound strategic management offers guidelines as to how and where this may be achieved in a global setting. At this level, consensus is easy to reach about the economic expectations of business firms. What may vary by country or region of the world is the question of what constitutes an acceptable rate of return or growth rate. Companies functioning in hypercompetitive conditions might look upon this question differently than those operating in developing countries. Therefore, this aspect of the framework is contingent upon local and regional expectations found in financial markets but remains foundational to survival and growth. Legal responsibilities of management and MNCs also are vital. Just as countries have sanctioned economic systems, they also sanction legal systems. The social contract between business firms and host countries 61

varies by country and, thus, legal systems and expectations vary as well. At this level, we observe significant differences in legal systems and responsibilities by countries and regions of the world. For example, we know that Chinese labor laws often are not enforced15 and that foreign investors are finding that Chinas legal system resolves few disputes.16 We also know that the absence of a legal system is inhibiting foreign investment in post-war Iraq.17 One thing is clear, however: The legal responsibility does exist and is found in developed, developing, and less developed countries alike. Ethical responsibilities are essential because laws are not adequate and companies and executives care deeply about their reputations, as well as about doing the right thing. As long as publications such as Multinational Monitor publish their annual lists of the ten worst corporations in global business, executives will find justifiable and practical reasons to care about ethics.18 Ethical responsibilities embrace those activities and practices that are expected or prohibited by society even though they may not be codified into law. Ethical responsibilities encompass the full scope of norms, standards, and expectations that reflect a belief in what employees, consumers, shareholders, and the global community regard as fair, just, and consistent with the respect for and protection of stakeholders moral rights. Superimposed on the host countrys expectations of ethics are the implied levels of ethical performance suggested by a consideration of the great ethical principles of moral philosophy, such as justice, rights, and utilitarianism. The ethical category is where divergent views traceable to different cultures are likely to be most significant. In a real sense, global business ethics is about the reconciliation of homeand host country ethical standards and the identification of norms that will satisfy both. The practice of moral relativism, wherein companies simply adapt to local norms, creates an often untenable situation because many countries, especially developing ones, do not have articulated ethical standards that protect vulnerable stakeholders. Bowie recommends moral universalism as a principle that would create a moral standard that is accepted by all cultures.19 Moral universalism is the identification of ethical standards that would have broad, international support, such as the U.N. Global Compact or the Global

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Reporting Initiative. Philanthropic responsibilities reflect global societys expectations that business will engage in social activities that are not mandated by law nor generally expected of business in an ethical sense. Though sometimes imbued with an ethical thread of rationale, philanthropy today is more often than not strategic in nature, with business expected to play an active role in global corporate citizenship. As in the case of law and ethics, philanthropic expectations vary widely by country of the world, and the wise executive will carefully research expectations of the host countries in this category. While presenting this idea in Helsinki, Finland, for example, I found that the Finns do not regard philanthropy highly because in their system, high taxes are thought by business to more than take care of these kinds of citizenship expectations. The Global Pyramid of CSR provides a conceptual framework for thinking through the multitude of expectations that may fall on the MNC or global manager. It is intended to illustrate the total social responsibility of global businesses. Although the component parts have been separated for discussion, they are not mutually exclusive and are not to be filled in this sequence. The pyramid intends to suggest the building-block relationship of the four responsibilities with economic at the base, because without it the others are beside the point. The pyramid depicts the full range of responsibilities that global firms and managers are expected to fulfill simultaneously. Stated in more practical and performance-oriented terms, the Global CSR Pyramid suggests that the MNC should strive to: Make a profit consistent with expectations for international businesses; Obey the law of host countries as well as international law; Be ethical in its practices, taking host-country and global standards into consideration; Be a good corporate citizen, especially as defined by the host countrys expectations. The Global Pyramid of CSR and Performance will help managers think through in a systematic way the different stakeholder expectations placed on their organizations. It

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should be recognized that responsibility implies performance. Previous research does support the contention that managers see the importance of their responsibilities as following this sequence of priorities: economic, legal, ethical, and philanthropic.

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5.0 Findings and Analysis

In understanding the corporate responsibility the following issues have been investigated under the corporate responsibility framework in the context of Bangladesh after considering OECD Guidelines for Multinational Enterprises as bench mark:

5.1 Separate Corporate Social Responsibility Disclosure:

CSR is related to complex issues such as environmental protection, human resources management, health and safety at work, relations with local communities, and relations with suppliers and consumers. The present-day dominant conception of CSR implies that companies voluntarily integrate social and environmental concerns in their operations and interactions with stakeholders. Therefore companies should disclose their responsibilities they assume and how they perform separately. In my analysis it is found that 40% of the sample companies disclose their corporate social responsibilities separately. Most of them are pharmaceuticals industry. For example: other than BAT, Square, Beximco and Renata pharmaceuticals disclose separately. Separate disclosure of CSR in textile industry is not found from any single company. The corporate slogan of British American Tobacco (BAT) is Success and Responsibility go together.

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5.2 Sustainable Development

This includes natural capital, physical (or produced) capital, and social (including human) capital. Together, their measurement provides indicators of the wealth of nations and they might be considered as forming the basis of sustainable economic development and growth (World Bank 1997). Key elements of sustainable development, according to Bansal and Howard (1997) are: connectivity embraces ecological, social and economic interdependence, equity suggests fairness, within and across generations and species, prudence connotes duties of care and prevention, technologically, scientifically and politically, security demands safety from chronic threats and protection from harmful disruption. The disclosure of sustainable development is found not even a single company among the sample companies. Only BAT mentions it in Directors report which is adequate.

5.3 Management systems and certification schemes:

Management systems and certification schemes includes: International Organization for Standardization (ISO) 14000 and ISO 9000, Social Accountability 8000 (SA 8000), Accountability 1000 (AA 1000), Sigma Guidelines. These are the product of the International Council of the Institute of Social and Ethical Accountability. The disclosure of management systems and certification schemes by our companies is very poor. Only 20% of the sample companies made the disclosure of management systems such as IBN SINA and Beximco Pharmaceuticals Ltd.

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5.4 Employee Relations:

Employee relations mean the whether the entity practices the followings: Human Resource Development- training & development, Fair Employment- recruitment & transfer, service conditions, Employee welfare program: benefits & loan facilities, compensation & benefits, travel rules, long service award, performance planning & appraisal, separation & final settlement, Gender issues and equal opportunities- gender equality, equal opportunities towards women, race-religion equality, the elimination of discrimination, Health & Safety- working environment, safe drinking water, sanitation, Labor Standardslabor Standards, child labor policy, basic rights according to ILO , job security, collective bargaining etc. In my analysis it is found that most of the companies try to disclose something about employee relations. But most of them mention it in either Directors report or in Corporate Governance report. When I consider separate disclosure about employee relations, it is found that 40% of the sample companies disclose is separately. Among them Square Pharmaceuticals and British American Tobacco (BAT) disclose it extensively.

5.5 Community Relations

Commitment to the community is one of core values, reflected in partnerships with community, government and various non-government organizations over the years. Companies should take reasonable steps to ensure that their operations do not negatively affect human rights in the communities where they operate. Most of the sample companies mention it that they do not under take any operations which violate the human right or contradictory to Government policy. While most of the companies disclose Government relations only two companies disclose community relations separately. They are Square and IBN SINA Pharmaceuticals ltd.

5.6 Shareholder Relations:

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Shareholders Relation mean sustainable growth in business and its economic value, protection of shareholders capital by ensuring highest return & growth of assets, Maximize ROI, reporting / dissemination of price sensitive information, take care of share holders interest. Almost all the companies of the sample disclose it either directly or indirectly. 50% of the sample companies disclose it separately and others also disclose it either in Directors report or Corporate Governance report or indirectly. For example Value added statement, performance highlights etc.

5.7 Compliance of Corporate Governance

Management systems and corporate governance are supposed to be existed for the existence of the certain matters in the organization such as management ownership, appointment and election of directors, presence of Non-executive directors, separate audit committee, nomination committee, compensation committee, disclosure of relevant shareholders. When the compliance of Corporate Governance report made mandatory by the SEC, all the companies disclose it separately. But many researchers such as Dhiman Chowdhury argue that the compliance report is unable to fulfill its objectives and protect the share holders inters. The compliance report is only putting tik mark ().

5.8 Environmental Responsibilities

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It means the responsibilities for environmental impacts for example maintaining environmental quality, adopting clean and eco-efficient production processes, sharing environmental technologies and for some industries, engaging in global challenges such as climate change and biodiversity protection. About 70% of the sample companies states that they are taking care of the environment either in separate disclosure or in Directors report but how it is not clear for most of the companies. Some companies such as HR Textile states in directors report that it is trying to establish effluent treatment plant. In this regard, Square pharmaceuticals and BAT provide extensive separate disclosure in the annual report.

5.9 Welfare Activities & Other Socio-economic issues

It mean whether the entity has any policy regarding the promotion of sports & culture, education, scholarship, participation in charitable & humanitarian activities, social foundation and contribution, population control programs, elimination of corruption programs. It is found that only 30% of the companies perform in socio-economic activities and disclose it. Among them Renata Pharmaceuticals acts on city beautification and BAT provides financial support to cyclone Sidr affected people and disclose it separately. On the other hand Bextex ltd. arranges training facilities for students and discloses it in the director report.

5.10 Technology
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Technology includes the innovation of new technology, environment friendly technology and endeavoring to upgrade and adopt new technology in quality of product and services. Among the sample companies only Square pharmaceuticals disclose about their investment in new technology. IBN SINA pharmaceuticals disclose their investment in information technology separately.

5.11 Contribution to National Exchequers:

Only 20% companies disclose this information separately. All of them are pharmaceuticals industry for example: IBN SINA and Renata Pharmaceuticals ltd. The disclosure of such information of textile sector in not found.

5.12 Business Ethics/ Ethical Standard

Adams (1998) said that ethical disclosure means covering issues (directly or indirectly) that gives an impression of the corporate ethical values. This includes not, directly or indirectly, offers, promise, give, or demand a bribe or other undue advantage to obtain or retain business or other improper advantage. Enterprises should not be solicited or expected to render a bribe or other undue advantage, respect the right of their employees, within the framework of laws, regulations and administrative practices in the countries in which they operate, and in consideration of relevant international agreements, principles, objectives, and standards, take due account of the need to protect the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development.

About 20% of the companies disclose such information. Among them Square and Renata

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Pharmaceuticals disclose this information separately and others disclose it in the director report.

5.13 Human Rights

This issue is only covered by Square pharmaceuticals very shortly. They disclose that they do not complicit in human right abuses but they do not mention it how.

5.14 Legal Compliance

Only IBN SINA and BAT highlighted this issue separately in the annual report. They mostly highlighted that they comply Companies Act 1994, Securities and Exchange Commissions rules and other legal issues as appropriate for the company.

5.15 Fair Employment

The issues regarding discrimination between gender, race, religion and handicaps should come under this topic. Many companies states in the director report that they do not discriminate employees between gender, race and religion. But neither of them discloses it separately.

5.16 Health and Safety

About 40% of the companies reported on this issue in the annual report. Square and Beximco pharmaceuticals, Bextex and BAT disclose this issue separately. Beximco Textile (BEXTEX) reported that, Our Company believes that employees are to work in a safe, healthy and hygienic atmosphere.

5.17 Labor Standard

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Only Square pharmaceuticals highlighted this issue in the annual report very shortly. But it is expected that garments and textile sector should highlight this issue. In my analysis it is found that most of the well reputed and profitable companies disclose more information than others such as Square pharmaceuticals and BAT. It has some exception also for example: Beximco pharmaceuticals. Square pharmaceuticals also disclose information about risk perception, corporate socialization and new product development. Again IBN SINA pharmaceuticals disclose separate statement of directors responsibility for financial statement. Renata pharmaceuticals report their BMRE information separately in the annual report consistently. BAT discloses their employee relation and social activities such as tree plantation program very extensively. From the analysis it can be conclude that pharmaceuticals industry disclose more information on the annual report that textile industry. Profitability as well as corporate financial performance was used by a number of researchers as an explanatory variable for differences in disclosure level. However, the relationship between corporate financial performance and corporate social and environmental disclosure is arguably one of the most controversial issues yet to be solved (Choi, 1998). The proponents argue that there are additional costs associated with the social and environmental disclosure and, the profitability of the reporting company is depressed. Among these researchers found a positive association between profitability and the extent of corporate social and environmental disclosure whereas Cowen et. al (1987) found no association between the variables. For profitable companies if the rate of return or return on investment is more than the industry average, the management of a company has an incentive to communicate more information (including social and environmental information) which is favorable to it as the basis of explanations of good news and is likely to disclose social and environmental information in their corporate annual reports as a result.

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6.0 Opportunities and Challenges for CSR in Bangladesh

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6.1 CSR Implications and Applications

Although the term CSR is novel in Bangladesh, its importance is increasing as responsible businesses not only contribute to the welfare of the society but also are more profitable in the long run. They can act as a strategic tool to facilitate the private sector including the micro businesses involvement in economic activities maximizing benefit to all stakeholders (Sobhan, 2006). There are evidences that some companies are engaged in responsible entrepreneurship in Bangladesh despite the difficult context they face in terms of corruption, weak legal and regulatory framework. 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 US and EU buyers set guidelines to RMG industry to ensure the standards.

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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. CSR in Bangladesh can also contribute a lot to community development. The corporate house can develop the community by creating employment, providing primary education, contribution to infrastructure development like road and high-ways and addressing environmental concerns. This is more relevant for a country like Bangladesh where the government interventions in these fields being augmented by corporate alliance can go a long way in developing the economy, society and environment. Because of global competitiveness and demand, the CSR practices and standards are being implemented in Bangladesh. Ultimately CSR practices should be better practiced in Bangladesh for better and enhanced performance. A recent study related good governance with CSR, pointed to indicators of good governance as 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. Consumers in developed countries are increasingly attaching importance to how a company is conducting its business and whether it is adopting socially responsible business practices as per its claims (Fliess et al, 2006). Due to increased scrutiny of the consumers companies in developed countries are under pressure to adopt voluntary CSR policies and this is reflected in the rise of organic and additive free products and also

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products created according to fair trade, ethical and environmental principles. Therefore one of the reasons for companies adopting CSR in developed countries stems from increased customer awareness about social responsiveness. In terms of protecting consumer rights and consumer awareness, Bangladesh, however, presents a different scenario. Although the social indicators of Bangladesh have improved in terms of rising female education level, increase life expectancy, infant mortality, the adult literacy rate still stands at 47.5% (UNDP Human Development Report 2007/08) which reflects the fact majority of the consumers are very vulnerable. They are generally not aware of their fundamental rights due to low level of education and the businesses take advantage of the ignorance of the consumers and engage in deceptive practices. Implementing CSR practices would help to avoid the excessive exploitation of labor, bribery and corruption. Companies would know what is expected of them, thereby promoting a level playing field. Many aspects of CSR behavior are good for business (such as reputation, human resources, branding and making it easier to locate in new communities) and legislation could help to improve profitability, growth and sustainability. Bangladesh has long been pursuing an export led strategy with the textile and garments sector alone contributing 77.7% of total exports (CPD, 2001). Due to the WTO (World Trade Organization) regime and globalization Bangladesh has to compete with others in the international market. In this context, there is a fear amongst Bangladeshi suppliers of large Western corporations that unless they can project a socially responsible image they are bound to suffer adversely in the international market. Managers of several export-oriented firms confirmed that in the absence of home- grown resources, adoption of these standards might help domestic firms to gain and retain access to the international market they serve. So, adoption of these standards makes a good business sense to them.

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Thus, it could be argued that instead of promoting transparency and accountability standards and codes are being used as a kind of legitimizing tool without changing actual corporate behavior. As a result, the very purpose of holding powerful corporations to account is being defeated. Instead these are causing economic burden to the domestic firms who view the current social responsibility movement as yet another instance of non-tariff barriers for developing countries like Bangladesh.

6.2 CSR for Public sector:

In todays world there are more opportunities than ever before to build such societies, but enormous challenges. No sector has the capacity to address these challenges alone. Governments and inter-governmental institutions have a more critical role than ever, but they cannot do it alone. The power and creativity of the market needs to be mobilized more than ever before, but is insufficient on its own. While the public sector has primary responsibility for creating effective domestic and international institutions and investing in human development, the private sector has an important contribution to make. This in turn may undermine not only business opportunities and economic growth, but also the potential to reduce poverty and to invest in environmental sustainability. Governments can help by providing effective domestic policy frameworks that include stable macroeconomic policy, non-discriminatory treatment of firms, appropriate regulation and prudential supervision, an impartial system of courts and law enforcement and efficient and honest public administration. Governments can also help by maintaining and promoting appropriate standards and policies in support of sustainable development and by engaging in ongoing reforms to ensure that public sector activity is efficient and effective. Governments adhering to the OECD Guidelines are committed to continual improvement of both domestic and international policies with a view to improving the welfare and living standards of all people.

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Public sector bodies may choose to address different CSR themes through actions reflecting a variety of roles. For example, it is quite feasible for a government to seek to increase and improve the level of corporate sustainability reporting by using any one or a combination of various mandatory (legislative), facilitating (guidelines on content), partnering (engagement with multi-stakeholder processes), and endorsing (publicity) tools. It is also apparent that some public sector activities, such as procurement, have multiple linkages with the contemporary CSR agenda. Mandating In their mandating role, governments at different levels define minimum standards for business performance embedded within the legal framework. Examples include establishment of emission limit values for particular categories of industrial installations, or requirements for company directors to take particular factors into account in their decision making. Even mandating activity can drive industrial innovation and best practice. For example, the familiar notions that enterprises should apply the best available techniques, best available technology, or the best practicable environmental option to manage industrial emissions allow for the fact that what is best will change over time with technological innovation and technology transfer. Facilitating In their facilitating role, public sector agencies enable or incentives companies to engage with the CSR agenda or to drive social and environmental improvements. In many of the approaches reflected under this heading, the public sector plays a catalytic, secondary, or supporting role. In their role as facilitators, public sector bodies can stimulate the engagement of key actors in the CSR agenda. Public sector bodies can also develop or support appropriate CSR management tools and mechanisms, including voluntary product labeling schemes, benchmarks, and guidelines for company

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management systems or reporting. And they can stimulate pro-CSR markets by creating fiscal incentives and by applying its public procurement and investment leverage. Partnering The notion of partnership is central to the CSR agenda. Strategic partnerships can bring the complementary skills and inputs of the public sector, the private sector, and civil society in tackling complex social and environmental problems. In their partnership role, public sector bodies may act as participants, conveners, or facilitators. Endorsing Political support and public sector endorsement of the concept of CSR and in particular, CSR related initiatives reflect a fourth public sector role. Endorsement can take various forms, including through policy documents, the demonstration effect of public procurement or public sector management practices, or direct recognition of the efforts of individual enterprises through award schemes or honorable mentions.

However, effective policy decisions can only be made if public sector bodies have access to information on the effectiveness of voluntary schemes in enhancing business performance and market access. Supporting initiatives could include country specific impact assessments of CSR-related requirements imposed through contracts for supply of goods and services, and work to strengthen the integration of CSR-related themes in enterprise development and export and investment promotion. Work to build awareness of the CSR agenda should be sensitive to the particular social and economic importance of small, medium, and micro enterprises (SMMEs) in many developing countries, their vulnerability in the face of some CSR requirements, and the

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policy priority for a number of developing country governments of supporting SMME development. If public sector bodies in developing countries are to harness the CSR agenda to national, regional, or local policy goals, then greater efforts will be needed to overcome the current lack of private sector engagement in key policy processes. This includes overall strategic frameworks such as national sustainable development strategies and poverty reduction strategies, but also extends to other areas where achievement of national public policy goals could be strengthened through private sector engagement, such as education. Public sector bodies need also to be aware of the potential for promoting CSR that is supportive of national policy priorities. For example, there may be opportunities to integrate business linkages programs into national poverty eradication strategies. Businesses could benefit from advice on how their country- or site-specific activities could be aligned with national development strategies. The development of public sector advisory services in these areas may require external support. The government also plays a dominant role in the control of the corporate behavior of multinational and foreign companies so that their activities conform to the social norms and expectations of the country. This is why multinational respondents considered government as an important stakeholder.

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6.3 THE RANGE OF PUBLIC SECTOR ACTIVITES

Setting minimum standards for business Encouraging and ensuring compliance Setting frameworks for business participation in public policy Supporting citizen action against poor performers Creating fiscal incentives for pro-CSR activities Engaging in intergovernmental and international initiatives, conventions, and guidelines Setting policy goals and overall strategy frameworks for private sector action Catalyzing voluntary CSR initiatives Defining socioeconomic priorities from which businesses can take a lead Promoting joined-up government on CSR by coordinating across departments Coordinating industry and civil society actions Leading by example (for example, through public procurement and management systems) Enabling and promoting pro-CSR consumer choice Pro-CSR export promotion Developing, supporting, and implementing codes of conduct Stimulating pro-CSR markets (for example, through public procurement) Promoting the interests of particular stakeholder groups (for example, producers or employees) Defining the boundaries of the CSR agenda in the local/national context Working in partnership: intergovernmental and/or with business and civil society Linking businesses CSR activities to public sector expenditures Encouraging responsible investments and loans Formal and informal judging of what constitutes good practice Collating and disseminating information on good practice, and encouraging replication Explaining CSR to companies and other stakeholders

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 Informing the international CSR debate about the local and national CSR context Developing the technical knowledge base for pro-CSR business Capacity building to help companies meet external CSR requirements Supporting civil society to drive CSR Informing and educating businesses, consumers, employees, investors, and regulators Facilitating dialogue among other stakeholders Giving political support and official endorsement to CSR initiatives Highlighting individual companies good practice

6.4 Prospects for the Future Development of CSR

Unlike the developed countries, where pressures from civil society groups, consumers, NGOs, media and other stakeholder groups are the main driving force behind CSR, the pressure to address social responsibility issues in the operating subsidiaries of multinationals in Bangladesh seems to be coming from outside (i.e. from parent companies). It often comes in the form of instructions from the head office based in the developed countries. Internationally, pressure is increasing on the domestic export-oriented companies, operating as suppliers to large Western corporations, to adopt international labour standards and carry out operations in a responsible manner. Moreover, operating subsidiaries of the multinational companies are under scrutiny by international lobby groups pushing them to enhance their social, ethical and environmental performance in developing countries. On the domestic front, the government is asking companies to deliver improved environmental performance and better labor conditions. In addition to this a number of pressure groups have emerged recently seeking to promote accountability and transparency in all spheres of public life, including responsible business

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practices. The strength of the trade unions is particularly notable in the public sector organizations in ensuring workers rights and welfare. So, the push for CSR came in from outside or abroad rather than spontaneously or indigenously from inside. Stakeholder engagement is one of the central themes of the current social accounting movement. It is argued that accountability to stakeholders should be at the heart of any social accounting exercise (Medawar, 1976). But this objective is yet to be achieved, as management of stakeholders seems to be the predominant aim of current social accounting practice (Owen et al., 2001; Owen et al., 2000). Within this category, international buyers exert significant influence on the corporate behavior of export led firms (particularly those operating in the textile and leather sector) because of their enormous buying power and the sole dependence of the domestic companies on them. This is why a number of companies have voluntarily adopted quality related standard ISO9000 to gain competitive advantage and the associated economic benefits it can bring to them. As compared to the large international buyers, individual domestic customers are less powerful because of their small individual buying power and also because of the lack of any organized efforts to exercise collective power to control corporate behavior. At present there is no consumer protection law in the country. As a group, domestic individual customers are not very organized to be able to influence corporate behavior in an effective manner. As a result, the rights of individual domestic customers are being neglected as evidenced by several media reports on customer deception and provision of sub-quality adulterated goods (Aziz, 2002). While the industrial units are making contributions to the countrys economy, their social, ethical and environmental performance has raised some concerns. Social expectations are rising as evidenced by the increasing demands for accountability and transparency in business practices (Rahman, 2003). The key issues of concern in the garment and textile sector, and also in other export-oriented industries, are child labor, equal opportunity and health and safety. Although in the face of pressure from Western consumers and

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international agencies, such as the ILO, child labor is being eliminated their welfare and rehabilitation have been neglected (Hossain, 2001). Similarly, despite having a great potential, the frozen food sector is progressing at a slow pace and the exporters themselves are responsible for this (Financial Express, 2006). The European Union countries which buy about 90% of the frozen food from Bangladesh often send back the consignments on grounds of poor quality. As the consumers in the developed economy are health conscious, they refuse to buy low quality and hazardous food products. Consequently, Bangladesh is not only losing a potentially attractive market, but also this is adversely affecting its reputation in the international market. Further there has also been great public concern over the widespread sale of adulterated, underweight food items at inflated prices and the risks associated with the consumption of such food items (The Daily Star, 20.01.2008; Editorial, 11.08.2005) To address the concerns stated above the government is calling upon companies to improve labor conditions and environmental performance. In addition, emerging pressure groups are demanding transparency in all spheres of public life, including ethical business practices. In addition to internal domestic pressure there is ever increasing external pressure on export oriented companies to adhere to the principles of international labor practices. The external pressure for ethical business practices mainly emanates from international agencies and large Western corporations (Milne, 2001). Moreover, subsidiaries of multinational companies are under pressure from international lobby groups to improve transparency and accountability in their operations in developing countries. Because of these pressures it is widely speculated that companies in Bangladesh will be asked to comply with the requirements of social accounting standards and corporate codes of conduct that are being developed in Western developed countries. What remains to be seen is whether such imposition will bring any real change by addressing the needs of local stakeholders. In this paper via interviews with these stakeholders we explore how they perceived the relevance of the externally driven CSR agenda which is emerging as a future issue on the horizon of Bangladeshi business.

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In addition to the pressures from parent company/head office and international buyers, there are pressures from international agencies such as the World Bank, OECD, ILO and UN organizations to improve the social, ethical and environmental performance of multinational companies operating in the developing countries like Bangladesh. The International Labor Organization (ILO), Organization for Economic Co-operation and Development (OECD), World Bank and UN organizations, peoples general awareness, emergence of pressure groups in developing countries with links to their counter parts in developed countries, increasing environmental pollution in Asian countries and the governments attempts to curb that pollution. OECD have published guidelines for multinational enterprises and principles of corporate governance and the UN Global Compact urges global companies to adhere to the nine principles concerning human rights, labor standards and environment. Global companies are adopting social accounting standards such as SA8000, AA1000 and GRIs Sustainability Reporting Guidelines. Not only that, they are also implementing those standards in their operating subsidiaries in the developing countries. In this regard ILO standards call for ensuring appropriate labor standards. Thus, pressure to make organizations socially responsible and accountable would appear to come from both home and abroad. On the domestic front, local pressures are growing steadily to make organizations socially and ethically responsible. In the context of ever increasing industrial pollution and deteriorating labor conditions government is urging businesses to take preventive measures for curbing pollution [The Daily Star (Online), 29th April, 2002, www.dailystarnews.com]. A number of environmental pressure groups have emerged in recent times seeking to improve environmental conditions in Bangladesh. Industry wide pressure seems to be

increasing in the garments and textile sector to improve working conditions of employees [The Bangladesh Observer (online), 17th August, 2001, www.bangladesh.net/observer].

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Community wide protests are being made against the tannery companies in the Hazaribagh area of Dhaka City compelling their relocation (Khan, 2001; Khan, 2001). All these local pressures imply that companies will have to address the various social, ethical and environmental issues in the near future. However, as compared to the international pressures, local pressures have not yet gained sufficient momentum to compel companies to respond at the present moment in time.

6.5 A Challenge for Companies Everywhere

Although recent developments in thinking have largely been in that context, the relationship between business and others in society poses questions relevant in all cultures and stages of national development. Depending on the socio-economic and political context our companies may well face daily operational and strategic challenges created by: Inadequate legal frameworks and governance structures Weak, authoritarian or failing public sectors Bribery and corruption Human rights violations High levels of poverty and inequities in the distribution of resources and livelihood opportunities Inadequate educational and public health infrastructures

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7.1 CONCLUSION

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The findings show that though some companies are disclosing the issues related to CSR in their annual reports, a clear picture of these issues cannot be identified from this effort. It can be identified that the reporting patterns of the companies are not consistent. About the same issue different companies are presenting and reporting differently. Moreover, as the companies are presenting the same kind of issues differently (not consistently), stakeholders get confused and they cannot compare between these companies on these issues, as consistent information is not available. Another characteristic of these disclosures that can be identified is that, most of the companies have stated about their awareness on this issue but they did not present any detailed discussion on their activities related to these issues. Most of the companies are reporting on these issues very reluctantly and these kinds of disclosures cannot be something useful to the stakeholders. Bangladeshi companies do not prepare any separate Sustainability Report but they report on several Corporate Social Responsibility issues in their annual report. Social reporting practices are done voluntarily by a very small number of listed companies in Bangladesh. The level of disclosures is also very poor. Disclosures made are limited to descriptive information only without their quantification. Companies portray CSR information in different places of the Annual Report. There is no standard or the reporting framework. The main problems involved in the CSR reporting are lack of provision in the Companies Act 1994, lack of separate International Accounting Standard, lack of understanding and awareness , lack of qualified and trained personnel and lack of motivation, poor performance and fear of bad publicity and finally lack of application and control of laws. The limitations of traditional legal approaches now mean that we must be innovative in developing effective regulatory measures to implement CSR.

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

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Good Governance, absence of strong labour unions, consumer forums and above all lack of understanding by business houses, specifically non-exporting ones, that CSR is not charity but is rather a contribution to the society without expecting financial return. These socio-political and organizational changes might influence the social responsibilities of the corporate bodies that might ultimately be reflected in the disclosure practices of the listed companies.

7.2 Recommendations:
Engaging in social responsibility activities involves costs, as it might require, for example, purchasing environmentally friendly equipment, implementing stricter quality controls, or new health, safety and environmental programs. Disclosing social responsibility information also involves costs such as those related to data collection, communication and audit. Since having and presenting an image of social responsibility involves incurring costs, benefits are expected to accrue to sustain business. However, the investments required may not have an immediate pay-off. Whereas the costs involved are usually shortterm or continuous outflows, the benefits are often long term. Unless the corporate governance structures are reformed with a view to empowering stakeholders, CSR will fail to achieve the fundamental objective of social accounting and auditing (Owen, Gray & Bebbington, 1997). Most of the stakeholders felt that the requirements for CSR should be made mandatory. In the absence of legal requirements many companies would not come forward voluntarily. In order to improve the CSR practices and their disclosures in the annual report, companies should follow the following principles:

1. Minimize harm: Work to minimize the negative consequences of business activities and decisions on stakeholders, including employees, customers, communities, ecosystems, shareholders, and suppliers. Examples include operating 91

ethically, supporting efforts to stop corruption, championing human rights, preventing environmental harm, enforcing good conduct from suppliers, treating employees responsibly, ensuring the safety of employees, ensuring that marketing statements are accurate, and delivering safe, high-quality products. 2. Maximize benefit: Contribute to societal and economic well-being by investing resources in activities that benefit shareholders as well as broader stakeholders. Examples include participating voluntarily to help solve social problems (such as education, health, youth development, economic development for low-income communities, and workforce development), ensuring stable employment, paying fair wages, and producing a product with social value.

3. Be accountable and responsive to key stakeholders: Build relationships of trust that involve becoming more transparent and open about the progress and setbacks businesses experience in an effort to operate ethically. Create mechanisms to include the voice of stakeholders in governance, produce social reports assured by third parties, operate according to a code of conduct, and listen to and communicate with stakeholders. 4. Support strong financial results: The responsibility of a company to return a profit to shareholders must always be considered as part of its obligation to society. From the foregoing content of this report, I recommended following key elements for reporting:

integrate economic with social and environmental performance in an account of the total impact on society dont overlook the fact that the companies are wealth-creating, economic agents;

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relate reporting to the companys mission, principles and key policies give an account of how effective you are at living out what you say you believe; base reporting on the individual stakeholders, whether one by one or thematically, consulting them to the extent necessary to be sure of their concerns these are real people who want to get to what interests them as easily as possible;

above all, use hard quantitative measures where ever possible to demonstrate actual performance, supplementing these with descriptions and case studies as necessary to bring the story alive as the saying goes: show me, dont just tell me;

put performance measures in meaningful context by use of benchmarks, trend data and target setting often the issue is not our absolute level but whether we are doing better than others and whether things are getting better or worse over time;

finally, focus costly verification on those few critical issues that really matter: for example a consumer goods company could check adherence to policies in its subcontractor supply chain in the developing world; get an independent expert to comment on apparent performance.

There is room for improvements in web-based environmental reporting practices. In order to improve the situation of web-based environmental reporting in Bangladesh, following recommendations have been offered and they are as follows: It has been found that companies had disclosed environmental information sporadically on their websites. Therefore, companies should have, on their home Dutta & Bose a hyperlink to a separate page containing environmental information.

Companies have been found to disclose only qualitative information about their environmental activities. They should also provide quantitative environmental information such as the amount of fines for non-compliance, the amount spent on tree plantation, the quantity of energy saved etc. 93

Companies have provided only positive information about their environmental activities. They should also provide negative information so that the information has decision-usefulness for information consumers.

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Appendix -1
List of Sample Companies: 1. Square Pharmaceuticals Ltd. Bangladesh 2. Beximco Pharmaceuticals Ltd. 3. Renata Limited 4. The IBN SINA Pharmaceuticals Industry Ltd. 5. Reckitt Benckiser Bangladesh 6. HR Textile Mills Ltd. 7. Square Textiles Ltd. 8. BEXTEX Limited. 9. Monno Fabrics Ltd. 10. British American Tobacco Bangladesh

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Appendix -III
Issues on CSR Disclosed by the Companies SL No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Separate Corporate Issues No. of Disclosing %of total Sample

Companies in the total Sample (n = 10) Social 4 0 & 1 4 2 5 10 40% 0% 10% 40% 20% 50% 100% 70% 20% 10% 20% 20% 10% 20% 0% 40% 10%

Responsibility Disclosure Sustainable Development Management System

Certification Scheme Employee Relations Community Relations Shareholders Relations Compliance Corporate Governance

Report Environmental Responsibilities 7 Welfare Activities & Other Social- 2 Economic Issues Technology Contribution to 1 National 2 2 1 2 0 4 1

Exchequers Business Ethics/ Ethical Standard Human Rights Legal Compliance Fair Employment Health & Safety Labor Standard

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