wasi ahmed |
January 18, 2022 9:51:30 PM
The central bank’s latest directive on corporate social responsibility (CSR) appears to have targeted some key areas that require increased support and intervention. Aimed at banks and financial institutions, the BB Directive lays down strict ground rules in terms of allocating funds and where the funds should go. The guideline, which is not the first of its kind, is more precise than those issued in the past in the design of the CSR application methods.
This time, the focus is more on health and the environment. All scheduled banks and non-bank financial institutions (NBFIs) in the country must spend at least 30% of their total CSR funds, instead of the previous 20%, to facilitate healthcare supports, according to the directive. Spending on the environment and the migration and climate change adaptation sector was increased to 20% of their total CSR funds, up from the previous 10%.
Since the Covid-19 pandemic began to wreak havoc on lives and livelihoods, mobilizing resources to help deal with the situation has become a top priority for governments. All over the world, countries – rich and poor – have devised means mainly in the form of cash distribution as well as various packages to support those affected. In Bangladesh, alongside the government’s efforts to provide stimulus packages and cash assistance, a very appropriate measure could strengthen the CSR mechanism significantly.
The issue of CSR in the country is often considered in terms of financial expenditure in a particular area of socio-economic activity or development. Public enterprises and commercial banks are primarily responsible for providing funds for CSR activities. So far, CSR in Bangladesh has remained confined to some specific areas and in doing so has not been practiced to directly contribute to poverty alleviation or, as is currently the case, to support livelihoods of millions of people. Now that there are fears that the pandemic will continue its onslaught – who knows for how long – the search for ways to alleviate the misery of the growing number of vulnerable people cannot be overemphasized. The new surge in Covid infection cases may drive up the poverty rate and that is why the need to spend CSR funds on the distressed, unemployed, vulnerable, homeless and defenseless has become paramount.
Clearly, the goal of CSR today is to drive positive social change. Covid-19 has highlighted the need for a more structured approach, with financial firms playing a key role in alleviating public suffering. But the debate over determining the effectiveness of all previous CSR efforts has raised several challenges: finding reliable implementing partners, monitoring and tracking funds, and evaluating their impact. A Bangladesh Bank report showed that scheduled banks spent nearly 5.17 trillion taka in January-June 2020 as CSR funds against their spending of 2.40 trillion taka in the corresponding period. of the previous year. However, it is unclear where and how the money was spent.
Now, in order to make sense of the recent BB directive, it is important that a plan is drawn up for the targeted socio-economic activities so that the actions can be taken in a sustainable way. According to the BB Directive, any program promoting employment opportunities, self-employment and skills development for young people can be financed from the CSR budget. Undoubtedly a good attempt, it requires proper direction, and the BB can suggest ways. Needless to say, much of the success of these and other activities will depend on how effectively they are followed up, and in doing so, involving stakeholders would hopefully yield better results.
Although CSR has been in practice in the country for some time now, it is clear that its method and purpose are both limited to the financial allocations of state-owned enterprises and banks only. We barely know whether companies follow CSR practices – inside and outside their companies. If there is will, CSR activities can be better practiced by companies in their work culture. In other words, this means that millions of employees directly benefit from the broad scope of corporate wellbeing. It is in this context that CSR is a self-regulating business model that helps a company to be socially responsible to itself, its stakeholders and the public. By practicing corporate social responsibility, also known as corporate citizenship, companies can be aware of the kind of impact they have on all aspects of society, including economic, social and environmental. In times like today, engaging in CSR by companies signifies their crucial role in repairing a calamity that has affected us all.
With regard to the emphasis on the environment in the BB guideline, this is clearly to mitigate a host of problems arising from climate change. It cannot be overstated that health, energy, water supply, sanitation, industry, transport, trade, tourism, agriculture, forestry, fisheries, protection of the environment and ecosystems, goods and services and food security are the country’s main development sectors that are directly affected by climate change. It is therefore important to see to what extent these areas are effectively taken into account when allocating funds and taking on projects.