CSR in Private Enterprises in Developing Countries: Evidences from the Ready-Made Garments Industry in Bangladesh | Nakib Muhammad Nasrullah and Mia Mahmudur Rahim

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CSR in Private Enterprises in Developing Countries: Evidences from the Ready-Made Garments Industry in Bangladesh
By Nakib Muhammad Nasrullah and Mia Mahmudur Rahim
CSR in Private Enterprises in Developing Countries: Evidences from the Ready-Made Garments Industry in Bangladesh

Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 CSR and Private Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 CSR and Private Enterprises in Bangladesh . . . . . . . . . . . . . . . . . 3
1.3 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2 Understanding of CSR and Its Standards . . . . . . . . . . . . . . . . . . . . . 11
2.1 Concept of CSR and Its Fundamentals . . . . . . . . . . . . . . . . . . . . . 11
2.1.1 Definitions of CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.2 Explaining the Different Dimensions of CSR . . . . . . . . . . 15
2.2 Development of CSR Standards: Institutional Approaches . . . . . . 21
2.2.1 Voluntary or Self Regulation as a Basis for the
Development of CSR Standards . . . . . . . . . . . . . . . . . . . . 21
2.2.2 Different Forms of Voluntary Codes of CSR . . . . . . . . . . . 22
2.3 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3 Trends in CSR Practices in Developed and Developing
Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.1 Trends in CSR Practices in Developed Countries . . . . . . . . . . . . . 41
3.1.1 CSR in Developed Countries in Europe . . . . . . . . . . . . . . 42
3.1.2 CSR in the US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.1.3 CSR in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
3.2 Trends in CSR Practices in Developing Countries . . . . . . . . . . . . 57
3.2.1 CSR in the Middle East . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3.2.2 CSR in Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.2.3 CSR in Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
3.2.4 CSR in Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.3 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4 CSR Practices in the Private Enterprises of Bangladesh . . . . . . . . . . 75
4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.2 Background to the Emergence of CSR Practices
and Its Driving Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.3 The Need for CSR Practices in the Private Enterprises . . . . . . . . . 78
4.3.1 Need for CSR Practices from External Perspective . . . . . . 79
4.3.2 Need for CSR Practices from Internal Perspective . . . . . . . 80
4.3.3 The Need for CSR from the Sustainable Development
Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
4.4 A Review of Current CSR Promotion and Practices in the
Private Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
4.4.1 Trends in CSR Practices in the Private Enterprises . . . . . . 82
4.5 The Trend of CSR Management Certification and External
Monitoring and Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
4.5.1 Social Audit Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.5.2 The Trend of Corporate Social Reporting . . . . . . . . . . . . . 99
4.5.3 Government or Public Sector Role for the Promotion
of CSR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
4.5.4 The National Legal Framework and CSR . . . . . . . . . . . . . 106
4.5.5 The Role of Business Associations for the Promotion
of CSR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
4.5.6 The Role of International Agencies for Strengthening
CSR in the Private Enterprises . . . . . . . . . . . . . . . . . . . . . 111
4.5.7 The Growth of National Institutes and NGOs for the
Promotion of CSR in Bangladesh . . . . . . . . . . . . . . . . . . . 111
4.6 Obstacles to the Promotion of CSR in the Business Practice
of the Private Enterprises in Bangladesh . . . . . . . . . . . . . . . . . . . 113
4.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
5 CSR practices in the RMG sector of Bangladesh . . . . . . . . . . . . . . . 117
5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
5.2 The Meaning of Social Compliance: Labour and
Environment-Related CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
5.3 The Need for Social Compliance/CSR in the RMG Sector . . . . . . 119
5.3.1 SMEs in the RMG Sector and their Scope to
Access Global Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
5.4 The Promotion of Social Compliance and Multi-Player
Activism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
5.4.1 The Role of BGMEA for the Promotion of Social
Compliance in the RMG Sector . . . . . . . . . . . . . . . . . . . . 127
5.4.2 The Role of BKMEA for the Promotion of Social
Compliance in the Knitwear Sector . . . . . . . . . . . . . . . . . 139
5.4.3 Government Initiatives for the Promotion of
Social Compliance Issues/CSR in the RMG Sector . . . . . . 142
5.4.4 Buyers’ Initiatives for the Promotion of Social
Compliance in the RMG Sector . . . . . . . . . . . . . . . . . . . . 145
5.4.5 The Role of Intergovernmental and Development
Agencies in Promoting Social Compliance/Labour
and Environment-Related CSR Issue in the
RMG Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
5.5 The Progress and Current Status of Social Compliance
in RMG Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
5.5.1 The Development of Enforcement Mechanism . . . . . . . . . 157
5.5.2 The Review of the Status of Practice in the
RMG Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
5.6 Restraints Involving Social Compliance in the RMG
Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
5.7 The Exercise of Social Development Activities and
Corporate Philanthropy in the RMG Enterprises . . . . . . . . . . . . . . 176
5.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
6 Current Trends in CSR Practices in Private Enterprises in:
Comparative Experiences of Bangladesh and Vietnam. . . . . . . . . . . 179
6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
6.2 The Main Driving Forces of CSR in Bangladesh and Vietnam . . . 181
6.3 The Performance of Labour and Environment-Related CSR
Standards and Compliance with Codes of Conduct . . . . . . . . . . . . 183
6.4 The Role of Business Associations in Promoting CSR
at Enterprises Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
6.5 The Role of the Government and Public Sector as Navigator
of CSR Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
6.6 The Development of Institutional and Partnership Activism . . . . . 190
6.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
7 Concluding the Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
7.1 CSR as a Business Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
7.2 CSR as an Emerging Trend in Global Business . . . . . . . . . . . . . . 198
7.3 Emergence of CSR in Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . 199
7.4 CSR in the RMG Sector in Particular . . . . . . . . . . . . . . . . . . . . . 200
7.4.1 The Growth of Multi-player Activities . . . . . . . . . . . . . . . 200
7.4.2 Development of Enforcement Mechanisms . . . . . . . . . . . . 201
7.4.3 Situation of Social Compliance in the RMG Sector . . . . . . 202
7.5 Recommendations for the Improvement of the Overall
Situation of CSR in Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . 203
7.5.1 Establishment of a National CSR Forum . . . . . . . . . . . . . . 203
7.5.2 Establishment of a Labour Standards Commission . . . . . . . 204
7.5.3 Promoting Government or Public Sector Roles . . . . . . . . . 204
7.5.4 Bringing Regulatory Reforms for Enhancing
Companies’ Social Responsibilities . . . . . . . . . . . . . . . . . 204
7.5.5 Development of Business-Community Partnerships for
Social and Development Activities . . . . . . . . . . . . . . . . . . 204
7.5.6 Building Up Multi-player Activism . . . . . . . . . . . . . . . . . 205
7.5.7 Expanding the Support of Development Agencies
and Intergovernmental Organisations . . . . . . . . . . . . . . . . 205
7.6 Specific Recommendations for the RMG Enterprises . . . . . . . . . . 205
7.6.1 Setting a Common Standard for CSR Application . . . . . . . 205
7.6.2 Initiative for the Formation of Participatory Committee
at the Industry Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
7.6.3 Strengthening Communication Systems . . . . . . . . . . . . . . 206
7.6.4 Introduction of Mandatory Reporting on CSR . . . . . . . . . . 206
7.6.5 Establishing a Tri-Party Partnership for Environmental
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
7.6.6 Strengthening Coordination and Activities of the Social
Compliance Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
7.6.7 Enhancement of Buyers’ Technical and Logistic
Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
7.6.8 Entrepreneurs’ Efforts for CSR and the Workers’
Associations’ Cooperation . . . . . . . . . . . . . . . . . . . . . . . . 207
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217

Preface
This book examines and evaluates how Corporate Social Responsibility (CSR) as a business agenda is growing and becoming recognised in the private enterprises of developing countries taking the readymade garments (RMG) industry of Bangladesh as a case study.

In Bangladesh, CSR is growing in importance in corporate businesses in response to global trends. This book finds that the overall application of CSR in private enterprises in this country is emerging and progressing in an incoherent manner. This is due to certain challenges and constraints, notably the absence of multi-player activities, lack of adequate public sector interventions, and an absence of a national consensus on CSR or uniform CSR guidelines.

The position is somewhat different in the private enterprises of the Bangladesh’s (RMG) industry. This sector is the largest source of this country’s export earnings. The practices of labour and environment-related CSR in the form of social compliance requirements from the international buyers are growing steadily in this industry. Also there is a trend of the development of the multi-player activism for the promotion of compliance with these requirements in it. But changes seem only to be occurring in the large contracting enterprises and the enterprises of Export Processing Zones (EPZ). A huge number of small and medium scale enterprises and non-contracting enterprises remain non-participants in this trend. The reasons for this include insufficient co-ordination among stakeholders, resource constraints in factories, the absence of concrete guidelines from government and associations, lack of awareness among workers about their rights, and the absence of firm commitments from international buyers.


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