CSR and its application in garments industry in developing country

8/20/2019 CSR and its application in garments industry in developing country

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Faculty of Engineering

Department of Textile Engineering

Assignment on

CSR (Corporate Social Responsibility)

Course code:

TE4212; Course title: Specialized Apparel Manufacturing

Submitted by:

Gazi Mohiuddin Alamgir; ID: 121-23-2943

Submitted to:

Mr. Md. Mominur Rahman

Sr. Lecturer

Date of submission: July 26, 2015


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ACKNOWLEDGEMENT

First I express my heartiest thanks and gratefulness to almighty Allah for his divine

blessing, which makes me possible to complete this assignment successfully.

I fell grateful to and wish my profound indebtedness to our honorable Teacher Mr.

Md. Mominur Rahman, Sr. Lecturer, Department of Textile Engineering,

Daffodil International University for his endless patience, scholarly guidance, continual

encouragement, constant and energetic supervision, constructive criticism and valuable advice,

which have made it possible to complete this assignment.


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ABSTRACT

Corporate Social Responsibility (CSR) in the business firms and enterprises has

evolved as an indispensable part for greater business and economic successes. In the context of

free market economy, corporations are increasingly operating business across boundaries where

sensitivity to social and environmental issues and accountability to society at large are

considered pivotal for corporate performances. This paper seeks to explore the corporate

perception, practices and current trends of CSR in the export-oriented apparel industry in

Bangladesh.

This assignment briefly reviews theoretical and practical aspects of CSR . The goal of

this assignment is to obtain a better understanding on CSR and to relate these findings to focuson the implementation and outcome in textile sector in Bangladesh. This report will also

investigate the interaction between the CSR and it‟s the impact on environment and society along

with the business. Moreover it will let me see through the corporate social responsibility in a way

better manner.


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LIST OF FIGURE & TABLE

List of figure:

i.

Figure 1: The Pyramid of Corporate Social Responsibility…………… 05

List of tables:

i. Table 1: Social Accountability 8000…………………………………… 09

ii. Table 2: Business Social Compliance Initiative……………………….. 09

iii. Table 3: Worldwide Responsible Accredited production…………….... 10

iv. Table 4: Fair Labour Association………………………………………. 10

v.

Table 5: Ethical Trading Initiatives…………………………………….. 11

vi. Table 6: Clean Cloth Campaign………………………………………... 11


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CONTENT

II. ACKNOWLEDGEMENT

III.

ABSTRACTIV. LIST OF FIGURE & TABLE

CHAPTERS PAGE NO.

1. INTRODUCTION……………………………………………………….……01

2. THE CONCEPT OF CSR ….…..……………………………………… .…….02

2.1 CSR ……………………………………………………………………02

2.2 History of CSR….…………………………………………………….02

2.3 Classification of CSR….………………………………………………03

2.4 Way of developing……………………..……………………………...03

3. DIFFERENT ASPECTS OF CSR …………………………………………….04

3.1 Goals of CSR ………………………………………………………….04

3.2 Key issues in CSR ……………………………………………………..04

3.3 Key drivers of CSR …………………………………………………....04

3.4 Coverage area………………………………………………………… ..05

3.5 Carroll‟s pyramid of CSR ……………………………………………...05

3.6 CSR: UN 10 principles…………………………………………............06

4. CSR IN TEXTILE INDUSTRIES…….……….…………………………......07

4.1 CSR in textile industries ……………………………………………...07

4.2 Initiatives for the implementation of CSR in textile industries……….08

5. CSR IN APPAREL INDUSTRIES IN BANGLADH………….……………12

6. CSR AND ITS IMPACTS……………………………………..…..………….14

6.1 Survey impacts………………………………………………………..14

6.2 Profit of CSR …………………………………………………............146.3 Arguments for CSR …………………………………………………. .15

6.4 Arguments against CSR ………………………………………………15

7. CONCLUSION……………………………………………………..…..……..16

REFERE NCE…………………………………………………………………….17


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1 . I N T R O D U C T I O N

Corporate Social Responsibility (CSR) is popularly perceived as corporate donations to a

socially acceptable area such as education, religious institutions, community care etc. Over the years it

has been deep rooted in our mindset that business should donate part of their profit in social and

community investment since charitable giving is encouraged as a means of salvation by most religions

practiced in Indian subcontinent. In the early stage of business development, particularly in Indian

business culture, entrepreneurs‟ perceived charity as a means of satisfying the goddess to business

prosperity but without any strategic planning of business development it is difficult to classify such

activities as CSR.

Corporation should not focus only on profits as principles and ethics is also crucial to remain in

business, hence business requires meeting their responsibilities both as an economic and social agent.

Donations to build mosques, temples without improving the workplace condition of the workers,

exploiting minimum wages or overtime hour work, irregular payment of wages is a question of ethics. On

the other hand, digging wells for community or supporting education or feeding babies without ensuring

safe drinking water for the workers or supply of reliable and safe products to the consumer at fair prices,

exploiting shareholders from reasonable benefits might not be considered as prior agenda for business.

Business ethics is about being answerable to the stakeholders where investor, employee, supplier,

customers, government, trade unions are considered important. Customers want quality product and

services, employee want safe and healthy work environment and reasonable benefits etc.

Here comes the Corporate Social Responsibility (CSR). Concept of CSR emerged in the 1950s

and gradually developed over the last five decades. In the recent years CSR concept has come across

many debates and shaped with a strong theoretical and empirical base. Corporate performances are not

confined on economic or financial performance of business firms as the stakeholders want to see that

companies are sensitive to social and environmental issues and accountable to the society at large beyond

its direct stakeholders.

The concept of social responsibility is a fairly recent one in the business world.

Awareness about the social responsibility of business organizations is rapidly on the rise and

firms are also accepting this concept. The textile industry is no exception. Textile producing and

trading firms are also realizing their responsibility towards the society and the environment.


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2 . T H E CONCE PT O F C SR

2.1 CSR:

Corporate Social responsibility is “an organization‟s obligation to maximize its positiveimpact and minimize its negative impact on the society”. In other words, it is “the concept that

businesses should be actively concerned with the welfare of the society at large”.

"Being socially responsible means not only fulfilling legal expectations, but also going

beyond compliance and investing more into human capital, the environment and relations with

stakeholders.“

-The European Commission

"Operating a business in a manner that meets or exceeds the ethical, legal, commercial

and public expectations that society has of business.‟‟

- Business for Social Responsibility

"The continuing commitment by business to behave ethically and contribute to

economic development while improving the quality of life of the workforce and their families as

well as of the local community and society at large."

- World Business Council for Sustainable Development

2.2 History of CSR:

In 1816, a British textile businessman, Robert own, Discharge his child labours and he

compensated by giving them incentives for schooling

In 1886, the founder of Unilever William H. Lever ventured into setting up a housing

estate for his workers with facilities of schools, library and dispensaries.

These instances, among several more alike, testify that the business people a century ago

felt and exposed their moral responsibility towards their employees and the neighboring

community.

However, there were also businesses that took all opportunities to make profit and keep

eyes closed on their moral or social obligations of caring for beyond-the-work needs of

the employees, not to talk of the communities around.

The idea of social responsibility of the business fathomed well in the middle of the 20th

century


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Within the next few years, a consensus was growing suggesting that beyond meeting their

legal obligations, companies needed to take certain responsibilities towards the society

Environmentalism started brewing up in the face of growing concern over climate

change, depletion of earth's resources, over-consumption etc

2.3 Classification:

Social responsibility can be broadly divided into two parts: human responsibility and

environmental responsibility.

Human responsibility refers to the responsibility of the organization towards the various

parties associated with it, which are known as „stakeholders‟ in business parlance. These

parties include employees, shareholders, the government, customers, investors, suppliers,

competitors and the society at large.

Environmental responsibility refers to the organization‟s responsibility towards

environment protection.

2.4 Way of Developing:

Corporate Social Responsibility customizes three broad aspects as:

First, it underlines compliance with legal responsibilities (e.g. tax, health and safety,

workers rights, consumer rights, environmental regulations) and industry standards.

Second, it concerns minimizing or eliminating the negative effects of business on

society and managing risk (for example of human rights abuses and environmental

pollution).

Third, it involves increasing the positive effects of business and creating value

through innovation, investment and partnership aligned towards social and

environmental good (for example job creation, social and economic development and

conflict resolution).


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3 . D I F F E R E N T A SP E CT S OF C SR

3.1 Goals of CSR:

The goal of CSR is to embrace responsibility for the company's actions and encourage a

positive impact through its activities on the environment, consumers, employees,

communities, stakeholders and all other members of the public sphere.

Furthermore, CSR-focused businesses would proactively promote the public interest by

encouraging community growth and development, and voluntarily eliminating practices

that harm the public sphere, regardless of legality.

3.2 Key Issues in CSR:

Labour rights:

Child labour

Forced labour

Right to organise

Safety and health

Environmental conditions:

Water & air emissions

Climate change

3.3 Key drivers of CSR:

Around the world

NGO Activism

Responsible investment

Litigation

Gov & IGO initiatives

Developing Countries

Foreign customers

Domestic consumers

FDI

Government & IGO

Human rights:

Cooperation with paramilitary forces

Complicity in extra-judicial killings

Poverty Alleviation:

Job creation

Public revenues

Skills and technology


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3.4 Coverage areas:

There are six major areas of CSR

The employees

Providers of finance

Consumers

Community and environment

Government

And other organizations and groups

3.5 Carroll’s pyramid of corporate social responsibility:

Carroll (1991) suggests that CSR activities of any company should consist of 4

distinctive elements: economic, legal, ethical and philanthropic responsibilities (Figure 1).

Figure 1: The Pyramid of Corporate Social Responsibility

(Carroll 1991, p.42)


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Carroll indicates that businesses should focus on satisfying expectations of shareholders

and delivering profits, obeying the law, being ethical and engaging in the philanthropic

responsibilities, which create a positive value for the society (1991). These responsibilities

however, should be fulfilled simultaneously “rather than in a sequence” (Cooke and He 2010,

p.356).

3.6 CSR: UN Global 10 Principles:

Human Rights

Principle 1: Business should support and respect the protection of internationally

proclaimed human rights

Principle 2: Make sure that they are not complicit in human rights abuses

Labour Standards

Principle 3: Businesses should uphold the freedom of association and the effective

recognition of the right to collective bargaining

Principle 4: Should eliminate all forms of forced and compulsory labour

Principle 5: Ensure effective abolition of child labour

Principle 6: Eliminate discrimination in respect of employment and occupation

Environment

Principle 7: Businesses should support a precautionary approach to environmental

challenges

Principle 8: Undertake initiatives to promote greater environmental responsibility

Principle 9: Encourage development and diffusion of environmentally friendly

technologies

Anti- corruption

Principle 10: Business should work against all forms of corruption including

extortion and bribery


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4 . CSR I N T E X T I L E I N D U ST R I E S

4.1 Corporate Social responsibility in the textile industry:

Like the firms in other industries, textiles firms are also realizing their responsibility

towards the various parties associated with them and the environment. However, the ways by

which different organizations choose to fulfill their social responsibility might be different.

The ways in which a textile firm can fulfill its responsibility towards various parties are

similar to those of firms in other industries, as is evident from the points mentioned below:

Towards employees:

By providing a competitive and challenging work environment to the employees.

By having ethical recruitment, remuneration, promotion and other policies

By providing opportunities to the employees to voice their opinion and complaints

and have an effective policy for the solution of these complaints.

Ensuring a safe working environment for the employees.

Having fair policies for the solution of employee disputes.

Towards shareholders:

By representing a fair picture of the company‟s financial position and profit/loss to

the shareholders

By paying them a fair rate of dividend

Towards the government:

By providing the necessary information to the government as and when required

By making payment of the due taxes and duties at the proper time

By abiding by the laws and regulations of the area in which the firm operates.

Contributing to the economy through exports.

Towards customers:

By providing quality products to the customers at reasonable prices

By undertaking constant research and development and coming up with innovative

and more useful products from time to time.


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Towards investors:

By giving the investors a true and fair picture of the financial condition of the

business.

By giving them due returns on the investment made by them.

Towards suppliers

Making competitive payment to the suppliers for the products purchased from them.

Maintaining a good relationship with the suppliers.

Towards competitors:

Indulging in ethical and healthy competition

Towards society:

Undertaking community development and area development programmes.

Undertaking charity work for the underprivileged sections of the society.

By creating job opportunities.

Towards environment:

Ensuring the purchase of environment-friendly supplies.

Ensuring a pollution-free process of production.

Having an efficient system for the disposal of waste.

Making the product and the process of production as environment-friendly as

possible.

Adopting eco-friendly packaging.

4.2 Initiatives for the implementation of CSR:

There are several initiatives specially targeting apparel industry, they are

Social Accountability 8000

Business Social Compliance Initiative

Worldwide Responsible Accredited production

Fair Labour Association

Ethical Trading Initiatives


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Social Accountability 8000:

Business Social Compliance Initiative:

Social Accountability

Administered by SAI/Social Accountability International

In operation since 1997

Initiative Multi-stakeholder (Companies, NGOs, governmental

organization, unions

Focus Social (Labour/ILO conventions)

Sector General, including textile and clothing

Verification/certification Third party audits leading to certification. Last year 5

factories are certified.

Business Social Compliance Initiative (BSCI)

Administered by FTA/ Foreign Trade Association


Initiative

Focus

Sector

Business initiative with 60 members in 10 countries

Social (Labour/ILO conventions)

General, including textile and clothing

verification/certification Third party audits, certification possible via SA

8000

Audited/certified companies

Participating textile brands

>1300 companies audited


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Worldwide Responsible Accredited Production:

Worldwide Responsible Apparel Production

Administrated by WRAP organization

In operation since

Initiative

2000

Industrial associations initiative (American

Apparel and Footwear Association, other industry

association). Academia and NGOs in board.

Focus

Sector

Social (Labour/ILO conventions)

Apparel (programs for other sectors are under

development)

Verification/certification Third party audits leading to certification

Audited/certified companies App.200 factories are certified in Bangladesh.

Fair Labour Association:

Fair Labour Association (FLA)

Administered by

In operation since

Initiative

FLA organization

1999

Multi stakeholder initiative (brand companies, NGOs,

Universitise)

Focus Social (labour/ILO conventions)

Sector

Verification/certification

Mainly sportswear and outdoor wear

Third party audits, no certification

Audited/certified companies 3.700 factories in 18 countries (2006)

Participating textile brands Adidas, Asics, Eddie Bauer, Drew Pearson Marketing, Gear for

Sports, Gildan Activewear, H&M, Liz Claiborne, Mountain

Equipment Coop, New Era Cap, Nordstrom, Nike, Outdoor

Cap, Patagonia, Phillips-Van Heusen, Puma, Reebok, Top of

the World, Twins Enterprise, Umbro and Zephyr Graf-X


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Ethical Trading Initiative:

Ethical Trading Initiative

Administered by ETI organization


Initiative Multi stakeholder initiative (brand

companies, NGOs, Unions)

Focus

Sector

Social (labour/ILO conventions)

General, including textile and clothing

Verification/certification Verification of the members by ETI onimplementation of the code.

Clean Cloth Campaign

Clean Cloth Campaign

Administered by

In operation since Initiative

1989

Network of national standards institutes of 157

countries

Focus Improving working condition and support the

empowering workers

Sector Global garment and sportswear industries

Verification/certification

Audited/certified companies

Rely on partner network of more than 200

organization and unions in garment producing

countries to identify local problems


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5 . CSR I N A P P A R E L I N D U S T R Y I N

B A N G L A D E S H

CSR Practices in Apparel Industry in Bangladesh:

Evolution of CSR in the apparel industries in Bangladesh started in mid 90s when the

international buyers put pressure on their suppliers. Harkins Bill was a big push for the sector to

incorporate social compliance issues to protect its market in the United States of America (USA).

In 1995, a Memorandum of Understanding was signed among the International Labour

Organization (ILO), United Nations Children's Fund (UNICEF) and Bangladesh Garments

Manufacturer and Exporter's Association (BGMEA) to eliminate child labor from the RMG

sector, hence RMG sector of Bangladesh became almost free from child labor from 1996

onward.

Movement of Garments Sromik Federation and other groups of the civil society

created pressure on RMG business firms to be more responsive to the employees, which resulted

in improving the fire protection and exit system in many factories.

Gradually they have established some health care centers and ensured health check-up

of employees and awareness raising on reproductive health, sexually transmitted diseases (STD)

and HIV -AIDS, and development of child care centers are some of the areas where the sector is

concentrating.

International buyers of RMG products were pressurized by different groups in the USA

and European countries that resulted in developing or following certain codes of conduct

developed by different organizations. Ending of the Multi-Fiber Arrangements (MFA) regime

and emergence of non-tariff barriers, which include maintaining quality standards and ensuring

commitment towards social compliances, has exerted tremendous pressure to comply with the

codes of conduct.

Different types of codes of conduct such as company codes, trade association codes,

multi-stakeholders codes, model codes and intergovernmental codes are followed. The most

comprehensive type of code of conduct would refer to the core labour standards identified by


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ILO that covers freedom of association, right to collective bargaining, no forced labour,

minimum age, no discrimination and equal remuneration (NGLS UNRJSD, 2000).

In addition, health and safety, maximum hours of work, wages for living, security, and

proper employment contracts are mentioned. UN Global Compact principles on human rights

and labour standard supported the above mentioned areas as measurement tools of CSR. Major

stakeholders i.e. employees, workers and the buyers of the apparel industry perceived business

firms should practice the above mentioned codes of conduct as the social responsibility of

business firms.

Over the years the sector understood the importance of addressing issues like

elimination of child labour, safety and security measures at workplace after a lot of incidence of

burning and death of numbers of workers, health as well as environmental hazard are threats to

exist in and expand the export market as well.

Analyzing the trend of CSR practices in RMG sector, it can be said these practices

were adopted due to pressures either externally or internally or both which is still a dilemma of

the sector to practice CSR voluntarily.


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6 . C SR A ND I T S I M P A CT

6.1 Survey Impact:

According to the survey done in USA

79% want to work for a company heavily engaged in CSR.

56% do not want to work for a company who is not at all committed to and

engaged in CSR.

Over 80% will switch brands if no CSR.

6.2 Profits of CSR:Although many companies still see CSR as a burden, if they are convinced of the

proofed human resource and environmental benefits then they will engage.

Social Responsibility:

Better working conditions and increased workers motivation.

Decreased overtime and decreased reworking

Increased productivity and increased wages

Improved health & safety, less illness and accidents

Improved (company) image

Increased ability to attract and retain quality employees

Environmental (Planet)

Reduced raw materials and energy inputs

Eliminated toxic materials use

Reduced quantity and toxicity of emissions and waste (water) outputs.

Economic Profit:

Enhanced reputation and brand value

Increased efficiency and productivity

Better product quality

Increased sales and customer loyalty

Attracting and retaining quality investors and business partners.


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6.3 Arguments for CSR:

Reputation enhancement.

Talent attraction/retention, enhancing employee morale.

Higher productivity, reduction of cost and increase in profitability.

Brand differentiation.

Addresses social issues business caused and allows business to be part of the solution.

Protects business self-interest.

Limits future government intervention.

Addresses issues by using business resources and expertise.

Addresses issues by being proactive.

Access to new market.

Customer loyalty.

Positive engagements with government.

6.4 Arguments against CSR:

Restricts the free market goal of profit maximization.

Business is not equipped to handle social activities.

Dilutes the primary aim of business.

CSR could reduce economic efficiency.

CSR would create excessive cost for business.

Business has enough power, and social involvement would further increase its power and

influence.

Business people lack the social skills necessary to deal with the problems of society.

Business is not really (?) accountable to society.

Less effective for short time business.

Limits the ability to compete in a global marketplace.


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7 . CONC L U S I O N

The concept of social responsibility is gaining popularity in today‟s times. Companies

are becoming increasingly aware of their responsibilities towards the various stakeholders

associated with them. More and more companies are trying to work in a way so as to protect the

interests of the employees, customers, suppliers and other parties and the society at large. The

concept of a business firm working only with the motive of earning profit is gradually becoming

outdated.

Most of the case we see, buyers‟ demands are conflicting. They want their suppliers to

comply with high quality and work standards (such as 8-hour shifts), while at the other hand theydemand supplier to keep prices low and work through „just in time‟ management. Along with the

pressure towards the suppliers for CSR buyers have to really think about the fair prices for what

are they asking.


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7 . R E F E RR E NC E

http://www.fibre2fashion.com/industry-article/2/179/corporate-social-responsibility1.asp

https://en.wikipedia.org/wiki/Corporate_social_responsibility

http://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-

cx_dv_1016vogel.html

Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral

management of organizational stakeholders. Business Horizon, 34(4), 39-48.

http://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-

important

http://digital.library.ryerson.ca/islandora/object/RULA%3A1900/datastream/OBJ/view

Wills, J., & Hale, A. (2005). Threads of labor in the global garment industry. In A. Hale

& J. Wills (Eds.), Threads of labor: Garment industry supply chains from the workers’

perspective. Oxford: Blackwell Publishing.
http://www.fibre2fashion.com/industry-article/2/179/corporate-social-responsibility1.asphttp://www.fibre2fashion.com/industry-article/2/179/corporate-social-responsibility1.asphttps://en.wikipedia.org/wiki/Corporate_social_responsibilityhttps://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.htmlhttp://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.htmlhttp://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.htmlhttp://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.htmlhttp://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.htmlhttp://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-importanthttp://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-importanthttp://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-importanthttp://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-importanthttp://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-importanthttp://digital.library.ryerson.ca/islandora/object/RULA%3A1900/datastream/OBJ/viewhttp://digital.library.ryerson.ca/islandora/object/RULA%3A1900/datastream/OBJ/viewhttp://digital.library.ryerson.ca/islandora/object/RULA%3A1900/datastream/OBJ/viewhttp://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-importanthttp://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-importanthttp://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.htmlhttp://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.htmlhttps://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://www.fibre2fashion.com/industry-article/2/179/corporate-social-responsibility1.asp

CSR and its application in garments industry in developing country

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