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International Journal of Scientific & Engineering Research Volume 8, Issue 9, September-2017 474

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The Importance of CSR Practices in


Business: A Case Study of RMG Sector in
Bangladesh.
1. Syeda Helmi Afrah, Lecturer (Department of Business Administration, BGMEA university of Fashion and
Technology, Dhaka, Bangladesh)
2. Moly Rani, Lecturer (Department of Natural Science BGMEA University of Fashion and Technology, Dhaka,
Bangladesh)

Abstract: Readymade garments (RMG) sector plays the auspicious role in our economic development. Nowadays this
RMG sector faces several remarkable tragedies which indicate the need of CSR in this area. Corporate Social
Responsibility (CSR) is a relatively new and rapidly developing phenomenon. After the tragic incident Rana Plaza and
Tazreen Fashions, the image of our garments industry is entirely damaged. But the scenario is changing day by day.
Many good practices are implemented by the factory owner which is outstanding. The best three environment-friendly
garment and textile factories in the world are located in our country these are Envoy Textiles, Remi Holdings, and
Plummy Fashions. They have taken the garment and textile factories of Bangladesh to thenew position to the world.
The primary objective of this paper shows the present scenario of CSR practices and importance of CSR practices in
RMG sector.

Key words: Corporate social responsibility, RMG Sector

——————————  ——————————
Introduction: field of Industrialization garment industry is
Readymade garments make up 80 percent a promising step. The sector now dominates
of the country's $24 billion in annual the modern economy in export earnings,
exports and 15 percent share of GDP. secondary impact and employment
Consultancy firm McKinsey and Company generated. It has given the opportunity of
has said Bangladesh could double its employment to millions of unemployed,
garments exports in the next 10years [1] especially innumerable uneducated women
of the country. In less than a decade it
Textiles have been an incredibly important increased its exports, foreign exchange
part of Bangladesh’s economy for a very earnings, and contribution to the GDP by
long time for some reasons. Bangladesh is 4.39 %. RMG exports reached a steadfast
the world's second biggest exporter of figure of USD 17.91 billion in the fiscal year
clothing after China [2] 2010-2011; accountingmore than 78% of
Although Bangladesh is not developed in national export earnings, which was about
industry, it has been enriched in Garment 4%-5% of the global total of such exports. It
industries in the recent past years. In the further contributes 10% to the country's

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GDP.Bangladesh's garment industry Corporate social responsibility has emerged


employs about than 3.6 million workers as a major issue in the Bangladesh RMG
which 2.8 million are women. Bangladesh’s sector. Despite the additional costs these
garment industry employs about than3.6 compliance demands a place in the area,
million workers which 2.8 million are there are sound economic reasons why the
women [3] Bangladesh garment industry should
Nowadays this RMG sector faces several implement CSR. If the RMG Industry fails to
remarkable tragedies which indicate the implement CSR, it may lose its global
need of CSR in this sector. Corporate Social markets. Lack of enough practicing CSR
Responsibility (CSR) is a relatively new and could harm Bangladesh's competitiveness
rapidly developing phenomenon. Despite as a supplier of ready-made garments. This
the phenomenal success of the RMG sector, could have dire results: the closure of most
poor working conditions in the factories and of the garment industry with millions of
a lack of Corporate Social responsibility are employees losing their jobs; the decline of
serious concerns which, lead to labor unrest economic growth
and damage to institutions and property. As Objective of the study:

a result, there is a rising fear in Bangladesh The primary objective of this study is to find

that the readymade garments sector may out


face a decline in demand. • How our RMG sector plays a crucial role
Despite the phenomenal success of the in our economic development and
RMG sector, poor working conditions in the • The concept of CSR and
factories and a lack of Corporate Social • Importance of CSR in our RMG sector

responsibility are serious concerns which, • Scenario of CSR practices in our RMG
lead to labor unrest and damage to sector
institutions and property. As a result, there Methodology: This paper mainly based on
literature review and some factory visit.
is a rising fear in Bangladesh that the
The concept of CSR:
readymade garments sector may face a
The most common definition of CSR is by
decline in demand. [4]
the World Business Council for Sustainable
Development: “The continuing commitment
by business to behave ethically and

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contribute to economic development, while


improving the quality of life of the The necessity for the integration of this
workforce and their families as well as of form of CSR was first felt by the export-
the local community and society at large." oriented private corporations, namely,
Ready-Made Garment (RMG) industries and
Corporate Social Responsibility (CSR) goes shrimp product andprocessing companies in
beyond philanthropy and compliance. It is Bangladesh. Following the 1992 US Harkin’s
about how companies take responsibility Bill[9] the RMG sectorencountered the
for their stakeholders and actions in the threat of boycott of their products from the
world at large. It is about investing US and EU buyers and consumers on the
inbusiness growth while ensuring allegation of child labor employment in the
sustainability of markets, customer’s and industries. It was thefirst driving factor for
the environment. the RMG to comply with international social
standards, including the abolition of child
CSR is an evolving concept with many labor, and the foreign buyers set a guideline
meanings. The definition used by the CSR forthe RMG industries to ensure the
Centre is: “CSR is about achieving standards.[8]
commercial success in ways that honor
ethical values and respect people, Civil society advocates question
communities and thenatural environment corporations’ fundamental motivations for
[5] CSR,asserting that corporate programs to
Corporate Social Responsibility assumes fund social and environmental programs
that the companies are socially conscious to are nothing more than public relations
discharge their social obligation for the campaigns to boost their brand reputations,
well- being of the society. [6] often disproportionately to theeffort itself.
This dismissal of CSR resides in a
CSR is the continuing commitment by fundamental distrust of a corporation’s
business to behave ethically and continue legitimate intentions to do anything more
to economic development while improving than increase its profits. On the ideological
the quality of life of the workforce and their right, critics reject the role of CSR in a
families as well as of the local community capitalist society where the primary
and society at large.[7] responsibility of business is seen as creating
financial returns for its shareholders and
CSR has long been a practice in the the larger economy. A company’s value,
businesses of Bangladesh, in the form of according to these critics, resides entirely in
traditional philanthropic activities, as in the its ability to generate financial wealth for its
case of other South Asian countries.[8] shareholders, and any social or
environmental initiative that does not
simultaneously create profit for a company
It cannot be pinpointed when and how the is deemed to be a waste of corporate
current stakeholder notion of CSRentered resources [10]
the corporate sector of Bangladesh. It
presumably entered into thebusinesses of Why RMG need CSR:
Bangladesh in the 1990s.[8]

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According to the IMF, Bangladesh’s Working conditions in the RMG sector are
economy is the second fastest growing below standard and do not meet the ILO
major economy of 2016 (Dec), with 7.11 standards. Labor standards and rights are
percent Gross Domestic Product (GDP) commonly ignored in the RMG factories in
growth rate where the growth rate was Bangladesh: poor practices include the
6.12 percent in 2015. Contribution of absence of trade unions, informal
industry to the GDP was 28.1%, where RMG recruitment, and irregular payment, sudden
sector donate the biggest part. Since 2004, termination, wage discrimination, excessive
Bangladesh averaged a GDP growth of 6.5%, work, and abusing child labor. Moreover
which has been importantly driven by its workers suffer various kinds of diseases due
exports of readymade garments [11] to the unhygienic environment and a
number of workers are killed in workplace
Recent incidents like fire in the Tazreen accidents, fires and panic stampedes.
Fashions factory 2012 that killed more than Absence of an appropriate mechanism to
110 and the collapse of the Rana Plaza ensure the enforceability of the available
garment factory building in April 2013 that laws for protecting workers’ rights and
killed over 1,100 people and more than maintaining workplace safety continues to
2,500 were injured in the disaster. It may be be a concern in the RMG sector. As the
the second biggest industrial accident in sector is an important foreign exchange
recent history. The image of the garment’s earning component, some changes are
industry has been threatened by these required. Working conditions in the RMG
accidents, showing the presence of severe sector frequently violate international labor
structural challenges but also the lack of standards, and Codes of Conduct.[12]
corporate responsibility in addressing issues Recruitment policies are highly informal
related to labor practices, safety and compared to western standards and there
security, environmental impacts, among are no written formal contracts and
others. There are many problems exist in appointment letters. They are therefore
this garments industry. vulnerable to losing their jobs at any time.
However, fear of losing their jobs and lack

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of alternative job opportunities compel retain sustainable growth and competitive


workers to continue in unsatisfactory edge of this industry
employment. [13]
Continuous work schedule, wage penalties, Corporate social responsibility has emerged
as a major issue in the Bangladesh RMG
physical and verbal abuse are common.
sector. Despite the additional costs these
Women workers face physical abuse and compliance demands place on the sector,
sexual harassment inside as well as outside there are sound economic reasons why the
Bangladesh garment industry should
the factories, but management does not
implement CSR. If the RMG Industry fails to
ensure the security of women workers. implement CSR, it may lose its global
Regulatory measures and its strict markets. Lack of enough practicing CSR
could harm Bangladesh's competitiveness
implementation and monitoring by the as a supplier of ready-made garments. This
government agency that could overcome could have dire results: the closure of most
of the garment industry with millions of
work place in security problem of garments
employees losing their jobs; the decline of
workers in Bangladesh [14] economic growth.
Garments workers are concerned with long
Scenario of CSR practices in RMG sector:
working hours or double consecutive shifts, The discussions on CSR practices in
personally unsafe work environment, poor Bangladesh in its modern global terms, is
relatively new. In general, it is true that in
working conditions, wage and gender
Bangladesh, the status of labor rights
discrimination. Indeed, employers treat the practices, environmental management and
RMG workers as slaves, exploiting workers transparency in corporate governance is not
to increase their profit margins and keep satisfactory, largely due to poor
enforcement of existing laws and
their industry competitive in the face of
inadequate pressure from civil society and
increasing international competition [15] interest groups like Consumer Forums.
There are many factors responsible for Globally, as CSR practices are gradually
being integrated into international business
these problems. Given the dominance of
practices and hence is becoming one of the
the RMG industry in the overall economy of determining factors for market accesses, it
Bangladesh, protection of this sector is very is becoming equally instrumental for local
acceptability. A focus on CSR in Bangladesh
important. Rather than basking in the glory
would be useful, not only for improving
everybody should work hand in hand to corporate governance, labor rights, work

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place safety, fair treatment of workers, Fashions have taken the garment and
community development and environment textile factories of Bangladesh to new
management, but also for industrialization heights.
and ensuring global market access. By now,
many CSR dimensions are practiced in These green factories have less carbon
Bangladesh [16] emission, higher production, and save more
gas, electricity and water compared to
Many initiatives are taken by factories other factories Bangladesh has a total of 32
which are promising sign for Bangladesh: green factories. More than 100 green
After the incident of Tazrin and Rana plaza, factories thirty garment, textile and
there was a misconception about the washing factories in Bangladesh have
garments industries in Bangladesh. The received LEED certificate.
working environment of knitwear and
garment industries of Bangladesh faced Vintage Denim Studio is the first factory to
stern criticism worldwide after Rana Plaza get LEED Platinum certificate in 2012. Shruti
building collapse tragedy but the scenario is Textile Mills achieved the LEED Gold
totally changed. The conditions will improve Certificate.
day by day. Many positive things are
Genesis Fashions and Genesis Washing
happening in nowadays. One of example is
received LEED Platinum Certificate. Osman
Denim Expert limited. The company has
Interlinings in Dhaka EPZ received LEED
certifications WRAP, SEDEX, BSCI and has Gold Certificate. Tosrifa Industries of
been accredited ISO 9001:2008 (Quality and Northern Tosrifa Group achieved the LEED
Management System) and ISO 14001:2004 Gold Certificate.
(Environmental Management System), with
an in-house compliance management team. Two factories of BITOPI Group have LEED
They think the employee is an important Gold Certificate. These are Remi Holdings
part of their company and without them and Tarasima Apparels. SQ Group has three
they are nothing. That's why they provide LEED Platinum Certificates for three of its
many facilities to their employees and factories-SQ Birichina, SQ Collblanc and SQ
workers. They practice many CSR activities Celsius-2. SQ Celsius has an LEED Gold
which really amazing. Certificate.

The top three environment-friendly Envoy Textiles of Envoy Group has an LEED
garment and textile factories in the world Platinum Certificate. Regency Garments
are located in Bangladesh, keeping pace (unit-1) of Chittagong EPZ has an LEED Gold
with the growing demand of green factories Certificate. It is a US organization. Green
worldwide. Textiles has a certified recognition are
under construction.[17]
Envoy Textiles, Remi Holdings and Plummy

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Our media should coverage these positive number are motivated by the benefits CSR
stories to the world.
can bring about when integrated with core
business strategies and operations.
Benefits of CSR practices:
Motivations for Practicing CSR [19]
For sustaining long term every company  Community development / give back
to society
should practices CSR.Because this practices  Business motivation / makes good
are deals with people,planet and profit. business sense
 Responsibility to employee and
Most importantly, findings from scientific community welfare
 Developing communities in ways
research are becoming increasingly clear that benefit business
with regard to how CSR is essential for the  Create shared value
 Do business the right way / operate
long-term sustainability of a firm. Firms that
responsibly
blindly and narrowly pursue the profit
IBM study ‘Attaining Sustainable Growth
motive, without concern for the through Corporate Social Responsibility’:
broadspectrum of Stakeholders that are The majority of business executives believes
that CSR activities are giving their firms
relevant to the long run, are increasingly competitive advantage, primarily due to
favorable responses from consumers.
shown to lack sustainability. But it’s not
only important to realize the importance of
Better Business Journey, UK Small Business
these groups. Firms must also be able to Consortium: “88% of consumers said they
were more likely to buy from a company
“connect the dots” and understand how
that supports and engages in activities to
various Stakeholders, and the satisfaction improve society.”
their needs, represent interrelated
Recommendations for improvement of the
challenges. For example, the strategic overall situation CSR in BD:
management of human resources is related
Ideally, well-managed CSR creates social
to customer satisfaction, and it is essential and environmental value, while supporting
for firms to attempt to understand and deal a company’s business objectives and
reducing operating costs, and enhancing
with this connection [18] relationships with key stakeholders and
customers. It is therefore imperative that
Although many companies are motivated by corporations establish a CSR unit whose
giving back to society, an almost equal primary responsibility is coordinating and
integrating initiatives in all three theatres in

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which a company is engaged in, even if The question of business sustainability in


responsibility for the various initiatives the international market of RMG products
remains dispersed throughout the and the question of national economy
company. This CSR unit, however, needs to prompted a multiplayer move for the
be headed by a person who has senior promotion of social compliance or labor and
management rank and holds the position as environment related CSR issues in the
garment enterprises. Thus a partnership
his/her primary responsibility. It is not
between stakeholders has been built up in
uncommon for CSR offices to be headed by
the process of promotion, which is the key
managers who split their time between CSR demand of the stakeholder approach of
and other corporate responsibilities, such as CSR. The major actors are: [22]
head of Human Resources or Operations.
For example, the 2011 survey of CSR 1. Business Associations (BGMEA and
managers and executives revealed that in BKMEA);
all three CSR domains, dedicated CSR 2. Ministries and Departments;
executives spent an average of only about 3. Buyers;
35 percent of their time on managing and 4. Intergovernmental organizations and
administering CSR programs, with some development agencies; and
professionals devoting less than that 5. Producers/Industries
percentage of their time to CSR
Following recommendations for businesses
responsibilities.[20]
in order to engage in CSR activities with an
increased level of efficiency:[23]

In a country like Bangladesh international a) Achieving increased level of cooperation


buyers are the strong stakeholder’sfor between the various departments of the
export-oriented manufacturing sectors. business in terms of achieving CSR related
Their demands and expectations always get aims and objectives;
top priority in the activities of the
companies. The prime consideration for this b) Engagement in strategic use of social
isbusiness sustainability in the international investment budget;
market that has in many ways implications
for the growth of a strong economic base of c) Introducing CSR aspects of the
the country. The ‘social compliance’ business at the initial stages of the project
requirements in the garment sector of and integrating it with long-term aims and
Bangladesh are viewed from that objectives;
perspective. In this regard a comment is
noteworthy that ‘the social d) Specifying the activities of stakeholder
responsibilityactivity is guided by buyers. identification and engagement as a
From toilet requirements to child labor continuous process;
elimination, all sorts of social activities are
now done by us under the influence of e) Ensuring the existence of CSR skills in
buyers’ [21] all employees within the organization;

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f) Implementing an effective “Corporate social responsibility is a hard-


audit/review system in terms of improving edged business decision. Not because it is a
the quality of CSR. nice thing to do or because people are
forcing us to do it… because it is good for
A specific recommendation formulated in our business [25]
that aspect states that “governments have
to foster accountability and transparency in
CSR practices to prevent them from being
used as smoke screens by corporations to Conclusion:
hide their malpractices. Governments can RMG sector is the significant area which
do this by, for example, actively creates lots of opportunity for the job.
encouraging companies to disclose their Many female workers get the chance to
social and environmental policies in their
earn money. Women empowerment
accounts on voluntary basis” [24]
created through this area. Our living
Many garments owner don’t have the clear standard will improve day by this sector.
idea about CSR. They think CSR is cost not This area can sustain long term in a
investment. Awareness should be created competitive market by practicing CSR. So
by arranging seminar workshop. To government should pay attention to
implement CSR is not the easy task. It’s not implement CSR, and all stakeholders should
possible only for the government to act responsibly for ensuring sustainable
implement CSR. All stakeholders should development in this sector.
worktogether to improve the CSR practices
in Bangladesh. Factory owner should
prepare CSR report annual basis. The
government should provide the reward to
best companies who are practicing CSR.
Media should highlight best practices
Reference:
There is an old and very common 1. Challenges for Bangladesh, Asian
assumption that companies implementing
Development Review, Bangladesh Textile
CSR often underperform but this statement
is nothing but furthest from the truth. Journal (2011)
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investment as well as corporate growth and (Various Issues) Annual Report (2005-2012)
responsibility and that too in comparatively
shorter span of time as compared to non- 3. Mahmud R.B (2012 ) Skills development in
CSR organizations. As Niall Fitzgerald
Former CEO, Unilever once said; Bangladesh RMG sector, the News Today,
http://www.newstoday.com.bd

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4. Ahamed, F. (2011). Working conditions in 12. Quddus, M. and Rashid, S. (2000).


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17. The ProthomAlo

18David Waldman1, Ron S. Kenett2, & Tami


Zilberg3, Corporate Social Responsibility:
What it really is, why it’s so important, and
how it should be managed

19. Report on CSR in Bangladesh 2016 by


CSR Center in Bangladesh.
20. KashRangan Lisa A. Chase Sohel Karim, Why
Every Company Needs a CSR Strategy and How
to Build It

21. Azizul Islam and Craig Deegan,


Managerial Perception of Social Reporting:
An Analysis of
the Bangladesh Clothing Industry’ (A
conference paper presented at European

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Accounting
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2007).
22. Nakib Muhammad Nasrullah , Mia
Mahmudur Rahim, CSR in Private
Enterprises in
Developing Countries Evidences from the
Ready-Made Garments Industry in
Bangladesh

23. Jonker., J. &Witte., M. (2006) Management


Models for Corporate Social Responsibility,
Springer Publications, New York, USA

24. Mullerat, R. (2010) Corporate Social


Responsibility: Corporate Governance in the 21st
Century, Kluwer Law International, Netherland

25Webinars by Dr. William P. Kittredge


August 6, 2014.Corporate Social
Responsibility Practice & Implementation

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