Environmental reporting : Corporate social responsibility
(Left) Industrial effluent being discharged in waterbody. (Right) River water polluted by industrial waste.
THERE has been an upsurge of interest and enthusiasms in the dilations and debates about Corporate Social Responsibility (CSR) and its reporting in the recent years. It is now almost unequivocally recognised that business firms must move beyond just the strict considerations of profit maximization, and address the wider interests of the society and the environment within the context of which they operate. Notwithstanding the growing popularity and use, the term CSR reporting defies any universally accepted definition. It has been variously defined and applied. The concerned academic literature deploys diverse terminology to refer to CSR reporting including such terms as 'sustainability reporting', 'social responsibility accounting', 'social accounting', 'corporate social disclosures', and 'social and ethical accounting, auditing and reporting'. Put rather simply, CSR reporting may be defined as the external reporting of social, ethical and environmental aspects of a business organisation. It essentially concerns the process of communicating the social, ethical and environmental effects of business organisations' economic actions to particular interest groups within society and to society at large. It involves extending the accountability of firms beyond the traditional role of providing a financial account to the owners of capital or shareholders. Such an extension is predicated upon the assumption that companies do have wider responsibilities than simply make money for their shareholders. This article presents partial findings of an extensive research on CSR practices in Bangladesh (for details, see A.R.Belal 2008 'Corporate Social Responsibility Reporting in Developing Countries: The Case of Bangladesh', Ashgate Publishing, Aldershot, England, 170pp.). Based on a systematic qualitative survey (including the use of such tools as content analysis and semi-structured interviews) of 87 business firms, representing such sectors as bank, insurance, textiles, pharmaceuticals, fuel, food, engineering, service, jute and miscellaneous, the study aimed to explore the emerging practice of CSR reporting in developing countries with particular reference to Bangladesh by examining the corporate attitudes towards social, ethical and environmental issues as represented in the text of corporate reports in the public domain. In what follows, we share selected observations and findings of the study concerning the corporate attitude towards environmental matters as reflected within their annual reports for the years 1999/2000. Out of the 87 surveyed companies, only a meagre 18% of them disclosed on environmental issues. Even then, the disclosure was very general and superficial. Here are some examples of the environmental disclosures: “The company is always active to keep its environment pollution free. In addition to the implementation of afforestation programmes in all mill areas steps have been taken to keep the internal environment of the factory pollution free by installing modern equipment.” (A private sector textile company, Annual Report, 1999-2000,). “In keeping with the national objectives, the company attaches the utmost importance to a congenial environment. We have taken adequate measures to control dust, which is generated during the process of manufacturing cement. Moreover, we have undertaken elaborate programmes within the factory premises and notable progress has already been made in this connection.” (A private sector cement company, Annual Report, 1999,). The corporate attitude, as evident from the above disclosure statements, suggests a rhetorically loaded but practically cautious and unsubstantial approach. The companies are saying that they have taken environmental issues seriously but their sincerity may be questioned in the absence of the development of an appropriate long-term corporate environmental policy and quantitative indicators to measure performance against the policy. The above ad hoc disclosures can, at best, be taken as a list of mere intentions without evidence of any appropriate action. The environment of Bangladesh is degrading rapidly. The untreated disposal of industrial wastes, gases and fumes is considered as one of the reasons for this. In spite of this, a large majority of companies (82%) included in this study did not make any environmental disclosure. There are specific allegations against the companies polluting the environment. For example, one recent study reports that “Residents of Hazaribagh and its adjoining areas are facing serious health hazards due to unabated release of untreated effluent from about 250 tanneries into the river Buriganga. Sources said due to release of effluents and emission of poisonous gases, various skin diseases have broken out in Katasur, …..Hazaribagh, …… and in Rayer Bazar areas…. Black spots are visible on the skin of the afflicted inhabitants of the area…gold ornaments, even chains of the wristwatches worn by the people of the area, get discoloured within a very short time due to release of gas from the tannery effluent.” A tannery company, located in the Hazaribagh area, in its 1996 annual report said, “If we are to attain sustained growth we need… more efforts in quality management and pollution control. Your company has already begun the process through investment in a new 'green' tannery”. In its 2000 report however it did not make any environmental disclosure excepting four words ('Caring for the environment') on its company logo shown on the middle of cover page and then on every page of the annual report. We are not told what the position is concerning that 'green' tannery now and how it is helping to mitigate pollution. All the company says is that it cares for the environment but what is does not say is how it cares for the environment when the people in the community of Hazaribagh are suffering from serious fatal diseases due to the pollution created by the tannery companies. The Karnaphully Paper Mills (KPM) is another public sector company seriously polluting the river Karnaphully. A newspaper article noted, “The chemical wastage of the KPM …… is polluting water of the river Karnaphully and its surrounding environment at an alarming level. Effluents of the mills have been polluting the surrounding environment on the one hand and on the other hand, bad smell spreading from wastage is seriously affecting normal life of the people living near the mills” [The Financial Express, 21 July 2001]. In spite of such adverse impact on the surrounding environment, like other non-disclosers, the company remained silent on the issue and preferred not to make any disclosure in this regard. In sum, the majority of studied companies have adopted a rhetorically bold but practically obscure approach to the wider issues of environment and society. The corporate attitude towards environmental issues appears to be of interim in nature as evidenced by the lack of long-term commitment. The overall findings of this study also allure to a very low and superficial level of disclosure. Further, the quality of disclosures is poor as is evident from the reluctance of corporations to provide precise quantified information. There is a growing consensus amongst both the academics and development activists regarding the crucial significance and topicality of rendering business organisations to act in a more socially and environmentally responsive manner. As voluntary reporting initiatives often fail to generate the required responses amongst the companies, one cogent view is to argue in favour of mandatory reporting of social, ethical and environmental information as the way forward. Research and practical demonstration on the possible ways and means of ensuring more effective social and environmental disclosures remain generally limited in Bangladesh. This interesting area of study deserves immediate attention from our policy planners, academics, business executives, and development practitioners. Dr. Ataur Rahman Belal (a.r.belal@aston.ac.uk) is Lecturer at the Aston Business School, Aston University, UK and Dr. Niaz Ahmed Khan (niaz.khan@yahoo.com) is Professor of Development Studies at the University of Dhaka.
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