When CSR becomes compulsory, does responsibility lose its meaning?

Corporate social responsibility (CSR) was traditionally understood as a voluntary commitment. It arose from a simple recognition: businesses do not operate in isolation. They depend on society’s infrastructure, talent, natural resources, and markets to generate profit. Responsible businesses, therefore, contribute to society and the environment because their obligations extend beyond the balance sheet.

But countries have approached that responsibility in different ways. India has taken the regulatory route. Under its Companies Act, qualifying companies must spend 2 percent of their average net profits over the preceding three years on CSR, while retaining considerable freedom to design their programmes. The United Kingdom has taken a different path, focusing more on corporate disclosure, materiality, and the way environmental and social issues affect business strategy and performance. South Africa offers yet another model, with corporate governance principles emphasising organisational responsibility, stakeholder relationships, and sustainable value creation.

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The lesson is not that one model is right and another wrong. Regulation can set expectations without necessarily prescribing what responsibility must look like. That distinction matters for Bangladesh. Voluntary CSR here remains patchy. Some companies undertake thoughtful, long-term programmes. But many still equate CSR with donations, charity, events, branding, and publicity.

Against this backdrop, the Ministry of Commerce’s proposed National CSR Policy is understandable. The draft requires companies to spend at least 1 percent of pre-tax profit on CSR, report their activities, assign responsibility to the board, and prevent activities such as political donations, advertising, or routine business expenditure from being counted as CSR.

On the face of it, this raises a philosophical question: can responsibility be made compulsory? Ideally, responsibility should not need to be forced. But if voluntary efforts have not been sufficient, a minimum regulatory push may be justified. What matters is what happens beyond that minimum.

The government can set expectations and require transparency. It can define what cannot be passed off as CSR. But it should be careful not to prescribe what every company must do. It should regulate the commitment, not the conscience.

This is where Bangladesh can learn from other countries without simply copying them. A spending requirement can bring more companies into the CSR conversation. But if companies become fixated on meeting a percentage, CSR risks becoming another compliance exercise. The question then shifts from “What difference did we make?” to “How much did we spend?” That would defeat CSR’s entire purpose.

The draft policy identifies 19 priority areas and aligns CSR with the Sustainable Development Goals. This provides useful national direction, but companies should not be encouraged to spread their resources too thinly to tick every box.

Not every company should do everything. A pharmaceutical company may have greater expertise in healthcare. Telecommunications companies may create greater value through digital skills, education, and innovation. A bank may be better placed to address financial inclusion, entrepreneurship, and decent work. An agricultural business may play a stronger role in supporting farmers’ livelihoods, food security, and sustainable production.

The principle should be simple: focus on where the company has relevant expertise, responsibility, and the potential to create meaningful impact. There is nothing wrong with choosing one or two areas and staying committed to them for years. A decade of sustained work on a problem may create far greater value than scattering CSR funds across a dozen causes every year. Not everyone should do everything. Everyone should do something meaningful and do it well.

There is also a question about the proposed 1 percent calculation. The draft uses pre-tax profit. It may be worth considering after-tax profit instead. Tax is a statutory contribution to the state; CSR is a separate corporate commitment to social and environmental priorities. If a company earns Tk 100 crore before tax and pays Tk 25 crore in tax, 1 percent of pre-tax profit amounts to Tk 1 crore in CSR, whereas 1 percent of after-tax profit amounts to Tk 75 lakh. The argument is not simply about reducing the obligation. It is about establishing a coherent principle: CSR should be an allocation from profit remaining after statutory obligations are met.

More importantly, CSR should be treated as an investment, not merely an expense. A well-designed CSR programme can strengthen communities, develop human capital, improve livelihoods, build resilience, deepen stakeholder trust, and drive innovation. Its return may not appear immediately on a company’s income statement, but that does not make the investment any less valuable. The question, therefore, should not only be how much money a company spends. It should be what value that investment creates for people, communities, the environment, and the wider business ecosystem.

The policy should not imply that serious CSR requires a corporate foundation. While foundations can support large programmes, they should be optional. Companies can deliver CSR directly or through partnerships. If a foundation is established, its activities must be clearly separated from the company’s own CSR. Foundations should not be used to label all activities as CSR.

Partnerships can be more effective than creating new institutions. By working together, businesses, development organisations, universities, and government can combine expertise and resources for greater impact, rather than each company building its own organisation.

The bigger question is how CSR will be measured. CSR reports should not become catalogues of cheques, events, and photographs. “Ten thousand people reached” tells us little on its own. Did incomes rise? Did learning improve? Did people become more employable? Did a community become more resilient? Did an environmental intervention reduce harm? Money spent is an input, not an impact.

The policy should encourage companies to demonstrate outcomes without creating bureaucracy that discourages smaller or innovative initiatives. Larger, longer-term programmes can reasonably be subject to greater scrutiny and independent evaluation.

No CSR policy can offset irresponsible business practices. A company cannot compensate for environmental harm, worker mistreatment, or customer exploitation through CSR activities or donations. Ultimately, how a company earns its profits, through fair employment, responsible products, customer protection, environmental compliance, ethical supply chains, and good governance, matters as much as how it spends its CSR budget. These are the basics of responsible business.

Perhaps that is where Bangladesh’s CSR conversation needs to mature. For too long, we have looked at CSR from the outside: what the company donated, whom it helped, how many people attended, and how prominently it was covered. The more important questions lie within the company: How does it treat its people and customers? What does its supply chain look like? What environmental costs does its business create? And what does it do about those costs?

A company that spends 1 percent on social programmes while causing significant social or environmental harm through its core business should not be considered a model of corporate responsibility. Therefore, the proposed policy should be seen not merely as a spending rule but as an opportunity to redefine what we expect of business.

The ultimate measure will not be how much CSR money companies spend. It will be whether the conversation inside boardrooms changes: from “What do we have to spend?” to “What problem can we help solve?” From “How do we report it?” to “Did it actually work?” And eventually, from “What should we give back?” to “How can we create value without leaving society to pay the hidden cost?”

That is when CSR means more than compliance. The most responsible company is not necessarily the one that gives the most. It is the one that understands that profit and responsibility were never meant to be separate conversations—and that responsible CSR is an investment in the society and ecosystem that make sustainable profit possible.