CSR for alleviating poverty, reducing inequality

It is argued that economic inequality has been a defining feature of human civilisation ever since human beings began to farm, herd livestock and pass on their assets to future generations. For over thousands of years, only violent events have significantly lessened inequality. Mass mobilisation, warfare, transformative revolutions, state collapses and catastrophic plagues have repeatedly destroyed the fortunes of the rich. These views have been exclusively discussed and analysed by the economist Walter Schiedel in his book 'The Great Leveller'. It is now an established fact that the global economic inequality has reached such a stage that another catastrophe is due for destroying the gargantuan inequality in line with the analysis of history by Schiedel. Any global armed conflict will put at risk the existence of human societies. The political leaders and economists will therefore have to think over the matter with the objective of reducing inequality.

Corporate social responsibility (CSR), meanwhile, is considered a very effective weapon for alleviating poverty and reducing inequality. CSR has now become a buzzword around the globe. But a substantial number of states are yet to realise that the governments will have to play the major role in implementing the CSR projects. There is, however, enough confusion with regard to the definition and objectives of the CSR. Does it come within the purview of CSR to provide a freezing van to the most elite bureaucratic club of the country by a bank? However, the Malaysian government has realised the importance of CSR and has very candidly defined its objective. It has become one of the most ideal countries of the world for implementing CSR programmes. Some of the important features have been elaborated below almost verbatim.

What is CSR? Corporate Social Responsibility or CSR has been referred to in the context of various themes, such as sustainability, corporate citizenship, corporate responsibility, environment, society and governance, and the triple bottom line. Despite this, there are common themes to its definition. CSR considers the current and future impact of business operations, purchase and sale of products and services on the environment, employees, local community and the society in general. CSR is a set of voluntary actions that a business undertakes over and above complying with the law. It includes, but is not limited to, corporate governance and philanthropy.

The Companies Commission of Malaysia: The Companies Commission of Malaysia, also known as Suruhanjaya Syarikat Malaysia (SSM), under the purview of the Ministry of Domestic Trade, Cooperatives & Consumerism, is a statutory body that regulates companies and businesses in Malaysia. This allows SSM to leverage on its linkage and network capacity, as the ministry is responsible for all domestic trade activities. With these strategic linkages, SSM is in a good position to drive the culture of corporate responsibility (CR) among businesses in Malaysia. According to its database, as of 31 October 2012, there were a total of 1,006,499 companies and 4,906,017 businesses (sole proprietorships and partnerships) registered with SSM. According to the statistics issued by SME Corp Malaysia, SMEs make up 99.2 per cent of the businesses in Malaysia.

Value of Reporting: In an effort to instil CSR culture into businesses, the Malaysian government requires all Public Listed Companies (PLCs) to disclose their CSR activities in their annual reports to the Securities Commission (SC) since 2007. This new requirement affected over 1,000 companies in Malaysia. Bursa Malaysia published a reporting framework for PLCs, which outlined potential CSR initiatives in the domains of environment, community, marketplace and workplace. The guidelines are flexible and require minimum disclosures to comprehend whether a company undertook CSR activities or not. The overall goal of the regulatory authority is "to raise the awareness on CSR and encourage PLCs to integrate the practice of CSR as part of the way they work and think".

Tax Incentives: In the light of growing importance of CSR in Malaysia and the government's support to this concept, tax incentives have been provided to companies who practice CSR. The tax incentives cover a variety of actions, such as the setting up of child-care facilities, contribution to the community and setting up of library services. In addition, the government has set up fiscal incentives at national level, where funds have been specifically allocated for activities that benefit children. The efforts of local companies who practice CSR do not go unacknowledged or unrecognised, as the government rewards these companies through the Prime Minister's CSR Award.

Awards and Recognition: The Malaysian government announced in 2007 that private sector contributions to the community would be recognised and awarded through the Prime Minister's CSR Awards Sponsorship. The CSR awards given by the topmost level of the government is a significant recognition of the impact that the business sector can have on the community. The government stated that the awards were also a means of instilling the CSR values in corporate culture.

The Prime Minister's CSR awards are managed by the Ministry of Women, Family and Community Development in Malaysia. Entrants are judged based on the impact of their programmes on the target beneficiaries, the programme's sustainability, and documentation of the initiative. The CSR areas and categories for which awards are given include community and social welfare, culture and heritage, education, environment, small company, best workplace practices, empowerment of women, special award - media reporting, best overall programme, family-friendly workplace and outstanding opportunities for people with disabilities.

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