Social businesses, located somewhere between NGOs and corporations, are currently making headway where nascent NGO sustainability efforts in Bangladesh are lagging behind

Poverty is pervasive in Bangladesh, making the challenge of improving many people’s quality of life the most persistent focus for the efforts of international and domestic NGOs.

That focus created what has been referred to by Indian academic Amartya Sen as the “imaginative activism” of the Bangladeshi NGO sector. That imaginative activism lies behind the birth of microcredit, through Grameen Bank founder Muhammad Yunus, and the social business movement.

Yunus, a Nobel Peace Prize laureate, is clear that the entities he has formed go beyond traditional NGO structures. He defines social business as either as “non-loss, non-dividend companies designed to address a social objective” or, alternatively, profit-making companies (such as the Grameen bank) but owned by depositors, either directly or through a trust structure, and dedicated to social causes.

Clearly these are different from traditional NGOs, which are non-profit bodies relying on donors to fund social work.

In a similar mould is the Bangladesh Rural Advancement Committee (Brac). Founded in 1972, Brac is considered the world’s largest quasi-NGO. It is 80% self-funded through commercial enterprises. Brac concentrates on the development needs of women, has similar microcredit services to Grameen, and operates in nine countries in addition to Bangladesh.

Unique, enormous, and far-reaching, both Brac and Grameen have taken the social aspect of sustainable development far beyond what a traditional business would, and have also been considerably more successful than both the Bangladeshi government, and, arguably, other NGOs, in delivering all types of services to the needy.

“Brac is one of the best-kept secrets of a development success story,” microfinance pioneer Susan Davis said at a recent Carnegie Council conference. “Where they can use a business model, they do.”

Grameen’s and Brac’s impressive results include more than $10bn in microloans (Grameen), more than seven million microfinance “members” (Brac) and running nearly 40,000 local schools (Brac).

Accountability concerns

Yet, as David Lewis, professor of social policy and development at the London School of Economics notes, the positive view most of the world has of Grameen and Brac coexists alongside “persistent concerns” about the NGO sector’s accountability. All NGOs face complex accountability challenges (to clients, government, funders and staff) but these new forms of organisation may face additional changes. That’s because they are not corporations, accountable in the way companies are with reporting and standards, yet neither are they content to wait for foreign donor money, NGO-style, to achieve their aims.

“The issue of accountability is a very important one since NGOs (and I use the term generically to mean not-for-profit organisations regardless of whether they themselves choose to use the term) are now talking about some of the work they do as ‘social business’,” Lewis says. “I guess it makes sense to bring them in to corporate responsibility discussions.”

According to Susan Davis and Brac itself, Brac has a number of accountability safeguards – good internal auditing and programme monitoring, external auditing, an ombudsman and even an internal investigation system. (The Grameen group does not detail its safeguards, and did not respond to Ethical Corporation’s requests for more information.)

Grameen perhaps has cause to be wary of journalistic probes. Yunus was removed from his chairmanship in 2011 by the current Bangladesh government, purportedly on account of his age (at 71 he bypasses the “official” retirement age by a decade). In addition, a damning 2010 Danish documentary tried to smear the idea of microcredit (which entails much higher interest rates than regular bank loans – typically about 20%). And many believe a personal grudge by the Bangladeshi prime minister, Sheikh Hasina, has put undue scrutiny on the organisation.

Smaller projects

If nothing else, the pre-eminence of Grameen’s and Brac’s roles can overshadow smaller yet important NGO projects.

The CSR Centre, headed by Shahamin Zaman and founded in 2007, is establishing itself as a resource on corporate responsibility. Zaman lists banking and the ready-made garment industries as two sectors that are leading in implementing corporate responsibility. The Bank of Bangladesh, for example, issued a directive in 2011 that counselled all banks and financial institutions to begin corporate responsibility reporting.

And in the ready-made garment segment, Zaman points to Viyellatex as an early leader. Viyellatex was the first to produce a GRI-based corporate responsibility report, in 2011; the company is undertaking training and engaging disabled workers; and it has bought a tea estate to help offset the carbon dioxide emissions from its other garment factories.

Zaman admits that Bangladeshi companies are not yet leaders in corporate responsibility or sustainable business. And yet the country has success stories – Bangladesh has made huge strides against child labour; has a great story to tell on climate change adaptation, and has realised that its many underprivileged citizens present a potential opportunity.

Successful and innovative

The Health Enables Returns project, jointly undertaken by Business for Social Responsibility and a group of apparel conglomerates and domestic factories, is not only successful but also innovative (see box).

The social business NGO sector, already innovative, is also not resting on its laurels. In the past two years Grameen has partnered in an innovative probiotic yogurt factory with Danone in Bangladesh, providing a low-cost nutritious product to the poor.

Grameen has also partnered with the giant Japanese clothing maker Uniqlo on a business to sell Bangladeshis fast-fashion made domestically and plough profits back to social causes. A campaign named “The Value of $1” forms part of the Grameen-Uniqlo project, in which e-books on educational topics are sold for $1, the profits from which are put into the production of T-shirts and books that are aimed at aiding literacy among Bangladeshi children.

Tapping into its own microcredit experience, Brac has designed a Haitian system that combines loans for the very poorest segments of society. Brac is also very focused on the idea that the human resources in Bangladesh and other countries like it are great, and an asset if tapped intelligently.

“The garment sector employs 80% of the female labour force – which is huge,” says CSR Centre’s Zaman. “We need to have standardisation of labour, and human rights, and environmental management. Now is the right time to take a more active corporate responsibility approach, ultimately in order for industries to sustain themselves.”

Life-changing health improvements for Her

A Business for Social Responsibility initiative, the Health Enables Returns (HER) project did not originate in Bangladesh. It began in China, linking international brand-name companies such as Levi Strauss with factory suppliers and local NGOs in order to implement women’s health programmes.

Investing in women has long been a theme for Bangladesh NGO aid organisations, and with such a large number of women employed in the garment industry, Bangladesh was ripe for an HER invasion.

“Supporting women’s health in the factory workplace is not just the right thing to do but also good for business,” explains Rachael Yeager, who has managed the HER project for nearly five years. “Reduced turnover and improved worker satisfaction are two among many business benefits. In every factory we are measuring some impacts.”

The programme’s design makes it easy for giant brands such as Nordstrom and Timberland to get involved – local costs are separated out for the multinationals to pay, and grant funding covers some of BSR’s overhead costs.

Using a peer education methodology, female factory workers are chosen to learn about women’s health – everything from menstruation to reproductive health to nutrition – and disseminate what they have learned among their co-workers.

In the case of Bangladesh, this education can spread to labour rights. Bangladeshi factory workers legally must request leave, and one of the benefits of HER is that now they know how to do that and are doing it, which in turn makes it easier for managers to plan.

“Honestly, I’ve seen the starting points so low, with [women’s] personal health neglected by parents, communities and employers, that the women always experience some benefits,” Yeager says.

But the biggest, most innovative aspect of the programme is that it can make reluctant factory owners – “a lot of them are resistant, the brand makes them do it, they don’t have any interest”, Yeager says – start to see business benefits, leading to a transformation in attitudes.

“For participating brands it’s a cornerstone of their corporate responsibility strategy – they engage with suppliers in a way they can’t otherwise do. For factory managers, it not only promotes ownership, it subtly shifts they way they see workers – not just as cogs in the machine. There are changes in workers’ attitudes toward management and management’s attitudes towards them.”

The shift to Bangladesh as a key global sourcing hub for the apparel business means, Yeager says, that BSR is able to engage with high-level stakeholders when implementing HER. Seven Bangladeshi factories have completed HER’s one-year programme, and when Yeager visited in January 2012 she was amazed at what had happened to some of the women enrolled as peer educators.

“The women who work in the garment district … are shy and face gender discrimination. In January we had an event at a very nice hotel, and the peer educators were completely comfortable talking about difficult health subjects in front of a crowd that was half men. It was really powerful to see.”

Partnerships fuelling real change?

By Andrea Spencer-Cooke

One of the largest foreign investors in Bangladesh and supplier of about half the country’s natural gas, Chevron is also one of the most visible multinationals in the region. It is therefore in a great position to show leadership and set the standard for corporate responsibility.

The company operates three natural gas fields, Jalalabad, Moulavi Bazar and Bibiyana, with daily production in 2011 averaging about 26m cubic metres and 4,000 barrels of condensate.

According to Chevron’s website, as well as providing safe and reliable energy, a key goal is to “create lasting value for communities” through social investments. Its 2011 corporate responsibility report is peppered with terms such as “partnering for a better future” and “promote mutual benefit”.

Since 2007, Chevron Bangladesh has funded a number of NGO programmes to deliver educational, environmental, business development, and health-related community improvements – notably the Alternative Livelihoods Programme in partnership with Friends in Village Development Bangladesh. “In 2011 alone,” its website states, “our health, education, business development and environmental stewardship initiatives affected the lives of approximately 30,000 families in Bangladesh.”

It all sounds good. But Sussex University’s Prof Katy Gardner, who’s been involved in an Economic and Social Research Council research project – Mining, Networks and Livelihoods in Bangladesh – paints a different picture.

Chevron’s social investments, she claims, have been useful but of limited benefit to local people. While consultation and partnership does take place, it’s far from inclusive, reinforcing local power hierarchies and excluding the poor. Communication channels and grievance procedures are lacking. And new jobs have largely gone to people outside the community.

Gardner says Chevron’s corporate responsibility efforts are more short-term philanthropic than long-term transformational. In her view, for those living near extractive industry sites, transparency, accountability and anti-corruption are far more important concerns than small-scale development projects. Until such big-picture issues are tackled, genuine development will not happen.

“Truly progressive corporate responsibility in the extractive industries must aim first and foremost at supporting human rights and freedom of information and transparency in the contexts where they operate,” Gardner says.

In Bangladesh’s gas fields, corporate responsibility, it seems, still has a way to go.

Chevron declined to comment. 

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