Globally, Corporate Social Responsibility (CSR) refers to ‘business self-regulation with the aim of being socially accountable.’ From a broader perspective this definition includes improving working conditions, reducing carbon footprints, participating in Fairtrade, and many more actions. On its most basic level, CSR is a manifestation of a business’ recognition of a duty to the world and the potential to be a power for good – Casey Schoff, Ecolytics
Sri Lankan organisations have engaged in informal corporate social responsibility (CSR) activities for over 30 years, though public concern and formal CSR policies have only emerged since the early 2000s. However, SriLankan Cares, a specialised branding and institution for charity by SriLankan Airlines, was established in 2003, representing one of the first such initiatives in the country’s commercial sector.
Some Sri Lankan organisations were involved in informal CSR practices for more than 30 years mainly as informal activities, while public awareness and concern about CSR activities grew in Sri Lanka starting around 2000. Later, in 2013, a revised code of corporate governance by the Securities and Exchange Commission of Sri Lanka (SECSL) and the Institute of Chartered Accountants of Sri Lanka (ICASL) included principles on sustainability reporting, further embedding CSR concepts into the corporate framework.
Today, several leading private sector entities are engaged in CSR activities, and some contribute a regular percentage of their gross profits or net profits to these activities. Some entities have set up Foundations devoted entirely to CSR activities. While these activities are very noble endeavours, this article would like to present some proposals as to how CSR funding, or at least some of the funds may be employed in a more structured and strategic way in specific national projects such as the Rural Upliftment project or the Praja Shakti Program, the Clean Sri Lanka project, in the education reforms envisaged over the next few years, especially engaging in teacher training support programs and improving learning facilities, climate resilience projects focusing on environment protection activities, in research activities focusing on long term sustainability and profitability of primary export crops, disability awareness and opening more opportunities for disabled persons, more care facilities for the disabled and the elderly, and in supporting long term, sustainable food security endeavours. These are just some projects that the private sector is either already engaged in, or they may consider future engagements.
The private sector being the engine of growth in the country’s economy, many of these projects could be looked at from the prism of self-preservation and growth for the companies engaged in CSR activities while considering community and social responsibility as a duty of care for the community by the private sector, and rightly so as per the classical definitions of CSR. A happier, more content and cared for community, economically and socially uplifted will always remember the services provided to them by a private sector entity engaged in commercial activities that serve the community, and the consequence could be increased loyalty to those entities that provide such much-needed services to the community.
In general, it is felt that the relationship between the private sector and governments of the day has been looked at from narrow political prisms, rather than a broader national prism. Mutual benefits for both parties from such relationships perhaps have assumed greater importance than any particular community service, and often communities too have been drawn towards a particular political party and community projects launched conditional on how the community would support a particular party. Such three-way symbiotic relationships have contributed to the evolution of a partisan political culture rather than a national culture.
One way this situation, by no means applicable to all CSR projects, may be overcome could be by launching discussions with the private sector at central level and regional level, and the Government of the day as well as the major Opposition parties participating in such discussions to work towards consensus of what may be identified as national priority projects that would continue even if governments of the day changes, and thereafter how the private sector could be associated with relevant CSR activities.
Global origins and evolution of CSR – It is interesting at this stage to trace the global evolution of CSR. While no doubt many reports and research work is available in this respect, the succinct article by Casey Schoff from Ecolytics titled The Evolution of Corporate Social Responsibility dated 29 January 2024 provides a valuable insight into origins and evolution of this important concept
Due to space considerations, only extracts from this paper are cited here and readers are encouraged to read the full article via the above link.
What is Corporate Social Responsibility (CSR)?
Schoff states that at its core, CSR refers to ‘business self-regulation with the aim of being socially accountable.’ From a broader perspective this definition includes improving working conditions, reducing carbon footprints, participating in Fairtrade, and many more actions. On its most basic level, CSR is a manifestation of a business’ recognition of a duty to the world and the potential to be a power for good. He says that while widespread adoption of CSR has been relatively recent, the concept itself has been around for over a century. It has its roots in the late 1800s, when the rise of philanthropy combined with deteriorating working conditions made some businesses reconsider their current production models. Business tycoons began donating to community causes, and some business owners (although somewhat reluctantly) reduced working hours and improved factory conditions, laying the foundation of responsible corporations.
The term ‘Corporate Social Responsibility,’ however, was not coined until 1953, when American economist Howard Bowen published Social Responsibilities of the Businessman. In this book, Bowen identified the great power of corporations and recognised that their actions had a tangible impact on society. Therefore, he argued, businessmen have an obligation to pursue policies that are beneficial for the common good. The concept of CSR has changed over time, and it has since widened to include many more social issues that are related to a wider range of business decisions.
As Schoff says this transformation began in the 1960s, when scholars began to approach CSR as a response to the emerging problems of the new modern society, and businesses in turn started implementing these practices. Business adoption of CSR continued steadily in the 1970s and 80s and became all the more important in the 80s due to greater deregulation of business, meaning corporations had to engage in more self-regulation and take responsibility for the social impact of their operations. Increasing globalisation in the 1990s was instrumental in widening the scope of CSR and laid the foundation for how we understand CSR today. Several international developments that occurred in the 1990s like the adoption of Agenda 21, the United Nations Framework Convention on Climate Change, and the Kyoto Protocol were also instrumental in reshaping the CSR concept. Throughout the 90s and into the early 2000s, CSR began to shift from minimising local harm to tackling global issues. Now, companies craft their CSR programs around the UN’s 17 Sustainable Development Goals, ranging from gender equality to the protection of ocean life. CSR is also increasingly related to growing Diversity, Equity, and Inclusion initiatives, as socially responsible corporations must foster a welcoming work environment and combat discrimination. While not every corporation follows CSR principles and those that do are far from perfect, it is encouraging that businesses are beginning to recognise the myriad of ways that they affect society and can change it for the better.
CSR today: The way to do business
Schoff goes on to say that today, CSR has become an integral part of doing business and is increasingly driving consumer choice. For instance, nearly 90% of consumers would purchase a product because a company supported an issue they care about, while 75% would refuse to buy a product if the company had a different stance on an issue. CSR is also a big factor in attracting talented employees, as people want to work for a company that upholds strong values. Further, a comprehensive CSR program can have the benefits of ‘increased brand reputation and credibility, improved risk and supply chain management, cost savings from efficiency improvements, and increased revenue.’ Companies are thus discovering that CSR is not only better for society, but in many cases better for business as well.
What the future holds
CSR is here to stay. As improving technology allows for increased corporate transparency and scrutiny, the incentive to be socially responsible will continue to grow. Also, the increasing severity of climate change and inevitable resource shortages that are in store will reward companies that are sustainable and have a small carbon footprint. Overall, CSR will likely continue to evolve down the line and will become more important in our uncertain future.
Contemporary Sri Lankan context
Sri Lanka’s GDP in 2025 is estimated to be around $ 100 billion. While the specific percentage of the Sri Lankan national GDP contributed directly by the private sector is not available, the country’s economy relies heavily on private consumption and private investment as key drivers of growth. Private consumption accounted for 73.3% of Sri Lanka’s nominal GDP in September 2024. The private sector also plays a critical role in generating employment and facilitating the adoption of new technologies, although it has faced challenges in translating its potential into a vibrant contribution to national growth. The private sector funds available for CSR projects is therefore very substantial.
Enhancing strategic and sustainable Corporate Social Responsibility
Based on sparse research data on CSR projects and outcomes publicly available, it is not clear whether projects have had long term sustainable outcomes. It is possible they may have, and an apology is sought from private sector entities who have funded such projects. However, a suggestion is made here that at least some of the funds are employed in national projects, ideally agreed to by the Government and the Opposition, and they are strategic in nature, spanning a period of at least five years with guaranteed State and private sector funding to ensure their sustainability.
It is also suggested that CSR funding is provided for research and development in primary export industries and also for interventions related to food security. As an illustration, CSR could look into how the private sector could play a more active role in reducing post-harvest losses in the country. In a report by Nimal Gunathilake published in the Island newspaper, the loss is stated as Rs 180 Billion. It is mentioned that according to a new study by the Department of Agriculture and several partners, the quantity lost is sufficient to feed the entire nation for two to four months. The research has found that more than 500,000 metric tons of produce goes to waste annually, during transportation alone. Of this, around 200,000 metric tons are vegetables, and 300,000 metric tons are fruits. About 30%-40% of harvest is lost in transit, with the heaviest damage occurring between farms and retail markets. Experts add that household-level waste also contributes to the losses.
The study has also revealed that transportation-related waste, which makes up about 10 percent of the Rs. 180 billion annual losses, could be cut down, delivering a 60 percent boost to both the national and farming economies. If recommended practices are followed, the study says that waste could be reduced to as little as 5.7%. These losses naturally enhance food insecurity and also affect export income for produce that is exported. This is an area where the Government could engage the private sector in discussions and explore ways and means of assisting the country to reduce this colossal waste. There is no doubt many areas which would benefit from CSR contributions.
Finally, in order to encourage more private sector entities to engage in CSR activities, a suggestion is made that some company tax benefits are afforded as incentives for the contribution they make to CSR activities, This will hopefully increase the number of entities engaging in CSR activities and consequently, the amount of funds and expertise available to support projects that benefit the community strategically and sustainably.
In conclusion, the Corporate Social Responsibility theme could become the bridge that links initiatives of the Government of the day and the private sector in a non-partisan way and projects undertaken through discussion and mutual agreement, hopefully from a long-term perspective, rather than just for immediate gains. Objective of both entities no doubt is the social, economic, environmental, health and education upliftment of the community so that the country prospers, and when that happens, the private sector prospers and grows being the biggest contributor to the country’s economy.