090119_from Social Accounting To Csr

 

The CSR Digest D

The CSR R Digest offers quality q content on corporatte social respon nsibility (CSR) and

Exploring the t Corporate Co onscience

sustaina able and respon nsible investment

From Social Account A ing to CSR C

(SRI). The CSR Digest ex xplores the corporatte conscience worldwide, w with a

leave a comment c »

special e emphasis on Ma alaysia and the Asia Pacific Rim. For ou ur editorial

A con nversatio on with Prof Dr Mustafffa

content, clickhere. The Digest is also

Moha amed Za ain of UiT TM

currently y a free distribu ution electronic c

Professo or Dr Mustafffa Mohamed d Zain is one of Malaysia’s

or press releases to us at editor [at]

digest, s so feel free to send your conte ent csrdiges st dot com .

academic pioneers in corporate e social responsibility (C CSR). Having had his interest piqued in his underrgraduate sttudies in nd environm mental accou unting, Prof Mustaffa mo oved into social an research h and study of corporate e social resp ponsibility in n the 1990s.

Pages

• •

About th he CSR Digest Sign Up For CSR Digestt Newsletter

Search

e Deputy Vic ce-Chancello or of Univers sity Teknolo ogi MARA Now the (UiTM), Prof Mustafffa specialize es in Financial Reporting g,

Subscribe to CSR Digest

ate, Disclosu ure, Financia al Manageme ent and Acco ounting Corpora Educatio on (in addition to corporate social responsibility y in

Subscribe in a read der

general)). Professo or Mustaffa sat down with the CSR Digest D recen ntly to discuss CSR, the Bakun Dam, CSR in an eco onomic downturn, the Madoff scandal and d CSR and SM MEs, among other things s.

Categorie es

• • • • • • •

Communiity CSR Diges st Editorial CSR Diges st Interviews Environment Marketpla ace Transpare ency Workplace e Tags accidents announcements CSR initiatives development employme ent erosion ethnic city Fuel health an nd safety hum man rights integrity logging Malaysia M Melamine migrant workersre eporting sustainab bilityToll unions

©2008 CS SR Digest. All righ hts reserved, exce ept

Page

1 

where ind dicated. Copyrightt of Deviant Art visuals remain with the e authors/artists.

Prof fessor Dr Mus staffa Mohame ed Zain

 

CSRD: What made you interested in corporate social responsibility in the first place?

MMZ: Initially, when I first enrolled as a bachelor student in the States, in one of the courses I took called contemporary accounting, one of the professors talked about ‘Social Accounting’. He wasn’t talking about ‘corporate social responsibility’, but that stirred an interest in me. That was considered a very new area in the mid-80s. During my masters’ program, I did a one course with this particular professor again, and this time he talked about social and environmental accounting.

CSRD: What is social and environmental accounting? MMZ: If it is accounting per se, we’re only dealing with numbers. But when we’re talking about

social and environmental accounting, we’re talking about beyond the economic numbers. We’re talking about contribution to society - accounting and society. It is more on the reporting on what is being done, what will be done, the key performance indicators (KPIs) and so on, not just the economic numbers or profit and loss. This is the newer concept of accounting, the three Ps - profit, people and planet. This professor was talking about this in the mid 80s. He was a pioneer in social and environmental accounting. So I got involved in this. I did my PhD in Corporate Social and Environmental Accounting Disclosure. I did a thesis on disclosing all this non-economic information in the company’s annual reports. I might be the first Malaysian to complete a thesis on this.

As time went on, I got beyond the accounting aspect. Now, I’m looking into CSR more totally, not just the reporting part of it only but also other areas of corporate social responsibility.

CSRD: Do you think reporting and disclosure is the primary CSR dimension?

MMZ: What the companies are doing nowadays - I think more and more companies are getting involved in this - is [CSR] activities. To me, disclosure is the end result, but the initial part would be getting themselves involved in social activities, social concerns and social responsibilities. The participation is the most important thing. The disclosure part is only in giving information but what the intention of the corporation is very important. It starts with intending to do good. There must be an intention to do good. Then you participate or create activities or you support, that’s the doing part. Lastly, there is the information part. After you have done something, you promote it, but not only for boosting your company’s profile that you did something good, but also to encourage others to do the same. So the intent, the doing, then the promotion.

CSRD: Do you think many companies do CSR activities just to boost their reputation?

MMZ: Initially, in the 90s or 80s, most probably many companies did it to get a better image. But nowadays, in the new millennium, companies are participating in CSR activities for two reasons. Firstly, top management realizes that companies are intertwined with society, otherwise they cannot operate. In other words, they have come to the realization that they have to do it or they cannot survive. The second reason is because others are doing it, so if they don’t do it, they’ll be losing out. So on a pure accountability sense they’re doing it, and also on the reason of competition, they have

Page

2 

to do it. They are legitimizing their business.

CSRD: How do you think businesses should go about with their CSR activities during the economic dip?

 

MMZ: In my opinion, there are two types of companies who conduct CSR activities. With the first group of companies, the top management realizes that it is part and parcel of their duty to provide this service to the community or to the environment. The second group of companies would only try to project their good image with their CSR activities. Now this second group of companies may not be doing as much during an economic downturn. But the company with the true intention of accountability would do it whether there is an economic boom or an economic downturn. But the other group might reduce their activities. That is my opinion. I have done some research on this during the economic downturn of 1997. Companies did continue their CSR initiatives, but with a slight decrease in activity.

CSRD: What about CSR within a business’ own shareholders and investors, for example, minority shareholders. In Malaysia, what is the situation?

MMZ: When you talk about corporate social responsibility, it can cover so many areas. We cannot expect companies to attend to each and every single need of their stakeholders. Their stakeholders are many, they can be the shareholders, the minority shareholders, it can be government, or the community or the planet itself. I dare not say that every company which looks into CSR are looking into the needs of their minority shareholders. My work focuses on other aspects of CSR, like the environment. In fact, there are other areas, like gender, where attention needs to be focussed on. Not much research has been done on gender.

CSRD: In your opinion, is a piece of legislation like the Sarbanese-Oxley Act needed in Malaysia?

MMZ: I’m not for the implementation of legislation and so on. CSR should be on a voluntary basis and not compulsory. When it is compulsory, it means you’re forced to do so and not out of good intention. But when you’re talking about voluntary, there needs to be mechanisms for checking the validity

of the activity disclosed. So, most probably, third party verification would be needed. As it is now, there are not many third parties verifying or audits on disclosure. There are some companies who offer third party verification on their annual reports, like British American Tobacco. I still believe there needs to be guidelines, not standards. Guidelines are good. For example, what the Silver Book is doing for government-linked companies (GLCs) is marvellous. It is a guideline. I

think the Silver Book is the way forward.

CSRD: Do you think SMEs are doing their part?

MMZ: I’m doing research on this, which is not yet completed. Not many researchers are looking into SMEs, I think, because the focus tends to be on the larger companies. But I believe that the

SMEs are doing their part, although they are not subject to the reporting. I think this shows the true intention of wanting to be accountable. If they are participating in social activities, without being asked to and they are not required to report them, why are they doing so? They may be doing so because of real good intention.

CSRD: How do you think Malaysia fares in CSR?

MMZ: There is a concept by David Crowther which states that businesses would be participating

in CSR activities out of habit. I would say Malaysia is in inbetween where we have to do it and

Page

3 

where we feel like doing it. But you’ll see that there are more and more companies are involved in CSR activities.

 

I have been doing research in this area since 1997, so I can see the movement and the amount of CSR activities in Malaysia. It is on the increase. One or two decades ago, companies don’t even know what it is. But now, everyone knows what CSR is.

CSRD: What are your thoughts on the allegations of native customary rights (NCR) abuse by logging and development companies in East Malaysia?

MMZ: There are certain international parties propagating for and against certain countries. For example, the Rio Summit has been talked about since the eighties, you know, logging and sustaining our forests and so forth. But if a particular country, like Malaysia, does not have any other resources but our forests, which comes first? Although I am a proponent of CSR, but I have to think of my country and the people of my country before I think of the people of another country. If, for example, the Malaysian population’s main income is from the forest, what are we going to do with the trees? If logging is the main income source for Malaysia, should we stop logging because it is detrimental to our environment?

The answer is ‘yes’ and ‘no’. Yes, I will cut the trees, even though it might affect total environment of the planet. But if I cut the trees, I have to find a way to replace the trees, so that would be reforestation. But some parties believe you can’t cut the trees at all. And they discourage other countries from purchasing timber from Malaysia and Brazil and so on. Now, if they do that, how are those countries going to sustain themselves because that is the main source of income? So they should not propagate not purchasing timber from such countries because this will kill the country. This will kill the people. They should say, “You can purchase timber from Malaysia if Malaysia has a policy of reforestation which is proven successful,” not an outright ban.

CSRD: What about the Bakun Dam situation?

MMZ: The Bakun Dam has been in the limelight for the past fifteen years, if I’m not mistaken. There is the pros and cons of this situation. If you do not have the dam, what will be the affect on the economy and on the people.

CSRD: Apparently the dam will be the main source of water to Kuching.

MMZ: Not only Kuching but also to Indonesia. We will be selling part of the water to Indonesia with the income for Sarawak. The main thing will be the people, not only the Bidayuh, but also the other tribes who are there, like the Penans. Also there are the vegetation and animals which will be affected by the building of the dam. But if the developer finds a way of making sure that the people needs are catered for, not only in terms of money but also in terms of relocation. The people need to be relocated to an appropriate place, like in the Batang Air Dam development, where the relocation of the Iban tribes there was done very well.

Now the Iban tribes are not only sustaining the way they used to live before, in traditional villages, but they also have new allocation of native land, which is very important for the Iban.

Page

4 

Their lifestyle requires hunting in the jungle, not just farming.

 

With the Bakun dam, this needs to be done as well. They need to be free to hunt and farm, so the new area must be appropriate as well, not only given money. If this is done, the development should not be criticized but instead encouraged. I see the Bakun Dam and the Batang Air Dam are almost similar developments, with similar kinds of effect on the people and the environment. So they need to find ways and means of solving the problem.

CSRD: Has Malaysian education institutions kept up with CSR in education compared to the rest of the world?

MMZ: It depends on which country and which area. If you’re talking about the developed

countries, they have been talking about CSR for the last three decades. In Malaysia, we only started exploring the area recently, so we are about ten or twenty years behind them. But ten or twenty years is not that far behind, because CSR itself is still in its infancy, not embryonic, but infancy. When it comes to education, Malaysian institutions are slowly trying to incorporate CSR into the relevant fields, for example, business. In fact, if you look into business text books nowadays, you will find at least a section on CSR, if not a whole chapter.

I’m a committee member for the accounting textbook curriculum for secondary schools, and we’ve already incorporated social accounting in textbooks for secondary schools. It’s only a small section but at least students will be introduced to it early on and they might get interested to

learn more about social accounting and CSR.

With CSR, you need to create an interest in people doing good, and this needs to be done from young. After secondary school, the students should have tertiary level education with some emphasis on doing good. I think in the accounting and business studies in UiTM, we have already incorporated CSR into the syllabi.

CSRD: Can ‘doing good’ be taught? For example, if someone is not generous or helpful, can you teach that person to be generous or helpful?

MMZ: This is why we need to go in line with religion. When you talk about CSR, it’s very hard to run away from the concept of religion, you know, such as giving of alms or philanthropy. But sometimes there is the problem of interpreting religion which is the stumbling block for doing good to others.

For example, I have done my research in CSR and Islam, particularly in Indonesia. People tend to give donations but they don’t talk about it, because, in Islam, ‘when the right hand giveth, the left hand should not know about this’. This is the concept in Islam.

But the thing is that, if you were to give something to others and you want to encourage others to do the same, you need to inform others. When you inform others, it’s not with the intention of boasting, but with the intention of encouraging.

In Islam, or any other religion for that matter, encourages giving, so when you do something

good, make sure you tell others, not to boast about it, but to encourage. There are many ayat in

Page

5 

the Quran, but there are otherayat which says that you need to tell others to encourage.

CSRD: How can businesses learn about which organizations need help or funding?

MMZ: The government has established the Tabung Ikhtiar, which is a body which manages funds for the less fortunate. If you want to donate money, you can put it into Tabung Ikhtiar, and

 

Tabung Ikhtiar will coordinate where the funds should go. This will benefit everyone much better because the funds will go where it is really needed, since Tabung Ikhtiar matches the funds according to needs. Since we have one coordinating body, we should utilize it. The NGOs should register themselves with Tabung Ikhtiar. It has been around since the 1990s.

CSRD: What are your thoughts on the Madoff/Wall Street scandal? Do you think auditors had the responsibility to have noticed the deficiencies in Madoff’s reporting? MMZ: Auditors should be responsible for what they audit, but you need to look things from the

auditors’ point of view and how they operate. This is because it is not within their term of reference to check each and every document from A to Z. They only do it at a random basis. There are so many documents, so many transactions, so many activities that are not being thoroughly looked into. Auditors just look at samples here and there. If they were to look at everything, it would take up a lot of time and cost the audited company millions and millions of ringgit because of the sheer number of activities and so on.

It’s like a policeman. They don’t go out and search every house, just look for what is suspicious. It’s the same with auditors. If this is the case, then it’s the process which needs to be changed especially since we’ve heard so much about inability to detect fraud and mismanagement recently. Perhaps, auditors should review their standard operating procedure.

CSRD: Do you think potential investors should do their own due diligence?

MMZ: The investors have the power to appoint capable directors, so it’s their responsibility to appoint good directors. Therefore, the directors they appoint must be competent and knowledgeable. So the investors need to be responsible when it comes to appointing the directors.

CSRD: Unless they are in the minority. MMZ: Yes, that’s another issue!

CSRD: Do you have any further comments?

MMZ: My hope for CSR in Malaysia is that, it doesn’t matter if it is economic downturn or economic boom, CSR activities must remain one of the primary aims of each individual corporation, because corporations cannot exist without society. They are in the society so they have to take care of their surroundings. They they’d be living in harmony with the society. And in the end, they will be the one who will be gaining if they have the support of the community. This is my wish, not only public listed companies but also SMEs. According to my research, if the top management of a company has good values, you can bet that the company will be heavily involved in CSR activities. ◊

Page

6