Tbl Issue 1

zouhair abdul khaliq

csr talk

INSIDE

The Three Magical & Misused Letters: CSR

The Neo-Pakistani Incubator

Responsibly Yours

Whose Ethics? Importance of LDC’s Participation in CSR

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PAGE 16

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A publication of Asiatic Public Relations Network (Pvt) Ltd.

regulars

contents

global briefs csr talk breather social partnership book in focus musings

8 20 29 32 34 40

cover story

cover illustration by umair anwar

the three magical ... letters:

by khadeeja balkhi

csr

The triple bottom-line concept forms the most common quantifiable gauge and driving mechanisms of CSR. The idea is that businesses can add value to society in three ways: economic, social and environmental. The triple bottom-line is a wide set of economic, environmental and social parameters used primarily to drive and measure an organisation's value creation as a corporate citizen.

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features cover story csr toolkit responsibly yours whose ethics? renaissance brand essential csr rise and rise of csr csr: serious or just a trendy fad?

editor-in-chief

11 16 18 22 26 30 36 39

subscription, advertising and feedback at: tbl:

triple bottom-line

Address: A-7, Street 1, Bath Island, Clifton, Karachi, Pakistan. Tel: (92-21)-5837674, 5823334 Fax: (92-21)-5867103 E-mail: [email protected] Web: www.triplebottomline.com.pk tbl is available at bookstores and magazineselling outlets at the cover price of Rs.200. Subscribe to a full year of tbl (6 issues) at the special rate of Rs.1,000 and save the cost of an issue. If you wish to subscribe to tbl, or unsubscribe, please write to us at [email protected] Jan / Feb 2008

zohare ali shariff

editorial director khadeeja balkhi

managing editor rutaba ahmed

research

raza tahir shumaila sadruddin

creatives sadia hussain kamran rauf umair anwar

reprint

in line with our mission, we encourage reproduction of material, provided tbl is given credit

publisher

asiatic public relations (private) limited

printed at

nikmat printers, karachi

disclaimer

the views expressed in tbl are the authors’ and not necessarily shared by tbl and/or APR

declaration

from the office of district coordination officer, city district government karachi

NO. DCO/DDO/LAW/CDGK/109/2007, Karachi dated May 22, 2007

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editorial advisory board

welcome on board The tbl Team is honoured to introduce our editorial advisory board. Comprised of diverse leaders and practitioners, our goal is that the board will steer our efforts to their highest potential.

Habiba Hamid – Member Founder of Saracen Consulting, a corporate governance and responsibility consulting firm. Currently articulating the Dubai Model of sustainable development. Based in Dubai.

Anwar Rammal – Chairperson Chairman of Asiatic Public Relations (Pvt.) Limited, Pakistan’s leading communications and PR agency, affiliated internationally with Hill & Knowlton. Also Chairman of JWT, Pakistan. Based in Karachi.

Ayesha Tammy Haq – Member

Khadeeja Balkhi – Member

Abrar Hasan – Founder Sponsor Member

Sustainability and CSR consultant and internationally experienced business and gender journalist. Based in Karachi.

Khawar Masood Butt – Founder Sponsor Member Chairman and MD of English Biscuit Manufacturers (Pvt.) Limited, Pakistan’s leading biscuit company. Entrepreneur and business visionary with a firm commitment to CSR. Based in Karachi.

Corporate lawyer, legal and media consultant. Concurrently a freelance journalist and host of a weekly current affairs television programme. Based in Karachi.

Chief Executive of National Foods Limited, Pakistan’s pioneering multi-category food company. Innovative businessman and industry leader. Based in Karachi.

Vivian Lines – Member President and Chief Operating Officer of Hill & Knowlton’s Asia Pacific Region and concurrently President and CEO Southern Asia. Based in Singapore.

vision and mission Vision: To steadily facilitate the germination of sustainable visions for organisational growth, sharing specific triple bottom-line knowledge and tools Mission Statement: To disseminate triple bottom-line knowledge to a diversified group including corporate, social development and general business groups primarily through a specialised journal, expanding in accordance with organisational capacity and market readiness

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acknowledgement

The term ‘Triple Bottom-Line’ (TBL), which translates into “People, Planet, Profits,” captures an expanded spectrum of values and criteria for measuring organisational (and societal) success - social, environmental and economic. Through our masthead we personify the term TBL. Essentially, our ‘bottom line’ is a grey bar with a burgundy border which runs through the masthead, at some points overlapping the letters and running under them at others. Here ‘t’ stands for triple and is represented through the three shades of the letter. The ‘b’ stands for bottom and it sits below our grey line with the line going through it - since this magazine is a below the line activity, the two gel in together. The ‘l’ stands for line and the letter sits comfortably on top of the grey ‘bottom’ line.

mr tbl Mr. Tanveer B. Lone is indeed a busy man, laden with his struggle for the truth in the Sustainability industry. His first name, Tanveer, according to our wonderful Ferozsons Urdu-English dictionary means 'illuminating'. We feel he is sometimes the seeker of enlightenment, and at others, the seemingly lone bearer. Driven towards his destination – the true light of CSR – he sometimes feels like a lone voice buried amidst the complex factors he confronts on the way. Yet as he sets forth, oft-alone on this journey, he knows he will meet companions along the sub-paths his journey takes, merging at destinations common with him. There will be occasions where we can all relate to him. At times, though his capitalist-training-bred financial focus may fluster us and his understanding towards disseminating the true implications of the triple bottom-line. Feel free to share ideas with Mr. TBL that might help clear the oft-murky waters he'll encounter in his expedition at [email protected] Jan / Feb 2008

The tbl team expresses its profound gratitude to the companies whose names appear below, for their agreement to support this publication. Bringing out a knowledge-based publication like tbl involves considerable effort and costs. It may not have been possible to bring out tbl in its present format without the invaluable support and contribution of our Founder Sponsors. Through their support to tbl our corporate sponsors have confirmed that they share our Mission of disseminating triple bottom-line knowledge to a diversified group including corporate, social development and general business groups. We believe that helping to spread awareness of true CSR is in itself an element of CSR. By becoming our sponsors, the following companies have taken that vital first step with us in our journey to facilitate awareness and understanding of true CSR in our country:

National Foods Limited Founder Sponsor

English Biscuit Manufacturers (Private) Limited Founder Sponsor

Engro Chemical Pakistan Ltd. ENGRO CHEMICAL PAKISTAN LIMITED

Co-sponsor

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editor’s note

giving csr a direction orporate Social Responsibility must rank as a front-runner buzz-phrase of the new C Millennium. Everyone mentions it all the time.

Certainly the principal actor itself, the corporate sector. And others: the NGO sector, the government, international institutions, the media and increasingly, the general public. But CSR, with or without its trendy terminology, has been around for a lot longer than the little over seven years of the present century. It just did not come into the public debate domain as much as it does now. As is quite common in cases where a subject becomes a hot topic, so too in the case of CSR. There are now a number of opinions as to what CSR is or should be. Even the term corporate social responsibility is by no means universally used, although it is getting there. A shortened, popular version is corporate responsibility or simply CR. Then Social Action Programme or SAP is another term with some following, particularly in the nonprofit sector. Contributing to the promotion of a universal nomenclature, this publication will go by the most widely accepted terms, Corporate Social Responsibility or Sustainability.

What CSR is and what it isn’t will not be told in this editorial. There is space enough for this in the inside pages and in our issues to follow. Let readers start off with whatever definition of CSR they hold, and then process what TBL has to say. Which brings me to the rationale or passion behind this publication’s birth. Our overarching objective is to be a responsible vehicle for the dissemination of information and knowledge about CSR, which we see as a prime example of the win-win models the human mind is

capable of constructing. There is a need to clearly understand the various dimensions of CSR and adopt best practices in this field, just as corporate entities endeavour to follow best practices in core business operations. A greater understanding of the subject is valuable not only for the corporate sector but for all stakeholders: the government as the legislator, regulator and facilitator of transparency; the business brains who kick-start the process; the vendors and contractors who must begin to think how to supply sustainable materials; NGOs and NPOs as platforms for the voice of the general public; and the media and other informers key to keeping society responsibly informed and poised for sustainable lifestyles and actions. The credible practice of CSR indeed permeates multiple tiers. As stakeholders delve deeper into the subject, the insight may well emerge that CSR could actually be CSO or Corporate Social Opportunity. It is vital to the success of our vision that you, the readers, play a proactive, participatory role in sharing CSR-related learnings. CSR is evolving rapidly and the more that people get involved in this process, the greater and more widespread its understanding will be. Welcome to the first issue of tbl. Sincerely,

Zohare Ali Shariff Editor in Chief

This publication is being sent complimentary to 1500 decision-makers and opinion-formers in the corporate sector, the government, NGO sector, international institutions and academia. Recognising that your sphere of work has the potential to compliment and reinforce the essence of our mission, we have taken the liberty to present tbl to you. It is also available at selected bookstores and other outlets. We would love to hear from you. Please do contact us at [email protected] with your thoughts, feedback and input from your corporate or social practices. tbl strongly believes in knowledge dissemination and sharing. Please feel free to share tbl contents with your peers and teams - of course we know you’ll give tbl the credit when you share our work.

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www.triplebottomline.com.pk

What do the following companies have in common? Atlas Bank

ENGRO CHEMICAL PAKISTAN LIMITED

HUBCO growth through energy

p r o t e c ts w h a t ’s g o o d

TM

Their Public Relations Agency

Asiatic Public Relations Network (Pvt.) Ltd. Karachi - Lahore - Islamabad

HILL KNOWLTON

A-7, Street 1, Bath Island, Clifton, Karachi, Pakistan. T 92-21-5837674, 5867576, 5372402 F 92-21-5867103 E [email protected] www.apr.com.pk

people

global briefs

First ever systematic set of global human rights risk indices launched

M

aplecroft has launched an innovative set of 25 human rights risk indices for 20 different sets of human rights violations, to bring greater understanding and policy focus to the field of business and human rights. Maplecroft, founded in 2001, is a specialist research and advisory company with strong corporate client base and research partnerships with leading international organisations, such as those within the auspices of the United Nations, the World Economic Forum and prominent independent non-governmental organisations. The set of human rights risk indices includes different types of violations and their risks to business within three broad categories: human security; labour rights and protection; and civil liberties and freedoms. Compilation of all indices is carried out through meticulous analysis of published human rights violations worldwide. Every business and organisation needs to understand the risk it runs of being complicit with human rights violations. Reputational risks arise from different human rights issues and different aspects of businesses; for example, purchasing of goods and services, sales, logistics, marketing and human resources. The Maplecroft set of human rights risk indices provides a comprehensive insight of human rights issues to enable businesses to assess their risk of complicity. The Maplecroft Global Report contains quantitative measures such as country report cards and detailed country human rights risk briefings which enables organisations to benchmark a country and gain a better understanding of issues at stake. This information enables companies to easily assess and plan their supplychain auditing, investment decisions, distribution profile and day-to-day operations. The set of human rights risk indices allows companies and businesses to manage non-financial performance and implement a strategic approach to CSR.

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Consumer Action Guide to healty toys

launched recently H ealthyToys.org, by the Ecology Center, is based on research conducted by several environmental health organisations and researchers around the country. HealthyToys.org aims to address the failures of the current regulation system -laws and policies - to regulate toxic chemicals in toys and other products, and to set requirements for full testing of chemicals before they are added to most consumer products, including children's toys.

The current regulation system fails to provide adequate assurance and information to consumers about chemical components in children’s products that may be harmful for health. Despite awareness concerning the dangers of lead and other toxic chemicals, manufacturers are allowed to, and continue, to use them in toys and other children's products. The only U.S. law restricting lead in toys applies only to paint. Children's jewellery is ineffectively regulated, and jewellery with high levels of dangerous chemicals is commonly found on store shelves. HealthyToys.org conducted tests on over 1,200 children's products and more than 3,000 components of those products, and these have verified that some toys contain a significant percentage of hazardous chemicals including heavy metals such as lead and cadmium. Currently, the U.S. government and U.S. toy manufacturers do not provide such data to consumers. HealthyToys.org has taken the first essential step in raising awareness and providing information to consumers so that they are able to make informed and better choices when purchasing toys and other children's products.

Awards recognise and reward sustainable best practices awards are a wonderful S ustainability way of recognising, rewarding and

thereby promoting best practices in sustainability. The European Business Awards for the Environment, organised by the European Commission, play a vital role in demonstrating progress on environmental and sustainable development issues worldwide. The

Sustainable City Awards are one of six UK feeder schemes to the European Business Awards. The Awards were established in 2001 by the City of London and are led in partnership with 15 organisations, including livery companies, trade bodies, voluntary sector organisations and businesses. These awards aim to recognise and reward best practice in sustainability, across the three pillars of sustainable development: the environment, social issues and the economy. The Sustainable City Awards have remained at the top of their field for five successful years and are constantly re-invented to include new awards and categories every year to better reflect current issues in the field. The Awards are open to business, public and voluntary sector organisations. Past winners include BT, British Land, F&C Asset Management, Sainsbury’s, U Can Do I.T., the London Cycling Campaign and HM Prison Services. The overall winner of the 2007 Sustainable City Awards was the London Fire Brigade for its initiatives to reduce carbon emissions by up to 1,900 tonnes, which have included electric cars, roof-mounted wind turbines and photovoltaic cells. The Sustainable City Awards categories include Sustainable and Ethical Investment and Asset Management, Sustainable Travel and Transport, Climate Change, Resource Conservation, Sustainable Buildings, Access to Goods and Services for Disadvantaged Communities, Sustainable Procurement, and Environmental Improvement in Small & Medium-Sized Enterprises.

www.triplebottomline.com.pk

planet

global briefs

The natural refrigerant used in the units Coca-Cola will provide is CO2 refrigerant.

Beijing 2008 Olympic Games to have HFC-free refrigeration units the world's largest nonC oca-Cola, alcoholic beverage company, has

committed to focusing on expanding use of innovative refrigeration technologies to reduce its carbon footprint and increase the sustainability o f i ts b u s i n e s s . C o c a - C o l a ’s commitment is to use climate-friendly coolers and vending machines in all official venues of the 2008 Olympic Games to be held in Beijing and six co-host cities throughout China. Calculated based on an expected tenyear life span of the units, the approximately 6,350 climate-friendly refrigeration units to be placed by CocaCola in the venues reduces greenhouse gas emissions by approximately 45,000 metric tons. Coca-Cola has been working together with Greenpeace to develop and commercialise climate-friendly refrigeration equipment and to advance sustainable refrigeration, since the Sydney 2000 Olympic Games. CocaCola has invested nearly $40 million in research, development, testing and deployment of sustainable refrigeration equipment. According to the United Nations Environment Programme, HFCs are potent greenhouse gases and some HFCs are 11,700 times more harmful than carbon dioxide (CO2) emissions. Greenpeace has been campaigning for the phase-out of HFC air-conditioners and refrigerators since the early 1990s. Through extensive research and development, CO2 and hydrocarbons have been identified as climate-friendly natural refrigerants. Jan / Feb 2008

The company has provided HFC-free refrigeration units at both the Athens 2004 Olympic Games and the Torino 2006 Olympic Winter Games. The Beijing 2008 Olympic Games will mark the first time that 100% of the coolers and vending machines provided by Coca-Cola to all official venues of an Olympic Game will feature hydrofluorocarbon (HFC)-free insulation, HFC-free natural refrigerant, and a proprietary technology called Energy Management System (EMS) that improves energy efficiency by up to 35%.

Commitment to a clean and green energy future: RE
G Renewable Energy Cheaper Than

Coal (or RE
is the latest step in its commitment to a clean and green energy future.

World’s largest Future Energy Summit World Future Energy Summit, T he the world's largest conference and

exhibition on renewable and future energy solutions, innovations, investments, policy and vision - was held on January 21 - 23, 2008 in Abu Dhabi. The summit was organised and hosted by Masdar, the world's first zero-carbon, zero-waste, car-free city, being built in the desert in Abu Dhabi. Launched in April 2006 by Abu Dhabi, Masdar is a global cooperative platform for open engagement in the search for solutions to some of mankind's most pressing issues: energy security, climate change and truly sustainable human development. The event included a wide range of networking events and conferences, covering an extensive range of issues looking at World Future Energy Policies and Strategies, Making It Happen – projects, technologies and commercial realities, and a number of streams focusing on carbon management, waste to energy, solar, wind, biofuels, clean transport, green property and sustainable architecture. There was a large international exhibition which filled 4 halls within the new Abu Dhabi National Exhibition Centre. There were over 200 exhibitors including pavilions from Germany, UK, Japan, China, Austria and the Netherlands, and a number of feature areas offering educational and business development opportunities. The Summit brought together the world's leading innovators, educators, scientists, venture capitalists and experts in the field of future energy – people who are champions and catalysts in creating sustainable solutions. There were over 80 VIP speakers from around the world, including Ólafur Ragnar Grímsson, President of Iceland; Philippe Boisseau, President Gas & Power, Total; Lord Browne, Managing Director, Riverstone Holdings LLC and HE Mohammed Saeed Al Kindi, Minister of Environment & Water, UAE.

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profits

global briefs

All state-owned companies to file GRI-based sustainability reports: Swedish Government

of addressing environmental challenges such as climate change and global warming. It will be the driving force behind global efforts to improve the environment.

Swedish Government has T he announced new requirements for

Finance industry sets higher sustainability standards for project financing

external reporting, that require all 55 state-owned companies in Sweden to file an annual sustainability report based on the Global Reporting Initiative (G3) Guidelines before the 31 March each year from 2009, in order to improve the sustainability performance of state-owned companies and ensure transparency in the use of public money. Sweden is the first country worldwide to introduce requirements for sustainability reporting of this nature by its state-owned companies. The “Global Reporting Initiative” (GRI) is a large multi-stakeholder governed institution made up of a network of thousands of experts worldwide, who participate in GRI’s working groups and governance bodies, use the GRI Guidelines to report, access information in GRI-based reports, or contribute to develop the Reporting Framework. The GRI G3 Sustainability Reporting Guidelines are the world's most widely used and recognised sustainability reporting framework, and provide companies with an excellent internal management tool. Adopting these Guidelines enable companies to enhance their brand, reputation, marketplace differentiation from other companies and gives them a competitive edge over companies not reporting.

NY launches the Green Exchange ew York Mercantile Exchange

N parent Nymex Holdings Inc., the

world’s largest energy exchange, and a group of Wall Street trading houses have announced launch of an Environmental Exchange, also known as the Green Exchange, for trading environmental products, including carbon credits. Green Exchange partners include heavyweights such as Evolution Markets Inc., Morgan Stanley Capital Group Inc., Credit Suisse, JPMorgan, Merrill Lynch, Tudor

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one of the largest banking HSBC, and financial services

Investment Corp., ICAP and Constellation Energy. The exchange is the first time an emissions bourse has brought together all the potential players looking to trade greenhouse credits, including traders for oil, power and gas companies and agriculture and financial futures traders and bilateral traders. The Green Exchange will offer a comprehensive range of environmental futures, options and swaps contracts focused on solutions to climate change, renewable energy, and other environmental challenges. It will begin trading during the first quarter of 2008, and will be regulated by the U.S. C o m m o d i t i e s F u t u r e Tr a d i n g Commission through the NYMEX. The Green Exchange initially intends to offer trading in global carbon-based contracts, such as carbon allowances under the European Union Emissions Trading Scheme, carbon credits under the U.N. Clean Development Mechanism, and verified greenhouse gas emission reductions used in accordance with voluntary carbon standards. It will also offer contracts for U.S. SO2 and NOx emissions allowance trading programs, as well as contracts for national Green-e certified voluntary renewable energy certificates. The Green Exchange promises to be a powerful initiative for leveraging financial markets, which is a vital part

organisations in the world, is introducing new initiatives to reduce the environmental impact of its day-today operations, and to ensure that project financing is done in a sustainable fashion. HSBC applies a Sustainability Risk Framework which includes a set of policies including the Equator Principles, a set of voluntary guidelines developed for assessing and managing sustainability risks (environmental and social risks) which arise when financial support is provided to clients.

The Equator Principles have become a global market standard based on best practice, and have achieved a critical mass of participation, with 54 banks as signatories, and cover 90% of global project finance transactions. Adoption of Equator Principles by banks reflects their commitment to report publicly about their implementation process and experience, and the number of transactions that are screened. HSBC recently took its reporting on the Equator Principles to a new level and established a new industry standard when it had its adherence to the principles independently verified by Det Norske Veritas Certification BV (DNV), an international provider of certification services. This decision to have a third party audit was taken to ensure greater transparency and assurance. HSBC has been the first bank to take this step. Jon Williams, Head of Group Sustainable Development HSBC Holdings believes that, “this will be part of a broader trend of increased reporting and independent verification of non-financial data”, and other financial institutions will follow suit.

www.triplebottomline.com.pk

cover story

the three magical -and misused- letters: csr by khadeeja balkhi for tbl

“

I must warn you not to allow your actions to be guided by ill-digested information or slogans and catch-words. Do not take them to heart or repeat them parrot-like.

”

Mohammad Ali Jinnah, during an address at Islamia College, Peshawar, April 1948

discussions on Corporate A sSocial Responsibility (CSR)

regress, the need for understanding the beautiful concept of CSR becomes increasingly urgent. Not only is CSR misunderstood, a variety of individuals - well-meaning and otherwise - are realising that they can rather conveniently stuff their agendas into these three magical Jan / Feb 2008

letters. And the corporate masses are buying it - for the most part. We must equip ourselves with the knowledge to decipher the truth of what is applicable to us. CSR 101 To some, CSR is more accurately called corporate responsibility, CR, since the concept goes well beyond social responsibility and is significantly technical in nature. Yet the three letters remain the most popular name, globally. Although used interchangeably, CSR can be seen as the most popular manifestation of sustainability: A subset of sustainability. While sustainability is a broader, more interconnected,

concept, the Brundtland Commission drafted among the first definitions that helped popularize sustainability; in 1987 it defined sustainable development as: "meeting the needs of the present without compromising the ability of future generations to meet their own needs". The UN-commissioned Brundtland Report then inspired the 1992 Earth Summit in Rio de Janeiro that resulted in the Climate Change Convention and in turn the Kyoto Protocol. At its recent twentieth anniversary celebrations, many capped that the Brundtland Report was instrumental in injecting e n v i r o n m e n ta l a n d s o c i a l

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cover story

consciousness into select, mainly Western, political mainstreams. However, true sustainable development has been achieved "to a very limited extent indeed" - as John Elkington, founder of SustainAbility and the triple bottom-line concept, put it. As a definition of CSR, though, the International Finance Corporation prefers: "the commitment of businesses to c o n t r i b u t e t o s u s ta i n a b l e economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development". Sustainability requires a balancing of the triple bottom-line opportunities, risks and implications of action – all within the context of the needs of current and future populations, as well as the limits of the ecological system. The triple bottom-line concept forms the most common quantifiable gauge and driving mechanisms of CSR. The idea is that businesses can add value to society in three ways: economic, social and environmental. The triple bottom-line is a wide set of economic, environmental and social parameters used primarily to drive and measure an organisation's value creation as a corporate citizen. The triple bottom-line ethos demands that a company's responsibility and accountability be to 'stakeholders' rather than shareholders, particularly at the cost of the former – with stakeholders referring to parties who are influenced, either directly

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or indirectly, by the actions of an organisation. A business entity can then be used as a wider vehicle for coordinating stakeholder interests, instead of maximising owner benefit alone.

In an increasingly discerning world of investors and consumers, a company must harness a CSR strategy to consolidate and streamline company-wide economic, environmental or safety and social initiatives. Why Do Companies Want In? From a business perspective, Sustainability is how businesses stay competitively viable in the long-term. In an increasingly discerning world of investors and consumers, a company must harness a CSR strategy to consolidate and streamline company-wide economic, environmental or safety and social initiatives. Industrial operations, for instance, no matter how scrupulous in their factory operations, leave a significant environmental footprint. Here a CSR strategy would help embed mechanisms that improve efficiency of resources used, reduce wastage and so on thereby impacting both the economic and environmental bottom-lines. A company must believe in achieving its profits with integrity and demand the same standards

from internal teams as well upstream and downstream partners. It also has to be careful of the disconnect that occurs when the overall human resources of the company have little understanding and ownership of CSR yet higher management thinks it is firmly committed to a set of strategic values that embody corporate responsibility. Staff enabled to live CSR as a routine business value will guarantee that the company pursues responsible profits and that its operations do not adversely impact people or the planet; thereby negatively impacting its own self in the longterm for sure. This ingrained staff mind-set comes from the process of continual self-analysis and selfdevelopment, often facilitated by external experts who can also offer objective feedback and keep the process streamlined and focused. Routine actions that embody the 'People, Planet, Profits' corporate responsibility motto require invested and sustained effort. Every type of business bears the onus to survive in the long term: to be sustainable. Financial institutions for example often find it difficult to implement more than just corporate philanthropy. The positive domino-effect of starting, for instance, with factoring environmental and social criteria into their lending and purchasing criteria as SRIs (Socially Responsible Investments) institutions do is visible in many areas. Not only will companies know that in order to attract this source of capital, they must be transparent in the triple bottomline, but it will help pressurise governments and civil society www.triplebottomline.com.pk

groups into fortifying institutions that promote and monitor responsible corporate behavior. “Because of the growing demands in the markets in which they operate, and the demands of their shareholders, multinationals face more and more pressure to be responsible for their operations in the various countries where they operate,” believes Alan Gegenschatz, President and General Manager of the courier company TNT Express, which employs more than 160,000 people in 200 different countries. “While Latin America has most of the environmental resources on this planet, it [like Pakistan] suffers from great inequality in the distribution of wealth, leading to significantly high rates of poverty and unemployment. As a result, the companies that we operate on this continent must adapt their CSR policies to the prevailing needs of these countries”. Companies in South America are adapting to CSR at a fast pace. Gabriel Berger, Director of the Social Responsibility Programme at the University of San Andres in Argentina notes that “CSR has been growing not only in Argentina, but also in Brazil, Chile, Mexico and Colombia”. In the rest of the region influential corporate organisations have been created. In Argentina, however, there are no business organisations that work exclusively in CSR; there are only non-profit organisations. On the international level, she adds, the phenomenon has grown in response to “consumers’ expectations, to pressure by NGOs that monitor those companies and to moves made by investors”. Jan / Feb 2008

The reality however has been that ensuring a certain level of financial return for shareholders takes undue precedence over conscientiously compensating employees or the scrupulous, and sustainable, use of communities' natural resources. This precedence then manifests itself in a variety of negative repercussions such as the over-repatriation of profits to headquarter countries without re-investing enough in countries where operations and profits originate. Or communities near industrial plants may find, perhaps, that the effluents drained into their water sources are creating medical complications in their children.

much until it is often too late.

Corporate philanthropy as practiced today is unsustainable anything a business does out of goodwill alone cannot last. There is frequently no true link between an organisation’s vision and its philanthropic activities. It is essential to have a vision for philanthropic activities as part of the overall CSR strategy.

This is not to imply that corporate philanthropy is wrong. The practice is as old as business itself. The Pakistan Center for Philanthropy found that almost fifty percent of Pakistan’s publicly listed companies donate one percent of their profits.

The Business of Giving Alas, most companies do not realise the bottom-line impact CSR can have and instead, engage in it as a form of image management. Again, this surfacelevel involvement is possible mainly because generating goodwill from a relatively passive set of stakeholders is not very difficult - they do not demand

Which is also why companies can get away with donating one percent of only profits after tax, not even total earnings, and be perceived as good corporate citizens. Few stakeholders have historically questioned whether the companies' core business functions are ethical. Are the products or services they're offering filling a need in society? Or do stakeholders instead allow a company to be ranked as an exemplary corporate citizen for its CSR strategies and ethics despite its spewing out products that are a drain on society - such as nutrition-less, preservativeridden junk food?

For example, according to a Pakistan Millennium Development Goals report, in Sindh more than half of the children five to nine years of age are not enrolled in a school, despite a government primary school education programme across the province. The findings suggest this lack of reach can be partially explained by the scarcity of basic facilities: less than one-third of all government-run schools in the region have access to drinking water, electricity, boundary walls or even toilets. The Pakistan Centre for Philanthropy’s (PCP) '3P's for Education' programme, aims to increase social investment in education through facilitation of linkages between

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cover story

corporate philanthropists, citizen organisations and the government. Multiple-party linkages such as this, when thoughtfully created in sync with a company’s core business model and not as charity work, set a positive cycle in motion, one that benefits all involved. However, corporate philanthropy as practiced today is unsustainable - anything a business does out of goodwill alone cannot last. There is frequently no true link between an organisation’s vision and its philanthropic activities. It is essential to have a vision for philanthropic activities as part of the overall CSR strategy. Corporate philanthropy has often become, among many other bandwagons, a means to assuage the corporate ‘conscience’ instead of a subset of an aligned corporate strategy. It also seems that there is no way for businesses to please critics. If they donate philanthropically while they may or may not try to manage internal change towards improved corporate citizenship, they get blamed for trying to 'greenwash' stakeholders. On the other hand, justifying the financial bottom-line of initial CSR implementation to shortsighted shareholders can be a serious roadblock, while sometimes perceived as a somewhat vulgarly mercenary to other stakeholders. And of course no one is happy with a company that simply earns p r o f i ts a n d d o e s n ' t f u l l y understand the ethics behind its profits - because it is perceived as not making an effort to earn the license society granted it to operate in the first place. Regardless of how mainstreamed

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and effective corporate philanthropy may become, the primary goal remains to integrate a higher level of consciousness into companies' core business f u n c t i o n s . F r o m a t ta i n i n g meaningful Environmental Impact Assessments to transparent public reporting, responsibility must be integrated into every step of businesses' actions. Addressing root causes often may not be as visibly glorifiable or instantly rewarding but it is a much more efficient and effective use of corporate philanthropic funds. Instead of treating symptoms of a community it works with, a business must take the time to engage with the community and identify root causes. For example, if it were to truly engage with the community, a company may find that setting up a water filtering system would have addressed the cause of the community's kidney ailments whereas an elaborate kidney center would only address the symptoms without actually reducing the occurrence of the ailments. One –Among Many– Corporate Responsibility Platforms

“

In today's world, the private sector is the dominant engine of growth - the principal creator of value and managerial resources. If the private sector does not deliver economic growth and economic opportunity equitable and sustainable around the world, then peace will remain fragile and social justice a distant dream.

”

Kofi Annan, Former United Nations Secretary General

The UNDP has been working with the Pakistani corporate community since 2003 to help establish the United Nations Global Compact, a forum for corporate responsibility. A local Karachi-based UNGC network alone has over 62 corporate members. “As a partner of the Global Compact, UNDP is continuously exploring opportunities of concrete partnerships with the private sector,” says Mr. Haoliang Xu, former United Nations Development Programme Country Director, Pakistan. Until the Global Compact Foundation becomes a reality, the UNDP also directly engages the private sector towards achieving national development priorities and the MDGs. The Foundation coordinates projects such as “Community Empowerment through Livestock Development & Credit” that focuses on generating income and employment among rural women through trainings and skills development in primary livestock healthcare and management. The project recognises that only imparting skills is not enough for true empowerment. Women need help marketing their services and/or products, especially if culture prefers for them to stay at home. This endeavour requires dairy companies to invest in their milk-supply networks, although they are currently sufficing. A positive ripple effect of this is including women into the economic activity their operations generate. However, it is their longterm goal of competitiveness that enables them to realise that this www.triplebottomline.com.pk

becomes a direct investment into building a more sustainable supply of raw materials for their future products. This indigenously sustainable economic empowerment creates a win-win situation, for rural communities, for the private sector that it serves as an upstream vendor to, and for development workers. What Role Can the Government Play? In capitalist environments, the government must serve as the principal regulator, protecting its citizens against manifestations of inherent human ills, such as greed. And by placing so much emphasis on the obligations of the private sector, we certainly don't want the government to feel that it is let off the hook in some areas - no matter how disillusioned we may be with its bottomline ineffectiveness. It is also vital for the government to vigilantly monitor those entities that enter a country for operations while its target markets are not within the host country. Such businesses feel no obligation or incentive to be vigilant to the needs of the citizens who are contributing to its success. In this scenario it is entirely the government's responsibility to safeguard the interests of its people, both in the short and long-term. Governments are beginning to view CSR as a cost-effective means to enhance sustainable development strategies, and as a component of their national competitiveness strategies to attract foreign direct investment

Jan / Feb 2008

and position their exports in global markets. There is a significant opportunity for the public sector to harness business enthusiasm for CSR to help achieve its goal o f r e d u c i n g p o v e r t y. T h e challenge today for the public sector in developing countries is to identify CSR and incentives that are meaningful in their national context, and to play a role in strengthening appropriate local initiatives. A World Bank study concluded that governments have innumerable other reasons to invest in developing sustainability frameworks – this was four years ago when the industry was indeed more nascent. The Public Sector Support for the Implementation of Corporate Social Responsibility study found that such efforts are likely to deliver economic and social spin-offs that contribute positively to national competitiveness. The report also stated that these frameworks provide a level playing field for enterprises active in the country, thus supporting much-needed entrepreneurship. And finally, they p r o v i d e g o v e r n m e n ts t h e opportunity to have greater influence over business outcomes than to simply react to repercussions of business entities' actions. The report is a wake-up call for governments, especially those of developing countries. The public sector plays a key role as the principal over-seer of the enabling corporate environment. Developing country governments are likely to be successful in improving social and environmental standards if they develop coherent strategies, such as publishing codes of conduct

that address all the critical elements of the enabling framework and create a deeper awareness amongst businesses. Stakeholders and consumers alike need to educate themselves and invest in companies that will leave a better tomorrow for their children. The bottom-line message? Stakeholders, wake up. Educate yourselves. After all, the ultimate accountability is to oneself. Individuals can continue to vicariously live their lives through the material possessions they obtain as opposed to through their inner selves. Education can serve as a route to either destination. As citizen-consumers we must all demand our rights. Put your money only with companies you believe will leave a better tomorrow for your children. Institutions will not reform unless you - the consumers, their audiences - demand it of them. As daily consumers there are few needs that we could fulfil without at least three different entities spending billions on coaxing us to meet our need through them. For a change let us capitalise on the Darwinian competition characteristic of ‘free’ markets and use it to our economic, social and environmental advantage.

about the writer As a Sustainability Consultant, Khadeeja Balkhi helps organisations embed and document sustainable practices into their core business models.

15

csr toolkit

the neo-pakistani incubator by salman abedin for tbl

E

ach region of the world has its common problems, and yet people in each country have found their own indigenous solutions to the issue of how small businesses should and can grow into mid-sized and then larger businesses. Various models exist including bank financing, micro credit ala Grameen, Venture Capital (VC) and cooperative enterprises like those in India. Out of these, the most interesting one, and the one with greatest import in Pakistan is the Incubation model. Incubation Background Stanford, MIT and other tech universities in the United States have perfected the Uni-IncubatorVC eco-system, and despite claims to the contrary, this system has not duplicated well, by and large, in other countries. Government-run entrepreneurial development incubators exist in other parts of the world, however, the objective of such setups is more social development, rather than economic.

Entrepreneurial Spirit

Don’t Industrial Parks Cut it?

However, this does not take away from the fact that Pakistanis, like many people in third world countries, are imbued with an inherent entrepreneurial streak. This results from a lack of social support mechanisms, underemployment and a lack of reasonable employment opportunities for many.

industrial zones, parks and other facilitational setups by the government are in place for capital intensive industries throughout Pakistan. However, no emphasis has been laid on incubating startups. Pakistan Software Export Board’s attempt at setting up technology parks presupposes a certain organisational size for park facilities to be accessed.

Over time, many communities have developed strong cultures of risk taking and business d e v e l o p m e n t . N o w, t h i r d generation entrepreneurs are present in the business space. Some of these are well known Gujrati speaking families, and some are not well known entrepreneurial clans from Central and Northern Punjab. Other business clans such as Nagoris in Milk production (doodh-walas) and Pathans (tea shops) also exist in large numbers.

In any case, there seems to be no funding of any sort available to garage startups. Successful garage startups have been made on family savings or investment from angel investors, and even those have had difficulty in going to the next level. Most die within 11 months - which is the rental agreement period in Pakistan. Need for a Neo-Paki Incubator All things considered, there is a

THE BIG IDEA

Incubation Experience in Pakistan TMT Ventures, a pioneering Pakistani VC company, ran an incubation model for most of its investments. However, the incubator made the entrepreneurs all too cozy, and resulted in low performance of most incubated companies. This may also be the result of a non-existent VC ecosystem in Pakistan.

16

Businesses created

Young rich kids

Jugaroo entrepreneurs

Handshaking organisation

www.triplebottomline.com.pk

need for an incubation system that allows startups to be created and with a strong hand to guide them through the process of growth. Since there is no ecosystem to provide risk capital at the present time, the incubator itself must be financially viable. Target Pakistanis are by nature risk takers. Many who have access to capital, especially those coming from family backgrounds where money is freely on-hand, are turning in large numbers to day trading on the Stock Exchanges, which to many is akin to a form of gambling, requiring almost no business acumen or entrepreneurial risk-taking. Those without capital, on the other hand, are setting up businesses of all sorts that sometimes succeed and sometimes don’t.

company were to serve as the handshaking organisation to an agricultural entrepreneur whose output would then become part of the HSO’s upstream supply chain. Ideally this initiative would be undertaken under the umbrella of an organisation akin to the Chamber of Commerce in association with VC firms, SMEDA and other entities interested in business value creation, such as forwardthinking, CSR-based HSOs.

Day Trader Funnel “Young Rich Kids”

into productive enterprise building; 4. Breaking down group stereotypes or socioeconomic barriers by making diverse people work together; 5. Paving the way forward for similar institutions to be setup in Pakistan and other comparable developing countries with comparable issues of business value creation; and

Grass Roots Business Person Funnel “Jugaroo Entrepreneurs”

300,000

3,000,000

30,000

300,000

A Funnel can be Created as Follows A group of people from different segments can be attracted and tapped to form the base of the incubator. Funding for the business idea will come from the casually labelled “young rich kids” segment, whereas the ideas will mostly come from the “jugaroo entrepreneurs” segment. Who should do it? The role of the incubator is mostly that of a facilitator. The incubator will also add value by training the incubators in required business skills. In cases where further financing is required, the handshaker organisation (HSO) enters as an angel investor. This is an ideal CSR inroad for the handshaking organisation, creating a win-win situation for itself and the entrepreneur by serving both as investor and downstream partner/purchaser of the entrepreneur’s services. For instance, imagine the positive repercussions for both if a food Jan / Feb 2008

3,000

300

300 Incubation

Advantages of the NeoPakistani Incubator 1. Channelising business ideas that are lost due to a lack of funding; 2. Training of youth or rural entrepreneurs in business management in a laboratory environment; 3. Bringing well-heeled youth

6. Creating an ideal CSR initiative inroad for a variety of businesses.

about the writer

Salman Abedin is currently Executive Director at Contract Advertising. He welcomes input and discussion on the model briefly inserted for TBL readership and can be reached at [email protected].

17

beyond philanthropy

responsibly yours

by zohare ali shariff for tbl

A

t a recent fundraiser in the city, one of those somewhat surrealistic evenings replete with Caesarian trappings that the excitement seekers gather at, the scion of an industrial empire outbid other birds of the feather to become the proud owner of a dress that a certain lascivious actress had worn in a hit film of yesteryears. All for a good cause. After all it was a fundraiser. Of course those present who had not participated in the bidding owing to comparatively lesser resources pronounced the highest bidder to be a pervert and a bragger. No matter. The highest bidder is on a high with his new acquisition and the ‘cause’ is delighted that the auction had gone well. Icing on the cake really, as the big bucks had already been made when the hundred odd tables seating ten persons

18

each had been pre-sold several weeks before the event itself. At a hundred thousand rupees each, the tables had raised a cool crore long before the DJ had played the first trance track of the evening. The party progresses and everyone has a good time. It’s a win-win situation for all. A fun evening paid out of corporate coffers. The annual report will duly report x amount donated to a charity working for the lesser privileged under the company’s corporate social responsibility programme. CSR. Three letters mouthed as often as CIA. Not that a connection is implied! Subject specialists would not classify the payment made for the female garment mentioned earlier as CSR. This action would

be defined by them as corporate philanthropy at best. Chequewriting to use another, less complimentary term that is also applied. Of course the recipients of the largesse are not bothered what appellation you give to it. But the donors insist it is CSR. After all a commercial company exists to make profits. So why should it give away money (read earnings) to some NGO? This is done, they justify, because the company is exercising corporate social responsibility. The company cannot itself set up and operate for example a children’s hospital, the argument further goes. It is not its business. So it does the next best thing instead and donates a sum of money to a suitable organisation that can be trusted to do just that – set up and operate a children’s hospital. Thus the proponents of chequewriting are very comfortable that they are in fact giving something back to society and are hence practicing CSR. If a strategic and much sought after table for ten at a highly desirable soiree comes their way in the bargain, then it is just coincidental. Purists are not convinced. They think the driving force in such an instance is the urge to revel rather than an altruistic calling to serve humanity. For them ‘true’ CSR has a much deeper and complex meaning. Firstly, it should be an ongoing www.triplebottomline.com.pk

and a long-term commitment and not a one-off gesture that uses t h e i n s ta n c e a s a p h o t o opportunity. And secondly, they say, true CSR aims at bringing about real and sustainable change rather than providing only temporary relief or, so to speak, merely being a bandage instead of a cure. The debate between the proponents of the two points of view can get quite extended. What is important to understand though is that the two arguments are not contrary to each other. Instead, the belief of the purists must be seen as a higher level of understanding of what CSR ought to be as it evolves and matures within individual organisations. And there is a very simple and logical reason why a CSR programme must continue to evolve and gain depth. The ultimate objective of CSR is to

benefit society. Cheque-writing certainly helps, but the benefits may come at a cost that is beyond the amount of the cheque itself. Costs in human terms that may not be overtly obvious in the beginning. Any number of negative forces may be at work. The credibility, honesty and competence of the cheque’s beneficiary for instance. Even given that the beneficiary is doing a ‘good job’, the question still remains whether the beneficiary was the right choice to start with. This brings us to the concluding point. If a company’s CSR programme is conceptualized and planned to relate to its own core values and to its business, then as a result two things will happen. One, the selection of beneficiaries will have some logic behind it, leading to more efficient utilization of the funds committed. And two, the company will have a much greater degree of participation in

the programme, extending beyond the financial into less tangible but equally important realms of human effort and cooperation. This, relating to the adage that companies exist to make profits, will in turn ultimately lead to greater return to the company in terms of a more empowered society, that will assure a market for future sales of products or services that the company offers. At the ethicalmoral level the company becomes eligible to sign off its CSR obligation as “Responsibly Yours, XYZ Corporation”.

about the writer Zohare Ali Shariff is CEO of Asiatic Public Relations Network (Pvt.) Ltd., based in Karachi.

about apr Asiatic Public Relations Network (Private) Limited or APR, as it is popularly known, is a leading, independent "CPR" (Communications & Public Relations) agency established in May 1992. Affiliated internationally with Hill & Knowlton, the world's first global public relations and public affairs network founded in 1927, APR is headquartered in Karachi, with other offices in Lahore and in the federal capital city, Islamabad and a presence also in Kabul, Afghanistan. APR offers its clients a comprehensive range of services aimed at achieving one key objective: Relationship Excellence. Services offered include PR counseling; media relations; employee relations; strategic writing; creative designing; publications; audio-visual productions; event management; community relations; government relations and crisis management. APR strongly believes in CSR being an essential business function of forward-thinking companies, with a direct contribution to the sustainable development of both the company and the larger community. www.apr.com.pk

Jan / Feb 2008

19

csr talk

Reshaping

lives

Khaliq shares his personal and professional passions by khadeeja balkhi for tbl

“Passionately,” responded Zouhair A. Khaliq, CEO Mobilink, when TBL asked him how he feels about CSR. “It is part of where we come from and a part of our religion to look after our environment and our people,” he continued. “If you look at it from the corporate perspective, when you work as hard and long as we have and have been blessed with the success that we’ve had, it is only natural to feel that you want to give back.” To Khaliq, the company’s social investments are directly related to the communities that have helped Mobilink be the success story that it is today. “99.9 percent of our staff is Pakistani,” Khaliq said. “When we use local people, it encourages them, it’s an investment again – we demand a lot of them.” “Again, it’s a passion – it’ll

20

permeate everything you do,” said Khaliq about his own ethos – personal and professional. To him everything is a manifestation of their philosophy: from the Pakistan-centric approach in their planning and imaging, to their socially inclusive products, to the fact that the drivers to the CEO all enjoy the same corporate cafeteria meals for Rs. 25. Trio of Success Khaliq delineated a three-pillar strategy that spelt the success of Mobilink – and its profitable sustainability. This journey to success started about five years ago. Hi-tech Infrastructure Mobilink has invested heavily in their core service. He estimates that over 90 percent of their investments have been in this area - about USD 2 billion in the past four to five years, and a total of USD 2.5 billion to-date. The

company plans to invest an additional half a billion in the infrastructure in the coming year. Talent Of the remaining 10 percent, he estimates that almost equal amounts are invested in the other two pillars: the people behind the company, and projecting the reality that they have worked hard to fix. The company started five years ago with 500 people. “We have today 5,000 people who work with us: brilliant, very talented individuals. In 10 years, people like us will be long gone - because we realise that this is for the long term, we invest in the people we hire today,” Khaliq said. “We have invested heavily in the development of our teams,” he said. The teams in turn help ensure the company’s success. For instance, they help formulate www.triplebottomline.com.pk

zouhair abdul khaliq

five and ten-year plans. To-date each of the five-year plans have been exceeded – another gauge Khaliq uses for their success, combined with the reality that Mobilink is the market leader. “It is CSR to me: each and every ad campaign that you’ve seen over the last 10 years – has been devised, dreamt up and put in place by Pakistanis,” Khaliq said. “The actors have always been Pakistani. As have directors and producers. We’ve never been to Bangkok or Bombay; our ads are always shot in Pakistan”. Mobilink’s ‘reshaping lives’ slogan is truly embedded. They see it as a direct investment as well as a long-term human capital investment to work with local vendors or agencies and then demand high-level services from them, instead of choosing to take their business abroad. In a humble way, Khaliq feels that the company is helping them raise the bar in different sectors. Every team member of Mobilink also volunteers their time and skills, about 250-400 hours, outside of their work hours – another example of an immersed corporate ethos. Imaging “Once you have the reality on the ground, you’ve got to project the reality,” Khaliq said, taking us to the third pillar: perception management. “It’s taken at least the last two years towards shifting the perception” following the phases of ‘reality-management’. Behind an image or perception, you’ve got to fix the reality first, that’s why our focus has predominantly been on infrastructure, added Khaliq – with only 5 percent of resources then invested in projecting the hardearned reality.

Jan / Feb 2008

But instead of spending on types of public relations that simply add clutter to our environment, the company prefers to keep its name alive in communities by engaging with them and providing core services that Mobilink can help provide through its newlyestablished Mobilink Foundation, initially endowed with Rs. 30 million from the Mobilink Chairman, Naguib Sawiris – the first of its kind in the region for a telecom company, added Khaliq. In the past 3 years for instance, the company has cut down its billboard advertising to 20 percent. “To be honest, we’ve not missed that 80 percent,” Khaliq said. To him, this is an instance of an integrated corporate philosophy. The teams realise that part of their direction is to reduce clutter while creatively keeping the brand alive. The Fourth P in PPP's Although many businesses in developing economies are hesitant to enter multi-stakeholder frameworks, Khaliq shares the secret to his success with PublicPrivate Partnerships (PPPs). A quality underrated by so many people, particularly in our oft-mad professional rush: patience. He believes that “if you learn patience, there are so many things that you thought you couldn’t do and now you can, because you learned patience.” “I think it’s always a challenge to partner with anybody, especially with government which runs at a different pace; but if you want to do things right, it is imperative rather than to try and invest something in parallel, which would just be squandering resources,” Khaliq candidly shared. Most of Mobilink’s socially inclusive services, for instance, are provided in conjunction with

government bodies. For example, the company’s lady health worker programme is carried out in conjunction with the Ministry of Health and draws on the resources of the international GSM Association as well. The projects two current pilots aim to tool up the Ministry of Health with a handset when they travel out to rural areas they can connect back into their facility for medical advice, supplies or emergencies. For the Mobilink PCO, the company partnered with the National Bank of Pakistan. The cost of purchasing the Mobilink PCO, after vendor discounts, was about Rs. 6,000, an amount small entrepreneurs often cannot afford. Via an NBP-provided micro loan, the cost of entry has been lowered from about $100 to $19. Measuring CSR RoI's “I think it’s early days to start measuring, in specific terms,” Khaliq said regarding CSR Return on Investments. The telecom sector faces extensive competition. “Everybody’s been out there pushing their products and services, some have tried to push only though lowered prices,” he said. Mobilink has never been a price leader, but has managed to retain almost 50 percent market share, despite the fact that some people sell so much cheaper. “I would like to think that it is also the image of Mobilink as corporate citizen”, added Khaliq. “I think the constant refrain that I have is, as individuals and as corporations we need to recognise that it’s up to us to improve the environment that we live in, the more we do for it the more we will see Pakistan flourish,” Khaliq shared as a final note, adding that the prosperity of Pakistan is proportional to the prosperity of our businesses.

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ethics

whose ethics? importance of

LDC’s

participation in

CSR by flavia thome for tbl

ethical values and T hestandards that a business

incorporates determine to an increasing extent, its stature in society, and play an imperative role in maintaining and encouraging public trust and confidence in its products and services. In this sense, businesses are playing an intrinsic role in our lives, and it is only logical that we expect more from them in terms of responsible and ethical behaviour: behaviour that reflects the values of the societies businesses operate in. However, the definition of what constitutes ‘right’ or ‘wrong’ is being continuously challenged as Corporate Social Responsibility (CSR) becomes increasingly prevalent in corporate activity. As global companies and local communities become more interconnected, there is growing importance in challenging the moral effects and consequences of cross-border businesses and the operations of multinational corporations (MNCs).

22

Although still not as dominant in less-developed countries (LDCs) as in the developed world, CSR has been making a big impact across the globe. As an LDC national, I am very encouraged by the positive potential of CSR. However, I am equally concerned about the ethical and cultural imperialist tendencies of MNCs, which are largely controlled by a handful of the world’s economically wealthiest nations. Can global corporations operate ethically across borders without diminishing local culture and values? We must explore, as this article will, whether there are grounds for such concern from the point of view of the host nation and the extent to which ethical and cultural relativism is a serious consideration for corporations implementing CSR policies in the developing world. What is Right or Wrong? CSR is, to a large extent, a response by corporations to the

moral concerns and expectations of their key stakeholders: employees, customers, neighbouring communities and shareholders (among others). As a remedy to stakeholder concern, CSR policies must incorporate a set of corporate moral values which take into account societal notions of responsible moral behaviour. Questions that revolve around the nature of morality traditionally concentrated on the actions of individuals but now the focus includes the conduct of corporations. Relativists argue that notions of right or wrong differ from one society to another and that no one culture is better than another. However, across the spectrum, ethical absolutists believe in the existence of absolute ethical standards which determine what is good or bad for all humanity. They would argue that a company should employ exactly the same standards and attitudes abroad www.triplebottomline.com.pk

as it does at home. This debate leads to questions pertinent to the global community in which MNCs operate: are standards of good and bad relative to the culture and place in which they exist? Are values absolute or could they change over time with each new generation, or management structure, for instance? If they vary, whose ethics should prevail? Should CSR practices presuppose the existence of a universal set of values? Is the ‘Balance of Power’ Balancing? In the world of CSR, the influence of ethical norms and differences on cross-border business activities is a topic of heightened controversy. The growing acceptance of relativism – both cultural and moral – is seeing a shift in the ‘balance of power’. As CSR becomes more integrated into business-models, attention must be drawn to the risk of imposing the moralities of the home country onto the host. For example, a U.S. computer company conducted a training course in a subsidiary in Saudi Arabia. The course included a case study where a senior employee makes sexually explicit remarks to a new female employee over drinks in a bar. Not only did the intended message of condemning sexual discrimination or harassment feel irrelevant to the local participants, it led to confusion and offence because the norms governing gender interaction as well as social outlets are very different f o r t h e c o m pa n y ’s S a u d i employees. Multinational corporations have to consider the appropriateness of respecting local culture and adopting the moral vocabulary of the host country. A major concern for corporations is that the distinction between ethical and Jan / Feb 2008

unethical behaviour relative to each society is becoming increasingly difficult to distinguish. If implemented correctly, CSR policies have the potential to do much good in the world, especially in LDCs where governments and local institutions are often weak. However, the danger that CSR poses if Western values are deemed absolute is moral imperialism at the expense of undermining cultural and moral differences across the globe. The main ethical dilemma is whose ethics should prevail when values are in conflict? Should corporations invest in a foreign country that does not allow employees to form a trade union? Should corporations replicate local practices of pay-offs and bribery? What about establishing industrial plants in developing countries which have lower s ta n d a r d s o f l a b o u r a n d environmental laws? Has Globalisation Endorsed Relativism? The more we interact with societies from distant parts of the world, the more we challenge whether the values and codes by which we live are true and absolute. After all, when we make moral judgments we do so in the name of our own culture and beliefs. MNCs have to be aware of local differences to avoid culturally cacophonic practices. A non-relativist approach to CSR imposes the homogenisation of standards, which may not be reflective of reality. An MNC expecting to face the same challenges in a host country as at home, will often find itself unprepared in dealing with changing situations. Even if the problems are the same, the options available may differ. An interesting example is the case of gift-giving, a normal tradition in many non-Western societies. Sharing small gifts, the

omiyagi in Japanese culture for instance, is an intrinsic part of business interaction, it symbolises reciprocity and relationship building although commonly misconstrued as bribery by Western corporations and misinterpreted as wrong rather than culturally relative. An African perspective was offered by the Olusegun Obasanjo, the former president of Nigeria when he criticised the assimilation of the tradition of gift-giving into corruption and bribery:

“

I can speak only for Africa. But what holds true in my own continent may apply in other parts of the developing world. I shudder at how an integral part of my continent's culture can be taken as a basis for rationalising otherwise despicable behaviour. In the African concept of appreciation and hospitality, a gift is a token; it is not demanded; the value is in the spirit of the giving, not the material worth. The gift is made in the open for all to see, never in secret. Where a gift is excessive it becomes an embarrassment, and is returned. If anything, corruption - as practised by exporters from the north as well as by officials in the south - has perverted positive aspects of this age-old tradition.

”

This clearly illustrates the importance of context when evaluating different practices, while ensuring that they do not violate universal norms. The similarities in moral reasoning must be embraced to avoid wrongness by those who use relativism to mask immoral deeds.

23

ethics

Relativism: a Scapegoat for Unethical Practices? CSR has come a long way to protect local employees from exploitation by money-hungry corporations. In the process it has become clear that some activities are wrong wherever they take place. The moderate form of relativism discussed here should not be misused as a scapegoat for oppressive regimes such as Mugabe in Zimbabwe, genocide by Nazi Germany or corporate irresponsibilities such as the use of forced-labour. Therefore, it is fundamental to eradicate the justification for such atrocities on the basis of ethical or cultural relativism. Forcedlabour or abuse of workers should never be accepted because there is no society which will consider this behaviour morally correct even if it is common practice. In a case reported by the United Nations Research Institute for Social Development, a fire in an international company’s toy factory in Thailand killed close to 200 employees because not only did the management have a defective sprinkler system but it had also locked the workers inside the plant. There can be no justification for such immoral and irresponsible corporate action. A controversial yet interesting case study is the employment of children. In most of the developed world child-labour is prohibited by law and morally condemned, therefore, MNCs operating in LDCs would be inclined to adhere to the same conditions. However in agrarian and rural societies, children are often expected to help work the land. This is part of local family traditions, not only accepted but morally encouraged and economically necessary. Moreover, because these societies often do not have the infrastructure to provide adequate

24

schooling, rural children would have no other means of subsistence if not for the work they do in the farms. Without understanding the local norms, a corporation aiming to be responsible and refusing to hire such children can actually cause damage to the society it tries to protect. The employment of children should not be unchallenged simply because it is common practice; instead it should be assessed in the context of the children’s well-being. Attention needs to be placed on the options and alternatives available within the context of the local community. For instance, an alternative could be to provide schooling and financial aid for children of rural workers. Another route that works is employing children, but only outside of school hours. Companies can work with educational non-profits such as The Education and Health Development Foundation in Islamabad, which recognises the reality that some children must work. EHD arranges separate classes for working children acknowledging that number of working children in Pakistan is in the region of 11 - 12 million, but facilitates their inroads into a future brightened by the light of education. CSR policies have great potential for good when they work in conjunction with local governments and institutions to improve the social conditions that are lacking due to weak infrastructure in LDCs. In the environmental arena, corporations face important strategic decisions as to whether they should adopt the standards of the home nation or adapt their standards to comply with local requirements. Managers need a local understanding in order to ensure a healthy long-term corporate strategy. We do not

have to dig deep in our memories to find scandalous illustrations of negligent corporate behaviour which has left a lasting harmful impact. The 1984 Bhopal disaster in India exposed half-a-million people to toxic chemicals during a catastrophic gas leak from a Union Carbide plant. The industrial disaster shocked the world and raised fundamental moral questions about corporate responsibility for accidents that devastate human life and local environments. Union Carbide exploited lower local standards without compensating for the lack in infrastructure. Although they may have followed local environmental regulations they were far from complying with a responsible code of conduct which would have avoided the accident. The question then becomes: if MNCs from developed countries operate in LDCs with inadequate environmental regulations, whose ethics should prevail? Once again the answer is relative to each context. As discussed in the case of Bhopal, the decision by Union Carbide was clearly wrong as it did not have a triple bottom-line concern. Corporations must consider all their stakeholders when making their choices. Why Does the Debate about Ethical Relativism Matter to Business? The apprehension of managers to insert more subjective measures such as ethics and morality into business analysis is understandable. These valuejudgments are difficult to determine, quantify and calculate. However, the reason this matters is because CSR is about irresponsibilities; it is about business having a positive impact in the society in which it operates – and in turn benefiting from that cycle of positivism. To do so, managers need to have a www.triplebottomline.com.pk

meaningful insight into the valuesystem of those influenced by the corporations’ activities. Recognition must be given to the demands of all those engaged in the business, be they employees, suppliers, customers or any other stakeholders. MNCs need to understand the ethical framework and moral vocabulary of where they operate and also be aware of problems that could arise due to these differences. A controversial argument is made by Donaldson, T. in “Values in Tension: Ethics Away from Home” to support the actions of a government and society which may choose to act in ways which may at first seem unethical. He uses the example that in times of famine it “may be wise to use more fertilizer in order to improve crop yields, even though that means settling for relatively high levels of thermal water pollution”. This example should not be used to justify unethical environmental behaviour but simply to illustrate once again the importance of understanding local context also as they apply to a nation’s developmental stage. Astute relativity is key. Alaison Maitland in “A responsible balancing act” discusses a study which shows that stakeholders across the globe have different priorities which dictate their expectations of corporate behaviour:

“

To Chinese consumers, the hallmark of a socially responsible company is safe, high-quality products. For Germans, it is secure employment. In South Africa, what matters most is a company’s contribution to social needs such as healthcare and education …

Jan / Feb 2008

There are common threads: consumers in the US, France, Italy, Switzerland, the Philippines and much of South America agree that the most important thing a company must do if it wants to be regarded as socially responsible is to treat employees fairly. But the differences stand out – and they mean that multinationals cannot hope to build public trust with a single global message.

”

The challenge for corporations taking responsibility seriously is to ensure that their CSR policies strike an appropriate balance among these differences. Through increasingly affordable travel and communication, we live in a global age with constant exposure to contrasting ideals. This exposure ensures that having global brands in every country is already contentious but to have those businesses impose their ethical standards would certainly be unsustainable. In today’s interconnected world, corporations cannot conceal their unethical practices in hidden corners of the world. Moreover, the opening of global markets also opens the way for a stronger global civil society. The stakeholders, whose concerns dictate corporate values, are now both at home and in host countries. The business realm is no longer a morality-free zone. By engaging in CSR practices, corporations are committing themselves to ethical considerations spanning borders. The application of universal values established through international consensus, such as human rights, is among the biggest challenges facing the future of corporate responsibility. However, this must not be done

through imperialism; emphasis must also be placed on LDCs’ participation in the process. To generate profits at the expense of each other is no longer acceptable, instead corporations must be more responsible: economically, socially and environmentally. The emphasis needs to move away from the traditional economic bottom-line to a modern triple bottom-line. This changing expectation of the role of business signals the increased significance for corporations to assist countries which lack in infrastructure or institutions that would protect its people. 1. D’Souza provides an insightful analysis of the practice of gift-giving in Asian cultures and provides an understanding of gift-giving for a more systematic assessment of relationship building. D’Souza, C. (2003). “An inference of gift-giving within Asian business culture.” Asia Pacific Journal of Marketing and Logistics. Volume 15: 27-28. 2. Obasanjo, O. (1994). “Positive Tradition Perverted by Corruption.” Financial Times, 14 October 1994. 3. United Nations Research Institute for Social Development. (1996). Transnational Corporations: Impediments or Catalysts of Social Development? 4. De George, R. (1995). Business Ethics. Englewood Cliffs, N.J.: Prentice-Hall Inc. 5. See Amnesty International report (2004), Clouds of Injustice: Bhopal disaster 20 years on, which looks at the human rights impact of the leak as well as the concerns over accountability. 6. Donaldson, T. (1996). “Values in Tension: Ethics Away from Home”. Harvard Business Review. Sept/Oct 1996. 7. Maitland, A. (2005). “A responsible balancing act. Strategic Management: Global companies must be sensitive to different concerns of consumers worldwide but must avoid double standards.” Financial Times, 1 June 2005.

about the writer Flavia Thome has worked as a consultant for Accenture and more recently as a Research Fellow at the UN-Habitat Regional office for LAC. Born in Brazil, she has a BSc in Economics and International Development and an MA in Global Ethics from the University of London.

25

responsible positioning

the renaissance brand & its CSR implications by adrian saker for tbl

or any company entertaining the idea of implementing a F Corporate Social Responsibility (CSR) programme in their business, the main barriers to adoption have always been the high startup costs and inadequate return on investment; but perhaps we should reframe the question and consider the cost of not doing so.

With the rise of consumer expectations for environmental stewardship and social responsibility, combined with the long-term worldwide shift towards conscious consumption, CSR has gone mainstream as global brands from British Petroleum to GE repaint themselves in a greener hue. They believe a company can do the right thing environmentally and still make money doing it. The former has even gone so far as to change the meaning of their very name to “Beyond Petroleum,” while GE has adopted “ecomagination” as their primary marketing message – although one must wonder what exactly is eco-friendly about manufacturing nuclear weapons – but never mind; where GE goes, the rest of corporate America must follow. And thereafter, the world. Indeed, BRIC (Brazil, Russia, India and China) and other developing nations must come to terms with the fact that, in perpetual endeavours to level playing fields, they too will be

26

required to meet ever stricter environmental standards for their products if they are to enter larger consumer markets. K&N, a pioneer in Pakistan’s frozen poultry products industry, has placed strict bio-security measures in all its breeder farms. Its environment-controlled houses are equipped with modern ventilation, cooling and heating equipment which reduces the risk of disease transmission through mechanically and physically transferred disease causative agents. That’s better for us humans, but we’ll have to explore how the chickens feel about it – certainly better than the corner store poultrykeeper’s cramped style, we hope. Across the globe, educated consumers are “greening” on their way to becoming green. They’re leaning more and more towards brands that are good for both their families and the planet and this has led to a fundamental shift in how they buy. There is a new purchasing equation: given a choice (ceteris paribus: all other things being equal), the informed consumer chooses the “ethically sourced” brand. [Note: this calculation demands that price, quality, efficacy, availability, and

service all be equal]. The key word here is informed, and today the consumer is more informed than ever. This product information is manifested by a new breed of consumers in several ways: the purchases they make, the brands they support, the companies in which they choose to invest, the web link they forward to friends, and the opt-in advertising they accept. www.triplebottomline.com.pk

So what might be the criteria that a forward - leaning - or Renaissance - brand must possess to survive in the modern marketplace? Perhaps we’ll call them “The Fab Five”: 1. They honour the importance of a corporate conscience: Ethics Milton Friedman declared, “the business of business is business”. Not these days; companies that ignore public sentiment make themselves vulnerable to attack and will be punished in the marketplace. Corporations can no longer make the environment an externality as companies from Union Carbide, Exxon, and Nike can attest. Indeed, in a 2005 Wirthlin Worldwide® survey, 82% of those questioned said that corporate citizenship has “at least some influence” on their buying decisions. Twenty-first century companies such as Google understand this, as their “Letter from the Founders” states: “We believe strongly that in the long term, we will be better served -as shareholders and in all other ways- by a company that does good things for the world even if we forgo some short-term gains. This is an important aspect of our culture and is broadly shared within the company. We aspire to make Google an institution that makes the world a better place”. They, more than most, know the internet has brought new levels of business transparency where actions are as important as what companies say in their marketing, and nothing kills a brand faster than saying one thing in your advertising, and doing another. 2. They adhere to global labour standards and practices: Wages They support Global Fair Trade agreements and undertake a responsibility to support a fair and Jan / Feb 2008

honest marketplace. As Nike discovered, to their cost, one ill-advised production decision to have Vietnamese twelve-year-olds manufacture sneakers in sweat shops caused untold harm to their brand image and undid a decade of great advertising. The anti-corporate position taken by fashion brand American Apparel illustrates the point: they tout their products as being manufactured without ‘sweatshop’ labour. They understand that today’s sophisticated GenMySpace consumer isn’t buying a product, they’re buying an experience. Brands have become more than just brands: they express us; an expression of our creativity, they’ve become a badge of individualism; and truly great brands transcend their category to become something bigger - they become a statement of our values. And so the emphasis has moved from what the product does (the golden age of the Unique Selling Proposition) to how the brand makes you feel. The consumer’s internal monologue says: “Yes, this brand understands and connects with me. I want to support this company and everything it stands for. I want it to succeed and become ubiquitous”. As Bob Lutz, former Head of Design at GM says, “These days when everything mechanically in a car is great, design becomes a huge differentiation. The interior assumes a bigger role because it's where the customer lives... If you don't meet people's psychological needs you're dead”. 3. They tread lightly on the planet: Environment They strive to reduce their ecological footprint and deliver a product or service whereby no

human being or animal is harmed by the manufacture of its goods or service. Thus, enlightened growers might use organic farming methods that safeguard the health of soil and water resources, protect b i o d i v e r s i t y, r e d u c e t h e i r ecological footprint, and support sustainable agriculture. Auto manufacturers would build cars that run on clean-air combustion or hybrid technologies; have a high percentage of recyclable parts; aggressively employ recycling technologies for end-of-life products; and are manufactured in an environmentally conscious method. Health and beauty products would be organic, free from synthetic additives, not animal-tested, biodegradable with raw materials such as palm oil sourced sustainably and not acquired as a result of felled virgin peatlands in Indonesia for instance. Indonesian peatlands are a huge source of carbon. According to Greenpeace, an environmental activist group, burning of Indonesian peatlands accounts for 4% of total global greenhouse gas emissions. Rampant deforestation in the peatlands and forests has made Indonesia the third largest emitter of carbon in the world. The printed media industry would use 100% post-consumer recycled, unbleached paper and non-toxic printing inks. The fast food industry would only purchase meat and poultry that is antibiotic-, hormone-, and nitrate-free; and has no artificial preservatives, or ingredients. Household products would be non-toxic and environmentally safe, with consumer information leading users to, for instance, prefer vinegar over bleach for

27

responsible positioning

most purposes. In Pakistan, Engro Chemical has successfully reduced the emission of green house gases (CO and CO2) on its per ton urea production from 850 kg CO2 per ton of urea in 2006. The reduction is perhaps directly linked to its energy conservation profile. As cited in Engro’s 2005 Sustainability Report: over fifteen years, the company was able to reduce its energy consumption by over 31 percent. 4. They run counter to the global consolidation trend, offering more: Choice This is not anti-globalisation, it is anti-consolidation; anything that limits consumer choice. Many of us are unhappy living in a Cokeor-Pepsi world and believe we deserve a wider choice of healthy products. In the first decade of the American auto industry, there were 346 different car companies. Buick, Cadillac and Chevrolet were all independent before they merged to form General Motors. And now there are two. In Pakistan, the emergence of MakkahColas, AmratColas and the like are a brand example of consumer empowerment through increased choice. Better still, perhaps are the examples of Pakola-ethnically flavoured milkbased drinks. This innovation-based culture however is, knowingly or otherwise, often stifled by larger MNCs, through their bulky leverage controlling upstream and downstream supply chains. MakkahCola for instance had to shut down for various related reasons. Lack of consumer awareness of such issues often leads to un-empowered purchasing decisions where consumers are not fully aware of the consequences of their choices.

28

5. They espouse sustainability for future generations: The Future They are moving toward sustainability in their business models and preserving our planet’s non-renewable resources for those yet to be born. Big business is getting the message: Honda’s new 213,000square-foot "Green Facility" car factory in Gresham, Oregon is the first Leadership in Energy and Environmental Design (LEED) Gold certified mixed-use industrial building. LEED is a Green Building Rating System™. The building’s rainwater collection system gathers accumulated rainwater on the roof and funnels it into a 90,000-gallon storage tank and is used to irrigate landscaping and supply water for toilets; their conference room wall coverings are made from recycled telephone books, and the tabletops are made from compressed sunflower seeds. And the sweetest irony of all? The hallway flooring is made from recycled car tires. Companies such as Honda are working towards a healthier future and a less polluted world. They are many years ahead of environmental legislation not only because they know it’s good for their corporate image, but because it’s a viable business model and they know compliance costs ten years down the road will be prohibitive. They are choosing to build a meaningful company that improves people’s lives. And so, a headwind is turning into a tailwind: green is moving from niche to mainstream; the word no longer needs to be phrased in quotation marks. Environmentalism is an idea whose time has arrived: companies that choose to embrace it will leverage the power of consumer choice and build corporations with a conscience. Those that shun it are truly on the

wrong side of history and will be penalized by the markets, markets that are increasingly informed and empowered. Nestle Philippines, for example, initiated its ‘Greening the Supply Chain’. The program, running over the last couple of years, set out from board level to encourage business partners to adopt environmental management. The company has now recruited 55 more of its 300 or so suppliers to join the scheme. The programme aims to encourage sound environmental practices, as well as realising economic benefits. As Machiavelli, a figure from Pakistan’s own Taxila-sprung ‘Ardh Shastrae’, said, “He is prosperous who adapts his mode of proceedings to the qualities of the times”. But whose times? It is up to us to define our times. 150 years ago American Calvinists said, “Business is about making money, and life is about doing good, and the two are not mutually exclusive”. It is key for tbl readership to analyse and apply the business values both in our cultural and religious heritage. Indeed, there is nothing new except that which has been forgotten.

about the writer Adrian Saker is one of New York’s leading art directors. With over fifteen year’s experience on a who’s who of blue-chip brands, he's worked in every category and business sector. Adrian holds a BA in Art & Design from England’s Brighton University.

www.triplebottomline.com.pk

breather

Done with my corporate social “responsibility for the entire year. ”

the first prize in our Annual “CSRAndAwards goes to Banana

Corporation, who coincidentally happens to be our lead sponsor.

”

“

Gentlemen, this company just cannot ignore CSR anymore. As CEO, I am pleased to announce that the management is freezing all salary raises this year. This will give us more cash flow to put into our CSR programme, starting off with a visit by your CEO to some countries this summer to study the CSR models there.

”

Jan / Feb 2008

29

mainstreaming csr

essential csr by glenn schloss for tbl

long-running debate about A the purpose of business has exposed some of the differences

between Western and Asian approaches to corporations. While the Western model has long focused on creating shareholder value, companies and governments in South Asia, including Pakistan, have tended to agree - but also emphasise their contributions to development of societies, economies and nations. Somewhere between these distinct approaches of what the late economist Milton Friedman described as “the business of business is business” and the developmental mode of capitalism lies a unique opportunity for South Asian and Pakistani companies. This approach will guide the most successful Asian companies in embracing corporate social responsibility (CSR). Assessing True Economic ‘Cost’ – and Benefit It is that the simple business of doing business is ultimately good for society because of the economic impact its products and generated revenue have on individuals and groups as well as creating wealth which rolls out in waves across the community. Taken to its logical conclusion, this approach to CSR is highly attractive to companies for one simple reason: it is good for business. However, in order to embrace true CSR, there are important steps companies need to take that require them to go far beyond the

30

assertion that simply by engaging in business they are helping the community. Companies have been engaging in business for hundreds of years while the past 60 years have seen a massive increase in competitiveness and emergence of a global economy. As well as creating massive amounts of personal wealth, and generating economic prosperity, companies have also wreaked an untold amount of damage on communities, the environment, and political systems. India and Pakistan have first-hand experience of the impact of rapid industrialisation with little thought for the social and environmental costs. The rapid pace of industrialisation exacerbated by a lack of proper infrastructural or regulatory systems in these

countries has led to adverse environmental impacts and stretched socio-economic disparities. Management should be acutely aware of the impact – both positive and negative – its activities will have. Companies must be prepared to abandon activities when the damage, hence ‘cost’, would be too great, modify when the risks outweigh the benefits for the community and consult with external stakeholders when undertaking any project with the potential to impact other parties. Asia

Mainstreams

CSR

The notion of Corporate Social Responsibility has entered the mainstream in industrialised countries. According to a KPMG www.triplebottomline.com.pk

survey, in 2005, 52% of the world’s 250 biggest companies issued separate CSR reports. As CSR embeds itself in the operations of leading companies around the world, an increasing number of companies in Asia are embracing the need to ensure activities are ethically sound – and beyond. They are also seeking to engineer projects which provide win-win situations for companies and stakeholders. Global social and environmental concerns such as climate change, poverty alleviation and labour rights are increasingly driving corporate strategies of firms operating in Asia. The reason is simple: forces of globalisation, political liberalisation, rise of digital and aggressive media as well as the emergence of NGOs in Asia are forcing companies to become socially responsible. Those that fail to do so will be punished by communities, purchasers, media, governments and, ultimately, markets. At a fundamental level, CSR is all about stakeholder relations; managing an effective communication and outreach programme; and providing feedback that truly impacts operations in the most positive way. The areas which comprise the most commonly discussed components – environment, labour, social impact – should all be addressed by genuine and professionally-operated communications programs. The drive across Asia towards freer markets and more responsive forms of government has been accompanied by an increasingly aggressive media and the proliferation of nongovernmental organisations (NGOs) which are placing corporations under the spotlight. Such scrutiny is not welcomed by most companies operating in Asia. Entrepreneurs and Jan / Feb 2008

professional managers running corporations in the world’s fastestgrowing economic region have traditionally preferred to focus on the business of running a business. Romancing the Stakeholders This new trend will require businesses in Asia to reorient their adversarial views of stakeholders such as media and NGOs to an approach based on partnership and relationship-building. Those that succeed in making the shift can look forward to a newfound influence and ability to set the agenda with important partners. Those that continue with the patterns of the past risk being locked into a pattern of conflict and waning power to affect the wider issues confronting their businesses. This stakeholderoriented approach to CSR provides dialogue and the basis for a genuine partnership. Media have become more aggressive in reporting the performance (and problems) of companies. At the same time, NGOs are operating in freer environments, particularly when monitoring business. Even in those places where political devolution does not fit the We s t e r n - t o u t e d m o d e l o f democracy, there is a willingness to allow business to be subject to greater levels of scrutiny, especially when management is found to have harmed consumers, engaged in corrupt practices or excessively harmed the environment. This trend has prompted some analysts to speculate that authorities are prepared to tolerate such scrutiny not only as part of the rise of market forces but to relieve various pent-up frustrations within the system through the “letting off of steam” through media and NGOs. Multinational corporations have played a key role in localising this global trend on the continent.

Adopting practices from the West where a free media, a multitude of NGOs including consumer advocacy groups, trade unions and crusading politicians have forced companies to hone their skills in dealing with interests they represent, MNCs have been fostering corporate Asia’s engagement with stakeholders. So proficient have some large Western multinationals become at managing these outsiders in their home markets that they now base entire corporate affairs strategies around stakeholder groups. Similar strategies, adapted to local conditions, are being rolled out in Asia. Key to effective CSR and management of stakeholder relations is identifying the various external (and internal) groups that have the power to affect not only a company’s business but also its operating environment and regulatory framework. Once those parties have been identified, they need to be prioritised and their interrelationships explored to better understand how, those who appear to be disparate groups, actually interact and influence each other behind the scenes in society. CSR is essentially a longer acronym for business acumen. Any business which ignores the community and groups which have the most power to boost or wreck their prospects is ignoring one of its key opportunities and responsibilities. And the stakes have just become much higher in Asia.

about the writer Glenn Schloss is Hill & Knowlton’s Regional Director for Corporate Communications, Asia Pacific.

31

his

on

social partnership

s

ti

ar

fo u nd

a

Hisaar Foundation

a foundation for water, food and livelihood security

by zehra qadir for tbl

Pakistan has more extreme H weather events than it did some

ave you noticed that

raising awareness about such issues.

years ago? That droughts and floods have become more frequent? Did you know that per capita availability of water in Pakistan has gone down so sharply, that Pakistan is now classified as a water scarce country? Did you know that the poor in the city of Karachi pay 12 times more for water than those who get water supplied through pipes, and that less than 2% of the sewerage and effluents generated in Pakistan are actually treated before being dumped into rivers, canals, lakes and the sea? Is there anyone out there who cares?

Hisaar Foundation, a non-profit organisation, originated in response to the severe drought that gripped parts of Pakistan in 1999 and 2000. Simi Kamal gathered a small group of citizens in Karachi and launched the Pakistan Drought Appeal. This campaign raised Rupees one crore worth of food, water, medicines and other essentials in cash and kind within three days, and had collected a month’s supply of food within 48 hours of its launch. During the early p h a s e s o f i ts w o r k , t h e Foundation engaged in two other major fundraising campaigns and hands-on relief and rehabilitation programmes (Citizen’s Appeal for Afghan Refugees and Appeal for Earthquake Relief and Rehabilitation), and continues to raise funds for causes related to helping people affected by climate change, earthquakes, waterrelated calamities such as droughts, food shortages and other situations related to survival and livelihood.

Hisaar Foundation – a Foundation for Water, Food and Livelihood Security, does care and has been working on these issues since 2000. “We believe that the rational management and conservation of water, long-term food security and lack of opportunity for all Pakistanis, 80% of whom rely on agricultural production to earn their livelihoods, are Pakistan’s biggest problems today. However there is little critical thinking or forward planning to address these issues by the government, civil society organisations and the media,” says Simi Kamal, Founder and Chairperson of Hisaar Foundation. Development and success of water conservation programmes requires the involvement of all stakeholders, including policy-makers, serviceproviders, consumers, media, community leaders and so on. The media has a crucial role to play in educating the public and

32

The Foundation has now developed into a unique institution that provides a platform for bringing together issues of water, food and livelihood and seeks solutions pertinent to dealing with this water-food-livelihood nexus in an integrated manner. Its vision is a Pakistan where water is judiciously used, food is sufficiently produced, and people are able to earn livelihoods with dignity. Its organisational goals include advocacy and awareness-raising among all

sectors of the society about conservation, management and recycling of water, better agricultural practices and less wasteful consumption of food and water. Hisaar Foundation is also working on solutions within the geographical, environmental and social framework of Pakistan that meet the needs of people while preventing long-term depletion of water and food resources. Within this framework the foundation runs the following initiatives and programmes, with a special focus on women and children: Women and Water Network Women Support Programme in earthquake affected areas of Azad Kashmir Karachi Water Partnership BioSand Filter Programme (for low-cost safe drinking water at point of consumption) Water Systems in drought prone areas of Thar Livelihood Rehabilitation, Nutrition and Health Support Programme in Badin Academic and Media Engagement, Orientation and Education Programme The Foundation is also a member of several international water-related and civil society organisations and collaborates proactively with them for the promotion of Integrated Water Resources Management, water conservation and environmental www.triplebottomline.com.pk

issues. These include the Global Water Partnership, CIVICUS, Pakistan Water Partnership and Pani Pakistan. Hisaar Foundation is not a foreign-donor funded servicedelivery NGO that does typical project funding for aid money. Hisaar Foundation has a unique development model and it raises the bulk of its support from individuals and institutions in Pakistan. “We have raised the rupee equivalent of approximately USD one million in cash and kind since 2000, the bulk of which has been contributed by the public in Karachi. This city has a heart of gold, and we will continue to raise support for our work from both individual and corporate citizens of Karachi. Increasingly we look to our work being supported through corporate social responsibility,” says Simi Kamal. Hisaar Foundation is governed by its members and an elected Board of Governors led by a chairperson, all of whom give time to the foundation’s work on a voluntary basis. Governors provide immense support and each programme has a separate programme committee headed by one of the governors. Management decisions are taken by the chief executive who is also currently working on a voluntary basis. This voluntary spirit and concrete contributions from members and governors is another unique feature of Hisaar Foundation. Currently, the Foundation is housed within the business offices of two council members, while legal, media, management and fundraising support is provided by the offices of four other council members and governors, all free of charge. Hisaar Foundation’s biggest and most challenging initiative to date is the Karachi Water Partnership (KWP). The project aims to support the development of an environment friendly Karachi with focus on safe water, conservation and management of sewage, industrial and solid waste. KWP was launched on 26th April, 2007, with an open call for partnership. Jan / Feb 2008

KARACHI WATER PARTNERSHIP MODEL Key Issues & Challenges

Strategy Establishment of independent KWP Government & stakeholders working together Focus on behaviour change Target advocacy programme for citizens & stakeholders Sharing experiences, information & technologies Providing international & regional linkages

Declining Water Quality & Supply Absence of Focused Strategy for Wastewater Poor Planning in Water Conservation Measurements

Sufficient safe drinking water for all

KWP Programme

Short & Long-Term Water Fact Institutional Development & Partnership Building Solutions for Integrated Water Resources Management

KWP Approaching Partners Stakeholders NGOs, CBOs, Industry, Academia Institutions, Public & Experts

KWP

Results

Government

Cleaner & greener city Integrated water resources management Citizen & stakeholder ownership Alternate solutions for industry

Citizens of Karachi

Information-based decision-making

International Linkages

GWP

AWP

“Our view is that water is everyone’s business, and each individual and group has a responsibility in conserving and managing water, sewerage and solid wastes, to make this city livable, and leave a legacy for our children that is not an environmental disaster,” says Simi Kamal. This is the first initiative of its kind, where improving the environment of a city of 16 million people is being attempted to the building of a partnership that brings together government institutions, industries, corporate sector, municipal authorities, businesses, civil society organisations and individual citizens, all on the same platform of action. KWP serves as a catalyst for all these groups to come together and ensure a healthy, clean and green Karachi in the long-term. To-date, KWP has over 200 partners, each of whom has made a contribution in cash, kind or time for promoting and actually carrying out the work of KWP. The initiatives and programmes run by the management committee and subcommittee members of KWP demonstrate its commitment to social responsibility. They have water saving and recycling systems and processes in their homes and offices, and promote these methods among other companies and institutions. KWP circulates guidelines in English and Urdu for conserving water in homes, offices and schools. Guidelines for industries and public spaces are being developed. KWP works

Pani Pakistan

closely with the Karachi Water and Sewerage Board and is in the process of initiating work with local government institutions. Current projects of KWP include a school advocacy programme (including children becoming “water detectives”); an experimental BioSand filter programme; a public awareness campaign through print, film and broadcast media to inform all stakeholders of the seriousness of the water crisis; developing and promoting innovative and successful solutions for a coastal city; defining the role of different groups of citizens; providing citizen-based guidance; and an annual Water Forum. Becoming a partner of the citywide multi-stakeholder KWP Forum has numerous benefits for companies and businesses. This forum can be used as a means to collectively disseminate knowledge and research related to solutions for water, sanitation and solid waste issues. Guidance and media support to promote water conservation and better water management can be obtained. Experts are also available to give talks, carry out water audits and give advice. There is an ongoing dialogue with the city government and the private sector. The KWP Forum provides an opportunity to a diverse group of stakeholders to share their valuable experiences. For more information on Hisaar Foundation please see www.hisaar.org

33

book in focus

corporate social responsibility doing the most good for your company and your cause by philip kotler & nancy lee by dilawar hussain for tbl

across the world corpoA llrations are learning and

perhaps the hard way - that success and failure is measured not just by how much money they make in terms of profits, but also by how much effort they make to stand up to their social responsibility as a "good corporate citizen". Corporate Social Responsibility is the buzz word in today's corporate world. But whatever is CSR? The authors define the term as: "A commitment to improve community well-being through discretionary business practices and contributions of corporate resources". The earliest impressions that the book makes on the mind of the reader is that "Corporate Social Responsibility" is not just about some kind of vague theories but supports all that it preaches with practical applications. Labelling the book as "a Bible for today's corporate citizen"- as the publisher does on the flap of the book- may be stretching it a bit too far, but "Corporate Social Responsibility", does provide thoughtful answers to a number of vital questions on how a corporation could do most good for itself and its cause. Authors Philip Kotler, one of the world's foremost voices on

34

business and marketing and Nancy Lee, President of Social Marketing Services Inc., put their heads together to come up with 25 best practices, assembled to guide decision making in the area of corporate social r e s p o n s i b i l i t y. Given the methodical explanations on how to apply theories to practice, it might just about be right for the authors to conclude: "It is in the end, intended to help maximize the return on discretionary corporate investments, resulting in efforts that do the most social, environmental and economic good". The authors hope that by applying the ideas presented in the book, business leaders would learn how to align their business goals with cultural and social ones; choose social issues and charities to support; gain employee support; implement successful initiatives and evaluate their efforts. The book includes first-person stories

from twenty-five business leaders of the business world's most admired companies. One corporate executive expresses his appreciation of the work by stating: "Corporate Social Responsibility makes a compelling case that corporate community engagement and maximizing profit are not mutually exclusive, but rather mutually reinforcing". The thrust of the opening pages identify six major initiatives under which most social responsibilityrelated activities fall. These www.triplebottomline.com.pk

include cause promotions; causerelated marketing; corporate social marketing; corporate philanthropy; community volunteering and socially responsible business practices. These six corporate initiatives are individually and elaborately discussed in the later chapters, all of which are condensed in the overwhelming idea of the book, namely: "How to do the most good for one's company as well as for a cause". The authors also caution against "potential concerns", which in no way means to discourage the cause, but to identify and reflect upon that side as well. The book does not leave the readers in the dark but also leads them to "key to success" by citing examples of how corporate giants such as Microsoft; IBM; Body Shop; Ford Motor Company; H e w l e t t - P a c k a r d , Shell Australia, Cisco, Coca-Cola, Motorola and scores of others were able to ride out the challenges. Few of the top names on Fortune 500 may have been missed, where examples are concerned, which shows the amount of research that the authors must have done. In a book, which essentially must be dry for a reader, there are spots of good humour. In regard to one of the six initiatives, the authors remind the reader that historically, companies' educating campaigns have reflected the founder's social consciousness and have been considered controversial by some, funny by others and inspiring to many. The book mentions a Cole Jan / Feb 2008

Corporation advertisement in late 1980's which read: "Our shoes aren't the only thing we encourage you to wear". And those words are accompanied by a graphic of a condom! The book proves to be a professional and practical work of people who understand the subject and know how to convey the ideas. In writing the book, the authors have in mind corporations and their communication agencies and foundations and public sector agencies seeking corporate support and partners for social initiatives. It is intended to guide decision making for corporate managers and executives; besieged on a daily basis with requests and proposals for support of social causes. For corporate executives who understandably are busy-bees and may not be able to turn over each of the 307 pages to read the book, the authors have thoughtfully provided a couple of paragraphs of "summary" at the conclusion of each chapter. The final chapter of the book lists ten recommendations under the head: "A Marketing Approach to Winning Corporate Funding and Support for Social Initiatives". These provide valuable guidance to corporate executives of all ranks and file.

“

For many years,

community development goals were philanthropic activities that were seen

as separate from business objectives, not fundamental to them; doing well and doing good were seen as separate pursuits. But I think that is changing. What many of the organisations that are represented here today are learning is that cutting-edge innovations competitive advantage can result from weaving social and environmental considerations into business strategy from the beginning. And in that process, we can help develop the next generation of ideas and

about the writer Dilawar Hussain is a senior reporter working for Pakistan's largest circulated English daily, The "Dawn". He has 23 years of experience of writing for local and foreign publications. His scope of interests include the stock markets, corporate sector and country economics. Holder of Masters degree in Journalism, English and Accountancy from reputed institutions in Karachi.

markets and

”

employees. Carly Fiorina

Excerpt from Chapter 1.

35

evolution of csr

the rise and rise of

csr

by michael hopkins

“

An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.

”

Evan Esar

hat has happened to CSR W since I started working on the subject over ten years ago? My involvement with CSR was stimulated by the feeling that the public agencies with which we had worked – ILO, UNDP, World Bank etc. – had done many wonderful things in the area of development (and better publicised, some well known failures) but their efforts have not been more than a drop in the ocean. After leaving a meeting at UN H.Q. in New York, I felt that the UN was getting nowhere fast and that, as the new millennium was five years away, it was clear that the next millennium would be handed to the private sector. Not without challenge nor doubt, but the private sector has, and continues to, show a robustness and vibrancy that, unfortunately, our public sector agencies both nationally and internationally have failed to show.

36

We have seen both Microsoft and then Google innovate at an amazing pace. The UN has offered us the Global Compact, the MDGs and ILO core labour standards. Not to be sniffed at, but all proceeding at a snail’s pace. Fifteen Key Items There are at least 15 key items on the CSR agenda that we have seen develop over the past ten years: 1. C o r p o r a t e s c a n d a l s Certainly CSR was not a new issue in the mid 1990s, for concern over social issues in business had gone back as far as Adam Smith and even before that with the South Sea Bubble. However, the mid 1990s saw an upsurge in interest as the public sector involvement in key industries fell away, particularly after the collapse of the Soviet Union, and as a crop of corporate scandals hit the headlines – the Ken Saro Wiwa affair that severely affected Shell’s international image was perhaps the watershed. 2. Terminology still unfocussed We had hoped that there would be a convergence on terminology so that we would, at least, know what we were talking about. However with the brief dominance of the term CSR in the early 2000’s, the terms corporate responsibility (CR) or corporate sustainability (CS) have tended to dominate in corporate circles. And what

is meant by CSR has led to some form of convergence – the social responsible treatment of stakeholders is accepted, environmental concerns are still very prominent but come under the heading of corporate sustainability. Yet issues such as corporate governance have remained firmly in the hard nosed business camp and are not often treated along with CSR concerns. 3. The stages of CSR (We continue to use the term CSR since leaving out the word social de-emphasises social issues). In the past ten years we seem to have followed the classical route of the introduction of a new technology – innovation, diffusion (through writings, discussions, seminars etc.) and implementation which is just about starting particularly in Europe. The USA is behind the European trend as is Japan. There is much interest in CSR in the developing world, especially India and South Africa even though few major corporations can be found with their headquarters in the developing world. 4. CSR reports CR or sustainability reports are now produced regularly by the major corporations in Europe and the USA, and there are signs that companies in middle income developing countries are producing CSR reports. There has also been a move away from printed material www.triplebottomline.com.pk

into web-based reports. 5. There are now many newsletters and newsgroups covering CSR from the very popular Yahoo group CSR-chicks that fostered CSR-blokes and regional newsgroups, to Ethical markets, Csrwire, Ethike, Ethical corporation, Ethical performance, and a whole host of regional newsletters such as CSR Asia, Philippine for Social Progress etc. Although there is now too much information to read, if one has the time, it is gratifying how much ‘good’ stuff there is about on companies and their performance, as well as the main actors in the field. 6. Few new laws have entered the arena directly related to CSR which was one of the concerns of market capitalists such as ‘The Economist’ and some ‘Financial Times’ correspondents. However, closely related was the Sarbanes-Oxley law covering corporate governance which has had the unfortunate effects of raising the costs of reporting and reducing the number of new flotations on the New York stock market in favour of slightly more liberal regimes such as London. 7. Accounting standards There has been a growth in ‘voluntary’ accounting standards for CSR – AccountAbility, for instance, with its AA1000 and then Alice Tepper Marlin’s SA8000, standards. Both groups, incidentally, steadfastly refuse to use the term CSR. In the pipeline is also a standard (ISO 26000) on Corporate Responsibility coming from the International Standards Organisation (ISO) based in Geneva. Corporations, however, have noticed that observing CSR does not Jan / Feb 2008

mean just ticking a set of boxes – the approach is more complicated and cannot be covered by legislation. 8. The Global Reporting Initiative (GRI) that emerged from the environmental movement CERES is still stronger on environmental concerns than social and economic but has had a major impact on the social reporting of companies who try and follow GRI guidelines both for reporting and for the production of very useful indicators. Certainly measurement has improved enormously over ten years when, in 1995, I had to scrape to find social indicators on companies. 9. Government has got into the CSR act, particularly the UK which has a lively website promoting CSR and also appointed a succession of CSR ministers who, unfortunately, don’t seem to do very much. Even the USA has haltingly produced a report on CSR and what Government can contribute after ignoring the field for many years. 10. International governmental organisations – European Union, World Bank, UNDP, IDB – being the most prominent. My previous employer, ILO, has gained prominence through the application and citation of its core labour standards but has no policy as such on CSR due to in-house in-fighting between workers, government and employer organisations (most notably the appalling IOE, International Organisation of Emplo-yers). The EU, in particular, has done good work in funding CSR initiatives all over Europe although my own personal experience shows that its bureaucracy needs a

lot of patience to work with. 11. N o n - g o v e r n m e n t a l organisations have grown in number by leaps and bounds from Tomorrow’s Company and SustainAbility in the UK to the Center for Social Markets in India, Ethos in Brazil, Philippine for Social Progress in Manila, Triple Bottom Line in Holland, Business Ethics in USA etc. 12. Third world development More and more companies are adding third world development to their CSR activities and, Type III development activities are rapidly increasing. There are three main types of development activities – Type 1: Development philanthropy, Type 2: Assisting developing countries purely through housing local operations there and Type 3: Development a s s i s ta n c e a s pa r t o f reputation building which, in turn, is part of CSR. 13. Finance centre scepticism As CSR has grown in prominence, at least in its various manifestations, the right wing so-called ‘think tanks’ have been arguing that profit maximisation should be the main aim of business while remaining within (more or less) the confines of law. Simply put, they argue that CSR simply adds costs with no immediate benefit to profits. Yet, the business case for increased profits through increased reputation, lower risk that come hand in hand with CSR have been ignored by the right. Despite the growing evidence that ‘ethical corporations’ tend to do better on average in terms of share price, Wall street turks and their mirror image in the major financial centres of London, Frankfurt, and Tokyo still claim not to understand what CSR is all about as they punch

37

evolution of csr

another button flashing money around the world. 14. Academic courses Few, if any Universities had courses on CSR although some had started course on business ethics. Today, hardly an MBA is taught without at least some discussion of CS or CSR or CR university courses. 15. S o c i a l l y R e s p o n s i b l e Investment (SRI) has been the fastest growing financial instrument in the USA and Europe financial centres over the past ten years. The strange contradiction, where the subject is ignored in the City but important to investors will, undoubtedly, change in the coming years. As better educated graduates enter investment houses, and as the investment record of SRI’s is better known, the right wing think tanks and their aficionados in the City and Wall Street will soon be barking up the same tree. What is the Future for CSR? And what will happen with CSR in the future, at least the next decade? Will become embedded There is no doubt that CSR will become embedded in a company’s culture and organisational profile to such an extent that it will not be noticed, explicitly, anymore. There is also not much doubt that the phrase CSR will disappear but the sentiments behind it will be in place. The area of business and society will continue to be one of great debate, and the corporation will certainly change its form. I would hazard a guess that the private sector will still flourish as far as the next 50 years ahead but its power will be very much controlled as our own personal liberties also, unfortunately, become, more controlled. No need for exit strategy There will be no need for a

CSR exit strategy simply because business will only survive if they can show, and be evaluated to show, a clear social responsibility in their continual treatment with their stakeholders. An exit strategy will not be required simply because social responsibility will just be part and parcel of normal business practice. Major inroads in developing countries CSR will continue to make inroads into developing countries, particularly through the main suppliers to the large corporations in the developed world, but also because developing country people will not suffer corporations that have no connection with local cultures and aspirations. SMEs will have CSR CSR will extend to SMEs through rapid assessment and implementation tools. Companies cannot ignore global concerns Companies will grapple with the big issues simply because they see failure as bad for business. Under-development, labour exploitation, curbs on migration, global warming, trade barriers, global terrorism are all major challenges for Governments and corporations. We already see signs of these increasing concerns for corporations at the annual World Economic Forum conferences in Davos. UN and third sector cooperation As companies cannot easily shape the macro agenda there will be increased cooperation between corporations, the UN and its agencies as well as NGOs, the so-called ‘third sector’ [1]. Political leadership will improve If the leadership of our nations continues to be poor – there have been very few decent leaders in the last 50 years that have combined decency with social justice (Nelson Mandela, Jimmy Carter,

Julius Nyrere, Nye Bevan, Harold Wilson and even Bill Clinton are just about all, and even those were not perfect) – then, like it or not, corporations will become even more powerful and influential. But will they be setting a coherent social agenda? Some will, some won’t but their agendas will be examined in ways hardly thought of so far today. So what is likely to happen next? Hard economics is losing way to more softer versions. Culture and ethnicity have dominated recent world events and this trend is likely to continue. Focusing on purely economic growth for countries or profits for companies will, of course, be uppermost in our leader’s minds. But the softer under-currents of change, such as CSR, will require new, inspired leadership and, as Jem Bendell puts it [2]: “Understanding power and its responsible use is probably the bedrock question underlying much work on corporate citizenship today.” And the UN? Until there is a change at the White House, the UN Glass House will remain under-funded and not able to deliver its many excellent development initiatives. Corporations…please note! 1. The Third Sector and its relation to the private and public sectors was subject to lively debate at a conference in Siena, Italy in February where the author gave a keynote speech. For more information contact us on [email protected] 2. Jem Bendell (2005) ‘Lifeworth annual review of corporate responsibility’, available from www.lifeworth.net

about the writer Dr. Michael Hopkins is Managing Director of MHC International Ltd (MHCi) and is an economist specialising in socio-economic issues. He has broad international business experience and almost two decades of action in CSR.

www.triplebottomline.com.pk

38

the eight fad tests

corporate social responsibility:

serious or just a trendy fad? by ivor hopkins you a Sceptic or a Convert A re– do you see CSR as an

expensive waste of time, a trendy option or a serious business activity? The eight fad tests: 1. Simple: “Fad concepts are easy to understand and communicate and tend to be framed with labels, buzz words, lists and acronyms.”

CSR has a fountain of labels and acronyms and this is certainly one of the major downsides in making CSR a serious management tool. During a presentation on CSR to a school, I asked the students to define CSR. Two days of discussion on CSR had opened up more issues than the students could easily summarise. Hence CSR is certainly not easy to understand! 2. Prescriptive: “Though a fad’s fundamental ideas might be sound, the need to be simple but prescriptive makes their action points easy to misinterpret or inappropriately apply.” One thing about CSR is that, although the prescription is a large one, it does not have to be taken all at once and the instructions for its ingestion are usually very clear. But, there is a view about CSR that it cannot, and should not be, overprescriptive although we have argued before that some legislation is necessary to level the playing field. 3. Falsely encouraging: “…all kinds of fads are better at raising hopes than delivering results…” ÊCSR highlights and gets to grips with major corporate issues. A company focussing on CSR is usually doing so not only because it is convinced of the tenet “Doing well by doing good” but also because the management is aware of risks highlighted by its stakeholders. 4. One-Size-Fits-All: “Fads claim universal relevance, Jan / Feb 2008

proposing practices that adherents say will apply to almost any industry, organisation or culture…” That CSR can be addressed by any size of company from trans-nationals to SMEs is true. Yet the needs of these companies, as well as the scope for CSR, differ so their CSR engagement has to be tailored accordingly. 5. Easy to Cut-and-Paste: “Because fad management ideas must be simple and easy to apply, they’re amenable to partial implementation.” The beauty of CSR is that a company can test the sustainable waters before going for a paddle and way before considering total immersion – you can start with partial implementation. But, CSR is a process: two things will ensure that the CSR activity is not tossed aside like a fad: one, the benefits of CSR will kick in (for example, improved recruitment) and second, increased stakeholder engagement will fuel the engine of CSR involvement. 6. In tune with the Zeitgeist: “Because fads focus on the concerns of the moment, they tend to apply to a few specific issues rather than addressing the fundamental weakness or soundness of overall business practice.” CSR focuses on modern business weaknesses be they in human resource management, corporate governance or in environmental policy. No one would disagree that each one of these is a key issue: CSR does not duck them. Further, a thorough dialogue with a firm’s stakeholders will draw out all problems and concerns not simply the topical or petty ones. 7. Novel, not radical: “..their freshness is often superficial, and, as such, fads don’t unduly challenge basic managerial values.”

CSR has strong historical roots, whether you look as far back as Greek Ethics or Victorian Corporate Philanthropy, so the concept is hardly novel. CSR does ask awkward questions and argues for change so if the will is there at CEO level then real strategic and sustainable change can take place. 8. Legitimized by Gurus and Disciples: “Many fads gain credibility by the status and prestige of their proponents or followers, rather than through empirical evidence.” The fact that governments, universities, businesses, NGOs, and other associations are running with and promoting CSR is a sure sign that there is more substance here than snake oil. Innumerable social reports show faith and speak volumes. There are books by an increasing number of CSR specialists. CSR is also an issue that is increasingly being given an airing in the media. In their review of fads and management classics, Miller and Hartwick comment that “if a management approach shares most of the fad features described here, beware. If it looks too simple to work, it probably is.” And if you are still not convinced by this article that CSR is not a fad but a real management tool, then you can base your continuing research on Miller and Hartwick’s closing paragraph: Does the approach have a track record for performance and measurable outcomes in similar companies facing similar challenges? Does it address problems or opportunities that are high priorities for our company? Are the changes it would require within our company’s capabilities and resources? Yes answers to these questions suggest an approach likely to pay off and endure.

about the writer

Ivor Hopkins is Director and Partner of MHC International Ltd (MCHi), and is a marketing specialist for CSR issues.

39

musings

do you

speak my language? by praetor for tbl

here was a time when some corporate executives in any T organisation would manage to

get by in their jobs year after year and get promotions too, all with very little effort or real work being done. They had perfected an art called LBDN: Look Busy Do Nothing. Cluttered desks, sleeves rolled up and tie loosened, long telephonic discussions presumably with clients and so on. A behaviour repertoire carried out with precision and great conviction worked wonders and while the nerds in the office, poor souls, slogged silently to ensure year-end profitability, the yuppie executives stole the limelight and caught the management’s eye. Not so any more though. Structuring of executive functions and HR practices has meant that those who do not genuinely deliver are soon caught out. So if everyone in the organisation has to deliver, how to stand out and be recognized? Well, you just need to speak the right language! Corptalk. Corptalk is a language that no ambitious executive can afford not to learn. Know it well and you are soon considered an authority on almost anything. Your peers look up to you and the management regards you as very promising and the one to watch. Clients are equally impressed and all in all it is almost as if you are back to the good old Look Busy Do Nothing days! So what exactly is Corptalk? Well, to give you an idea, here is a conversation between a blueeyed executive, a Corptalk expert

40

– let us call him John – and Aesop, a fresh business graduate who has just joined the company. The company has assigned Aesop to work under John and John wants Aesop to know who the boss is from the very start. So he goes into Corptalk to impress the pants off him. Now something that may have worked well with a client just doesn’t cut ice with Aesop, as he is not at all familiar with Corptalk. And as the conversation progresses he gets increasingly confused and yes, scared! So here is how the conversation goes: John (after explaining a point to Aesop in doublespeak): I hope you are getting the joke. Aesop: I am not sure. I didn’t know you were joking. John: Hey, it seems we are not on the same page. Aesop: Which page? Which book? John: Come on man, do you not know where I’m coming from? Aesop: Yes, I do. I remember. You come from this very city, don’t you? John: No, no! I mean yes, I am from this city but that is not what I was talking about. Aesop: Sir, I think I am confused now. John: Okay, no issue. Let me bring you up to speed. Aesop: I don’t do drugs. John: Drugs? Who said anything about drugs?

Aesop: You did. John: Okay. Forget that A-SAP. Aesop: It’s Aesop, like in Aesop’s Fables and not A-Sap John: What? You are really not with it, are you? Will I have to go the full nine yards? Aesop: I am sorry, are you going somewhere? John: For crying out loud. I think we need to take some baby steps here. Aesop: John I am feeling really lost here. Where did the baby come in and why is the baby crying out loud? John: Because, you moron, you are just not synergizing. Aesop: What do you want me to do? John: Leverage this opportunity man, that’s the bottom-line. Like, let’s decide the action items, follow the 80/20 rule, derive maximum mileage 24/7 and get results fast. Like yesterday. Aesop: I think you don’t like me. This is my first day here, so to start with I don’t know anything about yesterday. I don’t think it is fair to ask me about yesterday. John: Okay, forget it. Let’s revisit the drawing board. Aesop: Yes, let’s do that. Where is the drawing board? John (takes a deep breath): You have lost the plot haven’t you? Never mind. Do you know how to make a cup of coffee?

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