Doing Good, Doing Well

CSR Global Summit 2009

One might say that, in Malaysia, most people think being socially responsible for businesses means apportioning part of their profits towards some worthy cause. Those who have this view would have been confused if they attended the CSR Global Summit 2009, held in Singapore on 13th and 16th January 2009.

Organized by Pinnacle Group International, the event was for senior management, public relations, corporate communications and human resources professionals to learn more about strategies to enhance their CSR efforts.

What was evident from the get-go was that CSR, as most practitioners see it, encompasses far more than just generous donations. A conscientious corporation behaves responsibly from the beginning of its processes to the point it when it withdraws its profits for distribution, and beyond!

Dr Geh Min, the immediate past President of Singapore’s Nature Society, opened the conference with colourful analogies from her experience with the human anatomy. She pointed out that behaving in a responsible manner is fundamental to the health of a business, and not cosmetic application. She also noted that the only kind of cells that grows at all costs is the tumour cell, which eventually destroys itself. Likewise, she believed that corporations should, not only stop looking at profit at all costs, but go beyond the triple bottom line (profit, people and planet) in the future.

CSR reporting

The first day of the conference had a few talks where speakers attempted to define corporate social responsibility, perhaps in order to define the parameters of what a business is obligated to do (and by implication what it does not need to do), or perhaps because there are quite a number of definitions for CSR.  Founder and Managing Director of OWW Consulting Malaysia, Dr Geoffrey Williams, succinctly stated that

A responsible business finds out who its stakeholders are, what they want, and deliver it to them.

Dr Williams pointed out that this is the new management paradigm that businesses need to consider. Founder and Managing Director of Counterpoint Professional Services Malaysia, Steve McCoy, agreed with Dr Williams, adding that structural changes need to take place within the organization, and that CSR is not merely a matter of good intentions.

In fact, all the speakers agreed that CSR goes far beyond good intentions, and underpins all of a business’ processes. And, as pointed out by Professor Dr Mustaffa Mohamed Zain (see earlier interview), businesses should publicize their CSR efforts.

Aside from Professor Dr Mustaffa’s reason for reporting (to encourage others), Dr Williams stated that reporting is essential, otherwise no one would know a company’s standing in relation to the CSR efforts it has made. For example, Dr Williams displayed a chart showing the position of each country’s CSR standing, with Singapore generally ranked on the lower end. However, Dr Williams believes this is not because Singapore’s businesses are not behaving responsibly, but because they fail to report their behaviour successfully.

The reason why reporting needs to be done, aside from encouraging others and being ranked (i.e. the competitive component, which businesses cannot run away from in this day and age), is for investment purposes.  New ethical funds are approved all the time, and the fund managers need to know how ethical, responsible and green a business is, before it will invest in it. Furthermore, a country’s ranking will give fund managers and investors indicators as to where to place their money.

Aside from this, Dr Williams also said that the best way to attract and to keep employees (and investors) is to tell them about how the business is behaving responsibly. Furthermore, most times the failure to tell stakeholders might lead to the assumption that there is something to hide. UN PRI UK Executive Director, James Gifford, gave pointers on the principles of responsible investment (PRI), where he likened businesses to fiduciaries for its stakeholders and investors.

At the end of the day, Dr Williams noted, CSR increases revenue, decreases costs and therefore decreases risk.

Pressure points

Edelman Group’s South East Asia Managing Director, Robert Grove, stated that businesses are under pressure from three sources:

• Non-governmental agencies (NGOs)
• Labor / Employees
• Consumers

In fact, Grove pointed out that consumer activism is at an all time high. Perhaps, the CSR Digest notes, this can be seen in the recent conviction of perpetrators of the melamine poisoning scandal last year. In addition to this, fifty percent of employees would not want to work for an employer they did not trust. According to Grove, the workforce is doing its own due diligence on potential employers, made easier by websites like Glassdoor.com.

Grove also stated that IBM allows employees to spend ten percent of their working time on causes close to their hearts. This was explored by Steven Davidson of IBM Global Business Services Hong Kong on the second day of the event. Davidson explained IBM’s perspective when it comes to CSR and the workforce:

• CSR leadership attracts and retains top talent
• Employee involvement in CSR strategy leads to more and better solutions
• Employees involved in CSR objectives are best able to capture emerging customer expectations

While many corporations take a top-down approach when it comes to employee engagement, Davidson believes that CSR initiatives usually come from the bottom up. In fact, the program that allows employees to utilize ten percent of their time in their preferred causes benefits IBM. For example, when an employee decides to work in a HIV-related cause in South Africa, IBM eventually learns more about that emerging market. If the company were to decide to penetrate the market, it has personnel who have ground-level knowledge of the country and its workings.

Laws, soft and hard

IBM’s Davidson stated that his company believes that it is better to be open  than to be pried open. According to Davidson, stakeholders are now the brand managers for businesses, stating that all it takes is a photograph of one wrongdoing sent to a pressure group to cause great damage to a business’ brand.

With an estimated one billion camera phones worldwide, it takes  just one to cause negative impact to your company’s reputation, and with the world growing smaller, and the advent of Web 2.0, not just the products and services of a business, but its operations, suppliers, and partners are wide open to scrutiny.

On this note, Managing Partner and Head of the Corporate and Securities Law of KhattarWong, Tan Chong Huat, believes that soft laws, or guidelines, rather than hard laws, or legislation or case law, works best for CSR. Aside from the pressure points faced by businesses, Tan believes that fossilizing CSR into hard laws might cause unnecessary demands on a business.

Michael Chiam, Malaysian Mirror Committee of Social Responsibility Member, Nominated Expert for the Industry Stakeholder Group and Malaysian Employers Federation Council Member, opined that, on some occasions, these international guidelines or soft laws can cause hardship on developing nations, citing the troubles faced by Malaysia’s fishing export industry recently.

Millions of ringgit worth of seafood is languishing in freezer units in Malaysia because it ‘suddenly’ does not meet EU’s hygiene and environmental standards. As such, Chiam believes that these soft laws amount to trade barriers.

Going Green

Singapore’s Vice President and Head of Corporate Communications of Lanxess, Kaye Lim, discussed how Lanxess deals with its green issues. Believing that CSR is the “next Industrial Revolution” and global megatrend, Lim pointed out some alarming environmental issues, including:

• Atmospheric concentrations of carbon dioxide are thirty-five percent higher than before the Industrial Revolution
• Currently, there are 19 megacities (over 10 mill people) in the world, with 8 expected to come into existence within 15 years.
• World demand for oil and gas will outstrip supply within 7-10 years.
• About 1.1 billion people do not have access to safe drinking water.
• World food demand will rise by 50% over next 20 years.

Lim pointed out that business opportunities arise from these trends, such as clean energy, environmental resource management, energy and material efficiency and sustainable investment and business services. Furthermore, businesses in existence can develop a competitive advantage through sustainability.

Lanxess focuses on three aspects of CSR globally. Aside from its interesting social/cultural and education/ empowerment efforts, Lanxess efforts in its processes are noteworthy. Lanxess will build a second laughing gas reduction unit (LARA) at its Krefeld-Uerdingen site, set to be in operating this year. Because of this, Lanxess will cut its annual emissions of climate gas in Germany by 1.5 million metric tons by 2012. This project will eliminate as much as eighty percent of the company’s total direct greenhouse gas emissions in Germany.

Furthermore, the chemicals group is in the process of setting up an innovative and highly efficient co-generation plant at its Brazilian site. The new plant, which will have a capacity of 4.5 MW, will operate with bagasse, a component of sugar cane left over from sugar production. Through the use of raw material, energy generation at the plant becomes completely carbon dioxide neutral.

YTL Corporation Malaysia‘s Director of Environmental Investment, Ralph Justin Dixon, explained that YTL’s CSR focus includes protection of the environment, promotion of arts and culture, and supporting education and community development. While its promotion of arts and culture and development of education and community endeavours are laudable, YTL’s environmental efforts are of particular note, especially as its business is mainly in development.

Firstly, YTL’s takes a special initiative in responsible tourism. Its Pangkor Laut Resort on Pangkor Island Malaysia is an entirely green development, from its design to the types of building materials used, to its waste disposal. YTL also has on-site ecologists at the resort, dedicated to researching the biodiversity and ecology of the rainforest, wildlife and marine life on the island, as well as running educational tours for visitors.

The company also takes measures to lessen its activities’ impact on the environment. According to Dixon, YTL works with the Malaysian Government to implement a policy of using clean fuels. Its power stations are designed to minimise impact of emissions, particularly nitrogen dioxide and its submarine pipes are extended ten percent further than required by engineering by-laws so that the ambient temperature of marine environment is maintained. Furthermore, YTL has obtained ISO14001 Certification (Environmental Management Systems) for both its power stations in 2007.

Achievements

The event also allowed businesses to showcase their achievements. Proctor and Gamble (P&G), together with World Vision International, explained how they worked together to get a special community product by P&G (which purifies water) to Myanmar after Cyclone Nargis hit the country. With World Vision having its presence in Myanmar, the product was packed, shipped to Myanmar, and disseminated more easily than it would have been had there been no partnership in the effort.

Senior General Manager of Maswings, Dr Amin Khan, talked about the airline’s endeavours aimed at the environment and the people. Mentioning that the company’s CSR tagline was “Always for the People and the Environment”, or “APE”, the company has several CSR projects, including Wings of Borneo, a project offering cheap rural flights in Northern Borneo, Wings for Children, with which Maswings offers free flights to sick children living in the Northern Borneo jungles who are in need of hospital care, and Project PINTAR, which aims to improve the academic standards of children from deprived socio-economic conditions.

On the first night of the conference, Pinnacle also organized the Gala Awards Dinner & Global CSR Awards Ceremony at the same venue, recognizing outstanding CSR achievements in the region. The categories and gold winners are as follows:

• Best Environmental Excellence Award – Kulim (Malaysia) Berhad
• Best Community Programmed Award – Globe Telecom, Philippines
• Best Workplace Practices – FedEx
• CSR Leadership Award – Merck Ltd, Thailand

Many more speakers participated in the knowledge sharing and/or showcasing of their businesses’ CSR undertakings, a list of which is available here.◊