The International CSR Summit in Singapore

By Amanda Coffin

Singapore Compact hosted its inaugural International CSR Summit at the Orchard Hotel, 6 to 7 October 2009. A participant in the UN Global Compact, this non-profit society strives to promote “greater awareness, best practices, sustainable development and excellence towards CSR in Singapore.” Two hundred and forty companies now comprise the group’s membership. The conference displayed classic Singaporean efficiency in its planning and execution, yet it was not without contention and levity.

Three hundred and fifty attendees filled the conference room as Ms. Olivia Lum (President of Singapore Compact), His Excellency Par Ahlberger (Ambassador of Sweden to Singapore) and Mr. Gan Kim Yong (Singapore’s Minister of Manpower) opened the conference. All three speakers touched upon the challenges of promoting CSR, particularly when confronted with detractors who still regard it as a distraction from their primary goal of profit. Mr. Ahlberger stressed the need to involve all stakeholders in policy discussions – from top management to consumers, from employees to members of local communities. This approach “is not always easy, not always successful,” but, he maintains, it is the only route to effective policy. He concluded, “CSR is alive and well in Singapore.”

The first session focused upon philanthropy via corporate foundations. Mr. Lee Tzu Yang (Chairman, Shell Companies in Singapore) stated that the Shell Foundation operates independently of the Shell Companies. The Foundation forms partnerships with other companies and NGOs to initiate projects with the goal of spinning them off to run independently. One such project is Breathing Space, which aims to provide 10 million homes with smoke-free stoves by 2013 with a relatively modest initial investment of USD3 mill.

During the Q&A session, a member of the audience asked Mr. Lee why none of the Foundation’s projects are based in Southeast Asia, in light of the fact that Shell earns so much revenue here. He went on to ask how much profit, precisely, Shell derives from Southeast Asia?  Mr. Lee replied that the Foundation represents only a part of Shell’s CSR endeavours. Various Shell companies have their own CSR projects as well. As to the amount of profit that the company derives in this region, Mr. Lee said that, even if he knew the figure, he would be unable to disclose it, eliciting snorts of laughter from the audience.

In the same session, Ms. Ginney Lim (General Manager, SPH Foundation) and Prof. Tan Ser Kiat (Chairman, SingHealth Foundation) agreed that the existence of the philanthropic foundations helped their companies attract and retain good staff. Employees want to work for companies that give back to their communities, they maintained, and consumers also express their appreciation for the companies’ efforts. Ms. Lim expressed her view that foundations must operate very independently of the parent companies, the foundation having a separate and unpaid board of directors and clear guidelines for addressing potential conflicts of interest.

Mr. Jonathon Hanks (Founding Director of Incite Sustainability) opened the second session, CSR Global Trends. Mr. Hanks, from South Africa, is also the Convener of the Integrated Drafting Task Force for the ISO26000 International Standard for Social Responsibility. He opened with an impassioned insistence that we are facing “increasing turbulence in society,” and “we need a regenerative economy.” The challenges facing the globe are, he stated, increasing both in scale and in urgency. For example, 40% of the world’s population (including Singapore) depends upon water from neighboring countries. Social inequality, climate change, and economic instability fuel the turbulence. “We need massive re-thinking,” Mr. Hanks declared, requiring collaboration, genuine dialogue, innovation and adaptability.

While business and the market system “have been root causes” of the problems, they are also “critical agents for change.” It is imperative that CSR becomes integral to business. The ISO26000 standard, slated for release in 2010, is not a certification standard but a set of advisory guidelines, developed by a broad coalition of industry, labour, government, NGO and academic participants. It is designed to be equally relevant to businesses of all sizes operating in all parts of the world, in all economies.

One of ISO26000’s early adopters is the ASEAN Foundation, according to its Executive Director, Dr. Filemon Uriarte. This organisation evolved from an ASEAN Summit in 1997 to act as a liaison between ASEAN and industry, and “to help bring about shared prosperity and a sustainable future” for its 10 member nations. In terms of CSR, Dr. Uriarte noted that the more developed ASEAN countries can help the members who have fewer resources. Social responsibility, he asserted, “is not a luxury for only rich countries.”

Mr. Steven Oates (Senior Advisor, International Labour Organisation) spoke about UN and other global initiatives, including the Global Jobs Pact 2009 and the Declaration on Social Justice for Fair Globalization 2008. Mr. Oates stated that the ILO is currently focusing new attention on gender equality and has recently challenged the World Bank on some of its labour standards.

A member of the audience asked the panel about the impact of government corruption on efforts to establish good CSR standards. Dr. Uriarte pointed out that ASEAN runs the gamut in terms of governments – communist states, an absolute monarchy, republics, a sultanate, (he tactfully elided Myanmar’s military dictatorship) — yet all 10 member states agreed “at least in principle” to the Foundation’s CSR Agreement. Mr. Oates remarked that “the time when industrialized nations set the standards is behind us now,” but he added that underdeveloped states are simply less able to participate or comply fully.

Addressing the topic of Strategy for Sustainability & Success, Mr. Kwek Leng Joo (Managing Director, City Developments Ltd) opened by citing examples of companies that have reversed flagging fortunes by making CSR a key aspect of their businesses: Nike, Xerox, and Walmart, among others. Each, after facing public opprobrium, has proven that CSR can be both beneficial and profitable. Mr. Kwek’s own company, CDL, invests 2-5% of construction cost in innovation, strives to use “green” methods and materials, requires suppliers to meet ISO and other standards, and releases a GRI-verified CSR annual report. He added that Singapore has legislated “green” standards for all new buildings – standards that CDL has already been meeting voluntarily, including the first carbon-neutral development in Asia Pacific, 11 Tampines Concourse.

Her individual transactions with her customers may be for small change, but Ms. Saw Phaik Hwa (President and CEO, SMRT Corporation Ltd) avows, “I touch 2 million people a day. If I do the wrong thing, I can ruin their whole day, or worst case, there could be a loss of life.” SMRT is a for-profit listed company, not a government agency. Its mission: “To be the customers’ choice.”  Although Singapore’s rapid transit provider likely feels little pressure from competitors, there was no hint of complacency in Ms. Saw’s presentation. Indeed, her speech, including her use of the first-person pronoun, accentuated both her personal sense of accountability and the impact of a strong, top-down CSR policy. SMRT has organized a range of activities to express the company’s commitment to its staff. In turn, 90% of 7,000 employees volunteer or donate to community programmes.

“More from less” is the motto at IKEA, according to Mr. Thomas Bergmark, its Sustainability Director. The popular retailer of furniture and housewares has grown from frugal Swedish roots and has never veered from its embedded CSR values. Mr. Bergmark addressed IKEA’s attention to its supply chain, customers, employees, and the planet as a whole:

• 72% of its products are from renewable, reclaimed or recyclable materials. Self-assembly facilitates recycling and reuse.
• IKEA imposes strict environmental requirements on its 1,400 suppliers, and auditors inspect them randomly.
• 50% of its products are of wood, so the company employs forestry experts to identify sustainable sources, provide training, and in some areas (including Sabah), rainforest rehabilitation.
• IKEA has begun sourcing its cotton from Indian and Pakistani farms at which water-saving methods conserve 10.2 trillion litres per year.
• 47% of the energy for company’s own buildings – stores, warehouses, and offices – is now from renewable sources, with a goal of 100% in the future.
• Last year, IKEA recycled 85% of its own waste.
• The company has contributed $180million to a joint programme with Unicef to combat child labour.

All three speakers emphasised their companies’ efforts to educate their customers. Mr. Kwek noted that CDL distributes information to its tenants and buyers on energy conservation, including a campaign to illustrate the impact of raising air-con temperatures by only one degree. SMRT organised a training episode for 8,000 Singaporeans, preparing them to respond appropriately in the event of a terrorist attack on the rapid transit system. IKEA now uses various channels to inform customers about “greener lifestyles.” The panelists concurred that most people happily make more responsible choices given the information to do so.

The focus shifted away from consumers in the next session, Investors’ Perspectives on CSR. Mr. Lawrence Wong (Executive V.P. and Head of Listings, Singapore Exchange Ltd) expressed his opinion that a company focused exclusively on profit “is nothing but a parasite”, and one which overlooks revenue in its drive to do good “is known as a charity.” Both are crucial, but sustainable success comes only with balance.

Illustrating the influence that a conscientious investment fund can have, Dr. Hans-Christoph Hirt (Associate Director & Head of European Corporate Governance, Hermes Equity Services) spoke about his firm’s practice of engagement. Hermes manages the UK’s largest pension fund – USD40 billion invested in thousands of companies, all with a long-term perspective. When Hermes senses a problem within a company in which it has invested, the firm sends staff to address the problem directly with upper management. Building upon its already significant clout in this arena, Hermes has allied itself with twelve other pension funds to increase its influence even further.

In addition, Hermes is a founder-signatory of the UN PRI (Principles of Responsible Investment) and regularly engages with legislators and regulators worldwide. One might ask why the firm does this, Dr. Hirt admitted. “It is not cheap to have 50 people going about and talking to companies.” The answer is in the management’s fundamental belief that companies which practice CSR will achieve superior long-term results, thus protecting Hermes’ investment. In contrast, Dr. Hirt cited the case of Siemens AG, which incurred a USD1.6 billion fine for bribery last year and risked losing valuable contracts as a result, all of which is distressing news indeed for investors.

In 2005, Kofi Annan, then UN Secretary-General, had a similar vision of institutional investors worldwide acting as agents of change. He convened a meeting of big pension funds to begin drafting the UN PRI. Today PRI has over 600 signatories, reported Mr. Jerome Tagger (COO, UN PRI), actively demanding more appropriate reporting and disclosure from firms in which they invest, pooling their resources for maximum influence, and agreeing to incorporate CSR issues into their investment analyses.

An attendee asked Dr. Hirt about the impact of trying to do ethical business in countries rife with corruption. The panelist admitted that investment firms have limited influence with governments, but they can press companies as tax-payers to advocate change in their own countries. Ultimately, the investor must reflect upon the advisability of operating in corrupt and unstable states.

Another member of the audience asked Mr. Wong what the Singapore Exchange is doing to promote disclosure, mentioning that the Bursa Exchange in neighboring Malaysia has now made CSR reporting mandatory for listed companies. Mr. Wong shared his view that reporting in Singapore should remain voluntary: “If we push too hard for CSR reporting, we won’t get accurate reports… When companies realise that it’s beneficial to disclose CSR activity, they will do so.” The questioner then retorted, “Singapore is a compliant society. If CSR reporting were made mandatory this morning, there would be compliance by the afternoon.” He expressed his disappointment with the panelist’s opinion, and his comments triggered applause from the audience.

This provided a fluid segue to the next session, Communicating and Branding Your CSR. Mr. Reza Ali (Head of Business Development, ASEAN and Australia, ACCA) opened with comments on the GRI (Global Reporting Initiative), stating that last year, over 1,000 companies filed GRI-compliant statements. 80% of the G250, the world’s 250 largest companies, are now filing CSR reports, and 30-40% of the reports are audited or otherwise verified. ACCA is gratified by this more holistic approach to reporting, as it is more comprehensive than numbers-only statements, Mr. Ali said. He added that companies also benefit from the analysis required to prepare the reports. As for Southeast Asia, the speaker claimed that CSR reporting in the region is increasing in both quantity and quality.

A steady stream of corporate and financial scandals has dragged the public’s trust in business to record-low levels, according to the Edelman Trust Barometer. As a result, said Mr. Bob Grove (Managing Director, Southeast Asia, Edelman), people demand more information, and technology advances are providing it to them.  People can now search Google and Wikipedia for data using their iPhones. A project at the MIT Media Lab is developing a new bar-code system which will report significant product information to shoppers equipped with a small, affordable scanner. Simultaneously, however, companies must improve their transparency and accurate reporting, Mr. Grove insists.

What’s more, they must reiterate their CSR endeavours repeatedly, as companies that have lost the public’s trust through misdeeds must work diligently to regain it. He displayed a report on Nike: Although the company has taken dramatic steps to improve its reputation after it was exposed for labour abuses, many more conversations in the public realm continue to center around Nike and sweat-shops than around Nike’s CSR initiatives. This, says Mr. Grove, illustrates the importance of keeping a company’s good deeds in the public eye.  Accurate, verified reporting is the first step. Ideally that leads to further action, and finally to advocacy, at which stage the company becomes an evangelist for a given issue.

The Summit also marked the launch of a book, CSR for Sustainability and Success, featuring the experiences of ten Singaporean firms as they have devised and adopted CSR policies. The book is available in all of the city’s major book-shops.

For more information, please contact Singapore Compact.

Tweet This Post