How corporate social responsibility can benefit your bottom line
By now, corporate social responsibility (CSR) is not only a familiar concept in many parts of the world, it has also become popular among companies in the GCC, who appreciate the fact that CSR makes good business sense.
A growing number of firms in the region are integrating social responsibility policies into their corporate strategies and managerial practices. By embarking on CSR activities, corporations can regulate how they behave as companies, as well as contribute to meeting the needs of present and future generations.
In the GCC, CSR has become a topic of great interest, but its current practices differ starkly from the West. Companies in the GCC that have started to engage in CSR activities have initially done so though corporate philanthropy or zakat. But as the concept of CSR becomes more widespread in the region, companies have been noticing the potential for forming wider partnerships with private sector players, community members, consumers and other stakeholders.
While CSR does have a tangible presence throughout the Middle East and North Africa (MENA), there are noticeable differences in how it is actually implemented. The performance of corporate governance and economic policies, in what is still a period of economic retrenchment in the GCC, has meant that countries have approached CSR from a variety of perspectives.
In each case, there is an understanding that corporate governance needs to advance from the philanthropy of the past, to foster focused policies that create growth, or at least make inroads into both private and governmental plans for social and economic change.
Speaking at the Arabia CSR Forum and Awards Ceremony in Dubai last October, Abdul Rahman Jawahery, president of Bahrain’s Gulf Petrochemical Industries Company (GPIC), said Middle Eastern companies were “well behind” and were not “doing enough to serve our societies”. Jawahery attributed this at the lack of education, without which, “there were no defined CSR policies”.
According to Jawahery, CSR activities can help enhance a company’s reputation and lead to higher profitability. “Employees who feel that they work for a reputable business will perform better”. This in turn would lead to higher productivity and better profitability.
According to a poll conducted by job website Bayt.com, in 2013, 95.3 percent of people surveyed in the MENA region say they want to do social work. For the majority of the respondents (76.8 percent), working for a socially-responsible company was a top priority. Almost nine out of 10 respondents (88 percent) said they would favour products and services from firms with strong CSR policies.
While companies are taking part in CSR activities, the region is still lagging behind other parts of the world. Saudi Aramco for one has been taking steps to develop CSR in Saudi Arabia.
The state-owned corporation has been active in developing the energy resources of the country and operating extensive networks of refining and distribution facilities. In its Corporate Citizenship Report for 2012, the energy major emphasised education as a way forward to create CSR awareness in the kingdom.
Investment in CSR activities in the MENA region has been strong over the past two years despite the recent economic downturn. A study conducted by Dubai-based Hawkamah Institute of leading companies revealed a shift in CSR budgets from mere donations to socially responsible, sustainable projects.
Regional lenders such as National Bank of Abu Dhabi and Amman-based Arab Bank ensure money goes to dedicated CSR projects. Arab Bank earmarks 3.1 percent and NBAD 1 percent of pre-tax profits for community investment respectively.
In Egypt, Commercial International Bank (CIB) has formalised its social activities, by establishing a foundation that ploughs 1.5 percent of its profits into a series of CSR activities.
Another example is RasGas, a Qatari joint stock company established by Qatar Petroleum and the US’ ExxonMobil. As part of its 2013 CSR programme, the firm implemented a ‘Year of Education Campaign’ to support long-term CSR investment in education. In January, RasGas granted funds to Sung Eun School for the Disabled in Seoul, South Korea, to upgrade sports facilities. “At RasGas, we are committed to supporting the communities where we live and work, in Qatar and around the world,” says Ali Zayed al-Marri, public affairs manager at RasGas.
Elsewhere in Qatar, Bart Cahir, president and general manager of ExxonMobil Qatar, says his company has invested in programmes that create educational opportunities for members of the local community in which they operate — such as the Qatar University ExxonMobil Teachers Academy.
Doha Bank’s approach, on the other hand, while still concentrating on education, distinctively focuses on environmental issues. With its Eco-Schools Programme, the result of extensive collaboration with Qatari national educational bodies and UNESCO, it brings key environmental issues centre-stage, allowing the creation of environmental action plans specific to each school, college or university.
Dr R Seetharaman, group CEO of Doha Bank, says the lender’s CSR programmes are part of “an all-embracing sustainability philosophy that only supports national governmental initiatives”.
The bank also has begun to support Qatari youth across several company-funded educational platforms that cultivate the growth of local talent and provide opportunities for national development.
In the UAE, Mashreq Bank has also led similar collaborative efforts, first with the Higher Colleges of Technology (HCT), to create interactive workshops for young Emiratis. Mashreq is also working together with the ICDL GCC Foundation to train nationals in social media awareness and online safety skills.
Dunia Finance is another firm focusing on education as part of its CSR programme. The Dunia Young Business Leaders Programme is a three-week summer internship for students in the region. “As the UAE looks to increasingly diversify its economy, a key national objective is to focus on talent development programmes,” says Rajeev Kakar, managing director and CEO of Dunia Finance.
In Kuwait, United Real Estate Company has developed and established a comprehensive set of sustainable initiatives to support its business. Its CSR programme engages the developer directly with the local business and educational communities in Kuwait.
According to Manal al-Mattar, public relations executive manager at National Bank of Kuwait, the lender has actively supported social and community oriented activities. NBK launched more than 150 social initiatives during 2013. Its CSR programme covers a range of education, environment, health, philanthropic, social and sports-related initiatives.
Elsewhere in the region, real estate developer The Wave, Muscat, in conjunction with Oman’s Ministry of Agriculture and Fisheries, has played a key role in supporting the fishing industry in the sultanate. In December, at least 60 purpose-built artificial reefs were placed on the seabed at 20 locations off the coast of Oman — the first initiative of its kind in the country. In 2013, the property firm was awarded the Green Innovation Award at the Oman Green Awards in recognition of its CSR activities.
As the Gulf moves towards the next phase of its CSR journey, local businesses should be encouraged to cultivate a deeper understanding of CSR and its implications. The role of the government — either as supporter of private enterprise, partner in a PPP initiative, or alone as state sponsor — is important to steer the direction of organised CSR. According to a report published by business school Insead in 2012, most managers in the GCC believe their governments should be involved in guiding corporates to step up their CSR activities.
Interestingly, MENA governments are becoming more active promoters of CSR. Almost all GCC countries now have corporate governance codes or guidelines in place for publicly listed companies, which is a key enabler for CSR.
In an attempt to raise awareness of the importance of CSR, Dubai Chamber of Commerce and Industry (DCCI) developed a CSR Label in 2010. The first-of-its-kind initiative in the Middle East has been instrumental in encouraging organisations to incorporate CSR into their daily operations. The programme has been hugely popular with the local business community in the UAE.
In a report published last year, consultant Booz & Co says sustainable development — particularly as it relates to job creation, poverty alleviation, and the environment — is critical for the MENA region’s long-term prosperity and stability. Companies, ‘as good corporate citizens’, must become involved in sustainable development and contribute to the broader improvement of their societies, it adds.
For this to happen, corporates will need to align themselves with national goals that are built around sustainable development and use CSR to achieve them. However, the onus does not rest solely on the shoulders of private enterprise. Governments, educational bodies, and civil forums have roles to play in their own right.
Copyright: UMS International Fz LLCTheme