On Corporate Social Responsibility

Click here for a talk by the esteemed Dr Ashok Khosla held in the Lee Kuan Yew School of Public Policy. It’s entitled "The Future of Business and the Business of the Future". It’s not organized by us. It’s probably by the LKYSPP.

Anyway, Dr Khosla says a lot in it, but I’ll just point out one little point he stated. That is, social enterprises require a longer time-horizon than normal businesses.

A couple of friends from the NUS Business School opine that business shouldn’t think beyond a year or two because so many things change in a year that business strategies for the long term often become obsolete very fast. I do wonder how social enterprises adapt to new conditions and still keep to their original goals under such conditions.

Friday 17th October 2008, 600-830pm. Venue: NUS Business School LT17.
To register, go to http:// www.CSRSM.org. For more information, please email nus.csrsm@gmail.com

Mr. Tan Kin Lian writes a blog at www.tankinlian.blogspot.com to educate the public on insurance and financial planning. His blog now receives 3,500 visitors a day. The current hot topic is on minibonds, high notes and other structured products. Many investors have lost a lot of money in investing in these structured products. Mr. Tan is helping them to seek compensation.

Here’s a short article describing a very, very interesting correlation between CSR and geopolitics:

Results show that firms with high CSR ratings are more likely to be located in states with Democratic majorities, and firms with low CSR ratings are more likely to be located in states with Republican majorities.

Corporate executives tend to reside near a firm’s headquarters. It seems logical that corporate decision makers would align their policies with the views of their stakeholders in order to reduce conflict and create value for the firm.

Full story here.

I keep wanting to write about the possibility of the world turning towards a newer form of economics but time disallows me. So, here’s a bit from an IHT article that might tempt you to find out more:

"And signs of a protectionist backlash are multiplying as worries about climate change, the rise of state-run investment funds and the bursting of the recent credit bubble give novel ammunition to those in the West who question free markets and clamor for more shelter from globalization…

When students of economics open their history books in 2030, they might read about 2008 as the year when the groundwork was laid for a re-regulation of certain markets, a more redistributive tax system and new forms of international policy coordination, economists say."

I recently attended a Singapore Compact lecture by Dr Jem Bendell on the luxury industry and he highlighted to us how Beijing has taken down billboards of the luxury brands and how India has raised taxes on luxury items more than 100%. Both actions were direct results of concerns over unrest fomenting due to very perceivable inequalities in society. Looks like there are to be some serious changes coming. I wonder how the corporate world will deal with it.

In other news (full article here), Singapore has tasked an "Inter-Ministerial Committee" to look into sustainable development. Our PM says,

"How do we get economic development and growth, and at the same time, grow in an environmentally friendly way? That’s the idea of sustainable development, where you build into your whole development strategy this awareness of the environment, energy, conservation and efficiency," said PM Lee.

This committee will "seek to build new competencies and facilitate mindshare across the public, private and people sectors to develop Singapore as an "Eco-Hub". The aim is to make Singapore an innovative thought centre and hub for urban and environmental sustainability."

The continued mindless use of the word "hub" and "mindshare" aside, it’s a good piece of news. Let’s hope we go beyond simply environmental sustainability soon, though. Sustainability has so much else to offer.

From CSR Asia (16 Jan 08):

This week saw the start of Asia’s first specialised CSR course for undergraduates at City University of Hong Kong. There are 80 students enrolled, and 30 more want to do the course but the numbers are capped due to the classroom size.

Emphasis mine. See, there is definitely demand for CSR courses at the undergraduate level. I hope NUS does the same soon. I think we might be a step behind other universities in this regard. That said, it is great to know that another university has picked it up, even though it is through a professor in the social sciences.

That in itself is pretty interesting. Here is a bit more of what Dr Frost writes:

 

the name [of the course] is designed to keep the business folk happy enough to allow the course to run at all (at one point the Faculty of Business even suggested the term CSR should not be used because the C was their territory) 

 

Strange how territorial the Business people are. I may not be close enough to the context of things to understand it fully, however. Still, it’s another good reason why we should have CSR in Business!

Now I am considering going to the City University of Hong Kong for exchange. 

I don’t understand why people always pretend, and many times forcibly do so, that their conferences, seminars, bazaars and other events are successful when they obviously aren’t. Here are a few possible reasons:

1. Their sponsors might get upset if they say the event failed. They might never sponsor them ever again.

2. Their egos get hurt admitting the truth. It diminishes their abilities.

3. They’re in denial. (More symptom than cause, but perhaps can also be a major cause.)

Is it a bad thing? Yes, it is. It’s bad for sponsors, organisers and the people who come. Here’s why:

1. Sponsors may invest in you again and go on wasting money.

2. You can’t see the problems and therefore cannot improve.

3. Future participants will not get to maximize enjoyment and have to go through your ill-organised nonsense again.

4. In the long run, nobody will trust you.

I’ve been to a number of events this year, both by NUS students and larger, more professional companies. I’m afraid to say that the same cheery and exciting advertisements go hand in hand with each. The text and the pictures all paint such lovely images, but the actual thing seldom ever matches up. These have shaken the trust I had for advertising, and by extension, for the people who produced them and those who commissioned them. I wonder how many people feel the same way.

The moral of the story is, we have to tell the truth. It’s not really something that is right or wrong. It builds trust, improves skills, increases investment profits and produces reputation. Simply put, it makes good business.

I’ve been meaning to write, but my schedule’s been so hectic. Four essays due and exams round the corner. Deadlines hang by a thread over my head like the sword of Damocles. Anyway, I thought I would just write a little bit today about something that’s been on my mind for a long while now.

I was looking around for a film to screen in school for our latest CSR event recently. We didn’t want to screen The Corporation, Wal-mart: the High Price of Low Cost and Enron: the Smartest Guys in the Room again. So I looked around, asked around… and then Cuiyu found this film called Toxic Trail. I haven’t watched the film, but from its website, I found that a prominent pharmaceutical was spilling poisonous compounds in Peru. If I recall right, it was also doing the same thing in Cambodia.

What’s interesting is, every year, this same pharmaceutical holds an environmental programme for youths in Singapore, and this programme is held in pretty high regard. I believe it also has some sort of award ceremony, but I’ll need to check that up again. It has also been thanked on the National Environment Agency website.

Greenwashing? Looks like it, no? What is even more interesting to me is that most people, if not everyone, here do not know about this corporation’s darker habits nor do they want to find out. When I reveal the company’s indiscriminate actions to student environmentalists, they either shut up or say that we have to compromise (this involves not talking about this issue at all to the general public) because we need the money to carry out our environmental campaigns.

Someone in a local environmental NGO reflected a somewhat similar opinion when I pointed out a major oil company’s sponsorship of the NGO’s advertisements. "It’s blood money," it was acknowledged, but they prefer to take the money to carry out environmental outreach rather than be incapacitated by a lack of funds.

To me, this is something of a concern. We are obliged to advertise the companies’ logos on our flyers, posters, websites, etc, whenever we take their money. People who see these ads would think these companies are good companies and buy their products. The revenue from these products go towards supporting the companies’ undesirable actions. Yet, we take the money.

To be sure, we do not know if the good done by taking this money is larger than the bad done by the companies. There is no precise method to measure the good and bad done. Also, we do not know if the companies even know that they are polluting the environment and, in the process, poisoning locals who depend on the environment. Sometimes, top management may have difficulty figuring out what is happening down on the ground. For instance, Topshop was accused this year of using sweatshops. However, the guy at the top, Philip Green (styled Sir, and "largely avoids personal tax by paying dividends to his wife, Lady Tina, who lives offshore"), claims he was told by his managers that his factories were definitely not run under sweatshop conditions. True or false, it is quite possible that middle management hides some information from its bosses.

Should we blame companies for their criminal actions, then? Or should we give them the benefit of the doubt, believe that they are true and innocent at heart, and continue giving them our dollar votes and maintaining or increasing their capacity to do more of the same thing? How do we verify that what the companies say is true? I don’t have the answers. We can’t simply attack companies for their unwanted actions, because in most cases, they are great fixtures of the economy and of society. Removing them may do more harm than good. At the same time, having them continue in their malevolent ways does not bode well for a lot of people. So, what do we do?

I’m still thinking about it, but in the meantime, I take every official statement by the corporate world with a large pinch of salt and research each one of them before making any decisions. In some cases, I have been compelled to boycott their products as it weighs too heavy on my conscience for me to give them my money. In other cases, it is simply too difficult to avoid using their products.

How do you deal with this issue? 

From Inter Press News:

"I think that we have to fight the Global Compact, not only criticise it, because it is a public relations operation of the big multinational companies," Ziegler told IPS.

"The 500 biggest multinational companies controlled last year 52 percent of the gross world product," the Swiss academic said. 

 And:

Greenpeace’s Mittler took the view that it is not the U.N.’s role to organise business round tables. "It is the job of the United Nations to set binding international standards and ensure that these can be, and are, enforced," he said.

"The world needs action and binding global codes for corporate behaviour," he added. "The Global Compact is not delivering."

Mittler pointed out that an analysis by McKinsey & Co., a management consultancy firm, "showed that only in 10 percent of cases was there any evidence of companies doing something that they would otherwise not have done as a result of being a member of the Global Compact."

Oliver Classen, media officer for The Berne Declaration, one of Switzerland’s oldest non-governmental organisations, called on U.N. Secretary-General Ban Ki-moon to "fundamentally rethink the ‘accord’ with big business."

Mittler, in turn, asked Ban "to disassociate himself from ‘greenwashing’ by the coal and nuclear industries through the Global Compact."

"The UN’s Global Compact is been a mockery because several companies violating human rights have been free to join and remain in the Global Compact, (thus) benefitting from an association with the UN," said Aftab Alam Khan, ActionAid’s head of trade. 

What do you, think, dear reader?

On the one hand, I think this has some truth in it. On the other hand, I think not everyone takes well to harsh criticism, no matter how true they are. Thus, while the aggressive stance taken by Greenpeace and other suchlike groups are extremely helpful (and really, really admirable), more moderate institutions are needed to bridge the uncomfortable gap between the critic and his findings and the companies in question. The Global Compact provides a possible platform for such a thing to happen, but it only works if it is used in that manner. I guess for now, the Global Compact is still evolving. It will find its teeth sooner or later, but be they canines, incisors or molars is really what we would like to know.

Really, hasn’t the UN as a whole been criticized for just about the exact same reasons? It has no teeth and it panders to the stronger nations, so it has been said. The Global Compact faces the same problem, doesn’t it? Not everyone can agree on how to run things, and the companies are sovereign in themselves. The UN cannot bind them to agreements so simply just as it cannot easily bind sovereign states.

Still, as is stated, 10% of companies in the McKinsey & Co. study did perform socially responsible acts as a result of joining the Global Compact. While it is very low, it’s better than 0%. Add to that what groups like Mittler’s Greenpeace do and you’ll have more than 10%. The more coaxing and pressure on companies the better. A culture will gradually develop that will make companies regulate themselves. Takes time.

Ok, here’s something else other than the problems of the Global Compact. There is an interesting article here about how technology exported from China to the USA goes back to China as e-waste which is then exported back to the USA as toxic jewellery which has caused at least one death. I think I’ll post a bit more about this if I have the time. Responsible globalization is a very important topic with this sort of thing happening more and more.

This comes a little late, but at least it’s here now. Our Annual Report can be found here. It is downloadable as a PDF file.

I think we made some headway last year in introducing CSR into NUS. Not much headway, but still some. At least now there is wider awareness of the acronym "CSR". The way I see it, there are a number of problems why it is so difficult to ppopularize this and other ideas.

1. Students are extremely busy with studies, work and what little personal lives they have left.

2. After so much studying and working, they want to relax, not read about more ideas.

3. There is not enough free time in the NUS calendar to allow students to explore things other than what’s in their modules.

4. There are too many activity groups in NUS vying for the tiny community’s attention.

5. Many students are materialistic, so unless they stand to gain from an idea, they’ll not want to waste time on it.

How do we go about solving these problems? I’m thinking of getting internships for the Movement’s members, asking companies, certain government agencies and NGO’s to let us try implementing CSR and business strategies for them (helps them and gives us practice), and also getting us into a position to organise sharing and networking sessions for companies. These will allow our members to have practical experience and expand the individual’s network, which I think are what students nowadays want.

Another idea is to make things more fun, but I can’t think how CSR can be made fun. 

I am also in the process of getting as many groups in NUS as possible to come together to make an on-line calendar of events wherein we project all our events for the year and so be able to see where there is too much competition or chances for collaboration. That would lessen rivalry, hopefully.

Maybe one day, we can get credits in our modules for doing such CSR activities. That would be great. But that’s kind of a far-off wish at the moment.

Well, if there are any ideas floating around out there, do tell us about them. We are always seeking to overcome our challenges and improve.