Egypt Business Network
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Dr. Nilgün Birgören Premium Member Group moderatorThe company name is only visible to registered members.Doing well by doing good - CSR
Capitalism with a conscience, or the so-called CSR (Corporate Social Responsability) may have much to do in our group in the coming days..
More companies are giving back,but how much good are they really doing?
Here is an article by Michael Kaput:
<<The last few years haven’t done much for the idea that business can do well while doing good.
Whether it’s contractors linked to dumping sewage into drinking water in Al-Barada’a village or Mercedes being accused of bribing a government official, corporate culture is suffering from a serious PR crisis.
Unfairly or not, everyday citizens consistently rank businessmen among the least trustworthy people in the country.
In an effort to change public perceptions and cater to socially conscious consumers, more companies in Egypt are turning to corporate social responsibility (CSR) initiatives.
But simply giving to charity isn’t the most effective way to make substantial contributions, experts say.
Between multinational corporations importing their own brand of CSR — with commitments to sustainable projects that also improve bottom lines — and homegrown initiatives to foster comprehensive CSR programs, the idea of giving back in Egypt is taking on a whole new meaning, albeit slowly.
On March 22, the country launched the Egyptian Corporate Responsibility Index, — the second index of its kind in the world — to rank companies based on the strength of environmental, social and corporate governance factors. Launched in conjunction with Standard & Poor’s, a financial research firm, the index seeks to hold the country’s largest companies accountable for their actions both inside and outside the company.
It’s a big step for players like the Ministry of Investment to promote a comprehensive definition of CSR that hopes to see companies do sustainable good in local communities, while improving company operations and brand competitiveness.
But an ingrained culture of giving to charity rather than creating sustainable projects and shared value for companies and communities means that a CSR makeover could be a long way off.
Not So Philanthropic
Companies in Egypt only started talking about CSR about five years ago, according to Hala Youssef, manager of corporate and external affairs at CARE Egypt, a non-governmental organization (NGO) that works with several companies to implement CSR projects.
But it was only recently that the idea of using CSR programs to create sustainable change took off.
“The concept of CSR has evolved much more in the last two years,” she says. According to Youssef, though companies are moving towards CSR programs, not all have a clear definition of what CSR entails.
“Every company has a different view of what could be CSR,” she says.
Noha Youssef, research mobilization and marketing coordinator at CARE, attributes the rise in CSR practices to more multinationals working in Egypt.
“[Multinationals] applied the same concept [of CSR] they applied in other countries, whether [they are interested in] exposure or developing the community,” she says.
According to an article published in the Harvard Business Review, 64% of the world’s largest multinational companies published CSR reports in 2005. As they expand, these companies are exporting sustainable practices and a new type of CSR culture to countries in the developing world.
However, Noha Youssef says, only some companies in Egypt are involved in creating lasting change that can be sustained in communities over generations, rather than simply writing a one-time check.
Philanthropy of the more temporary sort has a long history in Egypt. “This culture is very charity-oriented by definition. Part of your religion is that you have to pay money to the poor,” says Ashraf Gamal El-Din, executive director of the Ministry of Investment’s Egyptian Institute of Directors. “And if you talk to anybody, they consider this to be part of CSR.”
But philanthropy can be more of an obstacle to effective CSR than an advantage.
“We don’t really believe that the philanthropic angle is sustainable,” El-Din says.
According to El-Din, companies need to understand CSR as a comprehensive concept; one that not only applies to every facet of corporate operations but also one that can better a company’s position in the market.
The Ministry of Investment, along with Crisil, the world’s fourth largest credit agency, and Standard & Poor, helped launch the new social responsibility index as the first step in changing the face of CSR in Egypt. The index analyzes companies listed on the stock exchange based on a set of 198 criteria, ranging from a company’s level of transparency and disclosure to its management of the environmental impact of its operations and its treatment of employees.
The 2009 top 10 companies on the index include big names like Commercial International Bank, ranked first, Orascom Construction Industries at number two and EFG-Hermes at number nine.
The ministry is also drafting a national CSR strategy, with the help of NGOs such as CARE Egypt, to outline not only what behavior is expected of companies, but also how that behavior translates to a better business model.
According to a United Nations Development Programme report released in 2008, companies that do business with the poor and disadvantaged can reap huge benefits while creating lasting positive change in communities. Some microcredit institutions, for instance, have seen up to a 23% return on their equity. Comprehensive CSR work that dovetails with corporate goals, such as improving communities near corporate operation centers, can expand labor pools and create new markets for products while still doing good.
“This is the key message we’re trying to give companies: It’s a win-win situation,” says El-Din. “It’s not that you are paying because you have to be good [] You are paying because once you pay you get it back in the form of recognition and creating a new segment in the market.”
Giving Smarter, Not Harder
Convincing companies that social responsibility can also please shareholders has been slow going so far. With the 2008 economic slowdown, El-Din says, CSR programs were one of the first divisions companies cut.
But Michael Porter and Mark Kramer argue in the Harvard Business Review article on CSR that companies need to stop thinking in terms of corporate social responsibility and start thinking in terms of corporate social integration. By developing CSR initiatives that directly impact the corporate supply chain, companies can create shared value.
Hanaa Helmy, CEO of the EFG-Hermes Foundation, the charity wing of EFG-Hermes, sees CSR operations in terms of how committed a company is, not what sector it works in.
“Being in banking does not mean that you have to work within the box,” she says. Instead of limiting the bank to financial projects like microfinancing, Helmy wants to have a long-term CSR strategy that allows corporate interests to help communities help themselves.
With a budget of LE 12-15 million a year, the EFG-Hermes Foundation has enough money to do just that. The organization runs projects dealing with everything from building water taps and latrines in Minya governorate to running a paper-recycling facility that employs underprivileged Egyptians.
But companies like EFG-Hermes stand out from the pack. Most are still married to traditional philanthropic donations and the good press generated by building a school or an orphanage. With traditional giving as the norm, El-Din readily admits that overhauling CSR in Egypt is going to take a long time.
“I would say 10 to 15 years [to fully adopt comprehensive CSR procedures],” he says. “This is taking time because it is a change of culture for people.”
Even five years out, El-Din still sees philanthropy accounting for a whopping 80% of CSR initiatives. In the meantime, companies are missing a huge opportunity to make sure their money has the most impact both on the community and on the balance sheet.
Source: BusinessToday
- 21 Sep 2010, 9:28 pm
