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Wednesday, November 29, 2006
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Responsible Business Management and the role of development agencies
- By Ces Rodriguez , Germany
30 years ago, it was perfectly acceptable for business to adhere to one principle: Profit. As globalization breaks down geographical boundaries and the information explosion increases the visibility and influence of companies and brands, the resulting scrutiny gives rise to new accountabilities.
In 1997, author John Elking coined the term “triple bottom line” to refer to a company’s added stake in social and environment issues, in addition to the traditional sense of the phrase. While Elking may have created the catchy moniker, the practice itself has been quietly gaining ground since the 1970S under the broad term "corporate social responsibility”.
The World Business Council for Sustain able Development broadly defines corporate social responsibility or CSR as “the continuing commitment by business to behave ethically and contribute to the economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”
The United Nations also acknowledged the force of business in effecting change by launching the Global Compact during the World Economic Forum in Davos , Switzerland on 31 January 2006 . The compact aims to advance responsible corporate citizenship by having companies apply “ethical business standards that positively affect society and human development.” It named a set of core values in the areas of human rights, labor standards,
the environment and anti-corruption.
Since U.N. Secretary General Kofi Annan first challenged business leaders with the idea in 1999, Global Compact has attracted the participation of 2400 companies in 8o countries. “We have to choose between a global market driven only by calculations of short-term profit, and one which has a human face. Between a world which condemns a quarter of the human race to starvation and squalor, and one which offers every one at least a chance of prosperity, in a healthy environment. Between a selfish free- for-all in which we ignore the fate of the losers, and a future in which the strong and successful accept their responsibilities, showing global vision and leadership.”
While companies must address and wrestle with contradictions and allegations, many more are lured by its two-fold promise: A legacy of development projects and the perceived value of such efforts.
Three generations of development
CSR was borne from a host of changes in the last 20 years. These include globalization, deregulation, privatisation and the growth of social activism. Pressure from civil society for business to turn more socially responsible was one of the main drivers of CSR.
In time, business learned that CSR could result in operational cost savings, enhanced reputation and the increased ability to recruit, develop and retain staff. It could also redound in enhanced relations with the government and better risk management and offer valuable opportunities for learning and innovation.
With CSR ramping into the mainstream, the 2002 UNIDO report noted that companies have become increasingly ambitious in tack ling issues in a way that’s more strategic and integrated. Therefore, CSR’s development can be traced back from this emerging trend:
1. Corporate philanthropy: Traditional and widespread, it reached its apogee in the 1990s. Examples are the huge monetary contributions of businessmen like Ted Turner and Bill Gates and typically involve donations of computers to schools and employee volunteerism, for ex ample. The overriding concern was reputation protection instead of reputation enhancement, or in the words of Chris Tuppen of British Telecom, “You just keep your nose clean.”
2. CSR as integral to long-term business strategy. The stage in which companies take the lead in forging CSR programmes.
3. CSR to effect policy change. In which companies eschew voluntary approaches and partner with civil society and governments to recast whole markets towards sustainability. This may involve rewarding CSR programmes and penalizing poor performance.
What can be done?
Regardless of the stage that CSR development companies have achieved, development agencies can promote their own agendas by finding opportunities to partner with the private enterprise.
Olaf Neussner Head of the InWEnt Regional Office Manila, recalls being approached by a dentist who was contracted by a company that manufactures sugar substitutes. The German dental expert approached InWEnt so the agency could train dentists from the Philippine Department of Health to apply global health standards in the research of dental health. The idea was to create local experts whose recommendations could influence consumers into foregoing sugar and choosing substitutes instead.
However, instead of waiting for proponents to come knocking on their door with proposals, development agencies like InWEnt, whose strength lies in training and capacity building, can actively seek out relevant partnerships in the private sector. This includes more than just the usual suspects — transnational corporations with well-entrenched CSRs — but small and medium enterprises or SMEs, long seen by experts as drivers of change and willing entrants into the world of CSR.
InWEnt’s training partnership with the Philippine Business for the Environment, a consortium of enterprises committed to environmental sustainability, can be replicated with SMEs as well.
InWEnt can also leverage its international long-term training programme in Germany by seeking out scholars from emerging enterprises or private sectors whose CSR blueprints hew closely to the agency’s development agenda.
Finally, it can strengthen its profile as a development agency actively engaged in the CSR needs of the private sector by publicizing its success stories and best practices and aligning them with the goals of local communities, national governments, and multilateral agencies like the UN.
Text courtesy: DIALOG/ASIA Number 1/2006. Embassy of Germany in Kathmandu-ed.
