Thursday, September 2, 2010

Businesses have begun to consider ethics and the impact of the way they operate but, writes Julian Pletts, more needs to be done to boost corporate social responsibility in the Middle East

Awareness in the Middle East busi-ness sector of the importance of corporate social responsibility (CSR) is now firmly established, according to the most recent research on the subject.

There is however, still work to be done before CSR is fully ingrained into corporate strategy here.

CSR includes a wide variety of considerations from reducing the environmental impact of your business, to giving back to the local community, or improving working life for employees and therefore preventing staff from wanting to run for the exit.

The Sustainability Advisory Group, which has a base in Dubai, recen-tly conducted a regional CSR survey which threw up some inter-esting statistics about how corporate responsibility is viewed in this region.

The majority of firms asked, 80 per cent, said that when carried out properly, CSR initiatives can “enable companies to maintain and build a strong reputation, attract and retain the best employees, and gain new customers” - no mean feat in light of the financial crisis.

“[CSR] has gone beyond being in its infancy in this region and the study proves that there is an increasing awareness and an acknowledgement of the issue but what companies are doing internally is still lagging behind, although that is a normal part of the journey,” said Maria Sillanpaa, founding director of the Sustainable Advisory Group.

Taking a proactive approach to CSR does not have to be all about improving corporate image, although that is one significant upside. It can also have a positive impact on your company’s bottom-line.

“The environmental dimension offers quite significant cost saving opportunities,” said Sillanpaa.

“For instance if we take green buil-dings, there may be a slightly higher initial investment cost but very quickly green buildings start paying back with low energy and utilities costs,” she added.

Gillian Foster, manager of the Dubai Chamber Centre for Responsible Business, which has carried out its own research into CSR, said that 73 per cent of companies in Dubai are aware that it exists, which is an 18 per cent increase on last year.

However, like Sillanpaa, she also underlined the gap between aware-ness and real action and suggested that companies avoid CSR at their own peril.

“Employees are impacted by CSR in terms of the companies that they want to join. It also reduces costs, not only through recruitment and retention but through cost management and also through reducing waste.

You can even get the chance of looking at new revenue sources as you move up the value chain of CSR,” said Foster.

A worrying statistic to emerge from the Sustainable Advisory Group’s study was that 30 to 40 per cent of businesses said that issues such as climate change and pov-erty alleviation are either not relevant or are not currently being addressed by their company.

A lack of action when it comes to environmental impact might be down to the low price and availability of oil in this region.

“Maybe it is to do with the level of awareness and the fact that the region is naturally energy rich, so access to energy is not a concern in the same way that it would be with other regions,” she said.  

It is not just businesses that have to take responsibility.

Governments in this region have a part to play as well.

The study found that one of the major barriers to CSR is a lack of government initiatives and funding.  

Foster is head of a government group set up to tackle CSR awareness in Dubai and feels that great steps forward have been made with many firms developing CSR plans.

But, she said, offering funding would be a difficult measure to instigate here.

“There isn’t a funding source in that sense,” said Foster. “However, in a seminar recently someone asked a question about how in the US you have tax breaks incentives.

But here there is no tax, so some of the incentives that the government can use, to spur companies to gain value from CSR initiatives we do not do here.”

With or without monetary incen-tives it is clear that CSR is gaining momentum among the Middle East business community and that even during a financial crisis, companies are still finding time and money to re-evaluate their social stance.

“Where once CSR was seen as a series of ad-hoc goodwill gestures, today’s leaders are seeing it as an enabler for business growth, innov-ation and enduring prosperity,” said Sillanpaa.