Corporate social responsibility (CSR) is often a priority for companies in developed countries, but in recent years, the discussion has extended to the developing world. In the developed world, non-governmental organizations (NGOs) accuse multinational corporations (MNCs) of mistreating host countries – the example of Shell in Nigeria being one of the most prominent. In addition, MNCs may only engage in short-term philanthropic projects in developing countries rather than developing a long term CSR strategy.
Because of campaigns by NGOs, MNCs are starting to take CSR seriously; however, what about the case of smaller companies in the developing world? Many smaller companies do not have the time or the resources to develop a CSR strategy. In Malaysia, however, CSR has now come to the forefront because from 2008, all public listed companies (PLCs) have to disclose their CSR activities. From 2007, the Prime Minister also began to host CSR awards, which has inspired some companies to develop a CSR strategy. First, it is worthwhile to ask what should be included in a CSR strategy. Secondly, the areas of stakeholder engagement and the environment will be examined. Thirdly, specific projects in Malaysia will be examined.
What is a CSR strategy?
When a company develops a CSR strategy, an array of factors has to be accounted for. According to a report published by the Association of Sustainable and Responsible Investment in Asia and the Centre for Sustainability and Excellence, CSR means a “voluntary commitment of businesses to include in their corporate practices the Economic, Social, and Environmental criteria/actions, which are above and beyond legislative requirements, and are related with everyone influenced by their activities.” This means that the company must consult with the public, government, employees, shareholders, and NGOs when they form their CSR strategy.
After the Malaysian government announced that all PLCs would have to disclose their CSR activities, Bursa Malaysia, which operates several securities exchanges, published a report advising companies on how to form their strategy. According to the report, there are four main areas to be accounted for: the environment, the workplace, community, and the marketplace. The environment category includes such topics as climate change, waste, energy efficiency, and endangered species; the workplace category, staff diversity, gender issues, and health; the community category, volunteerism and aid with schools; and finally, under the marketplace category, procurement of environmentally friendly products, social branding, and stakeholder engagement.
The Institute for Corporate Responsibility in Malaysia (ICRM) has also published a report on how to form a CSR strategy. One of the most important things ICRM stresses is stakeholder engagement.
The stakeholders of certain companies may not be familiar with CSR, which means that companies have to engage them when forming a strategy. In addition, organizations around the world such as the Global Reporting Initiative, which measures the environmental, social and economic performance of companies, want to see evidence that companies have engaged with their stakeholders.
First, companies need to figure out what is important for the company in terms of CSR; companies may have several areas they wish to explore but priorities need to be made. Afterward, companies can figure out how to engage stakeholders on those priorities.
The companies may choose to conduct surveys, focus groups, or interviews in order to engage a wide variety of people, states the ‘Corporate Responsibility Guide for Busy Managers’ by the Institute for Corporate Responsibility in Malaysia and CSR Asia. Finally, companies need to ensure that they listen to feedback from stakeholders and incorporate this into their CSR strategy.
In recent years, the environment has become a big issue for many companies because of the recent Copenhagen conference and the Stern report. In Copenhagen, Malaysia pledged to reduce the intensity of its carbon dioxide (CO2) emissions 40 percent from 2005 levels by 2020. For many companies, looking at the supply chain is very important to reduce their CO2 emissions; for example, paper use is a big issue. Many companies do not purchase recycled paper because it costs 14 to 65 percent more than the paper used now, states Chong Gabriel.
However, if the demand for recycled paper increased, prices would drop. Many companies also have meetings all over the world whereas with today’s technology, video conferences render plane travel useless. The environment also ties in with employee satisfaction, another area covered under CSR. Many employees would like to work from home, which reduces emissions, and have the opportunity to work flexible hours.
Companies can also encourage car pooling. These issues have become very important in Malaysia as many skilled workers are lured to high income countries.
Currently, there are between 300,000 to 500,000 Malaysians working abroad , thus if companies wish to retain talent, more incentives need to be put in place such as training, recreational facilities, childcare facilities and loan programs.
CSR Projects in Malaysia
As mentioned above, the Prime Minister of Malaysia holds CSR awards every year. This year’s awards recognized several companies for their CSR achievements. The overall winner was the oil company Petronas, which was also recognized in the sectors of education and culture and heritage. In the categories of environment, the community and workplace practice, the winners were Intel Malaysia, CIMB and Telekom Malaysia, respectively. The projects of these companies will now be explored.
Intel Malaysia is engaged in several activities in Malaysia and around the world. In Malaysia, volunteers from the company spent time at a turtle sanctuary and also planted 4000 mangrove trees. Mangrove trees are very important to protect coastlines in the case of floods. In 2008, volunteers collec-ted 1.5 million pounds of used electronic equipment and donated it to the organization Students Recycling Used Technology, which teaches students how to refurbish old computers, according to Intel’s “2008 Corporate Responsibility Report: What can we make possible?” Inside the offices of Intel, measures put in place to reduce energy consumption have resulted in a savings of 500 million kilowatt hours (KWh). Intel has also pledged to reduce emissions by 20 percent from 2007 levels by 2012, which is on target for completion. In 2008, Intel invested $100 million worldwide into solar energy companies and has also been recognized in the US as the largest purchaser of renewable energy.
CSR means a voluntary commitment of businesses to include in their corporate practices the Economic, Social, and Environmental criteria/actions, which are above and beyond legislative requirements, and are related with everyone influenced by their activities.
CIMB is a large banking organization and it also runs a foundation for its CSR activities. CIMB is engaged in several community projects, two of which will be mentioned here. CIMB is working with schools to raise awareness on the environment. Currently, it works with the organization TrEES to educate kids in urban schools about climate change and biodiversity in addition to developing recycling programs in schools. Environmental clubs in the schools have also been formed in order to ensure the program continues.
CIMB also has a program to encourage entrepreneurship among single mothers. Single mothers received a grant of RM26,000 in order to buy industrial size sewing machines, ovens and power tools, according to the CIMB Foundation. Because of the grants, they have been able to increase their average monthly income from RM150 to RM600 and in some cases from RM800 to RM1300 during the festive periods.
Telekom Malaysia has developed very innovative workplace practices. At its offices, there are recreational facilities and two of its offices have childcare centres, which encourage women to continue working for the company. Employees can also make use of counseling services if they have any workplace related problems. Employees are also kept up to date on the company’s financial results and the CEO has monthly sessions with employees all over Malaysia.
Petronas was recognized for its work in the education sector. One of its main education projects was building schools in Pakistan. The company also aided in training teachers and acquiring textbooks, stationary and furniture. In Pakistan, the company has also built medical clinics for 5000 people and provided drinking water in the Shahdadkot district. Through employee volunteer work, orphanages and homes for disadvantaged children in Malaysia have benefited greatly. Employees also aided communities in Indonesia which were hit by the tsunami in 2004. Petronas has continued this work by working with NGOs that conduct post disaster rehabilitation.
The CSR projects shown above have been conducted by larger companies; however, there is still much scope for small and medium sized businesses to contribute. In the future, the economies of developing countries will have to become greener as the population grows and resources dwindle.
Now, it is highly imperative for smaller companies to develop CSR strategies in order to realize a more sustainable future. With the large amount of purchasing power that large companies and governments have, the cost of sustainable products can go down and benefit everyone. They can also share experience of developing CSR strategies with smaller companies. This will be a definite boon to society.
Association for Sustainable and Responsible Investment in Asia and Centre for Sustainability and Excellence “Design and Implement an effective CSR Strategy and Report” http://www.asria.org/ news/events/lib/csr_eng_br.pdf
Yusli Mohamed Yusof “Bursa Malaysia’s CSR Framework for Malaysian PLCS” http://www.klse.com.my/website/bm/ about_us/the_organisation/csr/downloads/csr_framework_slides.pdf
Institute for Corporate Responsibility in Malaysia and CSR Asia “Corporate Responsibility Guide for Busy Managers” http://www.icrm.com.my/images/stories/pdf/CR_Guide_for_Busy_Managers.pdf
Gabriel Chong “New Economic Model raises importance of CSR in Malaysia” http://www.icrm.com.my/ index.php?option=com_content&view=article&id=123:new-economic-model-framework-raises-importance-of-csr-in-malaysia-&catid=41:article&Itemid=194
CSR Malaysia “Malaysian CSR Awards” http://www.csr-malaysia.org/news/malaysia/malaysian-csr-awards-20100312353/
CIMB Foundation “Project Showcase: Environmental Programme for Schools” http://www.cimbfoundation.com/index.php?ch=fd_pillar_comm&pg=fd_pillar_comm_showcase&ac=12
CIMB Foundation “Single mothers of Pulau Tuba, Langkawi” http://www.cimbfoundation.com/index.php?ch=fd_pillar_comm&pg=fd_pillar_comm_showcase&ac=27 Telekom Malaysia “Employee Engagement” http://www.tm.com.my/about-tm/cr/CR_footprint/workplace/Pages/employee-engagement.aspx
Petronas “Global Outreach: Pakistan”