Since arriving in Karachi nine months ago, I have heard widespread criticism of CSR in Pakistan for being focused on philanthropy as opposed to sustainable business practices. Such criticism results in calls for a change in mindset in relation to CSR. However, on their own these calls will have little effect.
In reflecting on my previous experience of CSR in the UK, it is clear to me that companies embedding more sustainable business practices into their business strategy is largely a result of the social pressures that persist within UK society. These societal pressures are unique to the UK -and countries with similar social realities – and differ from the societal pressures within countries like Pakistan.
Therefore, if it is a change in mindset that we want in Pakistan, we must look at how best that change can be brought about in the context of Pakistan’s culture and social reality.
Observations from the UK CSR Experience
As a frame of reference, let’s consider some observations from my understanding of CSR in the UK.
Over the years I watched social pressure act as the catalyst for change in the CSR mindset. As a result, companies are increasingly defining CSR in line with the triple bottom line approach as they go through a three-step process.
1. Consumer Pressure
Companies have been forced to react to the concerns of consumers as the world has become more interconnected. People are now basing their consumer decisions on more than price and brand alone as they seek to tackle global problems through individual action. This stance is perfectly exemplified by the 72 percent increase in revenue generated by Fairtrade products in 2007 alone, as stated in the Fairtrade Foundation communications.
At the same time, further pressure is being created through demands from graduates that their future employers be socially responsible. In a recent survey titled ‘Employable Graduates for Responsible Employers’ by ‘Student Force for Sustainability’, 86 percent of graduates said they often or always considered the ethics of a company when applying for jobs.
2.Public Relations Strategy
This pressure has forced companies to not only embed more sustainable practices into their business model but to also start utilising these practices in order to attract consumers and future employees. People are now employed to work on CSR and the resulting communication strategy in order to build the image of a responsible corporate citizen.
3.Feeling the Benefit
These PR strategies lead to increased business success. Furthermore, companies start to see the benefit of embedding more sustainable practices into their business model, so they continue to do so. More ethical waste management, for instance, is not only better for the environment; it also proves to be more cost-effective.
However, working in Pakistan has demonstrated to me that the same pressures and resulting reactions are not as visible here.
The Pakistan Context
What I believe this comes down to is the differing social context and culture of Pakistan compared to a country like the UK. Pakistan has a set of social pressures that force companies to act in a much more philanthropic and price-driven manner, thus resulting in a less
than 50 percent compliance rate with basic CSR principles and objectives.
Philanthropy and Community
In Pakistan, the ethics of a company are judged in relation to philanthropy. This is because philanthropy and community values are highly valued in Pakistan’s culture. It is expected that the more fortunate help the less fortunate, usually through donations. Companies are therefore under pressure to act in the same philanthropic way and, as a result, many do so.
In contrast to the UK, however, there is little pressure on companies to consider the economic, social and environmental impact their operation has on its stakeholders.
One reason for this lack of pressure on sustainable business practice is the seemingly small amount of awareness within Pakistan about the challenges facing the world.
This is primarily because less people have access to the platforms that would provide them the information to engage with these issues. For instance, only 3.3 percent of the country’s population has access to the internet, states Romail Kenneth in a recent Daily Times article .
But even within the seemingly few people that are aware of the issues, there is little individual action. Measures like recycling and energy conservation are rare even when the problems associated with these measures are adversely affecting people’s livelihoods.
If the majority of people are not concerned with these issues, for whatever reason, it cannot be expected of companies to be concerned with them either.
Finally, Pakistani consumers are not consciously pressurising change through their consumer decisions which is exemplified by the price-driven nature of the economy.
Although I enjoy bargaining for the best price for what I want to buy, it does show that brands and social reputation have little significance in consumer choice, for the majority.
This is reflected in the business culture too. Marketing, branding and reputation building are new concepts for Pakistani companies and are not always valued highly. This also means that even when companies do contribute to society, they see little benefit in publicising this.
Creating the Change
It is clear then that companies are already reacting to the social pressure within Pakistan by producing low-cost goods and exhibiting philanthropic qualities. However, if we want to expand the CSR mindset in Pakistan to include concerns for economic, social and environmental impact of business operations, pressure needs to be generated from the leadership of society in a variety of areas:
1. Leadership from Multi-National Companies
Part of MNCs’ social responsibility as they expand into Pakistan comes in leading and educating others on how to be more sustainable in a way that benefits business. They need to take responsibility for bringing expertise to CSR-based platforms in Pakistan at the same time as creating more opportunities for people to learn from their best practices.
2. Leadership through Education and Awareness
Furthermore, the education of Pakistan’s future business leaders, needs to be focused on making them both socially responsible and business savvy. CSR should be incorporated into the curricula of business degrees and courses, especially at leading business institutes such as LUMS or IBA.
Also, the media needs to play a more active watchdog role in analysing and educating consumers on the business practices of companies.
3. Leadership through Governance
Finally, the government needs to take responsibility for holding businesses responsible for their actions through setting, and enforcing, minimum standards in all areas of business impact. Furthermore, the government should proactively support the efforts of NGOs and companies in promoting the CSR agenda in Pakistan.
These are just brief suggestions as opposed to comprehensive solutions. Although the current culture of corporate philanthropy is positive, it is clear that this needs to be developed into a culture that incorporates individual responsibility for the economic, social and environmental impact a company has on its surroundings. Such a transformation will have to happen in line with the Pakistani social context and culture and will most definitely require strong leadership from those who shape the mentality of Pakistan’s society.