1. What could be the next evolution of CSR?

There is little doubt that the lack of responsibility in markets has led to today’s current financial turmoil and recession in most international markets. The private sector has taken a huge blow but there is agreement that no-one wants too much control by Governments although the exact division of public and privately provided goods is one of the greatest economic debates of today. CSR does provide many of the elements of a solution but its ideas were largely ignored by many of the big financial players to date, and has led to increased public sector involvement in the governance of corporations. As Thomas Friedman noted in the New York Times3: “This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics….That’s how we got here – a near total breakdown of responsibility at every link in our financial chain, and now we either bail out the people who brought us here or risk a total systemic crash.”

However, if you adhere to the theories of Adam Smith you may disagree about a larger role for the public sector. Smith argued more than 200 years ago that the general welfare was better served by people pursuing their enligh-tened self-interest than by misguided attempts to serve society.

Note that CSR is a strategic approach to managing a com-pany, not simply an add-on4. CSR encompasses all stakeholders of a company not just a few. CSR is concerned with treating the stakeholders of a corporate body ethically and in a responsible manner5. Yet, others misleadingly define CSR to be simply philanthropy or, perhaps worse, as sacrificing profits in the social interest. This is wrong: the central point is how profits are made, NOT profits per se. Yet today, companies have lurched more and more against CSR as exemplified by their seeming move to embrace ‘corporate sustainability’ or ‘corporate
citizenship’. This is aided and abetted by the ‘think-tanks’ of change such as the consultancy Sustainability or The Global Reporting Initiative. If either embrace the tenets of strategic CSR then perhaps we should worry less. But it does appear that those who embrace the last two ‘phrases’ have lurched either toward more environmentalism (sustainability) or more commu-nity involvement either at home or abroad (citizenship). These points are exemplified in Globescan and Sustainability’s 2009 Survey of Sustainability which focuses on climate change6. They list a number of urgent sustainability issues which could easily have been drawn up in 1970 after the celebrated report, and book, by Denis Meadows et- al The Limits to Growth!

The Game’s Still in the Name: CSR

This not to imply that the Globescan report has little interest to CSR since the issue of environmental sustainability is a key area of CSR discussion. My worry is that a focus on future concerns might lessen the focus on current and past concerns of which widespread poverty (mentioned by Globescan, to be fair) has been with us for far too long.

Curiously, the increased need for ‘responsibility’ comes at a time of a perceived tiredness with the concept of CSR. The rush into CSR in the 1990s was led mainly by environmentalists who had seen a useful concept to use in a world that eagerly and continually searches for new concepts. Further, when CSR is defined as ‘treating the stakeholders of a company in an ethically responsible manner’ it provides a powerful systems tool to managing a company.

But the problem with CSR has not been about what it means, when carefully defined, but the combination of the words corporate, social, responsible. Of course corporations are responsible, some would argue, because they could not otherwise survive an irresponsible company would soon have its wings clipped. Many companies have had their wings clipped because of irresponsible behaviour (Shell, Nike, Gap, Exxon, BP, Parmalat, Fanny Mae etc) and some have been disemboweled (Enron, Bear Sterns, Lehman Brothers, Worldcom etc).

Perhaps the problem is the word ’social’ as companies may believe that this means socialism through the backdoor? Clearly, on first sight, it seems to exclude econo-mics and the environment. But then, do not Economics faculties in our main universities come under the heading of social science? And can we deal with environmental problems without their economic roots? Of course not!

I think we would all love a ‘new’ term that describes all that succinctly. CSR has survived because it, as I define it above, has concentrated minds on all key stake-holders and how they are treated by a company or entity. Yet, when people start saying goodbye to concepts without defining them, as many have done with CSR recently (for example, the overly dramatic ‘death’ of CSR in The Financial Times and an earlier critical piece in The Economist, subsequently reversed) perhaps these concepts have more mileage left in them? For instance, many have predicted the ‘death’ of GDP as a concept because the growth it purports to measure does not capture such things as ‘intangible’ assets, environmental protection and so on.

Companies, or at least some of them, are now delighted that new terms allow them to forget the stakeholder model that covers such knotty issues as corporate governance, employee layoffs, supply chain standards, customer concerns, corruption etc and allow them to concentrate on such things as ‘corporate sustainability’ (that is, long-term environmental issues) or ‘corporate responsibility’ (which is what they do already). A VP of Unilever, who looks after these issues, confirmed what I suspected: that many companies switched too quickly over to ’sustainability’ issues and ignored the social and economic ones and he felt that a re-alignment towards ’social responsibility’ was sorely needed7.

Now there is nothing wrong with being concerned with either of the latter two issues. A strategic approach to CSR includes both of these as part of its overall systems approach. So has CSR been rejected too soon? This may be so and the trend does seem to be along this path. On the other hand, the financial crisis which is still with us will demand increased responsibility…so look out for sustainable corporate responsibility or even a new CSR Corporate Sustainable Responsibility or some such phrase!

2. What can we expect from corporations? What will be their role?

According to my company’s own mail bag, CSR is still attracting interest across all markets – from China to Pakistan to Nigeria to Brazil – each with differing rationales. In a poll conducted by The Economist Intelligence Unit of 566 US based respondents at the end of 2008, 74 percent said that CSR can help increase profits. In fact, CSR is not expensive although the respondents did think that financial philanthropy would be reduced over the coming year.

An example illustrates simple, but powerful, applications of CSR. When the three CEOs of Ford, Chrysler and GM came to Washington DC at the end of 2008 to plead for a $US25billion bail out of their companies, the Senate committee was scandalized that the three CEOs each flew in their private jets from Chicago to DC. At a time of recession, socially responsible CEOs would, at least, have shared the same jet or, better still, traveled commercially!

Normally, an article written today on this topic would announce that we are in uncertain times and we don’t know how the future will unfold. But, in fact, the future is more certain than ever before, especially for CSR. The recent turmoil in markets shows a role for more stakeholder engagement and legislation in previously unregulated areas. Take Lehman Brothers for instance. They stated in their 2007 letter to their shareholders that “Strong corporate citizenship is a key element of our culture. We actively leverage our intellectual capital, network of global relationships, and financial strength to help address today’s critical social issues.”

But, as one commentator noted:
Lehman Brothers did not produce a CSR report, but they produced a philanthropy report. Even if they had gone further, it seems unlikely that the complex nature of how they created wealth would have been a feature’.

Although in the short-term future there is no doubt we shall see contraction in the private sector, but the growth area will certainly be an increased compliance for CSR and CSR will become more important as regulation for the ethical behaviour of companies becomes more and more important.

3. What does CSR mean for emerging markets such as Pakistan?

An example is the case of Azerbaijan. It has already discovered that BP’s approach to CSR was very helpful in the construction of the Baku to Ceyhan pipeline. Not without controversy, but BP’s approach to wor-king with a key stakeholder – the communities adjacent to the pipeline’s route – has been, on balance, helpful. It claims to have spent USD 100 mn on CSI projects for communities in Azerbaijan, Georgia and Turkey.

As Lord Browne, the former CEO of BP once stated: I believe that our long-term future depends on our environmental and social performance. Excellence in operational performance generates financial returns, but enduring growth depends on something more – on being a responsible citizen in the world and earning the continuing support of customers, shareholders, local communities and other stakeholders.

Corporate Social Investment
To date, Azerbaijan companies, as many others in emerging markets, have focused upon Corporate Social Investment (CSI). This is welcome, but is only a part of an overall CSR strategy. The world’s successful and long-lived companies, as the famous book Built to Last showed, are those with a clear vision and those that encompass all stakeholders – management, owners, employees, shareholders as well as the external stakeholders customers, suppliers, the environment, and Govern-ment. These are the reasons that companies such as Coca Cola, IBM, General Electric, Tata and Sony, for instance, have been so successful over a long period of time.

China has become very interested in CSR according to CSR-Europe (A Brussels based CSR think-tank8). Citing Gefei Yin, Director and Vice-President of China WTO Tribune and the Development Center for Chinese CSR: “Despite the impact of the economic crisis, more and more Chinese enterprises are taking steps to integrate corporate social responsibility (CSR) into their business practices” he says. Further, according to a report by the GoldenBee Development Center for Chinese CSR, in 2008 there were in total 169 CSR reports published by Chinese enterprises. While, in 2009, up to mid-2009, the listed companies in Shanghai Stock Exchange and Shenzhen Stock Exchange had already issued more than 330 reports.

a. Responsible Competitiveness
Gefei Yin stated that there had been three major achievements in China. First, many enterprises were starting to move forward from a limited view of CSR that focused mainly towards looking at responsibility to stakeholders. Using the concept of ‘responsible competitiveness’ popularized by Simon Zadek9, means that enterprises help solve some social problems by using their professional advantages and finally increase their competitiveness.

b. Integrating CSR
Second, some leading enterprises already integrate CSR into their strategy. For example, Bao Steel has a CSR system, and publishes a Guide-line to Implement CSR from which it bases its action. With a comprehensive CSR roadmap, it presents its CSR concept systematically so as to integrate CSR into its daily operations.

Although Yin states that “CSR information disclosure is prominent through the establishment of CSR departments” it is probable that more sensitive issues such as rights, comprehensively treated in most western companies, are swept under the carpet.

c. Supply Chain Management
Third, the issue of supply chain management is being addressed given its importance for future exports to discerning foreign consumers. One technique being actively used is CSR-Europe’s own web portal10 that helps Chinese suppliers in impro-ving the capacity of their CSR performance. The portal promotes all the well-known supply chain issues such as health and safety, social dialogue, human rights, corruption, forced labour, child labour, collective bargaining, compensation, freedom of association, discrimination, environment and climate issues, working hours, health and safety. Yet, no data exist to see how, or whether, these issues have actually been addressed.

International Trade, CSR and China
Given the importance of China for international trade and as the holder of around USD 2 tn of USA debt, dealing with errant corporations in China is likely to be handled with kid gloves by Western Governments. A hopeful avenue is the reaction of consumers and how long they will tolerate abuses in the supply chain of goods coming from China. Clearly, China would like to avoid such reactions by careful manipulation of instruments such as the CSR portal. On the other hand, the CSR-Europe portal could promote international buyers’ capacity to find good Chinese suppliers. At the same time when they cooperate together, they can boost the build-up of a responsible supply chain. Through a better understanding the CSR implementation of Chinese
suppliers, international buyers can continuously optimize the concept and tools of CSR management in their supply chain.

4. What will be the future role of Governments in CSR?

As can be seen in the previous paragraphs, the importance of China in the world economy led the Chinese Government to adopt CSR for its companies, none of whom operate independently from the State. Clearly this is to promote its export industry so as to curtail a possible international consumer reaction. This is a story that requires more in-depth cove-rage which, in turn, would require the sorts of data that the Chinese Government is reluctant to release. But, perhaps, CSR will be the ‘Trojan Horse’ in China that may lead to events outside the control of the Government Itself. Only time will tell.

In the Western world, change is in the air as responsibility issues of financial corporations coupled with increased concern of energy issues, mean that sustainability is the watchword for a while. Five years ago in 2004, the UK Government was one of the leaders in promoting CSR. It published a report CSR – a Government Update11 and appointed a Minister for CSR. However, with the move toward ‘Sustainability’ and an eloquent spokesman, Jonathan Porritt, made Chair of the Government’s Sustainable Development Commission – the balance has been toward the environment, carbon offsets and global warming. Nothing wrong with that but a Government suffering deep divisions because of an expense scandal is not best placed to promote CSR.

Meanwhile the EU contributed a fair amount of money at the CSR environment with, unfortunately, limited success. Its flagship
project on ’stakeholder dialogue’ led to much talk but little action12. While the Government of Nations, the United Nations, bravely launched its Global Compact at the turn of the cen-tury, only to discover that the 5000 or companies who signed up for its ten principles wondered what they were doing there except to see and be seen13?

OECD and CSR
The, at one time better known institution than the UN, so-called ‘rich man’s club the OECD, discussed CSR at its financial ministers meeting in Lecce in June, in preparation for the July, 2009 Italian G8 summit. Some progress in words when two newish components appeared the finance minister’s ‘Lecce’ declaration whereby new business conduct principles might lead to a revision of the largely ineffectual (to-date) OECD Guidelines for Multinational Enterprises and that OECD Members, as well as Chile, Estonia, Israel and Slovenia, endorsed a ‘Green Growth’ Declaration. Although the Financial Times noted14 that Preparatory talks on another agenda item climate change held by senior diplomats of the 16-nation Major Economies Forum late on Tuesday dropped a reference in the draft communiqué to the goal of halving greenhouse gas omissions by 2050.

The ‘new’ business conduct principles in the so-called “the Lecce Framework”, has objectives to create a comprehensive framework, building on existing initiatives, to identify and fill regulatory gaps and foster the broad international consensus needed for rapid implementation. And it recognizes that there is a wide range of instruments, both exis-ting and under development, which have a common thread related to propriety, integrity and transparency and classifies them into five categories: corporate governance, market integrity, financial regulation and super-vision, tax cooperation, and transparency of macroeconomic policy and data.

Nothing particularly new there – although the use of the word ‘transparency’ has been weakened from its normal euphemism of anti-corruption, to only mean the transparency of macroeconomic policy and data.

Perhaps more interesting, in the OECD preparatory meeting was its mention of CSR for a rare moment, when they stated: “We consider that a renewed commitment to responsible business conduct will help to rebuild trust and confidence in markets. We firmly commit to the principles of propriety, integrity and transparency. Thus, we agree on the need to develop a set of common standards and processes regarding the conduct of international business and finance. For this purpose, we welcome the OECD work in relation to the Lecce Framework and a Global Charter for sustainable economic activity. We will continue to promote corporate social responsibility and welcome further consultation on the up-dating of the OECD Guidelines for Multinational Enterprises to increase their relevance and clarify private sector responsibilities.”

5. Concluding remarks

Main Street and Wall Street cannot be separated. If the captains of those financial companies, now in crisis or bankrupted, had acted more responsibly with a proper Corporate Social Responsibility strategy then their vessels would not have sunk nor would they be on the brink of foundering. Responsible business will be the new mantra.

In 2010, therefore, where will CSR be going? First, industry in the recession will take a hard look at all their programmes. They will have to look, hard and rapidly, at the business case for CSR. Second, given the lack of responsibility among Western Sub-prime holders, banks and financial institutions…there will be a new move toward responsibility. Third, great hope arose over the election of Obama and despite increasing criticism of lack of action, his actions are still likely to increase, and encourage, the need for national, corporate, public and personal responsibility.

So what next for CSR? I suggest six points:

First, CSR can help. A major stakeholder of a firm is its employees. CSR does not imply that downsizing should be prevented, that would be absurd. What it does imply is that companies must make an effort to organize layoffs in a socially responsible manner. This could include early warning, counse-ling, re-training, temporary financial assistance etc. The tendency of US companies, for instance, to give immediate notice is both distressing and can be counter-productive once re-hiring starts again. There is no doubt that there is an unequal power between companies and employees. A company can recover, it has its own institutions such as banks willing to keep it going through hard times. A redundant employee has none of these advantages and is in a very weak position once he or she leaves the confines of an institution.

Second, CSR urges transparency of operations through socially responsible reporting of activities such as informing shareholders and staff about off-balance sheet holding of debts. Enron, for instance, may well have been in much better shape today if it had behaved in a socially responsible manner. Even though Enron was a lavish donor, Simon Caulkin of The Observer (Feb 3, 2002) regarded its CSR as a ‘fig leaf’ and ‘of a piece with Enron’s overall strategy’. In fact, CSR is an overall strategy for systematic management of all of a company’s stakeholders and should not be confined to its PR department!

Third, CSR has not been given as much prominence, especially in the USA, simply because of the legal framework under which most corporations operate. Robert Hinkley argues17, for the USA, that the law, in its current form, actually inhibits executives and corporations from being socially responsible because the law baldly states that the purpose of the corporation is to make money for its shareholders. Any deviation from that could leave the corporation open to a lawsuit. So Hinkley suggests simply adding a phrase on CSR to corporate law so as to enhance CSR. Law, he advocates, would then read something like Directors and officers have a duty to make money for shareholders, but not at the expense of the environment, human rights, the public safety, the communities in which the corporation operates or the dignity of its employees.

Fourth, CSR has a positive impact on the intangible assets of a company and investing in CSR is not simply a cost but also a market opportunity.

Fifth, CSR has a long-term affect on improving a company’s bottom line. There is a positive link between social and financial performance especially when looking at the increased relevance of intangible assets such as repu-tation and knowledge networks. These turn into a source of market value and competitive advantage. As Warren Buffet said, reputation takes years to obtain yet can be ruined in a minute.

Sixth, social responsibility is not confined to corporations. Institutions that have a major impact on the way we live are also expected to behave in a socially responsible manner NGOs and public institutions, as well as personal responsibility. Thus, for organizations caught in financial storms or off course due to the buffetings of the markets, CSR will, more and more, become part of their strategic planning. A true stakeholder focus crystallized around reworked values is crucial for these difficult times and will help responsible companies eventually sail into calmer, safer waters.

But, does the constant grappling with definitions and the many transgressions of corporations mean that CSR is ‘dead’ or that we are now moving into ‘Beyond CSR’ or ‘CSR 2.0′ as some commentators would have us believe? Anti CSR editors and those burying CSR might be tempted to take the catchier sound bite in that part of today’s negative world where it is easier to dispose than propose and announce the ‘End of CSR’: they might be advised to take a look at the evidence and note that there is still life in the concept.

Some commentators are trying to return us to the hopelessly out-of-date Milton Friedman view of business but the conclusion remains, that social responsibility has been, is and will continue to be crucial to the future prosperity and integrity of business wherever it takes place around the world.

Can, therefore, we call it what we like but still mean a robust strategic and systems approach to social responsibility? Perhaps a better expression will surface but so far none of the contenders sustainability, citizenship, business and society, ethical business have stuck long enough to focus minds.

CSR is not dead, simply there is what I call a ‘DEARTH of CSR’!

Supply chain collaboration has regained its importance and methods to shorten lead time on product development are being looked into and evaluated. The only way to rise up to these challenges and outdo competitors is to constantly improve and improvise.

In order to deliver on the scale and pace the market dictates, companies need to focus on devising an effective application management system, which will serve to help the bottom line byimproving efficiency. This will be reflected in aspects such as lowered costs, faster adaptability and the means to alter processes with respect to ever changing levels of innovation and demand.

Research indicates that in order to maintain competitive advantage, all the major companies need a system that allows them to deliver considerable levels of innovation. This demand for innovation is fueled by fluctuating changes in the market. The consumer desires value for money and that comes from process innovation to lower production costs, business model innovation to engage effectively with partners, and innovation in CRM to develop insight into consumer needs.

It is for this very reason that the auto industry’s survival is dependent on its ability to innovate continuously. Undoubtedly, this puts a lot of pressure on the existing application portfolio.

There are four key factors which are a prerequisite for the concept of continuous improvements and innovation in the auto industry to be realized.

Efficiency

Throughout the supply chain, the pressure on improving the quality and lowering the cost of making car parts and components is intense. This is why efficiency isn’t concentrated on the manufacturer with a brand name to uphold. When undertaking decision making for new design and purchasing, manufacturing cost is given due consideration as it forms substantial part of the processes executed on the factory floor.

A high level of flexibility across all business processes is required in order to offer consumers greater choice in the form of BTO or built-to-order vehicles. In the face of change application, portfolios need to be adaptable and capable of providing the right feedback of management infor-mation to facilitate process optimization.

Alliances

The days of the monolithic automotive manufacturer have been replaced by an environment within which suppliers, fabricators, designers, manufacturers, and specialists need to collaborate seamlessly. In terms of integration, this places an enormous burden on existing processes and applications, including the time taken to form effective partnerships, and finally the risks and costs associated with managing an increasingly intricate product lifecycle. It is therefore imperative to tap into the ability to adapt existing systems to support new forms of partnerships, and subsequently, a far greater network of exchange of information. It is for this reason that application portfolios have a key role in making these changes a reality.

Meeting Demand

Product innovation in the form of updated and/or new models is the basis of car buyers’ demand. In the 1980s, from the conception of a car’s design till the end product rolling off the assembly line, a lag time of 18 to 24 months existed. Today, due to better and interchangeable usage of components between models, improved and faster design processes, this time has been reduced to just 12 months.

Engagement between automotive manufacturers and suppliers occurs much earlier now in the product lifecycle, and there exists an active involvement between various stakeholders in the design phase of new models. Due to this rationale, the flexibility of existing applications and processes are key factors in reducing the time it takes to bring automobiles to market.

Cost Reduction

The impact on profit margins is inevitable due to the intense struggle and competition faced by car companies as they try to cope with the need to tackle consumers’ demand to pay as little as possible while enjoying more and more alternatives.

The consumer desires value for money and that comes from process
innovation to lower production costs, business model innovation to engage effectively with partners, and innovation in CRM to develop insight into consumer needs. It is for this very reason that the auto industry’s survival is dependent on its ability to innovate continuously.

A considerable element of the cost of products and services is ’scrap and rework’, which is incurred when the production process does not meet the predetermined criteria in the first go. Therefore, in order to achieve improved profit margins through cost reduction, it is critical that automotive companies develop more sophisticated sourcing strategies, which combine quality, cost and flexibility.

Conclusion

Organizations that have the internal framework, invest in R&D to design processes, and promote a competitive yet healthy culture, all of which enables them to adapt rapidly and deliver constant improvements in cost management, product development, collaboration, and consumer insight, will be the ones to lead the market in terms of growth and profitability.

The key factor in supporting innovation relies on the approach automotive companies take in constructing and managing their application portfolios and the methods they adopt to govern the way in which applications and business processes.

Just as energy is the basis of life itself, and ideas the source of innovation, so is innovation the vital spark of all human change, improvement and progress
Theodore Levitt – American Economist and
Professor at Harvard Business School

Pre-Washington consensus public policy on basic food commodities was hinged on a two-pronged strategy: First, guaranteeing a minimum price to farmers for their produce (calculated on the basis of factor input costs) through heavy buying of the produce by the public sector; and second, a government determined sale price for consumers to control food inflation and ensure affordability throughout the year with little price fluctuation. This was done though releasing quantities from government bought stocks to stabilize prices.

Significant government intervention in the basic food commodity market was justified at the time due to:

1.The cyclical nature of agriculture produce (that is, coming of whole crop once a year), which made growers liable to be exploited by the middlemen and merchants, who could lower prices through collusion as there was surplus produce in the market at the time and the growers wanted to clear their liabilities and get cash for the next crop.

2.Inelastic nature of demand for food commodities (wheat, rice and sugar) meant that little disruption in supply or availability of these items would result in large fluctuations in prices, which created an incentive for hoarding and controlling of the supplies for maximizing profits.

Mainstream economists favouring free market mechanisms saw government intervention in food markets as a distortion resulting in wrong price signals and inefficient allocation of resources. They were of the view that given a chance, markets are capable of efficiently regulating basic commodities and will result in better profits for the growers and economical food commodities for consumers.

The aftermath of the debt crisis which engulfed most developing countries in the early 80s, resulted in the rise of market orthodoxy in US and EC. IMF and WB free market-based stabilization and structural adjustment program-mes advised developing countries to withdraw state controls from basic commodity markets and allow establishment and management of markets in basic commodity trade.

Pakistan, like many developing countries also followed suit. During the last 28 years, the government, from having total control of food commodities (wheat and rice), has withdrawn from basic commodity markets; it now has a partial presence in the wheat market (government still procures 22-25 percent of national wheat produce) and has totally exited from the rice and sugar markets.

This process has been gradual, characterized by privatization of state-run sugar mills, closedown of state-run rice export corporation of Pakistan and privati-zation of its storage and polishing facilities etc. In recent years, the government’s role in the sugar and rice markets has been reduced to announcing the minimum purchase prices for both commodities and the start of crushing season for sugar mills but both of these announcements have only moral suasion and are partially followed, if at all.

After having taken itself out of actual buying of sugar and rice, it has been witnessed that the government has repeatedly faced difficulties in ensuring fair prices both at farm-gate to the grower and later to the consumer throughout the year. This has been despite very stringent basic food stuff regulatory state laws.

Wheat is the last commodity in which the state still retains a strong role as it not only sets minimum purchase price based on the cost of production but maintains it as well by purchasing 20-22 percent of the crop. This purchase, storage and subsequent release of wheat results in fairer returns to the grower and stable wheat flour prices to consumers year round.

Uptil 2004, pricing and availability trends in basic food commodities remained more or less stable apart for the years when crops failed. However, since 2004 food commodities pricing and availability have seen constant volatility.

Pakistan exported 500,000 metric tons (MT) of wheat in 2007-08 and in five months, the government had to import wheat worth 860 million USD to stabilize wheat flour prices although country had enough wheat for local consumption. There was a good wheat crop in 2008 – 2009 and a bumper crop in 2009 – 2010, but a huge increase in minimum purchase price from Rs 450/40kg to Rs.625/40kg (2007-2008) and Rs.950/40kg (2009-2010) auto-matically pitched the price of wheat flour beyond Rs. 30/kg (adding 24 percent as overhead and overhead charges).

Furthermore, provincial governments decided to subsidize wheat flour below purchase price (selling wheat at Rs. 250/50 kg to flour millers) during the month of Ramadan.

Rice consumption in Pakistan is estimated at about 2.5m MT.

During the last three years rice export proceeds have increased to USD 1.836 billion (see table 2) owing to the increase in international rice prices and discovery of African markets for low valued IRRI rice. Export of low value rice, which is stable food for poor in Pakistan and was available at Rs. 6-9/kg before discovery of African markets became out of reach for local consumers tou-ching peak at Rs. 45/kg last year.

During the current harvesting season (starting from October) there have been constant complaints by growers about the decrease in minimum purchase price fixed by the government from the last year, despite government’s commitment to purchase 1.00 m MT at the fixed price to stabilize prices in the market in the wake of bumper crop. There have been concerns about top rice exporters acting in tandem to purchase rice at lower than the government fixed price and to add to it rice prices have not shown any downward trend even after new crop has hit the markets.

First, recent sugar crisis in 2005 resulted from a drop in yield to 44.67 m MT resulting in sugar production of 3.00 m MT only and the government resorting to heavy imports costing over 624 and 260 million USD 2005-06 and 06-07 respectively. Since then the sugar sector has been beset with constant problems between growers, millers and the government. Fixing of price of cane and premium, starting of crushing season (which is fixed as November 15 but never adhered to) and non-payments of crop arrears to growers by millers even after one year are some of the problems.

Growers got better prices during the last three years and millers made huge profits by controlling supplies (CCP is investigating sugar mills for cartelization and monopolistic practices). Despite regular sugar imports by the government, it has failed to stabilize sugar prices during this time. NA standing committee on agriculture has blamed the government and the State Bank for the ongoing sugar prices, estimating excess profits of Rs. 70-80 bn. Accumu-lating to traders and sugar millers, according to a Daily Dawn Report dated December 15, 2009.

Pricing Trends

Observing and comparing price trends in wholesale progression of these commodities during November 7-8 and November 8-9, one cannot help but observe a lack of any trend in pricing despite cyclical production of commodities, which should translate in lower prices when the produce hits the market and gradual increases until peaking just before the next crop hits the market.

This erratic pricing behaviour of commodities owes less to production and availability (not withstanding occasional weather related failure of crops) and perhaps more towards government factor and commodity pricing policies as well as profit maximizing behaviour of the commodity traders.

Since the last several years, the state (democratic or otherwise) has found it difficult to guarantee a fair return for the growers’ produce and ensure availability at affordable prices for consumers . Consumers have been complaining of ever rising prices of wheat flour as well as rice and sugar. Growers of rice and wheat lament exploitation by the middlemen by forcing them to sell their produce below government fixed rates through cartelization.

Rice growers have accused 45 biggest exporters of rice for colluding to reduce farm-gate prices of rice. Sugarcane growers have shown their frustration as they do not get fair prices for cane, payments are withheld by sugar-mills, and sugar mills refuse to pay the premium envisaged by government laws. Also, there are perpetual delays in the start of sugar crushing season thus reducing cane production by substantial amounts.

All these symptoms indicate a sort of adverse incorporation of all major stakeholders, selfish goals being pursued at the cost of others and a total lack of adherence to any rules and regulations.

While the scenario clearly speaks of complacency, ineptitude and weak regulation on the part of government it also manifests weak assemblage of consumer and agriculturist interest groups in the country who have been far off the mark in protecting their interests.

Source: Karachi Wholesale Market Prices (Jodiah Bazar)

The fact remains that profit incentives are the best impetus to safeguard individual as well as group interest and this has been clearly manifested in windfall gains to rice exporters and sugar mill operators. Although it is certain that this profiteering spree in the short run is specially aided by the peculiar nature of farm produce in the presence of weak regulatory state and underdeveloped merchant business; however, in the medium to long run, the economic agents (growers) who try to adjust to the situation are forced to convert to other crops (for example, vegetables). These crops are safer from exploitation in their perception. Not to mention the consumer who has to spend more on food essentials resulting in reduction in consumption of other goods. The net result: there is a net loss in welfare and efficiency.

In the realistic scenario where the government’s ability to reign in and the powerful quest for maximum profits is too much to desire in the foreseeable future. The government’s policy options should incorporate efforts to develop a trust based partnership with all stakeholders especially those involved in processing and trading of essential food
commodities.

The relationship must be hinged on mutual gains resulting in maximizing welfare with minimum sacrifices in gains manifested through CSR. Through an increased awareness of corporate social responsibility amongst the traders, their profit maximizing instincts can be conditioned through moral suasion and voluntary action. Rice, wheat flour and sugar mills associations can be used as contact points to inculcate a sense of responsibility.

All mature businesses must retain a broader view of the future and draw strategies as players planning a long stay in the arena thus regulating their profit motives.

In the last two years, many issues have arisen that threaten Pakistan’s ability to feed itself. Food insecurity exists in part because there have been continuing wheat and sugar crises.

The situation also looks set to worsen with the government proposal to lease land to other countries. As companies become increasingly responsible for food provision, Corporate Social Responsibility (CSR) gains significance. This article will examine the issue of food security in Pakistan followed by an analysis of the wheat, sugar and land leasing crises.

A Definition of Food Security

According to the World Health Organization, food security has three components: sufficient quantities of food are available, affordable access to food and finally, knowledge of basic nutrition. Currently, there are at least 60 million food insecure people in Pakistan and this number is likely to rise in the future due to the impact of climate change and population growth. It has been predicted that the Pakistani population will reach 300 million within the next 20 years. In addition, more land in Pakistan may fall victim to desertification, which means that there will be less land to grow food on.

Food insecurity also brings up broader issues in Pakistani society concerning women and children. Pakistan, India and Bangladesh have half of the world’s underweight children. If children are underweight, this often means that mothers do not get enough to eat either. The Constitution of Pakistan gives the concept of roti, kapra aur makaan meaning food, clothing and shelter its due as a basic human right. Food security in Pakistan should be incomprehensible since the country produces enough food to feed itself. In fact, Pakistan is one of the top five rice exporters in the world and parts of Pakistan are among the top wheat producers in the world; Punjab alone produces 16 million tons of wheat per year.

The Wheat Crisis

In 2007, Pakistan experienced its first wheat crisis. That was the year which saw food and grain prices rise by 83 percent. By 2008, the price of wheat had increased from 15 rupees per kilogram to 25 rupees per kilogram. In an attempt to make quick profits the government exploited this dismal situation to its fullest. It exported more wheat than its usual amount, creating a domestic shortage. To make matters worse, meat consumption has increased in countries like China and India, which means that now more grain is needed, for feeding people as well as livestock.

The situation in Pakistan is dire. The persistent shortage of electricity is a huge obstacle in optimal production of wheat flour, as the mills cannot work unhindered, therefore are not producing enough flour. To exacerbate this shortage, the private sector has joined hands with the government in order to take advantage of high wheat prices. Many reports suggest that the government provides cheap wheat to flour mills, and much of what these mills produce is either hoarded or gets smuggled out.

The black market in Pakistan is quite formidable and the wheat price hike of 30 to 35 percent in the last two years in Afghanistan hints at a high likelihood of smuggling. Many of the flour mills are owned by influential people who have links and connections with the top brass/politicians/people in power. Thus, they are able to maneuver the government greatly in order to make huge profits. This is detrimental to our society in that we don’t get enough of what we grow ourselves, and if we do, it is at an unreasonable price. Wheat is one of the cheapest and most available sources of protein, yet the collaboration between our private sector and public sector don’t let it remain either! Given that wheat is one of the staple foods consumed in Pakistan, the government and the private sector should be obligated to provide it sufficiently and affordably.

The Sugar Crisis

Sugar is the second largest agriculture related industry in Pakistan. Despite its importance in Pakistani society, the sugar industry has undergone a crisis almost every year since 2001. One of the major reasons why this happens almost annually is the great extent to which sugar is connected to Pakistani politics. About 50 percent of the sugar mills in Pakistan are owned by politicians or their families. This came about due to the heavy government investment in the sugar industry in the late 1980s in the form of loans from national banks. In the 1990s, many of these loans were written off, which ensured that the industry was able to sustain itself, regardless of whether it was efficient or not.

Middlemen have little or no power in such a situation. Firstly, the sugar industry holds a lot of clout within the government. In March 2009, the Economic Coordination Committee was aware of the huge gap between supply and demand for sugar, but did not import the sugar quickly enough, causing its price to artificially increase. Secondly, even though sugar experienced hyperinflation during Ramadan, religious authorities had nothing to say on the subject. Thirdly, the government dictates when sugarcane will be crushed, whereas even a fifth grader who has studied social sciences is aware of the fact that if the sugarcane is not crushed immediately after harvesting, its sugar content loses weight and the sugarcane fetches a cheaper price. Fourthly, there are laws which state that farmers cannot process their own sugarcane or sell the sugarcane out of their own zone. All these factors ensure that the government and mill owners dictate the terms on which sugar is sold. Because of this (and the increase in price of wheat) some farmers have stopped growing sugar and switched to wheat. In these abysmal conditions, sugar processing companies should take great pains to ensure that the demand for sugar is met.

However, they are financially indebted to the government and pressurized by their own greed.

Land Leases by Foreign Countries in Pakistan

Another major cause of food crises is the leasing of large tracts of land by foreign countries in Pakistan. This is already a common practice in other developing countries. Richer countries such as Saudi Arabia and other Gulf States struggle to feed their own populations. It is now likely that Pakistan will lease more than 200,000 hectares of land to Saudi Arabia. Despite the hunger crisis in Pakistan, the government allows land leases because of General Musharraf’s 2001 Corporate Farming Ordinance (CFO). The main elements of this ordinance are: there is no stipulation on the maximum amount of land that can be leased; corporations can import machines without any tariffs; the first lease lasts for 50 years and this can be extended by 49 years, and finally, banks will loan corporations money if needed. In addition to this ordinance, the government also allows landlords to become corporations and lease large amounts of land, which puts small farmers at a large disadvantage. It has been realised that this policy was one of the worst made under military rule, however the current government has not abolished it yet.

The government and supporters of this ordinance have argued that the CFO is necessary because the Pakistani agricultural industry is rife with inefficiencies. 67 percent of the population is linked to agriculture in one way or the other, and according to the government, this percentage is too high. Empirical evidence however, depicts that in some African countries where land was leased to corporations, many people became landless. Already, our small farmers are struggling to lease land from the government. The World Trade Organization has stated that Pakistan is a net food importing country so land leases will only make the situation worse. In October 2009, a deliberation about corporate farming was held in Karachi, and according to the intellectuals there, corporate farming is likely to deplete water supplies and degrade the surrounding environment. Plus, in the case where the corporations are from outside Pakistan, they will be able to retain/enjoy all the profits and tax benefits.

Conclusion

This situation is not likely to engender any sense of responsibility on the part of the corporations or the government. As mentioned above, farmers, labourers and middlemen in Pakistan have almost no rights in this situation and they are left to fend for themselves. Even if the government decides to not abolish the CFO, there should be regulations to limit and monitor corporations’ activities, and a percentage of their profits should go to maintaining the land in a responsible way, and to prevent future food crises. In addition, the sugar and wheat industries need to be regulated immediately and responsibly, as these foods are staples in the Pakistani diet.

Pakistan is rich in natural resources, and these resources need to be used sensibly and conserved. If efficient irrigation is introduced, areas performing at sub-optimal levels can be taken advantage of more efficiently. This is imperative, given the projected population of Pakistan in a few years. Climate changes already wreak havoc upon the environment. The government and the corporations in charge of the land need to acknowledge this and act accordingly and fast, to ensure that food crises will not be as persistent and repetitive as they have been.

References
1.World Health Organization, “Food Security”

2.Dr. Hassan Isfahani “Food Crisis in Pakistan”

3.Dawn Editorial “Looming Food Crisis”

4.DAWN.com “Will land leases worsen hunger at home?”

5.Niilofur Farrukh “Hunger Pangs of Pakistan”

6.Manzoor Ali Shah “Food crisis can create law, order situation”

7.Rubab Saleem “Food Crisis in Pakistan”

8.Abida Mukhtar “Pakistan’s food Crisis”

9.Shahid Kardar “Understanding the Wheat Crisis”

10.Dr. Adeel Malik “Sugar and political power Part I”
< http://www.thenews.com.pk/print1.asp?id=198042>

11.DAWN.com “Will Land Leases Worsen Hunger at Home?”

12.Upreti B. R and Yamuna Ghale “Factors Leading to Agro-biodiversity loss in Developing Countries: The Case of Nepal”

13.Ahmad Fraz Khan “The Pros and Cons of Corporate Farming”

14.Ramzan Chandio “Corporate Farming to Produce Unemployment”

15.Willem van Cotthem “Corporate farming or land grab”

The underlying theme in this article focuses on how the current global economic crisis can lead to a more positive tomorrow if we work with change as opposed to resisting it.

1

In 1999, it took two earthquakes to bring Greece and Turkey. Fashionably called “earthquake diplomacy”, the disaster gave the two sides a chance to ‘help thy neighbour’ – leading to a new political era of peace after decades of mutual hostility.

Similarly, this shared global financial vulnerability gives nations an opportunity to move away from confrontation towards more collaboration. This change is visible already. At the recent meeting of the G20, one could say that the leaders from the top 20 world economies were at odds on a variety of issues. Some were driven by practicality, while others had ideological differences. Some sought long term commitments, while others eyed short term cures. But the very fact that the G20 summit superseded the G8 in terms of importance for the first time in many years, presents a sign of hope. This inclusion of a greater number in definitive policy making may well lay the necessary groundwork for a new age of peaceful coexistence.

2

Black Swan theorist, Nassim Nicholas Taleb, recently said: “People who were driving a school bus blindfolded (and crashed it) should never be given a new bus”, with reference to all the economic establishments, academia, regulators, central bankers, government officials, various organizations staffed with economists, that brought the global economy to this state. The lesson there is equally applicable to responsible selection of political leaders. Hence, if global citizens apply the same principle when choosing political leaders, which progressive and pro-reform people should do, then one can expect this recession to at-least beget better leaders.

3

In the years preceding the financial crisis questioning the basis of our economic transactions was to invite contempt and mockery. As long as the economies were booming, the cost of changing their inherent defects seemed far greater than their perceived gains.

With fault lines now glaringly obvious, restructuring the philosophical foundation of our economic system is not just possible but also inevitable. Call it moral capitalism or a socialist market, structural changes seem to be on the cards. The present financial crisis gives us a chance to rethink how we should go about doing our business and, more importantly, put our focus back to where it should belong, that is, the real sector.

4

Small economies have fared better than the larger ones during this recession. Their resilience is akin to grass which is more likely to weather a storm than a tall tree. In that sense, this recession presents the idea that locally driven small clusters of markets are better than a hyper globalised monopolistic transnational structure.

This shared global financial vulnerability gives nations an opportunity to move away from confrontation towards more collaboration. This change is visible already.

5

The rising underemployment and unemployment is naturally disheartening but it forces more people to start businesses of their own since the opportunity cost is either very low or zero. Creating self-employment will eventually, as the markets recover, lead to having more players in the economy thus resulting in a better ‘perfect’ market system.

6

At the corporate level, the recession presents more reasons to discover efficient ways of doing things that should remain in effect but are overlooked during the boom periods. History shows that time and again innovation has thrived in hard times. Learning from the current mayhem, perhaps this generation of intellectuals, can direct their energies towards making things more productive and longer lasting than credit default swaps and fancy technological gadgets.

7

Another positive aspect of the economic slump is that it gives good employees a chance to shine. During a boom most employees look good because the business is coming in anyway. But a slowdown allows employees to prove their mettle.

8

During the financial boom stock prices of even fundamentally strong firms seemed inflated to many savers. But with the crash trimming those bloated values, many stocks now look much more attractive and many are within the investment budgets of small savers. There is almost no better time to jump into the market, of course, after due research.

Previously building on the two other settlements in Hyderabad and Gharo, the basti now holds over 20,000 people in approximately 1,800 developed homes with adequate infrastructure and education, health and other facilities.

One of the biggest issues in the basti that was left unresolved was the large amounts of trash gene-rated and left unattended everyday at the basti. Once the population in KKB-3 began to increase, there were many attempts by the administration to lobby the local municipal services to management trash in the basti.

Unfortunately, after 3 years, there was no regular support from the local municipal services to manage the waste for the basti. The lack of resources available to the local government made it impossible to deliver these critical services to the KKB-3 citizens. The residents had created 16 mini-disposal sites (kachra kundis) in the neighbourhood for disposal. Some residents were also employing sweepers to collect the trash and deposit in the self-designated areas.

Household kitchen waste is placed in oxygen-permeable composite boxes.

Saiban acquired funding from an international agency as well as technical help from Waste Concern, a Bangladesh-based NGO with a long history of implementing effective waste-management solutions, to launch a Solid Waste Compositing plant in KKB-3. The plant staff consists of a team of sweepers (who collect and manage the compost), volunteers, and a general compost manager. After doing community surveys, it was determined that while most residents were unsatisfied with the current waste-disposal services, few were using sweepers to collect waste from their own homes. Currently, sweepers are employed to collect waste from home, but soon each household will be paying a nominal fee of Rs. 30 to cover the cost.

View of the composite boxes as a visitor enters the plant. The "holes' allow for oxygen to enter the compost.

Other community development challenges include mobilizing people regarding the storage of waste within homes (reduce plastic bags and employ old boxes/bins) and waste separation at the household level. Special focus will be school-aged children and community women residents, both of whom can give training to their peers.

Manila can hold its own quite well as an international event venue city against more established regional competitors like Hong Kong, Singapore, Kuala Lumpur and Bangkok. A vibrant metropolis that also boasts the headquarters of the Asian Development Bank, Manila may not be at the same level as the other Asian cities named in certain areas like its international airport or the service quality of communications services, but it does have an edge over the others in other important respects. For example almost everyone an overseas conference delegate will come across – from event management staff to hotel employees to taxi drivers, understands and speaks English – arguably the world’s predominant language of communication today between people of different nationalities whose native language is not English. The Net may be a lot faster in Bangkok but getting understood the first time round in English by the staff at even some luxurious five-star hotels in the City of Angels can be a rare achievement.

Manila was the venue for the 8th regional Asian Forum on Corporate Social Responsibility, held on November 19 and 20, 2009 and hosted by the Asian Institute of Management/AIM-RVR Center for Corporate Social Responsibility. The 2009 conference carried the theme: Sustaining CSR in Difficult Times and attracted 494 participants from 281 companies and organizations from 22 countries. A sizeable event that culminated in the giving away of the Asian CSR Awards 2009 at a glittering Gala Night, that also featured a well executed sit-down service dinner for some 500 people. Anyone who is in the know of event management will appreciate what a huge challenge just this one aspect of the Gala Night can be.

I have to admit that generally speaking I am somewhat skeptical about the efficacy and even the justifiability of a lot of forums, seminars and conferences that seem to take place all the time. And not irrationally mind you. For a lot of these are so transparently commercial or so farcical that one can only wonder why otherwise seemingly sensible companies and organizations even take part in them. Even such conferences go through the whole gamut of ‘props’ so to speak – keynote speakers, guest of honour, elaborate Power Point presentations, Q&A sessions and so forth, but to what end? Often the theme or subject of the conference has been debated a dozen times before and while speaker after speaker extols action and proposes solutions, all is neatly forgotten at the end of the conference and life carries on as before.

The AFCSR 2009 in Manila was a notable exception. Invited to moderate one of the 25 breakout “Special Interest Sessions”, I was able to experience and evaluate all the proceedings over about two and a half days in some depth. Net conclusion: an extremely useful opportunity for CSR people to obtain new insights, share experiences, acquire important learnings, evaluate best practices and case studies and simply, network with fellow professionals.

Conferences tend to get quite hectic in their activity schedules and AFCSR 2009 too was fast-paced and demanding. One golden rule I always follow when attending conferences is to try and ensure that I am staying at the conference hotel itself. Saves a lot of time and stress, especially when busy conferences allow you hardly 5 free minutes at a stretch at any point in time!

The conference itself was on November 19 and 20, but speakers and moderators had to reach a day earlier for a pre-conference briefing reception, at which they could also preregister and avoid the rush at registration by the delegates the next morning. This was a good idea and the ‘Power Dinner served as a pleasant ice-breaker where moderators could get to know their speakers and discuss their presentations, rules of procedure and so forth.

The next two days had plenary sessions to start off with and then the breakout or special interest sessions. All were efficiently organized and generally speaking the presentations were of superior quality. One of the reasons why I am skeptical of conferences as I have stated earlier is just this. A lot of presentations are little more than recycled verbosity, adding little new knowledge. Meaning-less rhetoric that really does not stimulate thought, leave alone action.

While the presentations at AFCSR 2009 that I managed to attend were thought provoking enough, I did feel that perhaps the number of special interest sessions and hence the number of presentations overall should have been lesser. At an international conference, you must give a presenter more than 20 minutes is what I say. Especially when the conference field – CSR in this case – is so rapidly evolving that any new thought presented, must be allowed to be espoused in some depth.

There were a fair number of presentations covering topics that are quite relevant to our times and hence of high interest to CSR people. CSR and poverty alleviation, the challenges and pitfalls for implementing a large CSR related project in a public private partnership, integrating CSR Into core business strategy and plans and CSR and the supply chain are all areas that are highly significant both for the corporate sector and for the growth of CSR practices. To the credit of the presenters I have to say that they managed to say a fair bit in the 20 minutes or so that they were each allowed, but as I said, perhaps what was needed was more time per speaker and lesser topics, so that these vital CSR themes could be presented and discussed in greater depth.

There are a number of factors that spell success for a large conference. Besides the obvious ones like slick event management, quality of speakers and presentations and an interesting programme, there are other more subtle aspects that can make the vital difference. Primary amongst these and something that is often overlooked by conference organizers is the quality of the participants or delegates. Many conferences fill up the rows with disinterested or subject unrelated people, who are there either because they have been nominated or even forced by their organizations to be the official representatives, or because they have some agenda of their own which they hope to achieve at that particular event. Then there are those who go to conferences to try and rub shoulders with the high and mighty who they know will be there, while still others are even more focused – conferences, especially in five star hotels, mean a good meal!

So I would argue that a conference can really buzz if the participants or delegates are seriously interested in and committed to the conference subject. Further, beyond even serious interest, if the delegates are knowledgeable about the subject matter and are hands-on practitioners, then you have a conference that is alive and purposeful every minute of its duration. And so it was with AFCSR 2009. While one obviously did not and could not interact with each and every one of the about 500 delegates, one did meet and talk to a fairly large number of them originating from China, India, Indonesia, Japan, Malaysia, Pakistan, Thailand, Vietnam and of course Philippines itself. And each interaction was refreshing and value additive in some respect. I attribute this to the fact that all the delegates were people actively involved in CSR in various ways – as corporate CSR programme managers, consultants, researchers, academics, specialized media reporters and even as beneficiaries of CSR interventions.

I suppose one can say that this level of stimulation is present in most professional conferences where ‘like-minded’ people are present, like doctors or architects or financial sector gurus and so forth, but I believe this conference of CSR professionals or advocates had a higher degree of motivation owing to the innately passionate nature of the subject, CSR itself.

Further, perhaps one can even go on to say that unlike conferences of some other professionals, there was no sense of competition or the play of egos amongst the participants. Most delegates were as keen to talk about others experiences and take away learnings as they were to talk about their own stories and projects.

The Forum culminated on the second night with the Asian CSR Awards, in which 211 entries from 132 companies from 14 countries were received. Awards were given out in 6 categories and the Awards evening was a well orchestrated affair, with a high level of camaraderie, anticipation and excitement. Smoothly executed, it was a befitting end to a conference that in my estimate benefitted everyone who participated in it.

The time is right to implement the ISO 26000 standard, Guidance on Social Responsibility, according to the International Institute for Sustainable Development (IISD).

The IISD has carried out a global assessment (http://www.iisd.org publications/pub.aspx?pno=1009) of its relevancy to small to medium-sized enterprises (SMEs). It mapped the materiality of the ISO 26000 Social Responsibility to SMEs through a global survey of 59 SMEs, 37 social responsibility consultations and 16 National Cleaner Production Centres across the world.

While IISD, like a number of other stakeholders, believes the standard has many shortcomings, it recognizes too that ISO 26000 has been in development for over five years and that more years of debate are difficult to justify. Postponing its launch would be a case of ‘too little too late’.

IISD is confident the standard presents a toughly negotiated position on how social responsibility could be interpreted and applied worldwide. It is also consistent with ISO’s objective of developing standards that are practical tools for achieving a sustainable world.

ISO 26000: A Broad Reference Document

IISD’s survey conclusions cannot be regarded as definitive, as it was based on an early working draft of the standard, which has since evolved through several more drafts. However, the survey has the merit of bringing to light the preoccupations of SMEs with regard to social responsibility.

The study concludes that driven by the global and prestigious brand value attached to ISO standards, SMEs will look to ISO 26000 as a broad reference document which provides a comprehensive definition of social responsibility and a detailed description of all its contents.

The draft standard represents an international consensus on how social responsibility, a concept that has been hotly debated for over 20 years, might be interpreted and applied across organizations of all types in both public and private sectors. It marks an important step in what has been one of the biggest, formal, multi-stakeholder processes in the history of standardization, bringing together over 500 individuals from 91 countries.

Remembering the Global Economy’s Backbone

The ISO 26000 process and the product have not been without critics. There are some who consider the sustainable development process to be beyond the reach of SMEs, who form the backbone of the global economy. SMEs are perceived as un-engaged stakeholders in the quest for social, financial and environmental equity.

Given their small size and lower profile in the market, SMEs tend to escape both the scrutiny of watchdogs and the assistance of governments and donors. But they are the first to be affected by the dynamics of globalization, including the prevailing economic downturn and ensuing fall in consumption.

For example, the credit crisis has severely affected credit flows to SMEs who are heavily dependent on bank credit and have limited recourse to financial markets. This is of grave concern to the entire global community as SMEs account for between 40 to 60 percent of global GDP and up to 70 percent of employment in member countries of the OECD – even higher percentages in non-OECD countries.

Even as confidence may be restoring in the financial markets and government stimulus spending begins to trickle into major supply chains, resources aimed directly at helping small firms weather the downturn remain few and far between.

Governments and the financial sector must heed small businesses’ call for improved access to finance. If SMEs are to take on environment and social improvements, they will require concerted support in terms of credit and consultancy. They will also require external expertise to interpret and implement ISO 26000 in a manner that is best suited to their business context. This inherently implies additional costs that small organizations may find difficult to justify.

As speculation mounts on how ISO 26000 will play out across global markets, we also need to be aware that while it may raise the bar on the level and scope of work that is defined as social responsibility, it can also create immediate term difficulties for SMEs who will lack the financial resources and expertise in the short term to follow its guidance.

Finally, dare we suggest that it is not standards, incentives, or any other voluntary market policy that will drive social responsibility in SMES, but the personal values of the owner. ISO 26000, as a guidance standard, could well appeal to enlightened entrepreneurs, propelling renewed growth with far less discontent.

ISO 26000 and Beyond

ISO 26000 is an extremely ambitious project, not only in terms of the working group size, but also considering the wide range of issues that fall under the banner of social responsibility. Ranging from human rights and decent work conditions to consumer protection, these are aspects on which the global debate remains tense and even polarized.

IISD’s study establishes that ISO 26000 may increase awareness, provide definitions and add legitimacy to the social responsibility debate. Another dimension that supports this perspective is that SMEs and their stakeholders tend to view standards as valuable starter tools for introducing firms to the concept of sustainable development and possibly help them determine the best places to initiate action.

Still, SMEs have little interest in following codes of conduct, writing corporate sustainability reports, tracking performance indicators and paying for evaluation audits.

As ISO 26000 is being designed as a global guidance document, this might not come as a big surprise. ISO 26000 is also a global standard for all types of organization-public sector and governmental, as well as big business and SMEs.

It is therefore impractical to expect a global document to have equal applicability across diverse sectors and geographies. It is also important to note that as ISO 26000 was developed through a very large, global, multi-stakeholder process, it reflects the generic middle ground where different stakeholder groups “agreed to disagree”.

Our challenge is to find methods to implement the improvements offered by the standard, that are different from the more formal ones used by multi-national companies.

Finally, dare we suggest that it is not standards, incentives, or any other voluntary market policy that will drive social responsibility in SMES, but the personal values of the owner.

SMEs have little interest in following codes of conduct, writing corporate sustainability reports, tracking performance indicators and paying for evaluation audits.

ISO 26000, as a guidance standard, could well appeal to enlightened entrepreneurs, propelling renewed growth with far less discontent.

The International Institute for Sustainable Development contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change and energy, measurement and assessment, and sustainable natural resources management.

Having thus assured a comfortable and at least financially stress free rest-of-the-life, what does the Chief do? Golf of course ranks as a front runner post-retirement activity. Then there is contract bridge or poker, lunches at the club and soirees, some reading but not too much, much drawing room discussion on politics and high finance and then the occasional foreign trip to visit overseas based children and grandchildren.

This at least seems to be the most common pattern for the recently retired Chief. And isn’t it a sad existence at the existentialist level, beyond materialism? Is this then the meaning of life? The end all before it all ends? Cuban cigars and designer suits?

While still in office, the Chief will almost certainly have had a brush with CSR in one respect or another. These days it is virtually impossible for any Chief to completely stay away from it! Whether it is understood or not, what is understood is that CSR-Speak is in the order of things if you will; it can be, pardon the cliché, ‘leveraged’. The best case scenario? The Chief paid more than lip service to CSR, moved beyond philanthropy and strategized CSR as a business function throughout all operations in the organization. Did I hear someone say the CSR Purist speaks? Be it so but the change is coming. CSR is coming of age. But this musing is not about CSR. It is about the recently ‘RETD.’ Chief and PSR – Personal Social Responsibility.

So, as the Chief you had believed that the corporate sector has a social responsibility. It has to give back to the planet and to people, in a way that ensures the future of both, while strengthening the company in return, in a fashion that makes the giving back or CSR sustainable into the long run. Perhaps you even made it happen in your
company. Perhaps you even personally led by example by forging a behaviour that clearly exhibited your personal commitment to issues like conservation or climate change.

The simple question that begs to be asked is that now that you are retired, should your social responsibility also be put into the closet with the company tie? Cease to exist, buried by the blight of personal material well-being? Come on, do justice to yourself. This is the time when you can really outdo yourself. Your triple bottom line has just become a double bottom line. For by retirement you have already assured the profits – a comfortable, even luxurious life for yourself and your family. Probably also for the next few generations! So what’s left Chief, are the people and the planet.

This for you is the start of your own Age of Aquarius. You cannot shut out the pain and the suffering and the wrongs and the abuse going on all around. In this age of globalization that you so firmly believed in while sitting in that leather chair as the Chief, you need to look at the sadness in this world too on a global basis and beyond your own bubble or even country. Life has given you more than your fair share and it is time to think beyond your golf handicap.

You have high education, a world of experience, a certain repute and standing, a huge network of influential friends and acquaintances, hopefully good health and let’s be honest, enough spare moolah of your own to seed-capital a good idea. So in between the golf and the final whistle (for it will come for all), take out a little time and discover the spiritual uplift that Personal Social Responsibility offers.

Want a specific direction? A tip from Praetor? With your background Chief, you can do most by capacity building future leaders educated young men and women about to enter the real world. This is the greatest contribution that you can make without over-taxing yourself. How you do it is for you to decide. Why not start with a personal SWOT and take it from there?

Can you do it? Can you be a source of guidance? A direction finder for a youth that really has had no time to absorb the lessons of history? Can you be the Chief who is going to pursue the triple bottom line until the match is over and the lights go out?

Of all the articles included in this compilation, perhaps the most interesting, succinct and easy to read is the introduction itself. Addressed to the consultants hoping to cash on this opportunity and trying to provide value to their client firms, Galea has developed a highly relevant and extremely easy to understand matrix: the urgency-importance matrix.

Designed to categorize issues in terms of their urgency and their importance, it helps consultants define areas of current and emerging interest for firms and thereby help them become pro-active and remain ahead of competition – the core issue for an organization that wants to be sustainable. Consultants are advised to liken their client organizations to a car and develop the ability to identify which of the ’squeaks’ from their ‘cars’ are cosmetic and which indicate the need for an urgent trip to the car mechanic.

With the first chapter focusing on the current trends in consulting for sustainability in the UK as a whole, other articles focus on specific industries such as mining, real estate and finance and banking. Business concerns in these industries all over the world have a greater need for understanding and developing a tactical and strategic approach to sustainability since their operations involve use of finite resources and have a greater impact on the quality of life of people involved as stakeholders.

Likewise, there are articles that focus on the interrelationship between climatic concerns and human rights issues and the importance of correctly assessing environmental impact of the business. However, perhaps the most important articles are those that focus on the identification and assessment of stakeholders for any given business concern. The ’stakeholder dashboard’ is such a tool that, though technical and tedious to develop, aims to help the business become proactive about stakeholder engagement.

For consultants, these research articles will indeed serve to improve their understanding of their own role in this dynamic and challenging field. The chapters entitled ‘Strategic Sustainability Consulting’ and ‘Supporting the Change Agents’ help build a case for sustainability and provide practical tips for consultants. Galea’s editing efforts will also benefit business and environ-mental science students since it provides many tools and formulae that will aid practical reporting and research.

Even so, the articles are often tedious to read in spite of having subtitles. It would perhaps have been better to exclude the details of research methodology and focus instead on the research findings and their impact in specific business settings. Often the diagrams are complicated and confuse rather than illuminate, such as the figure showing the connection between social impact assessment, country human rights risk analysis and mitigation. Similarly, the number of graphs and tables could have been reduced. This book, therefore, would likely be read only as part of a curriculum or research assignment.