Thursday 28th February, 2008


Of corporate social responsibility in T&T

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BY Dr Ron Sookram

In the past year, there were significant efforts to promote the practice of corporate social responsibility (CSR) in T&T. This was evident by the various newspaper articles, CSR seminars and the report “Mapping Corporate Social Responsibility in T&T” published jointly by the United Nations Development Programme (UNDP) and the South Trinidad Chamber of Industry and Commerce. It is reasonable to think that this momentum will intensify in 2008.

Already, the United Nations Economic Commission for Latin America and the Caribbean (Eclac), together with the Organisation of American States (OAS), the Young American Business Trust and the Caribbean Association of Industry and Commerce have launched the research phase of their project “Promoting Corporate Social Responsibility in SMEs in the Caribbean.”

One of the key aims of this project is to capture regional corporate views and practices regarding CSR among SMEs in the sustainable development framework. Despite these initiatives, however, the local business community, unlike the multi-national corporations, remains generally skeptical about investing in the practice of CSR.

CSR challenges in T&T

An examination of T&T’s CSR climate reveals that the slow buy-in among our business community is due to a number of factors. In this article, consideration will be given to three of these.

1. There is still a limited understanding of the potential benefits that CSR can bring to business organisations. Arguably, the social and commercial value that CSR can add to companies has not been adequately articulated.

As a consequence, companies are yet to be convinced of the positive impact that CSR can have on their bottom line. Integral to this scenario is the perception that the practice of CSR is not an investment but rather an expense that adds no benefit to the financial performance of the company. Yet, it has been proven that CSR can be financially worthwhile to businesses (Business for Social Responsibility, 2006).

The financial rewards of CSR have to be considered in the same context in which intangibles have been understood to play a significant and growing role in the assessment of value enhancement in business. This is because a large degree of CSR benefits are, in fact, of an intangible nature.

Intangibles are rooted in human capabilities and are manifested in the relationships and the profile of organisations. They are assets that depend primarily on human creativity, not materials. These assets are transformed into enduring value for organisations by building know-how, capacity to innovate, and forming alliances and networks—all of which lead to enhancing brand and reputation.

When we speak today of the knowledge-based economy, the information economy and the services economy, we are actually speaking of the continuing ascendance of intangibles as key value drivers in the modern corporation.

Competitive advantage resides in the minds of managers far more than the portfolio of physical/tangible assets of the organisation. In 1997, investment in intangibles (e.g. brand, training and R&D) exceeded investment in traditional tangibles (e.g. property, plant, equipment) for the first time. The former is estimated at about $1 trillion a year (Business for Social Responsibility, 2006).

2. Although we speak of sustainable development in T&T, there is doubt concerning the extent to which it is actually practiced. The sustainability of investments in terms of their social and environmental impacts is not given the level of priority that is required. It is essential for us to re-assess or redefine development in alignment within the global context, and in accordance with the principles of sustainable development.

As with other processes, this change towards development will be slow and requires support from those that are most influential in our society. There is a significant link between sustainable development and CSR, and the extent to which CSR is implemented in an organisation or country is highly influenced by the extent to which sustainable development is embraced. Therefore, T&T’s CSR development can be assessed through this framework or perspective.

3. The involvement of stakeholders in driving the CSR agenda in T&T is also important. In societies where the practice of CSR is advanced such as Canada, USA, Europe, Argentina and Brazil, stakeholder involvement has been instrumental. In these countries, stakeholders advocate for companies to be socially responsible with respect to environmental and human rights issues, for instance.

Non-Governmental organisations (NGOs), particularly, have traditionally been not only the most effective stakeholder driver for the promotion of CSR but also watchdogs in determining how responsible firms have been in their CSR initiatives.

In fact, the development of the CSR movement owes a great debt to the activity of NGOs. It was this group of actors who first alerted the international community to the need for more responsible practices in the environmental and human rights arena.

Companies tend to build their CSR strategy according to the concerns raised by stakeholders. CSR initiatives have been undertaken based on the anticipated reaction of NGOs since “NGO actions can have a detrimental effect on reputation and business performance” (Martin, 2005). On the other hand, in T&T, stakeholder visibility and influence on the CSR question is not as forceful as is required. NGOs have not been adequately shaping or driving CSR in this country. Without their involvement companies will not be as motivated in adopting CSR practices.

The way forward

The role of government is also significant in the CSR equation, particularly in creating an environment that encourages its practice. The Government should deliver a credible message on CSR, one that is attractive to companies and society. In so doing, trust and respect is gained for businesses to get involved in the CSR agenda. The Government must leverage relationships with the big locally-owned corporations in T&T to be champions of CSR practice. These corporations must accept the demands of corporate responsibility.

In this way, government can get these business entities to promote transparency, accountability, co-ordination and the willingness to co-operate with SMEs and the social stakeholders in the pursuit of sustainability objectives.

Of course, the Government must not only guide and lead this process of CSR implementation, but it must also become a participant. It must ensure that CSR activities are properly aligned with the national development plan, Vision 2020, so that they can deliver real benefits to society.

In addition, the Government must present to businesses the meaning and importance of sustainable growth and development, both for businesses themselves and for society, by identifying CSR related activities that are of interest and concern to each industry sector and to companies of different sizes within each sector.

Dr Ron Sookram is engagement manager, CSR, Arthur Lok Jack Graduate School of Business. You may e-mail him at [email protected]

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