Businesses that respect the community benefit

PUBLISHED : Thursday, 14 April, 2005, 12:00am
UPDATED : Thursday, 14 April, 2005, 12:00am

Obligations to society may cost money but they also bring corporate gains

CORPORATE SOCIAL responsibility (CSR) makes great copy. Annual reports are full of it. Television commercials wax lyrical about it. But does anyone really take the subject seriously? Perhaps not seriously enough, said Richard Welford, professor of corporate environmental governance at the University of Hong Kong. 'Some take CSR seriously, but for some it's just public relations hype,' said Professor Welford. 'For those who take it seriously, it is more than mere communications.'

What exactly, then, is CSR?

Any definition is bound to include words such as sustainability, ethical behaviour, corporate responsibility, and health and safety. Simply put, CSR is about companies managing their operations in order to have a positive impact on society.

'CSR is about reciprocal obligations,' Professor Welford said. 'Businesses are given a lot of power in society, and they have this obligation to give things back. They should invest in the community; implement good employment practices, provide a good working environment, that sort of stuff.'

Is there a risk that commitment to the community can compromise a company's profits? Is there a chance of sacrificing the bottom line?

'There is zero conflict between CSR and the bottom line,' Professor Welford said. 'I just don't buy the argument that CSR subtracts money from the bottom line. That doesn't mean it doesn't cost money. It does. But it also brings benefits, such as enhanced reputation, brand image and trust, which is a big issue.'

Ethical practices have always been a corporate issue, but the surge of interest in the topic goes back to the anti-sweatshop campaigns of the 1970s and 1980s. CSR has become a buzzword in only the last five to 10 years. On the global scale, Europe leads the way, especially Britain and Germany.

In Asia, Singapore and Japan are relatively active. North Korea and Myanmar, where forced labour is still the norm, are probably at the other end of the scale. Child and bonded labour is a serious issue in countries such as India and Pakistan. Freedom of association - or the right to form and join labour unions - is a major concern in China. In Hong Kong, the key issue is what Professor Welford calls 'the work-life balance'.

'We did a survey on this recently and found that people work excessively long hours here,' he said. 'The average working week here is 55 hours. One-third of the respondents said they couldn't be seen to be leaving the office first, and they couldn't leave before their boss.'

Little wonder that 76 per cent of Hong Kong people say they are stressed.

Job discrimination is another key issue, and includes discrimination based on gender, disability, race, family status, age and sexual orientation.

'A lot of companies are increasingly concerned about diversity in the workplace,' said Shalini Mahtani, chief executive officer of Community Business, which provides training in CSR strategies. This concern is often born of the fear of lawsuits.

'There are laws in Hong Kong that make companies responsible for the actions of their staff. If a woman is subject to sexual harassment by another employee, the firm can be held accountable.'

It can also be argued that discrimination results in wasted resources. Not hiring a well-qualified person does not make good business sense. It makes less sense not to promote people you have invested in, simply because of gender or race. In Hong Kong, women are relatively well-represented in the workforce, accounting for 43 per cent, but only 23 per cent hold top management positions.

'Companies are not maximising their investments,' Ms Mahtani said. 'In most firms there are almost zero women at board level, and relatively few at senior management level.'

Most Hong Kong companies continue to take an old-fashioned view of CSR.

'Most still think CSR is about philanthropy - making a cash donation, donating equipment or having employees volunteering to do something, such as visiting homes for the elderly,' Ms Mahtani said. 'It is seen as a cost and not a benefit to business.'

One problem facing companies wanting to be good corporate citizens is that the CSR concept has broadened significantly in recent years. Companies know it is important but have a difficult time quantifying its true value. 'The emphasis companies place on CSR is not commensurate with its value,' said Lau Chung-ming, head of the department of marketing, Chinese University of Hong Kong. 'They know it is important but do not invest that much in it because the returns aren't immediate. The definition of CSR is also much broader than before.'

A couple of decades ago, companies thought it was enough just to make safe and reliable products; now they have to consider a host of issues - the impact of production procedures on the environment, the welfare of their employees, the impact of business on the community.

'Now it is not just the products alone but the whole procedure,' Professor Lau said. 'Companies have to be responsible to their customers, their shareholders and the community. To do a good job, they have to invest a lot.'

In the end, most Hong Kong companies simply follow what the law requires - nothing more, nothing less.

'Some companies that have factorieson the mainland do seek ISO certification to demonstrate that their products are environmentally friendly, but they do this just to satisfy the demands of their customers,' Professor Lau said.

'I think they all are conscious that practising CSR is good for their image, but they don't really know how much is necessary to satisfy all their stakeholders. So they just satisfy those that are most pressing.'