Asean CSR

(Source: BusinessWorld online. Click here to view the original article)

THE TARGET set by the Association of Southeast Asian Nations (ASEAN) to forge a single market by 2015 is fast approaching. The latest information we got is that the so-called ASEAN integration is now more than 70% complete. However, the remaining 20-plus percent is made up of the more contentious issues so reaching a definitive agreement to be able to meet the self-imposed deadline of Dec. 31, 2015, remains up in the air.

Still, in view of the confidence expressed by the ASEAN leaders as well as the enormous benefits that integration will bring to the member-countries, more likely than not, the deadline will be met -- one way or the other. The stakes are so high for the leaders of ASEAN to stumble at this stage.

How will an integrated ASEAN look like? Let’s examine some significant facts and figures.

• It will have the third biggest population (and therefore market size) in the world with 600 million people. This is next only to China       with 1.35 billion and India with 1.2 billion, and bigger than the European Union’s 500 million and the United States’ 315 million.

 • It will have a total gross domestic product (GDP) of $2.356 trillion, making it the eighth largest economy in world. This is larger      than India’s, Russia’s or Brazil’s. More importantly, the combined GDP’s growth rate will be one of the highest in the world.               ASEAN is expected to grow by 5.3% this year versus 3.3% for the rest of the world. In addition, foreign direct investment (FDI) in the region has been growing significantly in the past years. For 2011, it cornered 7.6% of global FDI.

• It will cover a land area of 4.46 million square kilometers, the seventh largest in the world. The territory possesses one of the most bio-diverse systems in the planet and is blessed with abundant natural resources.

Based on the above, the future possibilities for a united ASEAN will be mind-blowing and the probability that it could replicate China’s phenomenal growth is not far-fetched. Depending only on the vision, determination and cooperation of the leaders involved, the region’s rise to economic prominence will be just a matter of time.

The most compelling impact of the ASEAN integration would be in the area of trade and investment. This is bound to shoot up to unheard-of heights and thereby bring about sustainable prosperity to the entire region.

But for all these expectations to materialize, both the public and the private sectors must be ready and willing to seize the opportunities as they emerge. Governments must think long-term and set up the framework and policies necessary to encourage the growth of commerce beyond their own borders. For their part, private companies must have the gumption to expand their operation and broaden their reach. Governments will lay down the tracks and private companies will drive the engine.

This then is the challenge to the companies operating in the ASEAN region. They must now start thinking regional, if not global. It is of utmost importance. Exposing themselves to new markets, honing their global competitiveness, as well as partnering with other regional players will be the only way to go.

What then will be the imperative for companies to succeed in this new environment besides excelling in their core business? The answer lies in these three words: Corporate Social Responsibility or CSR.

Companies that will venture into new territories (meaning new countries) must guard themselves against becoming perceived as exploiters or in the game for profit alone and nothing else. On the contrary, they must work to be seen as institutions that imbibe the highest level of professionalism and integrity, and are considerate of the welfare of society.

After all, in defining CSR, companies must answer two sets of critical questions: The first set is: “How do we make our money? Is it through the practice of good governance? Are we mindful of our impact on the environment? Do we respect human rights? And the second is: “What do we do with our money? Do we benefit only our owners? What about the other stakeholders? Do we give back to society?

In the case of Philippine corporations, the ones that are already testing or have already tested the so-called waters of the regional enterprise like the Manny Pangilinan Group, the Ayala Group and the San Miguel Group, to name a few, are all practitioners of CSR. They probably have the most advanced CSR programs not only in the country but also in the entire region. They are all pillars of the League of Corporate Foundations (LCF), an association of the biggest companies practicing and advocating CSR in the Philippines. It is safe to assume therefore that their reputation as upright corporate citizens have preceded their entry into the expanded business arena.

Other companies intending to follow the lead of these three conglomerates should also be mindful of the importance of CSR and should include this as an integral part of their strategy for going regional. To do otherwise is to leave themselves vulnerable to charges of crass commercialism and insensitive opportunism.

The world of business today is far removed from the era of the robber barons of the early twentieth century. Corporations are no longer just judged by their efficiency to create value for their stockholders but rather by the ability and willingness to benefit the stakeholders where they operate. Hence, the term corporate citizenship was coined and gained currency to reflect the high ethical and moral standards that companies must uphold as part of their way of doing business. These are the very considerations that prompt companies to practice CSR: to drive home the point that the business of business today is not only business but also protecting the environment, creating jobs and social equity, and bringing prosperity to people and their community.

As society becomes even more observant and critical of the corporate behavior, the more significant becomes the role of CSR in navigating the emerging environment. To paraphrase a famous slogan in the mid-20th century, CSR is the wave now and of the future!

The article was first published by BusinessWorld (Manila, Philippines) and came out in its print and online editions as part of its 'MAP Insights' column, a regular space in the Opinion section that features contributions from the Management Association of the Philippines. 

The author, Mr. Edgado Amistad, is a member of the MAP CSR Committee, an advisory council member of the League of Corporate Foundations, and the current chairperson of the ASEAN CSR Network. His full-time job is as president of both UCPB-CIIF Finance and Development Corp. and UCPB-CIIF Foundation, Inc.

Feedback at <map@globelines.com.ph> and <ecamistad@cocofinance.com>. For previous articles, please visit <map.org.ph>

By Thomas Thomas

It has been just over a month since the collapse of the Rana Plaza garment factory in Dhaka, Bangladesh, killed 1,127 people, most of whom were lowly-paid factory workers. Barely three weeks later, closer to home in Phnom Penh, Cambodia, the roof of the factory manufacturing Asics sports shoes gave way, killing three workers.

Beyond the loss of lives, what is more unfortunate is the recurrence of such incidents time and again.

Last year, more than 400 workers perished in three separate garment factory fires in Pakistan and Bangladesh. In all three cases, the factories lacked fire extinguishers, had poorly designed fire escape routes or owners who had locked the escape routes.

These tragedies underscore the poor working conditions many factory workers in developing countries still face on a daily basis. And while these incidents occurred outside Singapore, we must not live in the belief that all corporations here are above board.

Singapore's labour laws ensure that a minimum level of standards must be met; however, there have been instances where companies have not performed up to par. Instances, for example, where migrant workers who lack collective bargaining power are exploited because they are ignorant of the local laws and of employees who suffer physical or verbal abuse at the workplace that go unreported.

SOCIAL MEDIA AND REPUTATION

Increasingly though, corporations are finding that their customers pay close attention to what they do, where they source their products and how they treat their workers, and companies are soundly chastised when caught doing the wrong thing.

In the case of the Rana Plaza collapse, clothing brands Benetton and Joe Fresh — rumoured to have garments made at Rana Plaza — had their Facebook pages inundated with comments from indignant customers upset about the human rights violation in their supply chains, and threatening to stop buying their products.

In Singapore, a company is now being investigated following a 17-second video clip of an alleged workplace abuse that went viral.

Social media is aiding the spread of information and, slowly but surely, raising the level of civil consciousness among consumers in the process.

In today's business climate, this means that companies must choose to do the right thing, instead of merely meeting minimum standards by adhering to regulations, because the cost to a company's reputation and image tarnished by human rights violation can be high.

In a marketplace fiercely competitive for customers and for talented employees, this is not a price that companies should be willing to risk.

CERTIFIED SOCIALLY RESPONSIBLE

What is heartening for companies looking to adopt a holistic, sustainable approach to business is that over the past decade, developments in the area of corporate social responsibility (CSR) have resulted in frameworks and tools that can guide companies on reviewing their business philosophy and operations, and look at where they can improve both within their organisation as well as with external stakeholders.

For example, the ISO 26000 on Social Responsibility, launched in December 2010, provides corporations with guidance on socially responsible behaviour and possible actions to adopt. One of the seven principles is the respect for human rights.

Although ISO 26000 is currently only a guideline and not a certification, many countries have introduced similar standards that convert it to a management system extending certification to compliant companies. Countries leading the way include Denmark, which has adopted a national standard, the DS 26001, offering certification in "socially responsible management system". Austria's national version goes further to mandate actions that are currently only recommendations under ISO 26000.

Part of ASEAN Community 2015's goal is for CSR to contribute towards achieving sustainable socio-economic developments. Could Singapore be an early adopter in South-east Asia and consider such national standards?

Another framework is the United Nations (UN) Global Compact, which covers 10 CSR principles in the areas of human rights, labour, environment and anti-corruption; advocates transparency and requires signatory companies to adopt, implement and report their CSR journey. And in 2011, the UN Human Rights Council endorsed the Guiding Principles for Business and Human Rights — the first UN framework on corporate human rights responsibility.

BREAK THE CYCLE

Regionally, the ASEAN Intergovernmental Commission on Human Rights is conducting a baseline study on CSR in its member states. The study will give us an overview of the situation in the region and will contribute to raising standards of human rights among businesses operating here.

The silver lining to the Rana Plaza tragedy is that it has compelled major clothing retailers such as Benetton, H&M, Mango and Esprit to sign the Bangladesh Fire and Safety Accord to improve the safety standards of their factories there. Meanwhile, major retailers such as Walmart and Gap are facing pressure from American media and consumers for their refusal to sign the accord.

It begs the question of what it would take for companies to finally sit up and take concrete, preventive action. Another disaster in Asia? Or more consumers demanding companies to demonstrate greater accountability?

In the face of a civil society that is growing in social activism, companies would do well to become early adopters of a more sustainable business model. Only when businesses actively look to ingrain the fundamental principles of human rights in their entire business operations, will we break the cycle of human tragedies like Rana Plaza.

***

Thomas Thomas is the Executive Director of Singapore Compact for CSR and CEO of the ASEAN CSR Network. The article was published in the 'Commentary' section of the TODAY newspaper in singapore last 28 May 2013. The Multi-Staekholder Forum on Business and Human Rights organized by the ASEAN CSR Network, Singapore Compact, UN WG on Business and Human Rights, Global Compact and Singapore Management University was held on the same day.

Chosun llbo, one of Korea's largest and most established daily newspapers, supported a one day CSR Conference with the theme of 'CSR Assessment Model Based on ISO 26000' and a sub-theme of 'Overseas CSR Strategies for Global Companies', with a particular interest in introducing Korean companies on how to practice CSR in the southeast Asian region. The event was hosted by Chosun Ilbo The Better Future and Arcon and was held last 10 April 2013 at the Millenium Seoul Hilton Hotel, Seoul, Korea. Close to 200 delegates were in attendance.

Resource speakers included Richard Welford of CSR Asia, Toby Webb of Ethical Corporation, ISO 26000 expert Hans Kroder from the Netherlands, CSR Specialist Florian Beranek from UNIDO in Vietnam, and Sam Lee of consulting firm InnoCSR in China.

The ASEAN CSR Network was represented by Ms. Yanti Triwadiantini, a member of its board of trustees and executive director of Indonesia Business Links, and Mr. Jerry Bernas, manager of the ASEAN CSR Network. Ms. Triwadiantini spoke on how CSR is practiced in Indonesia, providing case examples from selected industries and Korean companies. Mr. Bernas shared how CSR is linked to the development of an ASEAN Community by 2015 and shared examples of ASEAN companies in different stages of CSR implementation.

The High Commission of Canada to Singapore, in partnership with the Singapore Ministry of Foreign Affairs, Singapore Compact for CSR, Canadian Chamber of Commerce Singapore, and the ASEAN CSR Network, organized a half-day seminar on CSR last 12 March 2013 at the Marina Bay Sands Convention Centre. The event was attended by over 60 representatives from corporations, high commissions and international organizations.

Mr. Vanu Menon, Deputy Secretary, Southeast Asia and International Organizations for the Singapore Ministry of Foreign Affairs, opened the seminar by sharing on the history of Canada-ASEAN cooperation, starting from Canada becoming one of ASEAN's first dialogue partners in 1977. He said that the "cooperation has been growing from strength to strength" since then and that Singapore is pleased to take on the role of coordinator for continued dialogue between ASEAN and Canada.

HE Heather Grant, High Commissioner of Canada to Singapore, described how CSR is in line with Canadian values and reiterated her country's support to ASEAN integration and connectivity, including the promotion of CSR as this is critical in achieving long-term business goals and success.

Mr. Thomas Thomas, Executive Director of the Singapore Compact for CSR and CEO of the ASEAN CSR Network, presented on the state of CSR in the ASEAN region and its link and relevance to the building of an integrated ASEAN Community.

Ms. Signi Schneider, Vice-President for Corporate Social Responsibility at Export Development Canada, spoke on how they are practicing CSR through their investment decisions and operations, highlighting the importance of aligning business strategy with sustainability and social responsibility issues.

Mr. Edgardo Amistad, Chair of the ASEAN CSR Network and former chair of the League of Corporate Foundations (Philippines), spoke on how CSR was currently practiced in the Philippines and shared insights into how ASEAN's economic growth must be made more inclusive and sustainable.

Representatives from two companies –Ms. Ishete Chellaiah, Senior Environmental Consultant for Golder Associates (Singapore) and Corrine Tan, Head of CSR for Maybank Singapore– also shared their respective organization's commitments to CSR.