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Building trust through Corporate Social Responsibility

May 14, 2010

MAPping the Future

By Junie S. del Mundo
Philippine Daily Inquirer
First Posted 19:24:00 05/02/2010

CORPORATE reputation is a company’s most important asset.

Around the world, companies have realized that corporate reputation gives them a competitive advantage—from marketing their products to attracting the best talents.

An equally important asset is sustainability, defined in From One Earth to One World, as “the process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional changes are made consistent with the future as well as present needs.”

To a large extent, corporate reputation is a function of how a company addresses the issue of sustainability in its operations.
It is not hard to imagine that for many Filipino companies, saddled with the constraints of operating in a developing economy, achieving sustainability is a much bigger challenge.
However, this is a very short-term view that may have long-term implications on their corporate reputation.

A more sustainable way of building corporate reputation is through Corporate Social Responsibility (CSR). Definitely, CSR—when integrated into the life of a corporation—can build corporate reputation.

Not philanthropy

For companies with existing CSR campaigns, it is important not to confuse this with philanthropy. Richard Welford, chair of CSR Asia, notes that in the Philippines, many large companies are “extremely” generous in giving away money through their foundations, but they are not getting their money’s worth through these activities.

For CSR efforts to truly be sustainable, Philippine companies need to weave them into their businesses and see how they can create their competitive advantage this way.
It involves strategic planning and integration in the company’s business plan.
Companies, in this regard, are pursuing a more sustainable model of CSR where making profit is enhanced by enlightened self-interest.

Asian Sustainability Rating

Last October 2009, the Asian Sustainability Rating 2009—a benchmarking tool covering the top 20 firms by market capitalization in ten Asian markets, was released by CSR Asia.

The study was undertaken in Australia, China, Hong Kong, India, Japan, Malaysia, Pakistan, the Philippines, Singapore and Thailand. Information was gathered from publicly available sources only such as annual financial reports, CSR reports, corporate websites, brochures and presentations. The ASR scores were based on 51 indicators covering six major areas: governance, codes and policies; CSR strategy and communication; marketplace and supply chain; workplace and people; environment; and community and development.

Only two Filipino firms—Petron Corporation and Ayala Land—made it to the top 30 of the overall list, which comes as a disappointment considering that many Philippine companies have global footprints and considerable profits. The next Filipino companies in the list—Meralco and San Miguel—trailed way behind the two.

In particular, Philippine companies were observed to be lacking in the area of disclosure—a fact that regulators and the private sector have long recognized as a problem area, but have not addressed thoroughly. In particular, the ASR report noted that disclosure on environmental, social and governance issues was “surprisingly poor” given the size and global reach of the companies investigated.

Right tools

Interestingly, the report noted that Philippine companies do provide information on community impact and on development. This attests to the fact that these companies, in fact, care about the well-being of their stakeholders and the community at large. They only have to use the right tools in addressing these issues, as well as communicate these properly. At the same time, Filipino companies could also balance their efforts by disclosing information on other important areas.

Alongside this, they should begin looking at integrating CSR into operations. For instance, airlines could look toward a campaign that will address the effects of their operations on climate change. Agriculture businesses, on the other hand, should look toward sustainable water management. Likewise, large manufacturers (this can also apply not only to clothing but also on FMCG or electronics) should look toward poverty alleviation or child education, while mining companies can turn to community development in their areas of operation, such as stimulating entrepreneurship activities. CSR, after all, is not about aid, but teaching people to help themselves.

As companies start using environment-friendly raw materials, they should demand the same from suppliers and partners. Hand in hand with this, they could communicate proactively on issues pertaining to the environment, society and governance.

An investment

Definitely, companies have to see CSR as an investment. Welford emphasizes that this is an investment that pays beautifully for itself. CSR is about building brand reputation and trust which will lead on to economic benefits. It means getting better customers, better workers, and better investors.

Just like any investment, the time to leap on the best opportunities is during the most challenging environments, for instance, the current financial crisis. Not walking away from these challenges and instead embracing them, even during recession, adds trust and builds brand reputation.

Size should not stop a company from pursuing a sustainable CSR program. In fact, being small has innate advantages. With limited resources, they have a more strategic focus. Actions like practicing good “green” habits in the office like utilizing energy-efficient lighting and equipment as well as water recycling, among others, are initiatives they should pursue. Small companies can do small things that, when taken together, make a difference. After all, responsible business is everybody’s responsibility.

In pursuing a CSR program, companies have to devise a social engagement strategy that will enable them to sufficiently engage their stakeholders. Social engagement is a dialogue-based approach to building corporate reputation. By formulating locally relevant initiatives through meaningful multi-channel, transparent and real-time dialogues, a company does not just contribute to community welfare, but also ensures the sustainability of its business.

A social engagement program should always be trust-based and steeped in shared values. Its sustainability rests on the stakeholders’ ownership of the program, which in the end can mean its success.

(This article reflects the personal opinion of the author and not the official position of the Management Association of the Philippines. The author is managing director of EON The Stakeholder Relations Firm and member of the MAP CSR Committee. Feedback at map@globelines.com.ph For previous articles, please visit .)

http://business.inquirer.net/money/columns/view/20100502-267716/Building-trust-through-Corporate-Social-Responsibility

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