Government incentive for CSR, or not

With the government's intervention, CSR debate in India has taken a perverse course.

Indian companies, and foreign companies operating in India, have by and large failed to demonstrate respect for responsible business practices. Their inaction, and often irresponsible behaviour, is a result of the fact that India lacks a robust stakeholder community. A good chunk of NGOs in India are only too happy to receive donations than to press them to adopt responsible business practices. No wonder, most companies get away with PR-ish charity in the name of CSR.

Multinational companies operating in India have also found it convenient to join the charity-CSR bandwagon rather than setting leadership examples. Many of them have respectable CR initiatives in their home country but in India their CR fails to rise above charity.

Industry's apathy prompted the government last year to introduce voluntary CSR guidelines for listed companies. Though the CSR guidelines are quite impressive in the sense that they include several key issues such as care for stakeholders, workers rights, human rights, environment and inclusive development, the industry does not seem to be obliging. The industry actually started lobbying for incentives such as tax breaks if it were to spend on CSR.

Government officials are divided. India's corporate affairs minister has been quoted saying that companies may be provided fiscal incentives for participating in CSR activities. But a senior official in his ministry recently said that companies should adopt CSR as a corporate culture rather than asking for incentives. He even indicated that if companies fail to adopt CSR, the government may even make CSR-spend mandatory.

Now the perverse piece here is that CSR is being interpreted as philanthropy. Unfortunately, India Inc needs to include larger issues that have become more pronounced with breakneck economic development. These issues include climate change/carbon emission, environmental protection, anti-pollution measures, working conditions, human rights, customer protection, privacy and bribery.

India is even pushing for a bill in parliament that would require companies to spend at least 2% of their profit on CSR activities.

Most likely, companies will have to deal with local politicians and legislators who would want companies to spend on their pet projects. The legislation will also give rise to potential accounting fraud where companies will falsely claim expenditure on CSR.

But this is what happens when the private sector does not take voluntary action. Legislative action then appears as the only alternative. But legislative CSR is compliance, not CSR. Did we not teach all these years that CSR is when companies go beyond compliance?

Manufacturers take lead on sustainable fashion

The textile and fashion industry in Singapore is playing a leadership role in promoting sustainable fashion, clearly a first in Asia. The lead is being taken by the Textile & Fashion Industry Federation of Singapore (TAFF), the apex industry body.

I recently had the privilege of developing national competency framework standards for sustainable fashion for Singapore's textile and fashion industry. Based on the competency standards then I helped develop a three-day course on sustainable fashion value chain complete with an assessment plan. The course will be run by the Textile and Fashion Industry Training Centre, the training arm of the Textile and Fashion federation of Singapore. The course will be generously subsidised by the government which is keen to build sustainable fashion capabilities for the industry.

The Singapore industry is also hosting an international conference on sustainable fashion to be held on the 24th Nov 2010. I will be one of the speakers at the conference speaking on "Establishing the Industry Standards for Sustainable Fashion." Other key speakers include Adidas, M&S, Organic Exchange, IFC / World Bank Group, and Brandix-Sri Lanka.

See here for more detailed programme, or here.

To register for the seminar, see here, or get in touch with Textile & Fashion Industry Training Centre Pte Ltd, 2 Leng Kee Road, #02-09 Thye Hong Centre, Singapore 159086, Tel +65 64759897 Fax (65) 74753583 E-mail: eric@taftc.org

What's shaping CSR in Asia

Further to my comments on what is driving CSR in Asia, types of CSR activities preferred by companies in Asia, and key challenges for CSR in Asia, here are some of the recent developments in Asia that will potentially influence the course of CSR in Asia:

• Voluntary sustainability reporting guidelines by the Singapore Stock Exchange
• Hang Seng Corporate Sustainability Index by the Hong Kong Stock Exchange
• Voluntary CSR guidelines by the ministry of corporate affairs in India (comprehensive, core elements include care for stakeholders, ethical functioning, workers rights, human rights, environment and social development; includes need for policy, strategy, clear goals, measurement and reporting)
• India pushing for legislation to impose CSR Tax on companies
• Philanthropy in China: Tycoons pledging their wealth for charitable causes
• Asian businesses making headlines for the wrong reasons:
  Foxconn, the Apple Computers supplier in China for working conditions and workers suicides, a bunch of palm oil companies for environmental destruction and human rights issues, Vedanta Resources, a mining company, for controversial mining projects in the state of Orissa in India.

Key challenges for CSR in Asia

In the last couple of days, I have shared some points on "What is driving CSR in Asia" and "Types of favourite CSR activities in Asia" on this blog. These are the points that I made during my speech including a the panel discussion at the International Singapore Compact CSR Conference 2010 held in Singapore on 6-7 October.

As promised, today I am sharing a few thoughts on the real and potential challenges that face corporate responsibility in Asia. Here they are:

Key challenges

• Absence of strong and mature stakeholders means companies are under no pressure or scrutiny to do the right thing.
• In fact, green-washing is going to be one of the biggest problems in the coming months as more and more companies start writing annual sustainability reports to meet government guidelines.
• In the absence of a robust stakeholder community, green-washers will more likely have a free run.
• Green-washing is also going to be a big problem for those companies which are genuinely doing good work. Their work will be undermined by the Green-washers.
• Capability is going to be a major challenge. Companies will need to hire competent sustainability experts if they are to drive a genuine sustainability programme. And such talent is in short supply.

Lack of pressure from activists is actually an opportunity for businesses here. They can formulate a well thought out sustainability plan.
Most western companies did not have the luxury of planning out a well rounded sustainability programme. For most of them, it was a knee jerk reaction. When they were hit by a crisis, they reacted by taking one small step necessary to address the crisis. So every new criticism brought a new action. Only now some of them have started to take a more holistic approach toward sustainability.

Tomorrow, will be writing about the recent developments in Asia that will potentially influence of course of CSR in the region.

Types of CSR initiatives in Asia

Further to my blog post "CSR drivers in Asia" yesterday, here are what I find three broad categories of CSR activities in being pursued by companies in Asia:

• Compliance driven initiatives, mostly in the global supply chain
• PR-led initiatives, glossy reports and tall claims but no real work on the ground, mostly philanthropy
• PR-led initiatives, some initiatives on non-threatening issues such as environment but total silence on the core issues that are really material to their business
• Companies genuinely trying to embrace sustainability or corporate responsibility; this group is in minority

Your views or suggestions to improve/expand this list are welcome! Please leave your comment.

Tomorrow, will be talking about the key challenges facing corporate responsibility in Asia.

CSR drivers in Asia

Recently, I was asked to share my views in a panel discussion on "What is driving CSR in Asia" at the International Singapore Compact CSR Summit held at the Resorts World Sentosa Convention Centre on 6-7 Oct. Here are some of the points I made:

Key drivers:
Compliance was the first key driver in Asia when multinational retailers introduced social responsibility code of conduct for their suppliers. And compliance still remains a major driver.

Much of CSR in Asia is still limited to philanthropy. Last month, India’s leading industry federation Assocham published a report on CSR by Indian companies. The report said the companies’ primary focus is on community welfare.

PR is becoming an important driver. So you can expect to see more and more companies releasing glossy annual CSR reports, largely assembled by their spin doctors, low on substance and high on rhetoric and tall claims.

Reputational risk is becoming a driver in some of the sectors such as the palm oil industry.

More recently, governments have started driving sustainability. Sustainability reporting guidelines by the Singapore Stock exchange, CSR guidelines by the ministry of corporate affairs in India, and CSR reporting guidelines by Bursa Malaysia are some of the examples.

In Singapore, the Green Mark Scheme is another example where it is mandatory for property developers to achieve at least the Green Mark for all new developments.

Singapore has recently approved a national competency framework for sustainable fashion value chain which I help developed. The initiative is aimed at developing sustainable fashion and retail industry in Singapore. And Singapore will be organizing the first international sustainable fashion conference on the 24th of November this year. The sustainable fashion framework will be launched in that conference.

If you have other thoughts, will be happy to know. Please comment.

Tomorrow I will share the three broad types of of CSR initiatives in Asia, and the key challenges ahead. So, please return to this blog tomorrow!

Philanthropy is CSR in India

It's official now. CSR for Indian companies means philanthropy.

A study by the Associated Chamber of Commerce and Industry in India, a top industry federation in the country, says that community welfare is the primary focus of CSR initiatives by Indian companies. Education for the underprivileged and rural development are the other CSR priorities listed by the surveyed companies.

FMCG companies are at the forefront of CSR (actually philanthropy) followed by chemicals companies and IT companies.

There is no mention of workers' rights, human rights, child labour, tribal rights, bribery and ethics, governance, responsible supply chain, fair wages, workplace health and safety, discrimination, carbon reduction, product safety, consumer rights, stakeholder engagement, protecting natural resources etc.

Though there is no talk of moving toward a low carbon economy or committing to voluntary reduction of carbon emission, the report indicates that making money through carbon credits is catching the attention of companies. "The big corporate houses are now going for the carbon credits which have been a good attempt to prevent the global warming," says the Assocham press release on the report.

In most companies, CSR is being driven by PR executives who see philanthropy as a good photo-op. Many of these companies go on to win CSR awards and get invited (ok, they buy these speaking slots by way of sponsorships) to CSR conferences to lecture on CSR.

Actually, Indian companies have no pressure to embrace corporate responsibility in their operations. An enlightened civil society is missing and media is equally illiterate about corporate responsibility.

Ironically, development NGOs love these companies which are proving to be their new source of funding for philanthropic projects and saving their own jobs.

See here for more on the Assocham report.

See you at the International Singapore Compact CSR Summit 2010

The two-day International Singapore Compact CSR Summit 2010 begins on the 6th Oct at the Resorts World Convention Centre, Sentosa, Singapore.

I will be speaking at the conference on Asia's Successful CSR Strategies on Day-1, Plenary Session 2 (1:30:3:00 pm). Here is the session detail:

Plenary Session 2
Asia’s Successful CSR Strategies

· What are the regional drivers for CSR?
· How significant is CSR for businesses in ASEAN and Asia?
· What are the latest developments on CSR in the region?

Panelists
Dr Filemon Uriarte,Executive Director, The ASEAN Foundation
Rajesh Chhabara, Asia Editor, Ethical Corporation Magazine
Professor Richard Welford, Co-Founder & Chairman, CSR Asia

Moderator
Mr. Tay Kay Luan, President, Business Council for Sustainable Development Malaysia
Chief Executive, Institute of Bankers Malaysia

Book launch
The conference will also see the launch of "Socially Responsible and Sustainable-Company perspectives and experiences," a book on sustainability stories from Singapore. I am one of the co-authors of the book, published by Singapore Compact.

For more information on the conference, please see here.