Sustainable Business and Corporate Social Responsibility

By Thomas Thomas, Executive Director, Singapore Compact for Corporate Social Responsibility

It has created new demands and expectations of business which if not addressed, can be potential risks for a company. The question therefore is not whether there is a role for business in meeting society’s expectations, but rather what that role is.

Increasingly Corporate Social Responsibility (CSR) is no longer just a jargon used in a corporate PR exercise. Senior executives and corporate strategists worldwide are now honing their skills in aligning business competencies with CSR to build new markets, create business opportunities, engage key stakeholders and enhance their corporate governance and reputation.

Underpinning this momentum is a fundamental belief that business thrives where society thrives; good businesses are also business that do good. Companies that have the trust and respect of their stakeholders are likely to work better and be sustainable in the long run.

What is Corporate Social Responsibility?

Corporate Social Responsibility refers to carrying out business practices which lead to the sustainable development of the organization and abides by the good business practices and standards. It is essentially about doing good and doing well. It generally refers to the process of integrating social values and mission within business decision-making, to achieve positive and sustainable outcomes towards business, environment and the community at large.

CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental, and social imperatives (the so called triple bottom line) while at the same time addressing shareholder and stakeholder expectations. The Triple bottom line has been succinctly described as “People, Planet and Profit” and covers all the absolutes of corporate social responsibility. “People” (Human Capital) pertains to fair and beneficial business practices towards labour and the community and region in which a corporation conducts its business. “Planet” (Natural Capital) refers to sustainable environmental practices. “Profit” is the bottom line shared by all commerce, conscientious or not.

The International Organization of Standardisation (ISO) is trying to develop ISO 26000 a social responsibility. They started the process formally in 2004 and expect it to be ready by 2009, through a multi-stakeholder approach. The stakeholder categories are government, industry, labour, NGO, consumer and SSRO. The working draft definition of the ISO 26000 working group on social responsibility is:

“Responsibility of an organisation for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that is consistent with sustainable development and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organisation.”

Corporate Social Responsibility is not something that operates in isolation from the issues that concern companies everyday. Increasingly it is being seen as an important and integral part of normal business operations.

Our Shared Challenges Ahead

The challenges ahead of us are enormous. The world today faces many environmental, social and sustainability issues. Climate change, depletion, mismanagement of natural resources, people issues relating to disadvantaged families, children and the elderly in need have remained as key challenges.

In the region, there are also ongoing concerns like natural disasters and pandemics. Singapore as a city state plugged to the global environment is also not immune. Four years ago we had the SARS crisis. Now avian flu is a major concern globally as well.

What is the relevance for corporate management and board of directors today? In many instances, these are issues that not only impact the community at large but also directly affect the day-to-day business operations and decisions in the workplace.

A very important aspect of CSR is Corporate Governance. Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the goals for which the corporation is governed. An important theme of corporate governance deals with issues of accountability and fiduciary duty, essentially advocating the implementation of guidelines and mechanisms to ensure good behaviour and protect shareholders.

Another key focus is the economic efficiency view, through which the corporate governance system should aim to optimize economic results.

The Singapore CSR Landscape

CSR in essence is not new and has been an evolving term without a standard definition. It is generally understood to be how companies function as a responsible corporate citizen towards its stakeholders and operating environment.

It is not simply about philanthropy, public relations or charity money giving. It is an integration of management process

in achieving real benefits for both business and its stakeholders. CSR is crucial for the achievement of sustainable business and also fair economic development in the long run.

While the CSR concept may be relatively new to Singapore, its spirit and practices have been present in the social, environmental and economic fabric here. Some of these are reflected in the self-help groups, grassroots associations and charity groups strongly supported by the business community.

The strong tripartism that exists in Singapore has provided a good foundation for the development of various CSR initiatives. In Singapore, tripartite partners are key stakeholders in shaping new workplace policies and outcomes for implementation. In particular, CSR is relevant to employers, the labour movement as well as the government as all parties play important roles with ongoing efforts. In Singapore, CSR has been strongly promoted through the NTUC cooperatives.

There is a good chance you may be doing something already. Every business and organization has an impact on society through what it produces, how it employs and develops its people, and how it relates to its environment and community at large.

UN Global Compact and Singapore Compact

In the global CSR environment, the United Nations (UN) Global Compact plays an important role as a voluntary international initiative to unite business and social partnership. It seeks to realize the vision for a more sustainable and inclusive global economy. With about 3,800 companies in over 90 countries, the UN Global Compact is the largest corporate citizenship movement in the world.

Singapore has also adopted the UN Global Compact 10 universal principles as a clear and structured framework, in bringing forward the CSR movement as a country. Given the same objectives, the “Singapore Compact for CSR” was founded in January 2005 as a national CSR society and country network partner of the UN Global Compact global movement. The national CSR committee in Singapore has deliberately taken a multi stakeholder and tripartite approach in embracing the CSR movement, for a more coordinated, consensus-building and effective implementation process.

Key programmes include information and advisory services, networking and partnership programmes, among other ongoing efforts. A youth chapter was launched early 2006 with active interest. The inaugural CSR national conference for the first time had attracted over 500 participants and leaders from both the social and business sector.

It is encouraging that over 150 stakeholders including business, unions, cooperatives and NGOs have joined the Singapore Compact, in supporting the CSR movement here. There is now a growing pool of CSR interest groups and practitioners in the workplace. It is also notable several companies have since established clearer structure and committees relating to CSR.

Future Singapore Compact work plan will include a proposed national CSR survey and award to raise awareness and sharing of positive experiences among corporate leaders. The challenge ahead is to garner stronger support from more like-minded members, partners and business leaders to further the CSR dialogue and collaboration.

Conclusion — CSR as Inevitable Reality

The founding of the Singapore Compact for Corporate Social Responsibility as a national society has helped Singapore to embrace CSR being a coordinated national initiative, and to view the issues holistically while addressing gaps at the national level.

Singapore Compact shares the priority to shape the very structure of relations between business, community and government in the new economy, drawing opportunities to promote cooperation, and sustainable growth through stakeholder engagement and partnership. This is the practical and moral challenge of our time.

The 21st century challenge for business is to be both profitable and responsible. Social causes will have new champions.

Companies will inadvertently face increased expectation and scrutiny in the area of social reporting and accountability.

Towards this end, senior executives and board of directors are in position of power to reshape corporate strategies and influence positive outcomes. In the final analysis, CSR may not be an option for most companies; it could well be the inevitable reality.

ISO 26000 will:

• be for organisations of all types in both public and private sectors, in developed and developing countries;

• add value to SR existing work by:

• developing an international consensus on what SR means and the SR issues that organizations need to address,

• providing guidelines on translating principles into effective actions, and

• distilling the best practice that has already evolved and disseminating it worldwide for the good of the international community.

The UN Global Compact:

• international initiative that would brings companies together with UN agencies, labour and civil society to support universal environmental and social principles.

• a voluntary and non-regulatory initiative

• a framework to promote sustainable development and good corporate citizenship

• helps realize the vision of a more sustainable and inclusive global economy.

• catalyses actions in support of UN Goals

THE TEN PRINCIPLES

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights

Principle 2: Make sure that they are not complicit in human rights abuses

Labour Standards

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining

Principle 4: The elimination of all forms of forced and compulsory labour

Principle 5: The effective abolition of child labour

Principle 6: The elimination of discrimination in respect of employment and occupation

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges

Principle 8: Undertake initiatives to promote greater environmental responsibility

Principle 9: Encourage the development and diffusion of environmentally friendly technologies

Anti-Corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery