Discover the changing face of Asian CSR.
There was a time when Asian companies viewed corporate social responsibility (CSR) as little more than a cheap marketing stunt. CSR initiatives were a necessary lip service for the sake of good PR, but did not really play a role in the sustainable development of companies.
But that period is now in the past, according to speakers at Enterprise Asia’s inaugural International CSR Summit held in Macau SAR, China in June.
The summit, which gathered over 200 representatives from 14 key Asian economies, showed that far from being a mere publicity trick, CSR is now key in the tough balancing act that Asian corporations face when it comes to ensuring both sustainability and profitability.
CSR has gone beyond the arena of corporate giving and has now entered the realm of creating shared value (CSV) between businesses and the communities that they impact, said Alexandra Tracy, President of Hoi Ping Ventures and Chairman of the Association for Sustainable & Responsible Investment in Asia.
“The success of every business is impacted by other companies and the surrounding infrastructure around them. And so supporting or improving that local community could also have an impact on profit and productivity,” she said.
Instead of relying on occasional dole-outs, CSV occurs when corporations engage communities and individuals to create mutually beneficial economic value.
For instance, creating quality but affordable products for lower-income consumers does not only allow companies to reap profits from underserved market segments but also gives low-income communities access to products that would ordinarily be out of their reach.
CSV, as opposed to traditional CSR, also allows firms to cut down on costs and make their business models more sustainable. In particular, Tracy highlighted Olam’s sustainability drive, which resulted not only in substantial cost savings and a more efficient supply chain but also in employment creation for African women.
“Looking at this from an investment point of view, creating shared value is not an add-on but it’s really part of the core business strategy and it has the potential to be integral to a company’s profitability and competitive position,” Tracy said.
Even capital markets are now paying attention to shared value initiatives. Dr Niven Huang, General Manager of KPMG Sustainability Consulting, highlighted that bulk of a company’s value now comes from intangible assets such as sustainability practices.
Listed companies in Europe will soon be required to disclose their environmental, social, and corporate governance (ESG) information in their annual reports, while Asian countries such as Taiwan have also started mandating large firms to disclose their CSR initiatives.
“Last year, Singapore Stock Exchange also announced that maybe by the year 2017, all of the listed companies in Singapore will be compelled to release their ESG performance and information. Why would capital markets be so interested in CSR? There must be something going on about this,” he said.
Speaking at the same event, NTUC FairPrice CEO Seah Kian Peng said that Singaporean companies are still more focused on traditional CSR instead of more sustainable CSV initiatives.
“Investors are interested in sustainability because the public at large are getting more aware and interested in sustainability issues. So if your company is [not interested in sustainability], you do it at your own peril,” Seah said.
But the ball is not solely in the corporate court. Governments should also take the lead in institutionalizing sustainable business practices, said Tan Sri Dr Fong Chan Onn, Chairman of Enterprise Asia.
“Governments need to take the lead in shaping an enabling environment conducive to advancing sustainability. The society needs to embrace the idea that wealth creation and social empowerment can and should co-exists. And corporate leaders should adopt the notion that building a sustainable business is the greatest legacy of
all,” Dr Fong noted.
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