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Photo: Mark Lopatin IAT01-09/4 Aid & Development Corporate Social Responsibility: Easy to criticise – but not that easy to achieve Emily Talmon-l’Armee, Head of Operations at the Business Humanitarian Forum (BHF) in Geneva, Switzerland An Indian woman earning a livelihood making improved cook stoves for a local entrepreneur who sells them in nearby villages in the state of Maharashtra. R ecently, over what started as a rather pleasant lunch, and after a description of the kind of work I do, I found myself once again feeling backed into a corner and losing my appetite. My dining partner complained that large corporations are not really interested in helping developing countries at all or helping society, but are rather just hungry to make money and exploit markets wherever they get the chance. “...it’s all about profit and about selling more hamburgers; more services... more of the American way of life ...Companies are not very interested in helping the people in the world at all, only taking advantage of them!” How many times have I heard this in my work by colleagues who work in humanitarian aid for non-governmental organisations (NGOs) working in developing countries? Even within the great halls of government and multilateral donor agencies who encourage development and aid and participation of the private sector, there is a fear that the big multinational companies are simply out to make a profit. While people acknowledge that many corporations do some good with their Corporate Social Responsibility (CSR) activities, there is more evidence of finger pointing and criticism than praise by organisations such as The Economist and Christian Aid. Christian Aid wrote an article in early 2004, highlighting the fact that corporations can do a lot of harm, yet they mask it by pretending they are doing INTERNATIONAL AID & TRADE charitable and good work. The Economist also leans toward the negative aspects of CSR, while acknowledging some good. In January 2005, they wrote: “...for most companies, CSR does not go very deep. There are many interesting exceptions... practices that work well enough in business terms to be genuinely embraced; charitable endeavours that happen to be doing real good... But for most public companies CSR is little more than a cosmetic treatment. The human face that CSR applies to capitalism goes on each morning, gets increasingly smeared by day and washes off at night. A reminder of the definition of CSR As the name indicates, a CSR activity is defined as one where a private corporation undertakes to help communities in a responsible way and helps to relieve social ecological or economic problems where the company is based or where the company has corporate activities. These activities can involve working to solve a local crisis or emergency, improving the quality of local health or education, or improving environmental or labour conditions in society. The purpose of this paper is not to whole-heartedly endorse each company’s CSR policy, but rather to show examples of the tremendous amount of work involved in the implementation of CSR projects. Following are examples of how CSR activities are implemented in post-crisis and in other challenging environments. 1 Aid & Development DHL’s Story: Joining forces to establish a disaster management air transport network It took a human tragedy like the 2003 earthquake in Bam, Iran to realise that coordinated airport emergency services were necessary in order to respond quickly to help hundreds of thousands of people in need. In early 2004, seven companies gathered in Dubai, the United Arab Emirates, to establish a volunteer force which would be able to respond more quickly to emergency relief. Led by DHL, the other companies are: TNT; Emirates Airline; Dnata (Dubai Airport’s ground handling company); Aramex; Chapman Freeborn (these last two are also mainly flight logistics companies); and Dubai Aid City. After a period of ten months, 60 people in Dubai had become trained in disaster preparedness – to be able to deal with another crisis situation like that of Bam. The training came none too soon, since the “Team” would quickly be tested when the Tsuanami disaster struck on December 26, 2004. Two days after the incident, the Dubai team flew to Colombo, Sri Lanka to help local airport authorities manage the transport and logistics of all the humanitarian aid and to provide the most assistance possible in the critical relief period just pursuant to the crisis. Even though the Tsunami relief provided in Colombo was a resounding success, it did not go as smoothly as the Team would have liked. For example, DHL and its team were prepared to work around-the-clock, in dual work shifts of 12 hours each to help with the emergency relief effort. The local airport community, which had not been trained to handle this kind of crisis, was not aware of the amount of effort needed. It took nearly one day of extra effort and time in communications to convince the local authorities to allow for and participate in 24-hour work efforts. In addition, the Team was not aware that the Colombo airport lacked some of the basic equipment needed to off-load planes and transport incoming goods. Extra forklifts were hard to come by and other material handling equipment was also lacking. Other issues that were not anticipated were the need for customs handlers to clear the incoming goods through the Sri Lankan airport. It would have been best to include communications and media experts to handle all the journalists who had descended upon the country. In addition, the Team had initially expected to phase out their involvement after ten days. In this initial joint effort, the hand-over to the local Sri Lankan officials took 20 days and more staff than originally anticipated. For a company like DHL, this type of activity can and does incur costs, however, as Chris Weeks, a Senior Manager of DHL remarks, “It doesn’t cost the company a fortune to help out in this type of operation and our involvement is very timely and effective. We don’t stay involved for a long time and we turn the operations over to the local handling company when the surge has diminshed. However, we come in at a critical time, and we know all about logistics and transportation coordination. Therefore, we can help to bring in emergency aid in the most efficient way possible with fairly little effort on our part. This works well for all parties involved.” The focus of the Team’s intervention at a critical time had an extremely beneficial and life-saving effect on the ground. As Weeks remarks, “Working with a team of other companies and organisations required some extra coordination skills 2 IAT01-09/4 since the Team had not worked together previously in such an effort. Nonetheless, everyone of the group just left his or her corporate badge at the door and jumped in to get the job done.” Without these efforts, the Colombo airport would have been overstretched after a few days, with a possibility that it would have had to shut down due to excessive freight and lack of handling capacity. In that case, the loss of lives after the initial crisis could have been even greater. The Shell Foundation: Low cost clean stoves tackle indoor air pollution Given the parent company’s emphasis on oil, it is no surprise that the Shell Foundation works to solve the problems of affordable energy for the poor. Clean and affordable energy is often inaccessible to billions of poor in developing countries, either due to its high cost or due to the fact that power lines simply do not stretch to poor, rural areas. In many countries, women and children look for very crude solutions to solve the problem of heating and cooking in their homes. They burn anything from wood, to crop waste, to dung as a no cost or inexpensive solution to heating and to survival. This causes a great health threat, in particular to women and children who breathe in the fumes from these indoor fires, causing both pneumonia and chronic obstructive lung diseases. The WHO has identified indoor air pollution as the fourth largest health risk to people living in developing countries. In order to solve this problem, the Shell Foundation launched an Indoor Air Pollution (IAP) programme in 2003 called “Breathing Space”. With a budget of $11 million, a handful of people at the foundation and NGO partners in eight beneficiary countries, the Shell Foundation intends to help up to ten million people over the period 2003-2008. The organisation is not interested in a one-time donation of technical expertise or equipment to solve the problem. Rather it seeks longer-term sustainable methods for the affected communities to develop an alternative heating system. The issue of affordability was central to the Shell Foundation’s approach. So far, the project has assisted up to 200,000 households through pilot programmes in India and Guatemala. The Shell Foundation staff and its partners did in-depth work with impoverished households to determine whether the people indeed perceived their heating and cooking methods as a health dilemma. Interestingly, rural women played down the health hazard, by complaining of smoke, dirty kitchens and the time spent collecting wood. Once the Shell Foundation took this on board, the right marketing and cookstove solutions were combined. All of these steps add up to an approach which brings together stove design, the role of local entrepreneurs in making and selling the stove, as well as the preferences and purchasing power of the customer. Commenting on the progress of the Breathing Space project, Ms. Westley, Programme Manager at the Shell Foundation, remarks that “even the lowest price of a stove is still sometimes just too high for the poorest of the poor in the rural areas. Some of the people cannot afford micro-credit payments to purchase the stoves, since they will not have any means to pay back even these mini-loans.” Therefore, the Foundation is currently working with implementing partners to make links with women’s self-help groups and co-operatives in countries such as India. These types of www.aidandtrade.org Aid & Development Photo: E Talmon-l’Armee IAT01-09/4 BHF staff with Dr. Karim Baz: Local partner at the generic medicines factory site in Kabul grass root organisations can provide microcredit to their members for the purchase of cleaner stoves. Previously, the indoor air pollution problem had been tackled with government subsidy programmes which had been unsuccessful in the past. It is encouraging therefore to see that the approach of the Shell Foundation has, to date, been successful. The Shell Foundation has developed an IAP toolkit based on the lessons from its pilot programs that others in the field of IAP prevention can access. European Generic Medicines Association (EGA) works with the Business Humanitarian Forum (BHF) to donate a factory to produce much-needed medicines in Afghanistan This project concept was born in early 2002, when the EGA participated in a dialogue session held by the BHF in Geneva. The session was held to find ways for the private sector to partner with humanitarian aid organisations to solve some of the biggest problems resulting from 23 years of conflict in Afghanistan. The BHF facilitated discussions to identify solutions to healthcare and other issues in the country. EGA members agreed, as part of its “Access to Medicines” programme, to donate all the equipment necessary to establish a generic medicines production factory in Kabul, Afghanistan. It was decided that two or three members of the EGA (an association whose members number approximately 400) would donate equipment, staff time for training Afghan technicians, provide technical and INTERNATIONAL AID & TRADE mechanical expertise to calibrate and set-up the equipment upon arrival in Kabul, and some of the initial materials to produce the medicines. Upon completion the factory will produce as many as 16 types of antibiotics and other essential medicines, which are on the list of World Health Organization’s essential medicines list. While the idea may have seemed fairly straight-forward, as a pure donation from a pharmaceutical association to a post-conflict country, the actual implementation of the project has taken over three years and is only now reaching the completion stage. Transport of the equipment from the donating EGA members to Afghanistan involves many procedures in export, security and customs clearances. Fortunately, project partners are working to help with the logistics and the EGA has engaged a specialist firm for procurement and loading of properly sized special containers for getting the equipment ready for safe transport to the Middle East. Due to security issues in Afghanistan, the equipment cannot be brought in over land by truck, but must be flown in from the United Arab Emirates, a step not initially anticipated. At the moment, the BHF is working with the local Afghan owner on developing a marketing and sales plan for the sale of the pharmaceutical products once the factory is built and the production line is working. The BHF is coordinating with the factory owner, NGOs and public government institutes and ministries to obtain certification of the drugs so that they can be licensed and sold legally and safely on the Afghan market. This amount of detailed implementation work was not anticipated at 3 Aid & Development the start of the project. This project is a showcase of what can be achieved when the private sector (EGA) work with an NGO like the BHF and with donor agencies like UNDP. An important point to consider is that companies that engage in CSR activities wish to ensure that they will not fail for both humanitarian and financial reasons. Naturally, companies wish to avoid failed CSR activities, since they can lead to financial problems with clean-up solutions and can lead to negative public relations for the company in the future. Therefore, corporations often make an extra effort (while needing to balance this by working within budget limits) to guarantee that the project succeeds. Companies and organisations like DHL, the Shell Foundation, EGA, the BHF nonetheless really do care about the humanitarian outcome of these projects or they would not make the extra efforts described here to find solutions to complex problems. This paper has covered three CSR cases in detail. Many more such examples exist. These can be via well-implemented CSR programs of small firms working to help a group like the Palestinians; of large companies like Coca-Cola Hellenic Bottling Company, with headquarters in Greece (Coca-Cola HBC) working in Bosnia and Herzegovina or in Africa or of Microsoft’s work in countries world-wide. The Economist writes that only 0.97 per cent of pre-tax profits world-wide are spent on CSR activities. Upon reflection, one realises that this is a great deal of money which is dedicated to projects like those mentioned here. Before pointing the finger again at the “big, bad multinationals”, one may wish to take a deeper look into what such CSR work involves and check the longer term effects of such efforts. Maybe then we would realise that the human face applied by companies engaging in CSR each morning, actually does not “wash off” at the end of the day. 4 IAT01-09/4 ABOUT THE AUTHOR Emily Talmon-l’Armee has been working in interational economic development since the early 1990’s. Among other countries, she has worked and lived in post-conflict Bosnia and Herzegovina, the Former Yugoslav Repbulic or Macedonia and most recently in the Islamic Republic of Afghanistan. Ms. Talmon-l’Armee has held advisory or consulting posts with such organisations as the World Bank, the European Commission, the United Nations Economic Commission for Europe, and the Organisation for Security and Cooperation for Europe. She specialises in small and medium-sized business development and facilitating foreign direct investment into developing countries. Ms. Talmon-l’Armee holds both a Bachelors degree and Master of Business Administration from Cornell University. ABOUT THE ORGANISATION The BHF works to bridge the gap of understanding between humanitarian organisations and private business, encouraging both sides to work together to solve complex development problems. The BHF does this in two ways: Firstly, it provides training and encourages dialogue between humanitarian aid institutions and private companies. Secondly, this non-profit organisation has become involved in the facilitation of CSR activities and the implementation of projects, notably and most recently in the Islamic Republic of Afghanistan. ENQUIRIES Emily Talmon-l’Armee Head of Operations The Business Humanitarian Forum 7-9 Chemin de Balexert 1219 Chatelaine Geneva Switzerland Tel: +41-22-795-1803 E-mail: [email protected] www.aidandtrade.org