Sunday, August 27, 2006

CSR: why don't we call a spade a spade?!

“The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed in all its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind.” (Gordon Gekko, in the film Wall Street (1987).

"That which we call a rose, by any other name would smell as sweet." (William Shakespeare)

THE Philippine corporate sector is currently abuzz with the latest in-thing from the West: “corporate social responsibility” or CSR. These mostly pertain to acts of the corporate goodness ranging from donation to charities, to tree planting, to feeding malnourished children of slum dwellers, to providing market solutions to festering social problems, all usually done under the glare of media attention. But companies here in the Philippines should better define what they really mean by CSR, otherwise the general public would simply think it’s another term for public relations gimmickry that has nothing to do with improving people’s lives.

The World Business Council for Sustainable Development defines CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community at large.”

Supposedly, it started as a response by corporations in the West to global problems like the growing disparities within and among nations, worsening poverty, hunger, ill health and illiteracy, and the continued destruction of the world ecosystems. Events like the collapse of Berlin Wall, the riots in Seattle during the 1999 WTO ministerial conference, and the demonization of “big business” as the prime beneficiaries of globalization have forced global corporations to rethink how they do business. Somehow, they realized the rules of the game are changing, that the “right image” is increasingly becoming important as determinant of profitability, and that the traditional public relations strategies no longer worked as effectively as in the past. Voila! Corporate social responsibility. CSR!

In the Philippines, CSR has been manifested in various forms. One is the classic “resource transfer,” of companies doling out plastic bags and notebooks during school openings, a few feeding programs here and there, and a trophy or two for the winning basketball team in some forgotten barangay. It could also be about community relations like providing some health centers and school buildings, livelihood projects surrounding the cellular antenna sites to discourage rebels and malcontents from burning them down, among others. It could also be through the adoption of “codes of conduct” affirming commitments to certain values like “greening the value chain,” doing away with sweatshop operations, among others.

At the surface, most of them are harmless, even nice projects. But it begs the question why companies are doing the things that government are supposed to do and whether or not they are really helping solve social problems. Certainly, these are projects that are first and foremost, beneficial to the company. This is because “socially responsible” companies usually attract fund managers and investors, and consumers are likely to buy products and services from morally and environmentally upright companies. Again, this is fine, only that these are probably ineffective and unsustainable, and some might even be seen as hypocritical. Why?

“CSR is about giving back to society what we get from society,” says one executive of the League of Corporate Foundations (LCF), an umbrella organization of CSR practitioners in the country.

And how much do some businesses really give back to society? They say its P4.2 billion (US$80 million) in the last few years! By itself that’s huge, but taken in context, it’s a drop in the bucket. And how much do they get from society?

Let’s not count the companies’ gross revenue, for certainly they do provide the goods and services for which society pays. Let’s not count the tax evaded. Let’s count only the fiscal perks that they draw from the public coffers through tax holiday, tax credits, duty-free importation of raw materials, among many others through lobbying and connections with bureaucrats. These are estimated at about P300 billion a year! And for what? According to UP economists, almost 90 percent of these fiscal incentives granted were redundant, meaning, these companies would have invested anyway without those perks. Had many of the country’s firms instead just paid honest dues to the government, the state would have not suffered fiscal deficits, and the government would have had enough money to pay for infrastructure, rural development, social services, health, and education. It means that with taxes paid honestly, there would have been no need for “CSR” those little paternalistic gestures by corporations for which they repeatedly issue press releases.

Don’t get us wrong. We want local companies to be nice and compassionate to their employees, customers, suppliers, and to local communities where they are operating. But we simply want to highlight the fact that companies should never do CSR at the expense of their larger responsibilities to society.

And certainly, instead of firms doing giving away doles as well as tiny and ineffective projects, society would actually benefit more if firms just internalize CSR as the centerpiece of business strategy—like producing products that poor people can afford, providing electricity and water to impoverished areas, providing microfinancing to “nonbankable” farmers, cleaning the streets by using garbage as inputs to some socially beneficial products, providing decent and affordable houses, setting up advanced science and technology schools that welcome poor but smart students. That way, companies might yet transform Philippine society.

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