CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY POLICIES AND PRACTICES 2013 MIDDLE EAST AND TURKEY SURVEY REPORT

Transcription

1 CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY POLICIES AND PRACTICES 2013 MIDDLE EAST AND TURKEY SURVEY REPORT

2 CONTENTS INTRODUCTION 3 ABOUT THE SURVEY 4 KEY FINDINGS 6 SURVEY RESULTS 7 Policy 7 Strategy 8 Reasons for Implementation 9 Reporting and Budgeting 9 Strategy and Policy Structure 10 Organisational Structure 11 Level of CSR/Sustainability Leader and Reporting Relationship 12 Activities 13 Employee Engagement 14 Employee Health and Wellness 16 Metrics, Recognition, and Inquiries 19 Challenges 20 Future Plans 22 CONCLUSION 23 2

3 INTRODUCTION In an environment where needs are growing and resources are being depleted, companies are starting to redefine their corporate social responsibility (CSR) and sustainability programs and look at these topics more strategically. The situation presents an opportunity for business innovation that contributes to society and drives competitive advantage. For many companies, CSR/sustainability is a component of the overall business strategy, and companies implement and prioritise social and environmental projects that are connected with their core business. This enables companies to use not only monetary resources to support such programs, but to leverage their internal expertise and capabilities to generate longer-term benefits for society. Many businesses have transformed their products and services by taking into account social and environmental factors while still supporting and in some cases advancing business objectives. A move from traditional economic growth to sustainable economic growth that considers social and environmental matters alongside financial factors is becoming more prevalent in business today. As the concepts of CSR/ sustainability become further embedded in corporate strategy, companies will move forward to create ever more significant value for both business and society. The Corporate Social Responsibility and Sustainability Survey in the Middle East and Turkey was conducted to offer a unique perspective on and a starting point for discussion around the CSR/sustainability landscape in the Middle East and Turkey, and to identify its influence on several business factors. The results of the study represent different industries and organisation sizes and we hope that they will assist companies in benchmarking their programs and further developing their CSR/sustainability strategies. 3

4 ABOUT THE SURVEY The Corporate Social Responsibility and Sustainability Survey in the Middle East and Turkey represents Mercer s first research into these topics as they relate to companies in this region. The survey was conducted online in April 2013 across the Gulf Cooperation Council countries and Turkey. The survey aimed to identify: The main drivers for CSR/sustainability engagement by companies in the region. Key current and future CSR/sustainability initiatives and challenges. Activities that comprise CSR/sustainability efforts, and how they are handled, communicated, and quantified. The structure of the CSR/sustainability function and its role in organisations. The influence of CSR/sustainability initiatives on employee engagement and health. For the purposes of the survey, CSR and sustainability were treated together. A global version of the CSR/sustainability survey was conducted in 2012, with 82 multinational companies participating worldwide. Where relevant, we have cited results from the global survey in this report. READING THE REPORT In the survey results data tables, N refers to the number of respondents that answered each question. Because every question was not answered by every company, N varies from question to question. As with any survey, the results reflect the views of the respondents and may not be statistically robust in all areas, so decisions taken on the strength of the data reported should reflect an appropriate degree of caution. 4

5 SURVEY DEMOGRAPHICS A total of 41 companies participated in the survey. The majority of participants were located in the United Arab Emirates (32%), Saudi Arabia (30%), and Turkey (25%). The remainder of respondents were from countries including Egypt (5%), Lebanon (2%), Kuwait (2%), and Qatar (2%), and one respondent was based in the UK with an EMEA-wide role in CSR/sustainability. A relatively equal distribution among the types of participating organisations was evident with large local companies (32%), multinationals headquartered in the Middle East and Turkey (34%), and local operations of multinationals headquartered outside the region (34%) each representing approximately one third of responding companies. Respondents included employers of all sizes: One-third have a workforce of 5,000 or more employees (including a quarter of companies employing 10,000 or more individuals), 32% employ 1,000 to 4,999 employees, and 35% have less than 1,000 employees. The majority of participating companies have an annual revenue of US$100 million or more (73%) and just over a quarter have an annual revenue of less than US$100 million (27%). The main business sectors of the respondents are engineering, construction and natural resources (29%), manufacturing (27%), business services (22%), health care (5%), holdings (5%), and other industries (12%). Distribution of Survey Respondents Across Revenue Size Categories 40% Less than US$10 million US$10 million to US$100 million US$100 million to US$1 billion Over US$1 billion N=40 15% 33% 12% Distribution of Survey Respondents Across Employer Size Catagories 5% 25% 22% 8% 8% 32% Less than 100 employees 100 to 499 employees 500 to 999 employees 1,000 to 4,999 employees 5,000 to 10,000 employees More than 10,000 employees N=41 5

6 KEY FINDINGS Just over half of the participants (54%) have a formal CSR/sustainability policy; 24% have an informal policy or guidelines; and 17% undertake activities on an ad hoc basis, with no policy or guidelines. Among companies with a formal or informal policy, 58% have employed the policy for a period of four years or less, while 42% have had the policy for five years or more. The majority of participants (83%) indicated that CSR/sustainability has become more important over the past two years. While 86% of participants stated that it is a very important or important component of their business strategy, a similar percentage (83%) indicated that CSR/sustainability is a part of their strategic objectives. Approximately two-thirds of participating companies stated that CSR/sustainability is part of their founding mission statement (62%), while 41% of programs were self-developed most often to help with corporate culture definition, reputation management, and overall company performance. Forty-two percent implemented programs as a result of external influences, most often from employees and customers. Around half of participants (49%) stated that they issue an integrated, annual report on their CSR/ sustainability activities. While strategy and policy development for CSR/ sustainability varies between global and local levels, policy enforcement most often occurs at the local level (75%). Regional strategies are the least common. The level of the leader responsible for CSR/ sustainability is most commonly senior management level. CSR/sustainability is reported to the CEO by 41% of respondents. Employee health and wellness was identified as the top area for CSR/sustainability activities (82% of respondents). And over half of respondents (57%) indicated that employee health and wellness programs are a very important component of their CSR/sustainability program. Over half of respondents indicated that CSR/ sustainability activities have resulted in a significant or considerable improvement in employer brand recognition (64%), employee loyalty (55%), and employee retention (52%). Stress relief training/counselling and smoking cessation programs were reported to be the top two employee benefits that should be included in a CSR/sustainability program. Only 32% of companies use metrics or standards to monitor their CSR/sustainability activities. Quantifying the business value of sustainability and measuring CSR activities ranked equally as the top current challenges faced by companies in the region. Most companies (85%) plan to increase their CSR/ sustainability efforts within the next two years. Only about a quarter of companies have a core team dedicated to CSR/sustainability, with the majority reporting that other departments/ functions have part-time responsibility for CSR/ sustainability (47%). The most common function both regionally and globally with part-time responsibility is human resources. 6

7 SURVEY RESULTS POLICY Mercer s global survey on CSR/sustainability, conducted in late 2012, showed that 81% of companies have a CSR/sustainability policy. The Middle East and Turkey survey findings were in line with global results, showing that 78% of companies in the region have such a policy in place. Of companies that stated that they are undertaking CSR/sustainability activities without a policy or guidelines (17%), close to half of them (43%) plan to develop a formal policy within the next two years. Only 5% of respondents indicated that their company does not undertake CSR/sustainability activities. Percentage of Participating Companies With a CSR/Sustainability Policy 5% Yes, a formal policy 17% 24% 54% Yes, an informal policy Yes, but with no policy or guidelines No, our company does not partake in any such activities N=41 Among companies with a CSR/sustainability policy in place, almost all stated that their policy is readily available internally (91%) on the company intranet site and/or in the HR manual and procedures, whereas only half list their policy externally, typically on their company website. Looking at policy maturity, 41% of employers have had a CSR/ sustainability policy for a period of four years or less, while a similar percentage (42%) have had a policy for five years or more. Among companies with policies in place for five years or more, one-quarter has had a policy in place for 10 years or more. This demographic predominately comprises multinational companies headquartered in the region with more than US$1 billion in revenue and over 10,000 employees. 7

8 STRATEGY A large majority of respondents indicated the increasing importance of CSR/sustainability in their companies and throughout the region. CSR/sustainability has become more important over the past two years for 83% of participants. CSR/sustainability is a very important or important component of the business strategy for 86%. None of the respondents indicated that it was unimportant or not important at all. CSR/sustainability is part of the company s core mission statement for 86%. CSR/sustainability is part of the company s strategic objectives for 83%. Comments from participants regarding their company s strategic objectives include: Discussed (CSR) and approved at the family (management) council level. A five-year strategy is built for CSR activities and sustainable projects with clear feedback to internal and external shareholders on the main business strategy. Represented in our Corporate Strategic Objectives No. 14: to reduce water and electricity consumption; and No. 23: to further improve the living conditions of our workforce. We aim to be leaders in this space, both as a company and through our clients. Importance of CSR/Sustainability as a Component of the Business Strategy 14% Change in Importance of CSR/ Sustainability Over the Past Two Years 14% 3% 43% 43% 83% Extremely important Important Neither important nor unimportant N=35 Unimportant 0% Not at all important 0% Has become more important Has remained the same Has become less important N=35 8

9 REASONS FOR IMPLEMENTATION When asked the reasons for implementing a CSR/sustainability policy, approximately two-thirds of participating companies stated that it is part of their founding mission statement (62%). Companies also indicated that the policy was self-developed (41%) for reasons that include defining company culture, managing the company s reputation, and improving overall company performance. External factors for companies (32%) also came into play with employees, customers, and senior management as top influencers for CSR/ sustainability policy implementation. REPORTING AND BUDGETING Companies who have developed an integrated annual report on their CSR/sustainability activities and those who did not were almost equally distributed, with 49% issuing a report and 51% not doing so. Fifteen respondents stated that their organisation had a centralised budget for CSR/sustainability programs. Across industries (excluding oil and gas) and company sizes, budgets were variable, ranging from US$10,000 to US$4 million. The highest centralised budgets listed in the survey were in the oil and gas industry and averaged US$250 million. However, it is important to note that oil and gas centralised budgets are relatively higher because they are generally allocated as a percentage of company revenue and must cover multiple countries. For the remaining companies without a centralised budget, other funding options included a decentralised budget (47%), grants and government incentives (24%), project-based monetary support (18%), and other options (11%). Number of Years Company Has Issued an Annual CSR/Sustainability Report 6% 12% 14% 14% 3% Does not issue public reports Less than a year 51% Has your company downsized any CSR/ sustainability functions or activities over the past two years? Yes 6% Unsure 6% 1 to 2 years 3 to 4 years 5 to 9 years 10 years or more N=35 No 89% N=35 9

10 STRATEGY AND POLICY STRUCTURE Local (60%) and global (43%) CSR/sustainability strategy structures were the most predominant among participants. Regional strategies were less common with just 31% of companies following this type of structure. Policy development occurring at global (59%) and local (56%) levels were relatively equal in responses; however, policy enforcement was most often left to the local offices (75%). How Is Your CSR/Sustainability Strategy Structured? (More than one answer could be selected.) Global strategy 43% Regional strategies 31% Local strategies 60% N=35 At What Level Do The Following Activities Occur? (More than one answer could be selected.) Global Regional Local Policy development 59% 28% 56% Policy enforcement 47% 28% 75% N=32 10

11 ORGANISATIONAL STRUCTURE In both the global and regional surveys, close to one-quarter of participating companies stated that they have a dedicated team responsible for CSR/sustainability, while more companies both globally and regionally (59% and 47%, respectively) have crossfunctional teams with part-time responsibility. Among the remaining respondents, other types of structures were indicated, including a supervisory board and a committee for CSR/sustainability. The results clearly indicated that the top three departments with parttime responsibility for CSR/sustainability in the region are human resources (48%), corporate communications (45%), and public relations (33%). Human resources and corporate communications were also the most common responses in the global survey. Departments With Responsibility for CSR/Sustainability Implementation (More than one answer could be selected.) Global Regional Human resources 69% 48% Corporate communications 53% 45% Public relations/public affairs 26% 33% Environmental, health, and safety 50% 27% Business development 27% 27% Stand-alone CSR 27% 24% Quality control 20% 21% Other 24% 12% N=74 N=33 11

12 LEVEL OF CSR/SUSTAINABILITY LEADER AND REPORTING RELATIONSHIP Even within the majority of companies that assign part-time CSR/ sustainability responsibility to other functions, the leader of the CSR activities is predominantly at senior management level 77% of respondents identified the CSR leader as a director, vice president, board member, or executive. The importance of CSR/sustainability is reinforced, as these leaders have a direct relationship to the C-suite and executive committee. Level of CSR/Sustainability Leader 41% of respondents indicated that the CSR/sustainability leader reported directly to the CEO. 11% 6% 26% Executive Board member Manager Vice president 17% Director Other 20% 20% N=35 CSR/Sustainability Reporting Relationship (More than one answer could be selected.) Chief executive officer 41% Executive committee 32% Senior management 24% Chief operating officer Corporate responsibility officer 15% 15% Other 12% Chief marketing or communications officer President 6% 6% Chief administrative officer Chief financial officer Chief human resources officer 3% 3% 3% N=34 12

13 ACTIVITIES The three core areas for CSR/sustainability activities identified by respondents were employee health and wellness (82%), communitybased development (74%), and environmental affairs (68%). The high importance given to employees health and wellness by participating employers in the Middle East and Turkey concurs with the findings from Mercer s recent EMEA Health Care Survey. Conducted in late 2012, that survey reported that the majority of respondents (79%) were addressing workforce health as part of their corporate social responsibility to their community. Furthermore, the top three core areas all require long-term investment of both time and resources, which shows that CSR/sustainability programs are moving towards longer-term, sustainable projects rather than being treated as one-time initiatives. Approximately one-fifth of respondents indicated that fundraising (21%) is an integral part of CSR/sustainability, placing it last on the list of core areas. By its very nature, fundraising is typically a one-time initiative, so this result further highlights the move towards longerterm projects. While fundraising is an effective method for companies to support an environmental or social cause, the results showed that companies may start to look at fundraising on a longer-term basis (for instance, donating a certain percentage of sales per year) or as a part of a larger social responsibility campaign. Core Areas Considered for CSR/Sustainability Activities (More than one answer could be selected.) Employee health and wellness 82% Community-based development Environmental affairs Employee safety Labour/employee relations Community work Compliance 50% 74% 68% 65% 65% 59% Employee volunteering Product safety and stewardship Sustainability cost effectiveness Supply chain Economic progress Fundraising 21% 41% 38% 35% 32% 50% N=34 13

14 EMPLOYEE ENGAGEMENT When asked to what extent CSR/sustainability positively influenced employee engagement factors, survey participants indicated that employer brand recognition (64%), employee loyalty (55%), and employee retention (52%) were improved to a significant or considerable extent. In addition, when considering CSR/sustainability s impact on other business factors, similar proportions of respondents reported a significant or considerable influence on brand recognition (68%), customer confidence (56%), and quality improvement (53%). Employee Engagement Factors Significantly or Considerably Improved by CSR/Sustainability Employer brand recognition 39% 24% Employee loyalty 33% 21% Employee retention 24% 27% Employee productivity 28% 22% Job satisfaction and fulfilment Employee morale 30% 18% 28% 16% To a significant extent To a considerable extent N=33 Talent attraction 33% 9% 14

15 Business Factors Significantly or Considerably Improved by CSR/Sustainability Brand recognition 45% 23% Customer confidence 25% 31% Quality improvement 38% 16% Risk management 26% 26% Investor relations 26% 23% To a significant extent To a considerable extent Business development 22% 25% N=32 Financial results 19% 19% Cost efficency 26% 10% A significant percentage of participants (59%) indicated that they conduct employee engagement surveys; among them, 65% reported that specific workforce engagement factors are measured to identify the impact of CSR/sustainability on employees. The factors most commonly used by these companies to identify the impact of CSR/sustainability on employee engagement are employee pride in the company (92%), employee morale (83%), and job satisfaction and fulfilment (75%). Other metrics used in surveys include employee loyalty and productivity (both 67%) and recommendation to others as an employer of choice (58%). 15

16 EMPLOYEE HEALTH AND WELLNESS The connection between CSR/sustainability and a company s internal stakeholders is becoming more evident. Over half of the respondents (57%) indicated that employee health and wellness programs are a very important component of their CSR/sustainability program. Importance of Employee Health and Wellness Programs as Part of Company s CSR/Sustainability Policy 3% 9% 17% 14% 57% Very important Important Not important Not applicable Somewhat important N=35 When asked which employee health and wellness benefits (excluding medical-related insurance benefits) companies believed are the most important to include in a CSR/sustainability policy, the majority elected stress-relief training and counselling (84%) and smoking cessation programs (62%) as a priority. However, a clear gap exists between the idea and the application, as only 31% and 19% of respondents, respectively, indicated that their company currently offers these two benefits to employees. 16

17 Comparison Between Benefits Offered and Benefits Considered Important as Part of CSR Policy (Employee Health and Wellness Benefits, Excluding Medical-related Benefits) Stress relief education/ training/counselling 31% 84% Smoking cessation program 19% 63% Gym/sports/fitness/ health club memberships 31% 56% Onsite healthy food choices (in cafeteria and vending machines) 34% 53% Individual medical screening (beyond legal requirements) 28% 47% Dietary advice 25% 38% Personal health risk assessments 22% 34% Online health information/education 31% 34% Benefit considered important to have as part of CSR policy Personal health coaching 22% 25% Benefit offered Onsite or near-site clinics 22% 25% Onsite gym facilities and showers 19% 25% Other 9% 13% Onsite physiotherapy 6% 13% N=32 17

18 Other fluctuations between benefits offered and benefits considered important to have as part of a CSR/sustainability policy can also be seen: Personal health coaching and onsite/near-site clinics are both considered important benefits by one-quarter of respondents and a similar percentage (22%) indicated they are being offered to employees. While only 6% of respondents stated that onsite physiotherapy is an important benefit for CSR/sustainability policy, more than double the respondents (13%) offered the benefit. These variations in implementing employee benefits demonstrate that companies need to first assess and understand their workforce s health risks to be able to design a health and wellness program most suited to their employee population. In doing so, employers will be able to accurately evaluate the value added and optimise the return on investment from their wellness programs. 18

19 METRICS, RECOGNITION, AND INQUIRIES As companies continue to budget funds, increase activities, and excel in CSR/sustainability, the requirement for metrics, indices, and research grows. There are several different metrics and standards available to assist in monitoring a company s CSR/sustainability efforts. While the majority of respondents in the region (68%) reported that their company does not use any metrics for CSR/sustainability, among the companies that do (32%), the Global Reporting Initiative and Carbon Disclosure Project were the most frequent standards and metrics listed. WHAT IS THE GLOBAL REPORTING INITIATIVE (GRI)? It is a not-for-profit organisation that promotes economic, environmental, and social sustainability. It provides a comprehensive sustainability reporting framework used around the world. The GRI Sustainability Reporting Framework enables the measurement and reporting of sustainability performance and allows for reporting transparency and accountability. For more information: WHAT IS THE CARBON DISCLOSURE PROJECT (CDP)? It is an independent, not-for-profit organisation working to drive greenhouse gas emission reduction and sustainable water use by businesses and cities. It provides a transformative global system for thousands of companies and cities to measure, disclose, manage, and share environmental information. It uses measurement and information disclosure to improve management of environmental risk. For more information: Recognition of a company s CSR/sustainability efforts can occur in multiple ways: notably, 71% were featured in media reports, 55% were invited to speak at conferences, and 42% received awards. Some of the awards listed by respondents were: Green FM Company of the Year CSR Excellence Award, Arab Organisation for Social Responsibility. Energy Efficient Facility Award, Ministry of Energy (Turkey). Inquiries for information on the company s environmental and/or social performance occurred in 46% of regional participants, whereas globally a higher percentage of companies received inquiries (68%). The regional inquiries are typically received from government organisations (67%) and media (40%). One-third of companies also receive such inquiries from academics and investors. While about a quarter do not track the frequency of investor-related inquiries, among those that do, 20% receive up to four inquiries annually and 14% more than

20 CHALLENGES CSR/sustainability, as with any other business activity, does not come without challenges. The top-ranking current challenges for regional participants were the ability to quantify the business value of sustainability activities the same response as for the global survey participants and measuring CSR activities, followed by benchmarking data to peer companies. Both globally and regionally, budget and resources limitations were also ranked similarly. However, one striking difference was the idea of employers considering employee engagement and involvement in CSR activities as a challenge globally, 40% of participants listed it as a challenge, whereas in the Middle East and Turkey, only 22% of respondents indicated the same. 20

21 CSR/Sustainability Challenges Companies Are Currently Facing (More than one answer could be selected.) Challenge Global Regional Quantifying business value of sustainability activities 53% 47% CSR measurement 44% 47% Benchmarking data to peer companies 30% 44% Budget limitations 45% 34% Resource limitations 37% 31% Tracking and monitoring carbon footprint 23% 28% CSR/sustainability strategy implementation 29% 25% CSR/sustainability structure 26% 25% Business integration of CSR/sustainability function 40% 22% Employee involvement and engagement in CSR activities 40% 22% Maintaining CSR efforts in the long term 19% 22% Other 8% 16% Executive engagement and/or buy-in 32% 13% Supply chain transparency 25% 13% Managing external group pressure 7% 9% N=73 N=32 21

22 FUTURE PLANS Perhaps to overcome some of these challenges, 85% of participants plan to increase their CSR/sustainability efforts over the next two years. Among those companies, just over half (53%) plan to increase resources and a similar percentage (50%) plan to report publicly on their activities. Areas in Which Companies Plan to Increase CSR/Sustainability Efforts Over the Next Two Years (More than one answer could be selected.) Increase resources Report publicly on activities Conduct more supplier training on social and/or environmental standards Improve ecological aspects of our product line Make CSR/sustainability a board responsibility No increase in CSR planned Hire external expertise to advise us on CSR/sustainability program 12% 15% 15% 21% 26% 50% 53% Other 9% N=34 Furthermore, the majority (74%) of respondents indicated that their company needs to do more on CSR/sustainability, while seperately, 78% stated that this needs to happen within their own companies. CSR/Sustainability Areas in Which Companies Believe They Could Do More (More than one answer could be selected.) CSR/sustainability within our own company Communication of CSR/sustainability activities to the public Social conditions in the supply chain Environmental conditions in the supply chain Ecological aspects of our product line Other 4% N=23 22% 39% 48% 70% 78% 22

23 CONCLUSION We see that both globally and regionally, CSR/sustainability is becoming an increasingly important business issue. It is being identified as an integral part of business strategy and is gaining traction as a top priority on the agenda of business leaders today. The results of our survey indicate that employers recognise the significance of CSR/sustainability s role not only in addressing social and environmental issues, but also in positively influencing a large range of business factors, from strengthening the employeremployee relationship to increasing customer loyalty and overall company performance. However there are challenges to overcome. Classification and quantification of data for CSR/sustainability projects is an issue for many employers, particularly around the ability to accurately measure the return on investment of these projects. The lack of strong data on the value added by CSR/sustainability naturally imposes limitations on budget and resources. Therefore, it is encouraging that companies understand that there is room for improvement and are looking at ways to become more effective in the future. As employers continue to develop their CSR/sustainability strategies, these organisations will become the accelerators of deep-rooted social change, not only within their companies but in their larger communities. As responsible business becomes the new global norm, an authentic CSR/sustainability strategy will be key for companies to stay competitive in the market. 23

24 For further information, please contact your local Mercer office or visit: (Middle East) (Turkey) For any inquiries, please contact Cindy Arkin at Copyright 2013 Mercer LLC. All rights reserved MG