Building Alliances in ASEAN to Sustain CSR Programs 1

Building Alliances in ASEAN to Sustain CSR Programs 1 A broad agreement has developed in the corporate sector as well as in academic circles that corporate social responsibility involves more than the traditional philanthropic activities and covers issues such as corporate governance, human resource management, regulatory compliance, environmental stewardship, and community outreach. In its highly developed form, CSR is now viewed as an essential component of the core strategic functions of the enterprise and therefore must be consistent with the mission and vision of the organization. CSR activities must be consistent with and supportive of the concept of sustainable development and equitable sharing of resources across society. CSR in ASEAN A study on corporate social responsibility in Asia indicates that CSR culture in Asian business tends to have strong spiritual and philosophical underpinnings and that a profitable or competitive business climate and significant wealth accumulation are essential preconditions for companies to initiate CSR activities. 2 The comprehensive study made by APEC covering 14 countries including 5 from ASEAN shows that while there are similarities in CSR culture and practices between developed and developing countries in Asia, there are also significant differences. 3 In both developed and developing countries, CSR in Asia is found to be deeply rooted in the historical and cultural traditions of each country and profoundly influenced by ethical and religious practices. It is also apparent that CSR is moving inexorably from purely business philanthropy to a broader set of activities that are integrated into the core strategy of the corporation. CSR practices in economically developed Asian countries tend to have active civil society involvement with strong focus on environmental stewardship. They are linked to the management of the supply chain in response to well-articulated consumer concerns. Accordingly, many CSR programs are implemented in strategic partnerships with stakeholders within the communities in which the companies operate. In the developing Asian countries, the local corporate community tends to emulate good CSR practices of multinational enterprises and the key drivers for CSR are the requirements of the global markets, for example, for exporters to adopt appropriate practices to access markets or to attract overseas investment. Finally, there is tendency for global protocols to influence CSR practices to overcome local weakness and promote the capacity of local businesses to compete in global markets. 1 Paper presented by Dr. Filemon A. Uriarte, Jr., Executive Director, ASEAN Foundation, during the Asian Forum on Corporate Social Responsibility 2008 held in Singapore, 20-21 November 2008. 2 Gonzales III, J. L., Corporate Social Responsibility in Asia, Golden Gate University, August 2005. Four ASEAN countries were included in the study, Indonesia, Philippines, Singapore and Thailand. 3 Corporate Social Responsibility in the APEC Region: Current Status and Implications, Asia-Pacific Economic Cooperation (APEC), December 2005. Five ASEAN countries were included in the study, Indonesia, Philippines, Singapore, Thailand and Vietnam. 1

In the developed countries, the major CSR challenges tend to focus on the appropriate responses to globalization, identification and addressing gaps in CSR practices, the development of common standards of good practice throughout the supply chain, and in general assuring exemplary corporate behavior world wide. In the developing countries, on the other hand, the challenges involve raising further awareness of CSR, building capacity within existing institutions to drive the adoption of CSR, making the case to the local business community to adopt CSR, and transferring competencies to individual companies. In Indonesia, the APEC study shows that while CSR is still at its early stages the concept itself is not new and quite similar to the Indonesian concept of gotong royong. There are increasing signs that Indonesian companies operating in the global market are becoming increasingly aware of the importance of balancing the social, economic and environmental components of their business with building shareholder value. Most companies are in the compliance stage of the CSR learning curve, where they adopt policy-based compliance as a cost of doing business; some have reached the managerial stage, where they embed the societal issue in their core management process; and a few have even reached the strategic stage, where they integrate the societal issue in their core business strategies. In the Philippines market forces are the principal drivers of CSR behavior. Corporations get involve in CSR activities because top management is aware that business cannot prosper in an environment where majority of the population are poor. Majority of CSR activities are therefore philanthropic in nature with education and health being the main recipients. Nevertheless, there is growing trend to link CSR with the day to day operations of the organization and promote employee involvement. The principal agents for CSR promotion are the business leaders themselves but sustaining their commitment to CSR is challenged by difficult economic conditions and poor profitability. The development of CSR in Singapore is greatly influenced by its unique characteristics as a city state that has achieved great success in an economy that was heavily managed by the government in the first decades after independence. Although there have been reforms in recent years to liberalize key sectors of the economy, the public sector remains a key architect of the economy and has considerable influence over corporate behavior. The government-centric approach influences CSR approaches, with much emphasis on compliance with legislative requirements as a means of achieving and regulating socially responsible behavior, which may be viewed as the success of policy makers in enforcing the social contract between corporations and stakeholders but also raises the question of whether all aspects of social responsibility can be meaningfully legislated or promoted by the public sector. The practice of CSR in Thailand is in an early stage of development and is substantially influenced by religious beliefs, traditional norms of ethical practice. The full integration of CSR into business management at the strategic level is not yet widely 2

evident reflecting both an insufficient commitment to the concept on the part of top management and a general perception that CSR is primarily business philanthropy. Engagement with the NGO sector deals with broader aspects of CSR, including sound environmental practices, social development, as the promotion of the concept of a sustainable society, while engagement with government emphasizes compliance with environmental, health and safety standards and the need for legislation and enforcement related to the labor standards. In Vietnam CSR activities are regulated and supervised by the government and the enterprises social policies, in turn, generally observed state regulations, which are outlined in the enterprises annual plans along with concrete activities suitable to the real conditions prevailing in the enterprise. Enterprises and government are the two main players in the promotion of CSR where enterprises determine the success of CSR, given the fact that that the owner and management of enterprises are the biggest influencers in raising awareness, and government promulgates policies, supervises the enforcement of regulations and provides information on CSR issues. The CSR thrust of the private sector is good corporate practice including obeying the law, meeting the requirements of the import partners, operating in a favorable working environment, avoiding conflicts and disputes with local labor, and to some extent philanthropy. ASEAN Foundation and CSR In recognition of the need to improve the well-being of the peoples of Southeast Asia and to promote ASEAN awareness and people-to-people contact, the ASEAN Leaders established the ASEAN Foundation on 15 December 1997 during the 30 th ASEAN Anniversary Commemorative Summit in Kuala Lumpur. Its aim is to help bring about shared prosperity and a sustainable future to the entire ASEAN region. The Leaders also adopted ASEAN Vision 2020, which stipulates to use the ASEAN Foundation as one of the instruments to address issues of unequal economic development, poverty and socio-economic disparities. In line with ASEAN Vision 2020, the Hanoi Plan of Action (1998-2004) was adopted at the ASEAN Summit in December 1998 advocating to use the ASEAN Foundation to support activities and social development programs aimed at addressing issues of unequal economic development, poverty and socio-economic disparities and to support the activities of the ASEAN Foundation to promote ASEAN awareness among its people. Subsequently, the Vientiane Action Programme (2004-2010) adopted at the ASEAN Summit in November 2004, called for strengthening the role of the ASEAN Foundation in moving forward ASEAN political development initiatives through promotion of people-to-people contact. The Leaders also adopted the ASEAN Socio- Cultural Community Plan of Action, which mandated the ASEAN Foundation to play an active role in the implementation of the Plan of Action by promoting access to information and communications technology resources, enhancing ASEAN awareness through language training and mass media and youth exchange activities. 3

The Memorandum of Understanding establishing the ASEAN Foundation defines the twin objectives of the ASEAN Foundation as follows: It shall promote greater awareness of ASEAN, and greater interaction among the peoples of ASEAN as well as their wider participation in ASEAN s activities inter alia through human resources development that will enable them to realize their full potential and capacity to contribute to progress of ASEAN Member States as productive and responsible members of the society. It shall also endeavor to contribute to the evolution of a development cooperation strategy that promotes mutual assistance, equitable economic development, and the alleviation of poverty. In the same Memorandum of Understanding, the ASEAN Foundation is mandated to support the following activities: Organize and support activities to promote education, training, health and cultural life. Provide assistance to uplift the social condition of the peoples in the ASEAN Member States. Provide fellowships to and support exchanges of ASEAN youths and students. Promote collaborative work among academics, professionals and scientists. Implement projects assigned by ASEAN Leaders or Ministers. Collaborate with the relevant ASEAN bodies. Organize its own projects and actively raise funds for the Foundation s activities. Article 15 of the ASEAN Charter provides additional mandate to the ASEAN Foundations as follows: The ASEAN Foundation shall support the Secretary General of ASEAN and collaborate with the relevant ASEAN bodies to support ASEAN communitybuilding by promoting greater awareness of the ASEAN identity, people to people interaction, and close collaboration among the business sector, civil society, academia, and other stakeholders of ASEAN. The ASEAN Foundation shall be accountable to the Secretary General of ASEAN, who shall submit its report to the ASEAN Summit through the ASEAN Coordinating Council. In the proposed Blueprint for the ASEAN Socio-Cultural Community (2008-2015), which is expected to be adopted by the ASEAN Leaders at the Bangkok Summit in December 2008, importance is given to promoting corporate social responsibility. The Blueprint will include as part of its strategic objectives ensuring that corporate social responsibility is incorporated in the corporate agenda and contributes towards sustainable socio-economic development in ASEAN Member States. The actions called for in the 4

proposed Blueprint respond precisely to the aforementioned challenges and include the following: Develop a model public policy of corporate social responsibility or legal instrument for reference of ASEAN Member States by 2010. Reference may be made to the relevant international standards and guides such as ISO 26000 titled Guidance on Social Responsibility. Engage the private sector to support activities of sectoral bodies and the ASEAN Foundation in the field of corporate social responsibility. Encourage adoption and implementation of international standards on social responsibility. Increase awareness of corporate social responsibility in ASEAN towards sustainable relations between commercial activities and communities where they are located, in particular supporting community based development. CSR Alliances: European Experience The leading European business network for corporate social responsibility appears to be CSR Europe with a membership of around 70 multinational corporations and 25 national partner organizations. Established in 1995 by European business leaders in response to an appeal by the European Commission President Jacques Delors, CSR Europe has served as a platform for supporting member companies in integrating CSR into the way they do business everyday. It provides the means for connecting companies to share best practices on CSR, innovating new projects between business and stakeholders, and shaping the modern day business and political agenda on sustainability and competitiveness. In 2005 CSR Europe, together with its national partner organizations, launched an initiative for enterprises across Europe called the European Roadmap for Businesses Towards a Sustainable and Competitive Enterprise. The Roadmap included three key elements: (a) a shared vision towards a European enterprise built on short and long-term value creation, stakeholder engagement, new skills and innovation in every compartment of business activity; (b) a commitment to 10 strategic goals and processes articulating corporate responsibility and competitiveness; and an appeal to the European Union and stakeholders to develop action and forge partnerships allowing business to manage change in a sustainable and competitive way. In 2006 the European Alliance for CSR was launched as a joint initiative of the European Commission and the business community. So far, more than 260 companies and organizations have expressed their support to the Alliance, which aims to promote corporate social responsibility and integrate it into mainstream business practice. Its activities are focused on ten priority areas: 5

Fostering innovation and entrepreneurship Helping SMEs to flourish and grow Integrating CSR in business operations Developing skills for employability Promoting diversity and equal opportunities Improving working conditions, also in the supply chain Innovating in the environment field Enhancing stakeholder dialogue and engagement Improving transparency and communication Operating responsibly outside the EU. Since 2007, CSR Europe under the umbrella of the European Alliance for CSR has established 20 CSR Laboratories in various European locations. These CSR Laboratories involve over 200 business groups throughout Europe. They implement business-driven and action-oriented projects that address socio-economic challenges. Business practitioners, stakeholders and EU representatives are brought together in these CSR Laboratories to share experiences and explore joint operational projects. It is expected that the initial activities of these CSR Laboratories will be launched in December 2008 in the following areas: Base of the pyramid Supply chain management Skills for employability Enhancing science teaching in schools Mainstreaming diversity in the economy Well-being in the workplace Proactive stakeholder engagement Corporate responsibility and market valuation of financial and non-financial performance. Many of the so-called Base of the Pyramid initiatives will focus on the provision of essential products and services, new jobs and economic opportunities to the poor, thereby contributing to the UN Millennium Development Goals. This Laboratory will explore areas in which the public and private sector share common interests and correlative competencies, combining efforts and funding to enhance mutual understanding, exchange practical experiences, and identify concrete areas for action. The CSR Laboratory on Responsible Supply Chain Management will promote a cascade of responsible business behavior in the supply chain by reviewing current practice and helping companies and suppliers to mature supply chain management initiatives. One of its key deliverables will be the development of training materials on 6

responsible supply chain management by collecting tools from Laboratory participants and other companies and organizations with expertise in this area. Building CSR Alliances in ASEAN The ASEAN Foundation will promote the development of CSR alliances in ASEAN in three ways: one, through the establishment of a network of ASEAN corporate foundations; two, through the launching of a program called Friends of ASEAN; and three, through regional scholarships and awards in partnership with corporations and corporate foundations. Network of ASEAN corporate foundations. The ASEAN Foundation has sought the expertise and experience of the Asian Institute of Management to catalyze the establishment of a regional network of corporate foundation in ASEAN countries. The network is expected to build on the existing national networks such as the League of Corporate Foundations and the Philippine Business for Social Progress in the Philippines, the Singapore Compact for CSR, and the Indonesia Business Links, among others, as well as with existing regional networks such as the Asia-Pacific Philanthropy Consortium. Among the objectives of the network will be to identify gaps among CSR programs of different ASEAN countries; document best practices in CSR in ASEAN; and promote exchange of learning and experiences with a view of replicating proven successes across the region. Friends of ASEAN. The ASEAN Foundation will also be launching a program called Friends of ASEAN. Friends of ASEAN are individuals, corporations, and regional and international organizations that have faith and confidence in the future of the ASEAN Community. They support the mission of the ASEAN Foundation to promote greater awareness of ASEAN and interaction among the peoples of ASEAN and to contribute to equitable economic development and alleviation of poverty in the region. Individuals can become Friends of ASEAN by making a contribution of $10,000 to the endowment fund of the ASEAN Foundation while corporations and regional and international organizations can do so by making a contribution of $20,000. As Friends of ASEAN, they will be entitled to the following benefits and services: Participate in an annual meeting or conference to be organized by the ASEAN Foundation during which papers are presented or lectures delivered by distinguished experts and personalities on subjects that are of interest and relevance to the ASEAN region. Receive copies of all publications of the ASEAN Foundation such as project information materials and brochures, annual reports, newsletters, and relevant project outputs or technical and policy papers and reports. Request copies of selected publications of the ASEAN Secretariat and the ASEAN Foundation will exert its best efforts to provide these in a timely manner. 7

Request for copies of technical reports of projects funded by the ASEAN Foundation and/or policy papers prepared by organizations supported by the ASEAN Foundation. Names of Friends of ASEAN will be acknowledged and listed in the annual reports of the ASEAN Foundation, which will be widely disseminated, and selected stories of outstanding contributions will be featured from time to time. Names of Friends of ASEAN, including brief descriptions and photographs of them, will be featured in the website of the ASEAN Foundation. An attractive brochure of Friends of ASEAN will be prepared and widely disseminated containing relevant information about the individuals and corporations. The Friends of ASEAN will be presented a distinguished certificate recognizing their support and active practice of individual or corporate social responsibility. Partnerships on scholarships and awards. The ASEAN Foundation is building alliances and partnerships with corporate foundations to support a large scholarship program for qualified students from all ASEAN countries to study in a selected university where the corporate foundation is based. For example, we will be collaborating with a corporate foundation based in Thailand to offer scholarships to students from all ASEAN countries to study in a selected university in Thailand. The ASEAN Foundation will provide all the costs outside Thailand such as travel, visa fees and others plus a portion of the local costs while the Thai foundation will provide for the rest of the local costs such as tuition and allowance. The objective of the program is not only capacity building and poverty alleviation but also promoting ASEAN awareness and developing the ASEAN identity. Imagine if several corporate foundation in five or six of the more developed ASEAN countries offer scholarships in their respective countries to students from all ASEAN countries. This will result in the movement and cross-travel of a significant number of young people from one ASEAN country to another, living in a particular country for a few years, learning the culture of that country and building personal networks that they will need in the future. Since many corporate foundations will be giving priority to students from the CLMV countries, this program also addresses the issue of socio-economic disparity among ASEAN countries. Friends of ASEAN, the network of ASEAN corporate foundations, and the partnership program on ASEAN scholarships are three of the ways to build CSR alliances in the region. Once the network is fully operational, we envision launching programs and activities not unlike those of the European Alliance for CSR, but with an ASEAN flavor. In the future, we hope that there will also be partnerships between CSR Europe and CSR ASEAN. 8