May 25, 2013
30 April 2010
Adviser to the Management Thai Health Promotion Foundation
1. Sustainable development and CSR
Sustainable development became the buzzword following the 1st Earth Summit in Rio de Janeiro in 1992. It first called for governments to pay attention to environmental and social concerns, not just economic expansion. And business enterprises are urged to address the concerns, not just profitability. This later gave birth to the terms "corporate citizenship", "responsible corporate citizenship" or "corporate social responsibility".
The trend intensified in year 2000 when OECD issued the new guidelines for MNE's, which presented major revision from the first guidelines issued in 1976. This time, CSR was included in the guidelines. Multinational companies were required to come up with CSR practices and they were urged to do business only with companies that show social and environmental concerns. Thus, businesses breaching environmental, child labour and other laws could have problems doing business with OECD.
Thai companies are now subjected to these rules when doing business with European companies, with or without knowing that they are following the CSR guidelines.
In the financial world, as financial institutions are promoting CSR, there are terms "socially responsible investment" and "sustainable and responsible investment" to define funding for good projects. From green funds, now there are SRI funds or Ethical funds which are investing money in companies with good CSR. Unlike hedge funds, these funds are invested for long-term gains.
SRI might be a new word, but its origin dates back to the 1920s when ethical and religious investors avoided investing in businesses in gambling and alcohol industries.
In the US, one eight of fund investment was put in 192 SRI funds, of which size was US$2.2 trillion (as of end-2001). It is estimated that the value of SRI funds in Canada were tuned at $38.2 billion, the UK $6 billion, and $10 billion in other European countries. SRI funds in Australia were estimated at $14.3 billion, Japan $1 billion and the rest of Asia $1.5 billion. Globally, $2.5 trillion was ready to invest in CSR enterprises and the value is increasing fast. During 1995-2001, SRI funds in the US expanded 22 per cent per annum against 49 per cent in the UK.
3. CSR elements
World Business Council for Sustainable Development defines CSR as "The continuing committment 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 and society at large".
Without definite meaning, the elements of CSR are unclear. A World Bank's paper suggested that CSR should consist environment, labour, human rights, community participation, business guidelines, and markets. In the broader scope, it cound encompass activities in organisation development, health, education and disaster handling.
OECD Guidelines for MNE's - Revision 2000 highlights 7 areas - labour relations, human rights, environment, information disclosure, competition, tax payment, and science and technology.
During the World Economic Forum in Davos, Switzerland, in 1999, then UN Secretary-General Kofi Annan urged enterprises to be good global citizens, by doing good in all countries they operate. They must honour the international accords on human rights, labour and environment. He proposed the 10-point Global Compact to promote sustainable development. Business leaders must voluntarily honour the compact. At present, 1,861 organisations have become members of the UN Global Compact. (see www.unglobalcompact.org .)
In a survey in Europe, North America and Asia by the Centre of Urban Planning and Environmental Management of the University of Hong Kong, a CSR business must meet 20 aspects. It is not easy to determine if any enterprise demonstrates CSR.
The Japanese government, under its grant assistance for grassroots human security projects scheme (GGP), is providing Bt1.88 million for waste-management centres and promoting waste recycling in Samokhae sub-district in the Muang district of Phitsanulok province.
Richard Abela, country president of Novartis (Thailand) has donated Bt473,000 to the Pattaya Redemptorist School for the Blind, under the patronage of HRH Princess Maha Chakri Sirindhorn.
General Motors vice president of global manufacturing and president of international operations Tim Lee recently joined GM Southeast Asia president Martin Apfel to hand out 130 virtually indestructible footballs to schoolchildren in Chon Buri.