CSR – the tool that still only a few understand
Companies loosing billions because CSR misunderstood as charity event management
Sometimes it is frustration that makes people sit down and write their thoughts, their thinking, their frustration on to a piece of paper. Sometimes it is enlightenment, sometimes it is tossing a new idea at the people out there and seeing what is coming back. This is written from a mixture of frustration and wonder, how well paid business managers and owners are very often blind towards the obvious. How much money is lost by wrong decision making, based on limited information pressed into an exel sheet instead of looking at the full picture and taking the decision that is “written on the wall”?
I read very often in statements of companies, “our customers come first”. Well, currently we have a scandal happening with QNB in Qatar. Thousands of accounts were hacked and the information is out there on private and business accounts, passwords, transactions etc. And, the bank says - nothing. Information of customers – the ones that come first – zero! Now, just to be clear, it can happen to any company, to any state actually, that their computers get hacked, we live in a digital world, but what I am talking about is the reaction thereafter of the bank. Customers are the most valuable stakeholder, without customers the bank would not exist. Very often that is forgotten, somehow. Companies that are clients of QNB and who pay the salaries of their employees through QNB accounts asked the bank if and about what they could inform their employees. The answer was, do not say anything, we have to sort things out first. A week after the hack happened. And the information of the bank accounts is floating around freely in the net, meanwhile.
Again, that is not the main point I want to make in this context, crisis communication has to be learned, developed and managed, and maybe the bank thought it is living on a lonely island without any internet access. The point I want to make is, CSR would be the obvious answer to the trouble of the bank. Proper CSR, understood as managing the impacts an organisation has on the economic, social and environmental dimensions of its business would make them understand that one of their critical stakeholders are their customers. And now really, not in their marketing speech. One of the key elements of strategic CSR is to deal with your stakeholders based on accountability, transparency, ethical behaviour and respecting the rules of law. Information is the meat on the bones of accountability and transparency. Only few customers will cancel their account because there was a hacking attack on the bank but thousands of customers will cancel their accounts because they do not feel taken serious in their fears and not treated with respect in the aftermath of the incident.
And there is a tool out there, since 2010, internationally recognised, more than 100 countries have adopted it, amongst them also Botswana it costs around 90 USD online and is called ISO 26000. The international standard on Social Responsibility that defines CSR as a strategic management tool to handle the impacts of an organisation, be it for profit, government or non for profit, that sets the principles an organisation should follow like accountability, transparency, ethical behaviour and respect for the rule of law and the expectations of stakeholders. That defines the economic, social and environmental aspects of the business in seven core subjects, reaching from Governance issues, labour issues, fair operating practises to community development and, most importantly, provides a full mechanism on how to implement and integrate this into the company and make sure not that there will be no hacking attack on the bank, but to make sure the bank does not loose thousands of disgruntled customers for its mishandling of the situation.
And yes, the term CSR is loaded, especially in this region, as dealing with charity, philanthropy, sponsoring and not necessarily with the so called “hard” business elements. But actually that is a misinterpretation of the term and leads to not seeing the obvious and missing out on an opportunity developed by the world exactly for businesses to do things better.
Volkswagen is again another story that adds to my wondering how managers cannot see the benefit of integrating CSR into their day to day business. It is there, ready to be used, there are consultants that can help them if they feel the need, but as I always say, CSR is not rocket science, with good will, good intention and some learning it is doable, for the bakery around the corner just as much as for a global player. But back to Volkswagen. The car maker ran into trouble complying with government regulations in the USA regarding the emissions allowed of their diesel cars. So, there were two options, one, develop a technology that would meet the legal requirements (yes, it would take time and money to do so, but other car makers had done it already), or, the second option, to develop a software that would cheat at the emissions testing and so let the cars pass the inspections by the US Environment Authority. (“cheaper” and faster). Now we know which decision the Volkswagen management took, but the real issue is the following: Volkswagen is (was) a big shot in CSR. They had a big CSR department, spent millions, literally on CSR projects all over the world, had a great CSR report, were listed as the leading carmaker worldwide in regards to CSR etc.
Well, millions wasted, because they did not integrate CSR into the decision making process. Had they, and had they taken it serious, they would not have taken this decision. Now, some will say, well, business is business and CSR is CSR. No, CSR is business, because, simply look at the costs that Volkswagen has to bear now because of this cheating – the estimates reach from 50 – 80 Billion USD, including that in a few years Volkswagen will not exist anymore. By the way, a big part of the shares of Volkswagen are owned by Qatar.
Which leads me back to beautiful Doha. Here is a company that is really successful, not only in Qatar but globally, Ooreedoo, has 117 Million subscribers in 20+ countries. They make billions and they hosted a dinner a few days ago in the context of an United Nations conference on Business and Human Rights. A great gathering, more than 400 people from all over the world attending. So, a great setting for Ooreedoo to sponsor the dinner and present its CSR activities. But before that the Chair of the United Nations Committee on Business and Human Rights, Dante Pesce, who is a decades long friend of mine, asked me to tell him a few words about Ooreedoo because he had to say some words of thanks and wanted to know if they did something in CSR. I mentioned their program that for a flat rate of 10 QR a month the subscriber can call India for 600 minutes which is a great support to the large Indian expat community here, especially for the labourers on the construction sites, to keep in touch with their families. So Dante went on stage and mentioned this as a great initiative and applauded the company for it. The next speaker was the CSR responsible of Ooreedoo, and she showed some slides and a short film on the CSR activities of the company, but she did not mention with one word this real CSR activity. Rather she seemed very proud of the fact that Ooreedoo distributes 5000 lunch packages every three months to labourers on building sites. If you know that there are about 1,4 million labourers here in Doha alone, wow, what a nerve one needs to have to mention this. And what do lunch packages for labourers have to do with Ooreedo, a telecommunication company. The companies core business is communication, and the many labourers have communication needs, Ooreedoo is doing this, but rather puts the feather of some lunch package distribution on its hat than real strategic CSR.
This list could be continued for ever, Coca Cola in India, BP in the Gulf of Mexico, Mining companies around the world in dealing with local population, Oil and Gas companies in dealing with environment or political turmoil, big infrastructure projects dealing with stakeholders and including their expectations etc. etc.
Let me highlight one more example, simply because in 2022 Fifa will conduct the Football World Cup in Qatar. Now this has not been really smooth sailing, the media internationally, the NGO scene, the human rights activists, the international labour organisations, all are hammering Qatar for its labour rights – or their absence, the human rights situation, the environmental costs of the event, the after use of the infrastructure and so on and on, the list is long. The image of Qatar especially in the Western World is just above North Korea for that matter. Modern Slavery is a term regularly used in conjunction with Qatar.
Here the Committee on Legacy is in charge of preparing the infrastructure for the World Cup. Fifa is tied up in a corruption scandal and has to also answer unpleasant questions on why and how it had chosen Qatar. The Committee is doing its best, and there are great people in charge, only they are like the mouse in front of the snake, hypnotised by their enormous task and only looking at extinguishing one fire and then the next and the next. And again it is written on the wall. FIFA has used ISO 26000 to evaluate the Football World Cup 2014 in Brazil, after it was over, to evaluate and measure the social and environmental impacts the event had. Now the Committee on Legacy knows that, we told them that, we showed them the report FIFA made, we met the people in charge - and nothing happened. You are still preparing the World Cup, you have all the chances, all the opportunities to do it right, it is there, it costs 90 USD in the internet, you have the world largest and most successful CSR consultancy with the global Chair of ISO 26000 being the CEO of that company, headquartered in Doha, in your neighbourhood, but for more than a year nothing has happened. And to make things even worse, at the already mentioned UN conference the Fifa spokesperson mentioned in his speech that Fifa is using ISO 26000 and its sector specific sister standard to evaluate the games. How big do managers need to have it written in front of their eyes to react and do something?
Why is this so? Why are shareholders wasting billions, why is Qatar wasting billions in investing in companies were the perspective of managers ends on the computer screen in front of them showing the exel sheets of costs calculations based on purely the economic dimension of a project, and do not see the obvious, the huge potential risks coming from societies not accepting the decisions taken, environment being so destroyed that people (workers) are forced to move away (some areas in China). The legalistic point of view, we have the legal right to do something, we got the concession from the government etc, is only half the story, there is the “social license to operate”, and without that business in future will not work.
But the sadest thing is that even the front runners on this only see the risk potential of CSR, in dealing with potential hick ups and solving crisis, but they still do not see the real potential of CSR, that goes way beyond any risk management, it is the tool to identify opportunities. We need business opportunities, not risk prevention, and CSR can provide these business opportunities, because we listen to what the customers want, not what some managers believe they want or not want. And for sure they want information, they want to be treated as partners, not as cash cows. And they have needs of which the managers in their glass tower corner office have not yet even dreamt about. But if we address these needs we have business opportunities without end.
There is huge potential for smart businesses, only where are the smart managers?