Social Auditing in Pakistan A Tale of Three Sectors

Friday, October 22 2010

Khurram Aziz Fani (Kaif Associates, Pakistan)

Dr. Nadeem Bashir (King Saud University, KSA) ISOSS, Superior University, Lahore.

Sequence of the Presentation

Background Main Area of Research Focus and its Importance Methodology Findings Conclusion

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Background Social Auditing

Social auditing - issue evoked under Code of Corporate Governance. Last 2 decades, pressure from stakeholder to comply social responsibilities makes it important. Seminal work of Bowen (1971) who argued that businessmen should focus on businesses discharging their social responsibilities. Steiner and Steiner (1991) highlighted importance of social auditing. Frederick et al. (1992), social evaluation needs to have disclosure in some form.

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Main Area of Focus .

Stewardship Theory Vs Agency Theory Vs Stakeholder Theory

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Social Auditing Importance

SA creates impact upon Governance. Linked with Social, Economic and Environmental issues of organization. Measures organizations shared values and objectives (Prakash, 2006). Results in improvement in management practices and accountability. Important tool in building trust (Gao and Zhang, 2006) and improving accountability and transparency (Zadek and Raynard, 1995, Ebrahim, 2003, O'Dwyer and Owen, 2005).
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Research Aims and Objectives .

SA is gaining prominence. Growing awareness among stakeholders. Aim is .. to analyze the current state work on Social Auditing and its application in Pakistani context.
Analyze application of social auditing in a telecom sector. Analyze application of social auditing in a food sector. Analyze application of social auditing in oil and gas sector.

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Theoretical Framework of Research

Corporate Social Responsibility

*Employee Welfare *Equal Opportunity Employment *Safeguarding stakeholders Interest * Social Welfare

*Support to Environment * Waste Disposal * Energy Efficiency

Social Compliance

Environmental Compliance

Social Auditing

** Application in 3 Sectors

Oil and Gas

Telecommunication

Food

Findings

Conclusion and Managerial Insights

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Methodology - I

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Methodology - II
Stages of Research 1. Identification of issue to be studied. 2. Investigation of published material on CSR and Social Auditing so as to enable the candidate to develop understanding about the area and shape the research design.

3. Development/identification of Research instrument. 4. Conduct of case study and collection of relevant facts. 5. Analysis of information collected in the preceding stage.

6. Drawing up the conclusion about the research objectives

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Methodology - III
Stages of Research 1. Identification of issue to be studied. 2. Investigation of published material on CSR and Social Auditing so as to enable the candidate to develop understanding about the area and shape the research design.

3. Development/identification of Research instrument. 4. Conduct of case study and collection of relevant facts. 5. Analysis of information collected in the preceding stage.

6. Drawing up the conclusion about the research objectives

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Methodology - IV
Detailed Literature Review was carried out in area s like:
Need for Organizational Governance. CSR Historical Perspective. CSR Area in Focus. CSR Definitions and Features. Advantages of CSR Recent Research in CSR Dimensions of CSR. Social Auditing, Environmental Responsibility and Sustainability Reporting. Diversity Across Countries

Reference Documents were from Emeraldinsight, JStor and EbscoHost ,Governmental and Non-Governmental documents. Data was collected through structured interview-guides. Questionnaire developed by Balboni et al. (2007) was used. Conducted research for Ministry of Housing, Planning and the Environment of Trinidad and Tobago in collaboration with UN and South Trinindad Chamber of Industry and Commerce.
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Methodology - V
Data was collected from three firms. SNGPL, Telenor and Nestle. Qualitative Research in the form of Case Study was carried out. Data Collected during June 2010. Survey Instrument used as Interview Guide, Key Informants Interview + several unstructured interviews. Content Analysis applied on various reports and websites. Most of the interviews were conducted in Urdu. Triangulation of Data Research ethics were not violated Informed response, Sharing only what was being told by the respondent, Correct reporting of the findings, Authenticating collected information.

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Methodology - VI
Yin (2008) suggested that the validity and reliability can be Improved through Construct Validity, Internal Validity, External Validity and Reliability Balboni et al., 2007, same purpose (yet different settings) so questionnaire would ought to measure the same things with same reliability level. Internal validity, not relevant to as descriptive research instead of causal research. Conduct of case study in actual field setting enables the dissertation candidate in generalization of findings. Triangulation of data ensures that data is collected from reliable sources.

Construct CSR is widely accepted and Researched So construct validity is assured

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Findings . Telenor - I
(Pvt.) Ltd., financial statements not required , Not Listed Company so no code of Cor. Governance. CSR projects done inside department 2008, awarded Environmental Excellence Award at 5th Annual Environmental Awards. Maintains a comprehensive health and safety policy to save environment from potential hazards of its products and services. For employees, comprehensive health assurance and a medical scheme, pension, maternity leaves, employee assistance programs, etc. Encourages participation of previously deprived social sector in job participation.

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Findings . Telenor - II
has high respect for ecological concerns. As compared to other telecom operators, Telenor has limited influence on the external environment but still it is working to reduce the impact to its minimum. State of the art technology and has limited influence on the human masses. Using outdoor Base Transaction Station towers., energy efficient and able to manage tough environmental conditions. Uses better quality of generators on its cellular tower sites. Reduce gas and noise pollutions. Extensive site audits, conformation to own and policies of PTA.

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Findings . Telenor - III

Solar Energy Generators Emergency Response Program. Trained employees to cope and contribute in case of any disasters (flood, earth quakes, air/rail/road accidents).

Khuddar Pakistan (Naya Qadam)

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Findings . Telenor - IV
Engaged in extensive mobile radiation research, unlike others. Also financing. Maintained a helpline where customers can launch their complainants. From other networks, as well. Customer service infrastructure is nations state of the art customer service centres. Only company adhering to the requirements of TL 9000., QMS is a special purpose system designed for telecom suppliers and service providers.

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Findings SNGPL - I
Market leader in provision of gas. Operates in North Central area of Pakistan, operations in Punjab and newly commissioned Khyber Pakhtoon Khwa. With an experience of more than 45 years, Incorporated under Companies Ordinance 1984 of Pakistan and is listed on Lahore, Islamabad and Karachi stock exchanges of Pakistan. Arranges different social gatherings, employees from all cadres participate. Independence day celebrations, Eid festivity, etc.. Very recently, company has completed an improved design project in collaboration with local engineering university. Improved thermal/combustion efficient, Organizations environment sustainability endeavours. In 2009, upgraded its OSHA to 18001200t from previously held 1999 standards.
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Findings . SNGPL - II
Listing requirements of stock exchanges and in compliance with code of corporate governance, the company issues quarterly financial statements. The reports are in accordance with applicable accounting and auditing standards and applicable GAAP. Rating Agency (PACRA) changed from s AA to A1+, OSHA for employees and contractors. Compliance to legal requirements. The company is also striving for making itself a better and safe working place.

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Findings . SNGPL - III

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Findings . SNGPL - IV

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Findings . Nestle -I
One of largest firms of Pakistan which is operating in food sector. Listed at LSE and KSE, 1988, Switzerland. Milkpak Ltd. Milk, dairy and chilled dairy, beverages, bottled water, food, breakfast cereals, chocolates and confectionary. CSR initiatives include sponsorships, charity, community welfare programs, ecological sustainability, employment generation, etc. Programs designed at Head office while regional offices are given autonomy. Regional Offices, In charge of identifying and reporting CSR projects Head office then evaluates and develop full programs. Aim is to bridge gap which was not left un-filled by the Public sector.

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Findings . Nestle - II
Major areas are education, community welfare, improving quality of life and investment in health. Major contribution in agriculture, helped sports and cultural events flourish in the country. Spent considerable amount of money on school rehabilitation and advancement of education. APWA college mobile laboratory. Earthquakes support in Pakistan. Health and Safety policy for its employees, Emergency response for employees. Employee training and development, skills at par Nestle SA. Workplace is continuously monitored. Work-life balance, ethics training, etc. health insurance, pension, entertainment / gym, maternity/paternity privileges, employee assistance programmes.
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Findings . Nestle - III

Manufacturing processes are so well designed that they minimize production wastes. Sustainability of environment as less and less of the materials are required in the processes. Being in the food and beverages business, the compliance of health and safety policies are very important for the firm and it is giving due regard to this. Helpline for complaints. Abides by all relevant product quality and safety legislation Adaptation of World Health Organizations Codex Alimentarius on manufacturing food items. Laboratories at Sheikhupura and Kabirwala were given top grading by Nestl SA.

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Conclusion .

CSR and SA are on the boom. Industry wise compliance. Organization are complying to their Environmental and Social Accountability and are increasingly reporting these projects. Environmental and Social Accountability initiatives differ from industry to industry with lot of similarities and dissimilarities.

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Question Answer Session