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on Corporate Social Responsibility Practitioners in Lao, PDR
Table of contents
Executive Summary ....................................................................................................................................... 1 Abbreviations ................................................................................................................................................ 2 1. Survey Background ................................................................................................................................ 3
2. CSR background and development ........................................................................................................... 4 2.1 Defining CSR ........................................................................................................................................ 4 2.2 CSR development ................................................................................................................................ 5 2.3 CSR Dimensions ................................................................................................................................... 7 3. CSR in Asia and Laos .................................................................................................................................. 7 3.1. Philanthrophy and the Art of Giving................................................................................................... 8 3.2. Asia is Waking Up ............................................................................................................................... 9 3.3. An Asian CSR Tour .............................................................................................................................. 9 3.6. The Case of Laos ............................................................................................................................... 15 4. Study findings .......................................................................................................................................... 17 4.1 CSR Awareness .............................................................................................................................. 17 4.2. Current practice............................................................................................................................ 19 4.3 Spending and budgeting ................................................................................................................ 29 4.4 Plan and support needed .............................................................................................................. 33 5. Case studies of CSR program beneficies ................................................................................................. 34 MMG Training Center .......................................................................................................................... 34 Creating opportunities for disabled people ........................................................................................ 37 We can do it better.............................................................................................................................. 37 6. Conclusion and recommendations .......................................................................................................... 38 Annex 1: Questionnaire ....................................................................................................................... 41 Annex 2: Respondents‘ Directory ........................................................................................................ 51
The German Development Service (DED) has requested the Enterprise & Development Consultants Co., Ltd (hereafter called EDC) to conduct a survey on Corporate Social Responsibility practice in 17 LMEs in Vientiane Capital and Savannakhet province from December 2010 to February 2011. This survey is the first of its kind in Laos. It aimed to find out if there are sufficient CSR practitioners (particularly among the large and medium enterprises LMEs) and if so, how is the practice spreading. Three case studies were selected and included herein as best practices among the companies surveyed. A questionnaire was used with a focus on qualitative rather than quantitative information. Globally, there is no unified definition of CSR. Generally, it is referred to as corporate conscience, corporate citizenship, social performance, or sustainable responsible business. Wikipedia suggests that it is a form of self-regulation integrated into a business model. The goal is to embrace the responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. CSR in Laos is alive but on a very early stage of development and embeddedness in the companies. Applications have been sparse and limited in scope. Practitioners see this as an important trend that they must respond, follow and comply to. CSR has not reached the stage where they will be performed continuously by the practitioners. Interestingly, all companies interviewed in the survey said they were aware about CSR and found it useful and important for the company. The most common programs are to address health and safety issues of the company staff, education and training for staff and communities and environment protection. The main drivers of CSR in the companies are the top management. The bigger the companies, the more CSR needs to be understood and promoted. The current biggest challenges for CSR that the companies are facing are limited budget, no support policy and lack of awareness. They needed more awareness, educating their staff and their stakehoders and other relevant ―publics.‖ A number of recommendations mainly focusing on awareness raising, education on the topic and networking of CSR practitioners are made for DED‘s consideration in order to move forward with CSR promotion in Laos.
ASEAN CLICK COP CSR Association of South East Asia Nations
Coalition for Lao Information Communication and Knowledge
Community of Practice Corporate Social Responsibility
Civil Society Organizations
German Development Service (merged and renames in 2011 as GIZ)
EDC EMS EU GPN HQ IGES
Digital Data Divide
Enterprise & Development Consultants Co., Ltd Environmental Management System European Union Green Purchasing Network Headquarters Institute for Global Environmental Strategies
ISO LCA LNCCI LME MDG MNCs NGO NTPC SMEs SRI TBL TQM
International Standard Organization Life-Cycle Assessment Lao National Chamber of Commerce and Industry Large and Medium Enterprises Millennium Development Goals Multinational Corporations Non-Government Organization Namthern Power Corporation Small and Medium Enterprises Socially Responsible Investments Triple Bottom Lines Total Quality Management
1. Survey Background
The German Development Service (DED) has requested the Enterprise & Development Consultants Co., Ltd (hereafter called EDC) – a private human resource development company in Laos to conduct a survey on Corporate Social Responsibility (hereinafter, called CSR) practice in Laos. The survey is the first of its kind in Laos, with the aim to find out if there are sufficient CSR practitioners (particularly among the large and medium enterprises (LMEs) in the country and if so, how is the practice spreading. The survey covers a sampling size of 17 LMEs (2 extra compared to 15 companies in the original plan) in Vientiane Capital and Savannakhet province and has been carried out from December 2010 to February 2011. Three case studies were selected and included herein as best practices among the companies surveyed. The EDC survey team consisted of Ms. Buakhai Phimmavong, Mr. Anousack Chaysavang, Mr. Ki Latmany and Mr. Intha Phanouvong and was assisted by Ms. Julia Dreeßen – a MBA student, who specialized in CSR and provided valuable technical inputs during the survey implementation. Dr. Eduardo Canela, a social enteprise consultant provided technical supervision and read the draft reports. The survey started later than planned. December turned out to be one of the busiest months for some of the repondents. The team did not get the appointment with Phubia Mining and Namthern Power Corporation (NTPC) till about mid-January 2011. Due to the relatively few practitioners in the sample, the team could generate only three good case studies (Laos Soft drink, Digital Divide Data DDD and Minerals and Metals Group MMG) instead of five as originally planned. Most of the other practitioners‘s CSR are still on their infancy stage. The Sample Firms. Much unlike the earlier CSR surveys of South Africa and Malaysia, this survey used a very samll sample of 17 enterprises. This is largely due to the small size of Lao PDR‘s industrial base. Moreover, the questionnaire (See Annex 1) focused on qualitative rather than quantitative information as the former surveys did. The survey covers a wide range of sub-sectors such as manufacturing including agricultural plantation and mining (7), trading (2), professional business service (2), tourism and hotel (2), transportation (1), telecom (1), education (1) and telecommunication (1). The detailed respondents‘ list is in Annex 2.
2. CSR background and development 2.1 Defining CSR
There is no unified definition of CSR. In the Anglo-American language and in the German literature, it is referred to as corporate conscience, corporate citizenship, social performance, or sustainable responsible business. Wikipedia suggests that it is a form of self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal is to embrace the responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Practitioners would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public, regardless of legality. Consequently, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honouring of a triple bottom line (or TBL): people, planet, profit1. The European Commission‘s Green Book defines it as2: "Concept where companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders." It refers to responsible corporate action beyond legal requirements. It manifests itself throughout the value chain, in a company‘s treatment of its employees and in its dealings with the relevant stakeholders. This definition also hints on the TBL: Good economic performance Good social practices Good environmental performance.
Fig.1: The Triple Bottom Line of CSR
Source: http://en.wikipedia.org/wiki/Corporate_social_responsibility Green book / European Commision: http://www.jussemper.org/Resources/Corporate%20Activity/greenbookeu.html
CSR thus refers to an integrated business plan so that all "social, environmental and economic contributions of a company voluntarily assume social responsibility that goes beyond regulatory compliance." 3.
2.2 CSR development The Beginning
The structure of the industrialized economies fundamentally changed at the end of the 19th century. Larger enterprises representing significant concentration of power began to emerge, while smaller companies became less important. It was the visibility, power and reach of these new companies in that society that initially placed CSR on the public agenda. Some philanthropic entrepreneurs behind the new companies responded positively and began to improve the situation of their employees by building accommodation and enhancing working conditions. The classical laissez-faire economic model remained dominant until the 1930s, then it was replaced by a new system where the state assumed a more active and critical role in the economy. This prompted companies to improve working and living conditions for employees, for example, or facilitate social progress. [CARROLL 2003].4 The term CSR became popular in the 70s following the movements of many multinational corporations (then called, MNCs) in the then emerging markets. The term ―shareholders‖ (MNC owners) was expanded to ―stakeholders‖ to include those that the MNC activities have an impact5. Proponents argue that corporations make more long term profits by operating with a CSR perspective, while critics argue that it distracts them from their main economic roles. Others opined that CSR is merely an attempt to pre-empt the role of governments as MNC regulators. Over the years, CSR image changed. It is now seen to aid a company‘s mission and guide it to what it stands for and will uphold to its consumers. It is now used to examine ethical and moral principles to ethical problems that can arise in business environments. ISO 26000 is the recognized international standard for CSR (currently a Draft International Standard). Public sector organizations (the United Nations for example) adhere to the TBL. It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities. Today,
Green book / European Commision: http://www.jussemper.org/Resources/Corporate%20Activity/greenbookeu.html
Thomas Loew, Kathrin Ankele, Sabine Braun, Jens Clausen: Significance of the CSR debate for sustainability and the requirements for companies.Munster, Berlin 2004. 5 See R. Edward Freeman, Strategic Management: A Stakeholder Approach (Pitman Series in Business and Public Policy), 1984.
CSR practitioners integrate social and environmental concerns in their business operations and in their interaction with their stakeholders voluntarily.
CSR Debates in the USA
The CSR debates in the USA began in the Fifties. The first major work appeared in Bowen‘s Social Responsibilities of the Businessman in 1953. It noted that the economy influences the life of citizens in many areas. Bowen showed that a company's social responsibilities must reflect on the society‘s expectations and values. Initially, it was a company's owners who were expected to discharge these responsibilities, but over time the emphasis shifted to the social consequences of companies‘ actions. In 1967, Davis minimized the importance to the individual interests of people or companies and instead expanded the concept to include the total benefit to society resulting from the use of the means of production as the most important factor.6
The European CSR process
The UK was for a long time the only European country to use the CSR approach. The European Union (EU) started looking for its own CSR concept via the strategies adopted in Lisbon in 2000. The strategy called for the EU, ―to become the most competitive and dynamic knowledge based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion‖ by 2010 [EUROPEAN COMMISSION 2001C:2]. This was followed by the EU‘s strategy for sustainability that pinned CSR as an important contribution by businesses to sustainable economy. This is EU‘s political drive to promote CSR [EUROPEAN COMMISSION 2001C].7 In 2001, the EU published the Green paper as its CSR framework. Five years later, Malaysia developed its own version (called the Silver Book) which leaned towards the Swedish‘ CSR concept (called, White paper). All these frameworks belong to a catalogue of international standardizations initiative. Since 2004, CSR became a subject of an international standardization process [ISO 2004] by the ISO. The United Nations Global Compact‘s strategic policy initiative is committed to aligning business operations and strategies with the ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption. There are other international standards which belong to the international labor right and the millennium development goals (MDGs).
Thomas Loew, Kathrin Ankele, Sabine Braun, Jens Clausen: Significance of the CSR debate for sustainability and the requirements for companies.Munster, Berlin 2004. 7 Thomas Loew, Kathrin Ankele, Sabine Braun, Jens Clausen: Significance of the CSR debate for sustainability and the requirements for companies.Munster, Berlin 2004.
It is difficult to use the broad characterization of the CSR activities in Europe and the US as a framework for examining the Asian context. Currently, the European-US framework has: (a) greater emphasis on the importance of environmental stewardship and strengthening of environmental management practices; (b) strong and active civil society involvement; (c) management of the supply chain in response to well-articulated consumer concerns is a major driver; (d) strong traditions of community outreach including corporate community investment that extends beyond charity; and (e) companies are increasingly engaged in strategic partnerships with stakeholders within communities in which they operate. Asia is far from these features. In Europe the new CSR concepts are grafted on a tripartite system institutionalizing relationships among social partners, i.e., the public authorities, companies and trade unions. On the one hand, CSR concepts are perceived positively as tools to help to the revitalization of the welfare state and adapt it to globalization. Business cannot substitute to the state but its input is considered as essential to solve specific issues such as unemployment, regional development and education. Business is also expected to participate to a co-regulation process with the other stakeholders.
2.3 CSR Dimensions
CSR has internal and external dimensions. Inside a company, socially responsible practices include employees and other initiatives such as investing in human capital, health and safety, and managing change, while environmentally responsible practices relate with the management of natural resources as factors of production. Integrating CSR opens a transformative change process and reconciles social development with improved competitiveness. CSR spreads beyond the doors of the company into the local community and widens the concept of stake holding in addition to employees and shareholders (e.g., business partners, suppliers, customers, public authorities, NGOs representing local communities and the environment). Rapid globalization has placed the CSR into the global agenda on governance.
3. CSR in Asia and Laos
Looking from country to country, the CSR Asia8 confirmed that there are numerous businesseses who practice CSR. The origins and conceptualization of CSR in many Asian countries are rooted in the diversity of tradition, culture and religious ecosystems that are deeply influenced by ethical concepts spawned by religious practices. This diversity makes the Asian CSR scene very complex, strange and different from the ways they are practiced in the US and Europe.
LRQA: CSR in Asia The real picture. 2010. http://www.csr-asia.com
3.1. Philanthrophy and the Art of Giving
The CSR concept as we understand it today has already been practiced in many Asian countries in their own humble and unique ways as shaped and tempered by their tradition, culture and religious beliefs. The origin, introduction, spread, applications and depth of use of the CSR in Asia vary from country to country‘s rich and diverse religious landscapes. In the old days, the terms closest to CSR were charity and philanthrophy.
Box 1: Religion and Philanthrophy Look back at your business and life, at their end, and honestly say that the years of doing business have had some meaning. We should be able to look back and see that we have conducted ourselves and our business in a way that had some lasting meaning and which left some good mark on the world. Buddha If one’s actions are motivated only by profit, one will have many enemies. - Confucius A good name is to be chosen rather than great riches, and favor is better than silver or gold. The rich and the poor have this in common, the Lord is the maker of them all. - Bible Book of Proverbs [9:60] Charities(Sadaqaat) shall go to the poor, the needy, the workers who collect them, the new converts, to free the slaves, to those burdened by sudden expenses, in the cause of Allah, and to the traveling alien. Such is GOD's commandment. GOD is Omniscient, Most Wise. Quoranic Verses You came into this world with fists closed and you go away with open palms. So even while living stretch your hand open and give liberally. (mutti bandhe aye jagat me hat phasare jaoge bhai). Kabir (c1398-1470) The Sarvodaya movement in India (developed by Archarya Vinoba Bhave, 1895-1982) is a program of land gift (Bhudan), village gift (gramadan), wealth gift (sampattida n), and life time commitment (Jivandan) for bringing about non-violent economic and social change.
Take old Japan for example. Businesspersons were expected to follow the samourai code to be resepcted. This unleashed a business culture where companies were (and still are!) expected to bear benevolent responsibility towards those with whom they had direct relations: employees, subsidiaries, business partners and customers, and the community surrounding the workplace, shopkeepers and service providers, i. e., the stakeholders in today‘s CSR language. This was observed in old China as well. Businesspersons emphasized honesty, integrity and respect of ethical values. The core of values in Japanese and Chinese societies were faith and trust that have deep roots from Buddhism and Confucianism.9
Ho, B. Confucian Businessmen, CSR Asia Weekly, Volume 2, Week 43, October 25, 2006.
The same sense of righteousness and respect for ethical values cut across many societies whose main relious inclination sways from Islam to Christianity. Believers thought that success of a businesshighly depend on the favours gained from people and society. Businesspersons are expected to reciprocate or return back a certain amount even beyond any contractual agreements. Doing something good for society enhances social reputation and deserving respect different from the contempt reserved for the mere profitseekers (Lebroux). Indeed Asia‘s companies and businesspersons were concerned about their social responsibilities, long before the term CSR was invented.
3.2. Asia is Waking Up
Compared with their counterparts in the US and Europe, Asia may still be considered as barely becoming aware of the CSR imperatives. CSR is gradually metamorphosing from its historical focus on business philanthropy to a more strategic integration of the practices into the core values of larger organizations. Many large MNCs and local companies in more advanced Asian countries (e.g., Japan, South Korea, ASEAN 6) never shied away from their social responsibilities. But before CSR, however these responsibilities were fulfilled as implicit obligations embedded in their business practices. For example in areas where social commodities were less developed as in health, pensions and education in many Asian countries, companies have taken over the responsibility over these issues. Such reponsibilities usually fell into the hands of the corporate owners rather than a specific organizational unit.
3.3. An Asian CSR Tour
A brief overview of the CSR practices in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam follow. Indonesia State of CSR is still in early stages but recent developments indicate encouraging signs. In addition to its Islamic roots, the concept is embedded in the Indonesian gotong royong culture. Current promotion measures are led by an informal alliance in both government and private sectors. Most CSR users are in compliance stage. Companies comply with relevant policies and regulations as part of doing business. Some have reached the managerial stage where societal issues are embed in their core management process. Still, a few others are in strategic stage where companies integrate social issues in their core business strategies. While it is fair to say that CSR makes a positive contribution to the human rights of those working in MNCs, it is also fair to say that it only makes a difference to those few large companies targeted by consumers or who are convinced of the necessity of thinking ethically and responsibly. Other companies can avoid such pressure by staying under the radar screen. The on-going CSR debate centres on instrusive CSR policies and regulations, rather than CSR‘s usefulness. Numerous companies10 resisted the inclusion
Edward Manik, “CSR: The Indonesian Context”, Frontier, June 2008.
of CSR under Law No. 40 of 2007 on Limited Liability Companies, Article 74, paragraph 1 that states: Companies doing business in and/or in relation to natural resources must put into practice social and environmental responsibility. Still, cynics argue that Indonesia may benefit from CSR, but it cannot rely on CSR to solve issues of exploitation, environmental devastation and poor labor standards, particularly when Western finance corporations are impervious to environmental or labor rights lobbying and community outrage.11 Malaysia This country has taken CSR seriously. Among its many continuing achievements in CSR promotion, it has recently developed a Framework Agenda that was composed by Bursa Malaysia for public listed companies in 2006. Bursa Malaysia is an exchange holding company under Section 15 of the Capital Markets and Services Act of 2007. The Agenda is set of guidelines for public listed companies who want to use CSR. The internal and external dimension of CSR in the Bursa Malaysia Agenda consists of: Environment, Community, Workplace and Marketplace. See the framework areas12 in Box 2. Box 2: Bursa Malaysia Agenda
- Climate Change projects - ISO 14000 - Renewable Energy - Energy Efficiency - Waste management - Recycling, Reuse, Reduce -Biodiversity protection Develop Carbon Funds: -CDM / Carbon Markets
- Employee Volunteerism - Education: digital divide / Schools adoption scheme - Youth development - Underprivileged homes
-Employee Involvement - Workplace Diversity - Gender issues - Health & Safety -Human& Labor Rights - Human Capital development
-Green Products - Stakeholder engagement - Ethical Procurement - Supplier management - Vendor management - Social Branding - Corporate Governance
CSR Report in Indonesia, UN Research Institute for Social Development (Dec 2001). Bursa Framework
Philippines The CSR concept and its initial practice can be traced as far back to 1950s. Market forces have been the major CSR driver due the the presence and push by NGOs and civil societies. Persistent social problems are the main challenge to sustaining commitment to and making resources available for CSR. Most CSR efforts are philanthropic in nature with education and health being the main recipients. There is growing internal expressions of CSR linked to operations of companies promoting employee involvement. Leaders who play significant role in CSR are the principal agents for the CSR promotion strategy. One non-profit, Philippine Business for Social Progress has obtained mandatory contributions (based on gross profit percentage) from its usually large company members. Emerging new CSR areas including fair trade, microfinance and solidarity movement have already immigrated out of the corporate corridors in response to the MDGs, persistent poverty and the expanding needs of the Bottom of the Pyramid. Singapore Development of CSR is influenced by the country‘s unique city-state character that has achieved economic success where government remains a key architect of the economy and has considerable influence over corporate behavior. Government-centric approach influences CSR strategies with much emphasis on compliance with legislative requirements as a means of achieving and regulating socially responsible behavior. Corporate residents follow the state rules rather than their headquarters when dealing with CSR appropriateness. Thailand Practice of CSR is at its early stages of development substantially influenced by religious beliefs and traditional norms of ethical practice. Full integration of CSR into business management at the strategic level is not widely evident yet reflecting insufficient commitment by top management and the general perception that CSR is primarily business philanthropy. Engagement with NGOs deal with sound environmental practices and social development while engagement with government emphasizes compliance with environmental, health, labor and safety standards. The CSR challenges include narrow perception of CSR by many leaders, threat of economic downturn, and negative perceptions that of CSR standards as a form of trade barrier. The development of local standards is fairly well developed in Thailand. Vietnam CSR activities are regulated and supervised by the government and corporate social policies observe state regulations as outlined in the companies‘ annual plans. CSR thrust includes meeting requirements of import partners, avoiding conflicts with local labor and to some extent philanthropy. Enterprises and government are the main players for promoting CSR where enterprises determine the success of CSR and government promulgates policies and supervises implementation. The main challenge is to raise the level of awareness of CSR since consumers have limited appreciation of CSR and do not relate it with social concerns.
This brief CSR Asian tour shows us that while there are positive signs of progress, much still needs to be done. Most CSR practices vary between the CSR concept in the West and philanthropy in the East. Many companies are taking the best of both worlds and continue to take in what works well in their respective context. A few prefer to have their own CSR versions. Indeed, the question is no longer why CSR, but how CSR. CSR is particularly important in Cambodia, Laos, Myanmar and Vietnam. They have to confront the painful trade-offs between economic growth, preservation of the environment and creation of good jobs in their rush to catch-up with their ASEAN neighbours and the rest of Asia.
3.5. The CSR Drivers
As the Millenium began, CSR dialogues and conversations in Asia have increased. They have been happening and practiced in China, Japan, South Korea, Singapore, Malaysia and Vietnam. Such dialogues point to many CSR drivers that may be used to anchor future CSR promotion initiatives. The following are driving CSR in Asia: MNCs, good governance, environment, social
movements, global SRI funds, the state, and economic sense. MNCs Over the years, CSR surreptitiously landed in Asia via the MNCs invasion and technology transfers before the mid-seventies. MNCs brought in new human resource development programmes where some CSR practices have been embedded. They proved to be powerful magnets in attracting talents and loyal employees in what was then an Asia with limited talents and competencies. Some practices survived while others began to fuse with existing philanthropic practices that previaled in those times. Both the sides liked the idea of MNCs adapting themselves to their new business environments. At that time, most of the small and generally owner-managed companies in Asia began learning the ―western‖ ways. Some are now giants in their own rights, Toyota, Tata, Samsung, HuaWei, to name a few. All started CSR as corporate charities and have now become integrated in their business operations. GOOD GOVERNANCE Since the 1980s, demand for accountability and transparency (considered as hallmarks of good governance) spurred a shareholder activism in the United States and later in Europe. This was unknown and even strange in Asian countries until very recently. Whilst having the objective of defending shareholders interest it has also become a tool to foster social and human rights-related causes. This behaviour has affected corporate governance in Asia. The unexpected decision of the California Public Employees Retirement System, one of the biggest pension funds in the world, not to invest in China a few years ago and to withdraw from countries such as Thailand and Indonesia is a case in point13. The pressure exerted by Free Tibet on British Petroleum to get out of a pipeline project to Tibet in collaboration with PetroChina is another14. Consequently, efforts for improving measurement and reporting grew rapidly in the belief that the outcomes will enhance CSR credibility. For other highly visible companies, CSR has
Association for Social and Responsible Investment in Asia, 2002.
Dodd, M., BP in Vietnam: social involvement, an evolution, Doshisha Business School, 2004.
become a response to meeting regulatory obligations and responding to public opinions that demand higher standards of good governance and accountability. ENVIRONMENT Many CSR adopters see becoming better Earth citizens as an easy door to the CSR. Such environment related CSR measures respond directly to the market demand. Western giants like HSBC, Mark & Spencer, Tesco and Wal-Mart have all pledged to become carbon neutral or substantially reduce their carbon emissions. This is bound to have a strong impact on their Asian suppliers.15 But there is also a strong inside pressure. A few Asian governments instituted policies to encourage the purchase of environmentally-friendly products. Japan has a Green Purchasing Law since 2000 while South-Korea has Green Purchase Act. But still, consumer awareness lagged behind and seemed to have stagnated. Japan established the Green Purchasing Network (GPN) in 1996 and is now being localized. South-Korea formed a GPN in 1999, Malaysia in 2003, and Taiwan and Thailand in 200516. Elsehwere in Asia, more GPNs are underway. One major initiative is EU‘s Switch Asia which encourgaes the promotion of sustainable production and consumption practices among the producers and the consumers. The applications and use of environmental management system (EMS) such as life-cycle assessment (LCA), environmental reporting, environmental accounting, and the application of ISO 14001 has increased steadily. National standards certification organizations have been established in Malaysia, Singapore and Thailand. Japan leads in ISO 14001 certificates issued, followed by China and South-Korea; which are among the world‘s top ten issuers. Certification bodies also srang up and grew in Taiwan, India and Thailand.17 Asian companies disclose more detailed non-financial information than before related to social and environmental issues. In adopting the triple bottom concept, they recognize the necessity to protect the intangible assets considered as key competitive advantages. They are also aware that evidence of the emergence of shared workplace values is appearing in the corporate codes of conduct arena where multistakeholder efforts such as the Ethical Trading Initiative and SA 8000 are gathering ground.18 SOCIAL MOVEMENTS Even they wanted to, many Asian companies are inadequately equipped in tools and access to handle many social issues. Child labor, unsustainable work hardship, human trafficking and prostitution are better handled at levels much lower in the production chain by public authorities, NGOs and civil societies. If at all, CSR interventions will have to be meticulously designed, very expensive and may well go beyond the corporate missions. Then as IGES noted, the high level of indebtedness of countries like Indonesia, Laos, Myanmar and Vietnam, makes it difficult to divert significantly higher financial resources to
Crow, L. Global Sustainability Targets: Will They have an Impact in Asia?, CSR Asia Weekly, Volume 3, Week 28, July 11, 2007.
Institute for Global Environmental Strategies (IGES),Sustainable Asia 2005 and Beyond - In, the Pursuit of innovative Policies, 2005. ISO World Inc. 2007, World-Wide Number of ISO 14001, 2007. 18 Roche, J., Corporate Governance in Asia, Routledge: London, 2005
environmental facilities and infrastructure, and to assure the monitoring of the laws that would solve the social issues.19 Social labeling is almost completely unknown and Fair Trade has not penetrated the Asian markets as it has in Europe. The recent sneakers in Indonesia and cell phone manufacturing in China are two cases in point. While consumers are concerned about child labor and dangerous work conditions, they are indifferent to the issues of unionization and living conditions. Japan,South-Korea, and Thailand have developed their own eco-labeling schemes for various products, including organic food. GLOBAL SRI FUNDs Socially responsible investments (SRI) funds in socially responsible companies. Common areas SRI include avoiding investments in those that produce or sell addictive substances (like alcohol, gambling and tobacco) and seeking out companies engaged in environmental sustainability. They seek those that offer alternative energy and clean technology. SRIs can be made in individual companies or through a socially conscious mutual fund or exchange-traded fund. Globally, it is growing into a widely-followed practice, as there are dozens of new funds and pooled investment vehicles available for retail investors. Exchangetraded funds provide an added advantage as investors can gain exposure in multiple companies across many sectors with a single investment. Investors should read carefully through fund prospectuses to determine the exact philosophies being employed by fund managers. Anpha Capital Company is the first Vietnamese company to adopt the United Nations Principles of Responsible Investment. It integrated environmental, social and corporate governance issues into investment analysis, decision-making and ownership policies. It also plans to introduce the SRI Index of Viet Nam to help create a more transparent and equitable environment for investment and management activities. Anpha Capital manages Viet Nam Equity Holdings and Viet Nam Property Holdings, which are both listed in the Frankfurt Stock Exchange. THE STATE CSR policies are likely to continue being State driven in China, Singapore and Vietnam. At first glance their approach shares similarities with the European willingness to codify CSR rules or laws. But even here, there are differences, specially in social partnerships and organized labor. Vietnam and China have no independent unions as communist States. The recent involvement in CSR of the All China Federation of Trade Unions remains 100％ under control of the Communist Party. In Singapore the tripartite system is also controlled by the State although unions representatives are members of the board of the Singapore Compact, the public organization in charge of CSR.20 Japan is the only Asian country to have developed a balanced tripartite structures although the collaboration between management and unions are not as close as in Europe.
Ibid, IGES, 2005. See Singapore Compact, Annual Report, 2006.
In Malaysia and Indonesia freedom of association has long been curtailed in the export-oriented industries.21 Active labor unions have emerged in Indonesia, the Philippines and Taiwan the last 15 years. But those countries are characterized by anti-union behavior from the political and business environment. Therefore, in those countries the development of a tripartite system with trade unions playing an important role is unlikely. Most Asian large companies are close to the US firms on this point. At best, trade unions are just one stakeholder among the others. Partnership with them on CSR does not fit with their business strategy. Like their Western counterparts, they want flexibility to deal with a diverse workforce responding to their constantly evolving needs in term of human resource management22. THE ECONOMIC SENSE One important driver of CSR is the idea that there is a business case for responsibility, i. e., responsible behavior in business activities can be financially sound. Companies with good social and environmental records show that CSR activities can result in better performance and can generate more profits and growth. For some, CSR is a new activity and longer term evaluation remains to be done. The economic impact of CSR can either be: direct and indirect. Positive direct results may, for example, derive from a better working environment, which leads to a more committed and productive workforce or from efficient use of natural resources. Indirect effects can result from the growing attention of consumers and investors, which can expand market opportunities. Inversely, there can sometimes be negative impact on a company‘s reputation due to an image of improper business practices which eventually affect company‘s brand and reputation.
3.6. The Case of Laos
As this study would show, Laos is admittedly just in the very beginning stage in crafting a CSR culture. Current initiatives in ground focus on social and environmental concerns and are still imperceptible at the national level. More visible and meaningful involvement by the Government, NGOs, private sector, civil society and donor communities are still urgently needed. Lessons from the brief CSR tour above requires assessing three main preconditions for CSR in Laos: (a) practices must blend well with it‘s significant spiritual and philosophical underpinnings, (b) practices must eventually lead to improved profit, competitiveness and wealth accumulation; and (c) a legal framework that promotes openness, partnerships and participation. Looking at these three lenses shows that Laos is ready to confront the CSR challenge. Laos has a very rich Buddhist culture which would confirm the presence of CSR as defined within its context rather than Western ways. Western observers even suspect that it is even applied by the smallest enterprise units in the most remote areas where the demarcation between ―family‖ and ―business‖ blur. In
Caspersz, D., The Talk versus the Walk: High Performance Work Systems, Labour Market, Flexibility and Lessons from Asian Workers, Asia Pacific Business Review, Volume 12, No. 2, April, 2006.
CSR and Sustainable Development in Asia: a Growing Awareness Philippe Debroux, 2008.
the rural areas, money from the sales of goods in small retail shops are placed in a box accessible to everyone including the customers. This indicates a high level of trust between sellers and buyers. This is likewise the same box where the family members draw their funds for personal use. Since it adopted the New Economic Mechanism and the open-door policy in 1986, business investments in Laos has steadily grew. Key social and economic indicators have steadily improved. In fact, despite the Asian financial crisis throughout the Nineties, economic growth rates have steadily increased.23 The Government is very careful not to impose unnecessary rules and conditions that can stifle the flow of investments in various high growth areas including mining and exploration, agroforestry processing, real estate, industry hubs, and the service sectors. Companies are free to volunteer and adapt their own CSR practices and define the boundaries where these practices can apply. The legal framework has yet to be developed. In Laos, building the legal frameworks takes time. This has been exhibited by its experiences with the Enterprise and Non-Profit Association Laws. The experiences however show that Laos is trying hard to adjust itself with the realities of a more globalized world. To sustain its future growth, the Lao government encourages all companies to voluntarily become socially repsonsible while it continues to strenghten existing Lao Laws to insure everyone‘s participation that businesses participate in development. Some companies are obliged to practice social responsibilities specially those that have strong ties with communities and environment. Nevertheless, much is still desired for all the businesses to comply with those laws. Laos will soon open its own stock exchange that like in Malaysia could paly a vital role in promoting the CSR. The Lao Poverty Eradication Programme mentioned that the strategies and laws aimed to cover sustainable development including social and environment responsibilities. Host to highly visible projects (hydros, MRC, etc.), Laos stands to benefit from the best practices on safety, climate change, multi-country river management, marine eco-system, air pollution, and dealing with problems from both international and local dimensions. This calls for a close and high level collaboration between Asian states at sub-regional and regional levels to provide the necessary institutional framework. Simultaneously, grass-root activities are also necessary because long- term solutions require the involvement and acceptance of the actions by local people. To the casual observer, Laos faces the following CSR challenges: (a) identification and addressing the gaps in CSR practices, and this study is in the right direction; (b) development of common standards of good practice throughout the supply chain; (c) emphasis on the role of MNCs in importing good CSR practices, which are emulated by local corporate community; (d) raising further awareness of CSR; (e) building capacities within existing institutions to drive adoption of CSR; (f) making the case to the local business community to adopt CSR. The State will play a crucial role in the confronting these challenges. However, Laos can rely on her neigbours, particularly Vietnam, Singapore and Thailand in crafting its future CSR strategy.
National Poverty Eradication Programme (NPEP)
4. Study findings
4.1 CSR Awareness Have you heard of the concept of Corporate Social Responsibility (CSR) before? When asked if they heard about CSR, the respondents reported that CSR is not new to them. They all have heard the term before and most have their own ideas about it. They also expressed that CSR is done voluntarily and it is becoming more and more important for businesses in the country. One respondent even reported that it has CSR in its portfolio of products and services for LME clients. Still another respondent is interested in incentives for CSR initiatives. Finally, the respondents expressed their desires to consider CSR in their business strategy and are willing to learn more about the concept. See Figure 2. Figure 2: Have you heard about CSR?
Understanding CSR What do you understand by CSR? The majority of those interviewed reported that CSR is doing good for the environment, society and the company staff. It is the way the companies return something back to the environment, society and the well-being of their staff, voluntarily. Compared to 4 areas in the framework Agenda of Bursa Malaysia, the marketplace was not mentioned or least been aware of. Many agreed that it should be built in as one of the company‘s core values. Two interviewees raised their concern that CSR concept came to Laos via their mother companies and feels like being forced by their international customers. So far, there has been no related local laws nor regulations on this area. See Figure 3.
Figure 3: Understanding CSR
Usefulness Do you see CSR as a useful concept for companies? Why so? All companies interviewed agreed that CSR is useful and important for business. They claimed varying reasons including: creating and maintaining good reputation, making the socio-economic development process faster and more sustainable, bringing long-term returns to the business and establishing good relation with the local authorities. CSR activities enhances the company‘s image, build trust on their products/services and therefore, could bring in more customers in the future. They also believe that together with the Government‘s efforts, their CSR program makes an important contribution to the economic and social development of the surrounding communities in particular and the country in general. It is also worth noting that the respondents consider CSR as a long-term investment through people who get trained and would eventually come back to work with the company. See Figure 4.
Figure 4: CSR Usefulness
4.2. Current practice
Does your company have any CSR initiatives in the sense of the definition stated above? Please specify All respondents are aware of the social concerns in Laos. They try to fulfill the social needs for their own employees and the local communities. The most common CSR activities are: health and safety programs for the workers. Employee rights are given the utmost importance by the companies. Some examples are: self-help fund, from which employees can borrow money for personal purposes and a special health care scheme such as eye and teeth treatment that other companies would normally not provide. The respondents also support education by encouraging their own employees or workers for self-education for better job performance. Furthermore, companies give scholarship to students, who could potentially join their workforce. Sector wide,
the manufacturing companies claimed to have staff wellfare more than companies from other subsectors. Going beyond what the laws stipulate, the companies also practice social responsibility in other areas such as supporting community school construction and repairs, providing learning facilities, providing support to ASEAN Youth and Annual Cultural Exchange Programmes, and helping the disabled. In environment aspects, the manufacturing companies are more active than the companies in other sub-sectors. Some companies turned their business to a sustainable resource management operation such as water cleaning, recycling, power saving and renewable energy. Others began because they have perceived a wide impact to water and air in nearby communities. Also, they offer sponsorships for tree planting or clean up campaigns. They try to reduce their environment impacts and costs. Those engaged in these activities felt that they have built a better image on environment and relations with local communities and authorities. One respondent reported having Public-Private Partnership projects on rural electrification, income generation, clean drinking water and waste water treatment. See Figure 5. Helping out the youth and schools, doing cleaning work or staff training are spread out in almost all sub-sectors.
Figure 5: Current CSR initiatives
Intensive CSR practice In your opinion, where is CSR extensively practiced in Laos? Seven companies reported that CSR is practiced intensively in multinational LMEs, particularly in the mining and hydro power sector because they have bigger budgets. Three other companies claimed that even local LMEs have CSR initiatives. Finally, three other companies reported that even non-profit organizations use CSR. The larger LMEs focus their CSR initiatives on environment and community concerns. See Figure 6. Figure 6: Intensive CSR practice
Information sources Which of the following do you use to obtain information about CSR? The primary external sources of CSR information are: government documents and internet. Internally, the companies rely on materials from their HeadQuarters, competitors, and other media. It is noteworthy that three companies learn CSR from their competitors. See Figure 7.
Figure 7: Information sources about CSR
CSR structure and drivers Does your organization have a CSR department or a CSR team? Who are the internal CSR drivers in your organization and how many people are involved? None of the respondent companies has a separate CSR department. In smaller enterprises, CSR is ran by the managers (the HR managers are popular choices) and is discussed from time to time in management meetings. Only a few companies like Green Discovery, Sunlabob and DDD make their CSR initiatives known to all staff and appear to be holistically integrated in their business structure. Top management (CEO, Top Executives, etc.) is still the main drivers of CSR initiatives. In the larger enterprises, CSR ran under the Community Relation Department. CSR activities are quite well planned and organized in these companies because they clearly assign who are responsible for certain plans and activities. Without the CSR departments, those interviewed feel that it is hard for them to carry out because of their daily work routines. This fact shows that compared to the concept of CSR in Malaysia as mentioned in Page 9, paragragh 1, the CSR in Laos is just in the early stage of development and mainly operated as extra activities instead of being strategized like in the large companies. See Figure 8. Figure 8: CSR structure and drivers in companies
CSR Initiatives: When started and why What was the year when you started to apply CSR in your company? Why? Six companies started their CSR activities in the early 2000 while another six companies have CSR since they were established. The four other companies started theirs less than five years ago. This implies that CSR in Laos also started at the same time when CSR came to Asia. CSR initiative began for different purposes. Five companies followed their mission as a social enterprise, a non-profit organization and to fulfill their HeadQuarter‘s requirement. The majority are from the manufacturing companies, which are mainly joint-venture or foreign invested. Other reasons are: (1) the team expanded and had more ideas, (2) the establishment of the mass organization units in the company, and (3) more pressure to support society. See Figure 9. Figure 9: Start-up time and reasons
Selection of activities How do you go about selecting CSR projects? Most companies selected their CSR projects via internal discussions on their business nature and mission, the owner‘s preference, staff‘s ideas rather than demand-based (9 versus 2 replies). They seek advice from their international HeadQuarters on specific projects. The policies from the international business partner also influence the selection. For example, after Carlsberg joined the Laos Softdrink Company, CSR has been introduced and selected to apply as part of the company policy. See Figure 10.
Figure 10: CSR project selection
Start-up barriers/constraints Are there any barriers/ constraints when you start the CSR initiatives? In the sample, all respondents felt some barriers in starting their CSR activities, except for two. The most common barriers mentioned are: (1) limited time and budget, particularly no specific budget set for the CSR activity, (2) people and staff are suspicious about the company‘s real intensions, as well as (3) limited understanding by the company staff and workers. The respondents reported that it would even be more difficult to sustain the activities at their workplace because their co-employees do not understand the real purpose. It is also interesting to see that few companies find it difficult to achieve a balance between maximizing profit and spending ―extra‖ money for CSR. Two companies pointed to lack of supporting legal framework and policies as main barriers to CSR start-up. See Figure 11.
Figure 11: Start-up barriers/contraints
Frequency How often do you practice CSR in your company? Eleven companies regularly carry out CSR activities frequently, e.g., cleaning, painting, campaigns to give back to society. A few companies organize it based on needs or on special occasions such as tree planting. One company also mentioned that they have new CSR plans every year. See Figure 12. Figure 12: Frequency of CSR activities
Venue for applications In what areas of your company is CSR applied*? Most companies are active in three CSR areas: environment, community and workplace (7 replies), among which the majority is in the manufacturing sector. This confirms the respondents‘ earlier remarks about the current initiatives on staff training and benefit schemes, education, resource saving, and so on. Five companies reported that they were working in all four areas. The larger enterprises‘ CSR activities are focused on the environment and the marketplace. See Figure 13. Figure 13: Venue for CSR applications
External CSR target and intention Which external stakeholders does your organization/company want to address through its CSR initiatives? What are the objectives of the CSR activities with respect to the stakeholders referred to in your response?
Figure 14: External targets of CSR program For the external targets, interviews revealed that the companies target mostly local
communities (16 replies), customers and Government (7 each). To a less extent, they are also aiming at: competitors, NGOs, suppliers and industry associations. For these stakeholders, most companies aim to bring in societal and environmental impact (13 replies) and internal business performance improvement (9 replies). Other intention such as attracting or retaining talented people, benchmarking, supporting Government are considered but to a lesser degree. See Figure 14. CSR general aims What will be the company objectives for you organization to apply CSR? The findings above on the external targets and intentions confirm that the companies in Laos still have the general notion that CSR is philanthropy (10 replies), followed by making contributions to environment and society (8 replies each). Other purposes such as attracting new investors or customers, being demanded by stakeholders, competition are not considered the key aims. Interestingly, a company claimed that its aim is to show the public how to do and achieve success in CSR initiatives. See Figure 15. Figure 15: CSR aims
Successful projects and results What are the main CSR projects that your company has undertaken? Which one is successful and why? Five companies considered the staff development and education-related projects as successful. Likewise, interviews revealed that some concrete results of CSR include: (1) motivated and healthier staff, (2) employees having more time to interact with each other and hence building a better relationship (social capital), and (3) staff earning more money after on-the-job-training. All the respondents understood that staff development and education-related projects have longer time yields. Two more companies mentioned that successful projects like tree planting should immediately yield visible results. Beneficiaries Who are the beneficiaries of your CSR initiative? Figure 16: CSR Beneficiaries The respondent firms claimed that the nearby communities (15 replies), employees and staff (13) and local government (10) are the main CSR beneficiaries. These 3 groups of beneficiaries are widely chosen by companies cross the sub-sectors. Customers and NGOs are considered less important target groups. See Figure 16.
Compliance to other standards Does your organization/ company formally adhere any initiatives/ standards/ indexes in the fields of environment, social and human right or is planning on doing so?
In addition to CSR, the companies follow or comply with various standards, including: ISO standards on quality management system (ISO 9001), UN Global Compact, fair trade, total quality management (TQM), and company code of conduct. However, four companies do not follow any of the above standards. See Figure 17. Figure 17: Company‘s compliance to other standards
4.3 Spending and budgeting
How much does your organization/company spend on CSR initiatives annually? How do you set the budget for CSR? Six companies had a fixed CSR budget. It varies from 3,000 up to 370,000 USD per company per year. Other five companies follow variable budget, which is calculated as a proportion profit or operation costs and based on the needs percieved. Two other companies did not know how much is atually spent for CSR activities. See Figure 18. Figure 18: Annual spending
When asked about budgeting, however, there were more companies that set their CSR budgets based on the needs rather than as a proportion of profit, costs, or sales. The percentage vary from company to company, e.g. 3-5% of sales, 5% of profit of the year before or 1% of the annual profit. See Figure 19. Figure 19: Budgeting methods for CSR activities
Internal and external influence What are your experiences with CSR? Has CSR changed your business? Do you notice the influence of CSR internal or external of your business? Most companies admit that CSR creates internal and/or external influence. Some internal influences are: motivated staff, improved performance, better understanding about CSR, and increased sales. The most common external impact is good reputation (7 replies). Four companies disagreed. They found no clear impacts within the company, only externally in the society. See Figure 20.
Figure 20: Internal and external influences of CSR to business
Challenges What challenges, if any, have you had in applying CSR? According to the companies, the biggest challenges for CSR are: limited budget, no support policy and lack of awareness. The companies‘ particular concerns regarding budget is that the company with CSR program has high expenses than other businesses without the program, hence, the company profit is not maximized. In addition, the business income may not always be sufficient to allow a budget for CSR. This constraint is mentioned by almost all companies, except those in the education and banking sub-sectors. Regarding the limited awareness, the companies claim that people and local authorities are sometimes suspicious about the company‘s intention, which is misunderstood as equivalent to the advertising function. Moreover, the staff themselves also does not understand and hence, do not support the program. Being unsure about how the company‘s donation is spent or villages not available during the planting season were also mentioned as challenges. The issue related to awareness is mentioned most by the manufactoring companies. See Figure 21.
Figure 21: Challenges in CSR applications
Impact assessment Has your company measured the impact of its CSR? If yes, which of the following do you use to check the impact? Generally, companies (11 replies) did not pay particular attention to assessing the impact of their CSR programs, although they mention the activities in their annual reports to stakeholders. Other five companies did assess their impacts through different means such as statistics, periodic monitoring, social impact assessment. Interestingly, 12 out of 15 respondents said that impact assessment results were not immediately available. Others claimed that the results are published on their website and in their mid- and annual project reports. One company reported that they were required to assess their impacts before additional new CSR projects are considered. See Figure 22. Figure 22: CSR Impact measurement and availability of results
4.4 Plan and support needed
Future plans What are your organization’s plans for CSR projects in the future? When asked about their CSR plans, more companies wanted to expand their existing activities and introduce new activities. More favoured new activities than ―continuing with their existing activities.‖ They plan to have more activities on: (1) environment and support to nearby community, (2) build a relaxation facilities, (3) Green Care Foundation and University for better staff performance, and (d) further study, to update the company‘s formal document on CSR and to expand the program to other communities. Involving the local communities and government in the program is another idea raised by the companies. Some planned to implement activities with the nearby communities concerning environment and other social topics. They realize that a good understanding from local people and authorities is necessary. In addition, companies realize that they do not have enough human resources to manage the CSR activities. Some are seriously thinking about collaborating with other organizations in this area. Support for CSR implementation Do you think your organization/company needs more support in CSR? The most common support needed by the companies is on raising the awareness within and outside the company. They suggested events like specific in-house training or workshop and internal consultations and through internet and publications. Assistance in formulating company‘s strategy is also mentioned. They also recommend to have a better connection and network among the companies that are interested in CSR. Most of them want more support or encouragement from the Government. See Figure 23. Figure 23: Support needed for CSR implementation
CSR promotion What needs to be done to encourage more CSR practice in Laos? To promote CSR in Laos, the majority (11) of companies suggested to raise awareness in both public and private organizations, at the Government and all other levels through publication, media, and news. To advocate for the Government to have respective policies has also been mentioned, e.g. ― Government should have policies to promote CSR‖, ―The Ministry of Commerce and Industry should be the leading body in the CSR initiatives together with LNCCI‖, ―to provide tax incentives for companies doing CSR, to enforce the CSR when issuing investment license, to monitor the program regularly. Integrating the topic into the education and building network of companies having CSR are also recommended. Figure 24. Figure 24: CSR promotion
5. Case studies of CSR program beneficies
MMG Training Center
Minerals and Metals Group (MMG) is the biggest mining company in the country. It is located in Vilaboury district, Savannakhet Province . The district is the most rural area of the province. Before the MMG started, there were only a few households in this district. After the company came, more people and families from different districts nearby migrated to settle in the area. The local economy improved rapidly by the affect from the mining industry. One can say that the economy of the district depends on this industry. Since thousands of workers work for the industry, the rate of the consumption of the local products and services increases. On the other
hand, the industry also addresses the social and environment concerns from the local communities and government. Therefore, MMG has different departments to be responsible for these works.
Training Center and Sericulture Training
Providing job opportunities to the local people is one of the company‘s strategies to reduce poverty and improve people well-being. Since most of the local people lack of knowledge and skills, MMG cannot employ them. Furthermore, the services of the local service providers were not qualified according to the company‘s requirements. For that reason, MMG has built a job training center to provide training to communities. MMG started the Job Training Center in Vilaboury district with the aims to improve employment skills of the local people. It provides a relative wide range of skills, which people can choose to learn such as agricultural production (frog rising, pig rising, goat rising, poultry rising, fish culturing, and growing vegetables) or handicraft making (weaving and mulberry planting, bloom
making, and tailoring). People who have chosen to attend the agriculture training actually produce and supply their products such as fish, chicken, pork, different kinds of vegetables to MMG. Those who obtained better techniques and skills in mulberry planting and weaving from training could improve their ways of production.
Those who have learned tailoring can choose to open their own shops or work in MMG‘s clothing factory, which produces uniforms and cloths for company‘s workers and staff. At the beginning, the project has satisfied the communities‘ needs. The local people have gained skills and knowledge from the trainings and use them to earn money. However, there were some complains from the communities about the sustainability. The complaints were from the farmers who supplied agricultural products to MMG. What happened was that their products were not qualified to sell to MMG. The vegetable was too small in size due to the improper plantation. When MMG did not accept those products, the farmers claimed that the company did not want to support the community anymore. To deal with the problem, MMG has to organize extra trainings for the villages on improving agricultural production. After that, farmers are more satisfied because they can improve their productions and sell to MMG again. From this experience, MMG has included additional essential topics to the course such as animal diseases, vegetable diseases, and good farming practice.
Creating opportunities for disabled people
Mr. Sakda Vilahong has joined DDD since 2009 after his Business Administration Course graduation from Sikert Vocational School – a vocational school for disable people in Vientiane capital. By the low income of his mother and younger sister, his family has to feed two old grandmothers and support two sons to study. Somsak is one of the sons, who came to study in the Capital City for two years with the family support hoping that he can earn and take care of himself after he graduates. After his graduation from the vocational school, it was not easy to find the job because of his disability. Then he applied for a job with DDD and was trained to be a full time staff after one month as a data entry officer. There he works for six hours a day and spends the rest for extra trainings of the company such as English and computer skills. Working with DDD has changed his life completely. Before, he had a plan to work and make a saving for his further studies. However, it was be too difficult for him to do so from the little income. Now he has a chance to develop his English competence by attending the advance English course in the company. Somsak said that there is a big chance for him to develop himself at this company. For more than one year, he has attended different trainings. Up to now, he becomes a typing trainer for the young trainees and still works as a data entry officer. His earning can cover all his expenses such as room rental, gas, electricity, water supply, etc. According to the policy of the company, he plans to continue his study on Information Technology, for which he has to pay 40 percent of the tuition and the rest will be covered by the company. With the vision as a social enterprise, DDD creats opprotunities for the disadvantaged people like Somsack, yet gives him the freedom to find another job that he likes so that he can start his new working life. What much more important than money is the knowledge and experience that he gains with the company, which has made a great change and brought bight hopes into his life.
We can do it better
The Lao Soft Drink Company is the biggest soft drink producer in the country. It was a stateowned enterprise before the Carlsberg Brewery A/S joined the business in 2007. The company
has made a significant contribution to the country‘s income. It is reported that the company paid tax of more than 34.9 billion Kip in 2007. Since 1971, the company has improved its soft drink production under many kinds and brands of quality products to serve the domestic market. Besides taking efforts on product improvement, the Lao Soft Drink Company has still been involved in social responsibilities in many ways. From the past, the company applied CSR mostly in the social dimension. Similarly to other big companies in Laos, the company gave sponsorship to schools activities such as sport and art. It also sponsored different traditional events such as festivals, Lao New Year, Children‘s day, Lao National Day, etc under the Corporate Social Responsibility program and the company advertisement campaign. The social activities were implemented by the administration under the management‘s decisions. There was no person in charge of this specific area. Since 2007, the CSR practice in the company has changed. After Carlsberg Brewery A/S became the shareholder, many new management policies and initiatives were introduced to the company. The managers‘ committee can choose the suitable policies and strategies to improve the business. CSR initiative is one of the chosen ideas to be practiced in the company and is actively supported by its partner. CSR is more seriously planed and implemented by being more structured in the company. Even so far, there is no separate CSR department but at least a person is assigned to be in charge of CSR. The company has ensured that managers and officers understand the concept. Among not so many CSR activities, waste management and cleaning activities are the key ones within the company before the ideas are brought to the nearby community.
6. Conclusion and recommendations
The findings revealed that CSR in Laos is alive but on a very early stage of development and embeddedness in the companies. Applications have been sparse and limited in scope. Practitioners see this as an important trend that they must respond, follow and comply to. CSR has not reached the stage where they will be performed continuously by the practitioners. They needed more awareness, educating their staff and their stakehoders and other relevant ―publics.‖ Each company needed to set in motion processes that lead to better planning, implementing, bugeting, and managing CSR initiatives for impacts. The bigger the companies, the more CSR needs to be understood and promoted. The lack of understanding of CSR leads to the question how much is real CSR and how much it is ‗‘Green washing‘‘ and ‗‘Window dressing.‘‘ The CSR in Laos is still in philanthropic stage and needs to move a notch higher, e.g., embedding the the CSR principles and values within the business strategy and corporate plans.
While companies increasingly recognize their social responsibility, many of them have yet to adopt management practices that actually reflect them. These CSR practices have to be integrated in their day-to-day management involving their whole supply chain, companies‘ employees and managers need numbers of training in order to acquire the necessary skills and competence. Pioneering companies can mainstream CSR practices by disseminating best practice. While CSR can only be taken on by the companies themselves, stakeholders, particularly employees, consumers and investors, can play decisive roles — in their own interest or on behalf of other stakeholders in areas such as working conditions, the environment or human rights — in prompting companies to adopt socially responsible practices. They require effective transparency about companies‘ social and environmental performance. The Team would like to recognize the CSR achievements of the following LMEs: Green Discovery, Sunlabob, MMG, Lao Softdrink company, DDD and Birla Lao. DDD and the LaoAmerican College‘s program about the voluntary students teaching and environment awareness in a primary school could be recommended for a PPP program with DED.
As a way forward for promoting CSR in Laos, DED can: 1. Start a series of awareness raising campaigns in public, private companies and in educational institutions especially where the business management courses are available. It will be important that the Government goes hand-in-hand with DED in these activities as part of advocacy measures. In addition, DED can cooperate with NGOs, CSOs and other social institutions for these initiatives. This can be done via a series of well-selected and placed events (roundtable discussions that can be implemented via radio or TV spots, exhibitions, internet-based events, and others) designed to upgrade the level of awareness via good practices and model CSR initiatives. 2. Corollary to the above, DED can support a CSR Community of Practice (COP) starting with the actual managers and professionals of the companies in the sample. The COP will enable the group to exchange notes and best practices and communicate with one another. Then, in the midterm, DED may consider pooling all the COPs in a network of CSR practitioners that can sustain the awareness program and other promotional activities. 3. Share more CSR resource materials, tools and best practices. Many new investments are currently flowing in to highly environment-sensitive areas like mining and hydropower. More than ever, this is the right time to introduce CSR ideas and tools for the LMEs and the smaller
enterprises as well. Tools like TBL accounting, social audits and impact assessments can be introduced. 4. Link with the universities in Vientiane and elsewhere. Future CSR events must be linked with the universities to touch the lives of the next generations (and sustain its legacy). Long term awareness can be embedded in environment related courses in various fields of business, engineering, social sciences and economics. Another advantage is the multiplier effect that can be expected out of the partnerships. 5. Work with the Coalition for Lao Information Communication and Knowledge (CLICK) and EDC regarding the establishment of a small internet portal for CSR that will be in both English and Lao language. The portal should initiate discussions, chat, podcast, etc. on CSR materials. The content of this report should be one of the major entries to the site. 6. Introduce and develop the concept of CSR Champions as change agents in the LMEs sector. Initiate a 5-day course on Leading CSR Initiatives in Laos plus a sustained mentoring support can facilitate the adaptation of many CSR practices. 7. In line with the stock market opening in Laos, DED can also introduce the concept of CSR Index that will enable the future stockholders and investors to gain insights into the environment and social friendliness of the companies in Laos.
Annex 1: Questionnaire
EDC-DED CSR Survey 2010
A Survey of Corporate Social Responsibility Practitioners in Lao, PDR
Name of department head:
Designation (CEO, MD, SM): Organization Name:
________________________________________ ___________________________________________________________ ___________________________________________________________
Designation (CEO, MD, SM): Hand phone No.: Tel No.: Fax No.: Email Address:
_______________________________________ ___________________________________________________________ __________________________________________________________ __________________________________________________________
ORGANIZATION DETAILS: Organization sector / sub sector classification*:_______________________________________________ Type of organization (MNC, LLO, SME, GLC)*:_______________________________________________ Ownership of your organization: o o o o o Lao: ___ Foreign : ___, please specify_________________________________ Foreign Subsidiary:_________________________________________ Joint Venture___ Other, please specify________________________________________
Year established: _______ Permanent number of employees: _______ Number of females: ______ Number of subcontractors: ______ Sales (last year) according to the report*: ___________________ (US Dollar)
GENERAL UNDERSTANDING of CSR
1. Have you heard of the concept of Corporate Social Responsibility (CSR) before? Yes__, No__. 2. What do you understand by CSR? (Essay)
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 3. Do you see CSR as a useful concept for companies*? Yes__, No__ and why? ______________________________________________________________________________ ______________________________________________________________________________
CSR DEFINITION CSR is a “concept whereby companies integrate social and environmental concerns in their business 24 operations and in their interaction with their stakeholders on a voluntary basis” . It refers to responsible corporate action beyond legal requirements; CSR manifests itself throughout the value chain, in a company’s treatment of its employees and in its dealings with the relevant stakeholders. The economic, social and environmental are the key issues for CSR and the three dimensions of sustainability. CSR thus refers to an integrated business plan so that all "social, environmental and economic contributions of a company voluntary assumption of social responsibility that goes beyond regulatory compliance. “, involves.
Fig.1: The Triple Bottom Line of CSR
The four areas, in which CSR is practiced, are: Environment, Community, Workplace and Marketplace. The following scheme gives an idea on possible CSR initiatives in each area : Environment Community Workplace Marketplace
Green Book- European Commission Bursa Framework
- Climate Change projects - ISO 14000 - Renewable Energy - Energy Efficiency - Waste management - Recycling, Reuse, Reduce -Biodiversity protection Develop Carbon Funds: -CDM / Carbon Markets
- Employee Volunteerism - Education: digital divide / Schools adoption scheme - Youth development - Underprivileged homes
-Employee Involvement - Workplace Diversity - Gender issues - Health & Safety -Human& Labor Rights - Human Capital development
-Green Products - Stakeholder engagement - Ethical Procurement - Supplier management - Vendor management - Social Branding - Corporate Governance
Not all criteria apply to all companies. ORGANIZATION / COMPANY UNDERSTANDING of CSR
4. Does your company have any CSR initiatives in the sense of the definition stated above? Please specify: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 5. In your opinion, where is CSR extensively practiced in Laos? don't know, large local, medium local, large multinational, medium multinational, small enterprise, non-profit association, SOE, others, please specify: ______________________.
6. Which of the following do you use to obtain information about CSR? government documents, competitors, company headquarter, internet, local government, none of the above, Others, please specify: ___________________
ORGANIZATION / COMPANY CSR STRUCTURE
7. Does your organization have a CSR department or a CSR team? Who are the internal CSR drivers in your organization and how many people are involved? executive leader, board members (or partners), managers, local government.
8. What was the year when you started to apply CSR in your company? ____ Why then (Essay)? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 9. How do you go about selecting CSR projects? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
10. Are there any barriers/ constraints when you start the CSR initiatives? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
11. How often do you practice CSR in your company? sometimes, periodic (during specific occassions) regularly scheduled, during Lao holidays (specify______), routine, others please specify: _________________________.
12. In what areas of your company is CSR applied*? (Is based on: amount spent, people involved, beneficiaries, all of the above.) Environment (E.g. renewable energy, energy efficiency, waste management, recycling / reuse / reduce, carbon markets, environmental cause, etc) Community
(E.g. employee volunteerism, education: digital divide / schools adoption scheme, youth development, underprivileged homes, etc) Marketplace (E.g. green products, stakeholder engagement, ethical procurement, vendor management, social branding, etc) Workplace (E.g. employee involvement, workplace diversity, gender issues, health & safety, human capital development, etc) o others, please specify: ________________________.
13. Which external stakeholders do your organization / company want to address through its CSR initiatives? Local communities Non-Governmental Organizations (NGOs) Employees Competitors Suppliers Customers Industry Associations Regulatory bodies / Government Others
14. What will be the objectives of the CSR activities with respect to the stakeholders referred to in your response to question 13? Internal business performance improvement Societal and environmental impact Attracting / retaining talented personnel Social care for workers Analysis of stakeholder assessment needs and expectations Provision of a holistic reporting effort Benchmarking Provision of a forward-looking business perspective Provision of information Others
15. What will be the company objectives for you organization to apply CSR? Improve business performance Differentiation opportunities Philanthropy Attraction of new investors or customers Legal or regulatory obligations Environmental concerns relating to products or services Social concerns relating to products or services Community pressure Information demand by stakeholders Competitive pressure
16. What are the main CSR projects that your company has undertaken? (Name at least five punctuating: time started, how much staff was involved, how many benefitted, and for our how long. CSR Projects/Activities When undertaken and duration (in days, months, etc.) How many of your company’s staff members/workers were involved How many benefitted (excluding staff and workers) Estimated expenditures
17. Which of these CSR project were considered successful and why? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
18. Who are the beneficiaries of your CSR initiative? Own employees Own customers Nearby communities Advocacy groups including NGO and CSOs Local government Others, please specify: _______________. 19. Does your organization/ company formally adhere any initiatives/ standards/ indexes in the fields of environment, social and human right or is planning on doing so?
Year of establishing
ISO 9001 ISO 14001 ISO 31000 SA 8000 OSHAS 18001 Global Reporting Initiative (GRI) UN Global Compact Dow Jones Sustainability Index FTSE4Good Amnesty International Business Principles OECD Guidelines Sigma Guidelines International Labor Organization (ILO) – Declaration on fundamental principles and rights at Work Universal Declaration of human rights Fair-trade certificate Code of Conduct PPP-Projects
20. How much do your organization / company spend on CSR initiatives annually? ______________________________________________________________________________ ______________________________________________________________________________ 21. What are your experiences with CSR? Has CSR changed your business? Do you notice the influence of CSR internal or external of your business? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
22. What challenges, if any, have you had in applying CSR with respect to: Business environment:________________________________________ Regulatory policies:_________________________________________________________ Beneficiaries: _________________________________________________________ Support from within the company:_________________________________________ Sustainability: _________________________________________________________ Annual budget: _________________________________________________________ Increasing demands: ____________________________________________________ Others: ___________________________________________________________
23. Has your company measured the impact of its CSR? Yes __, No __ . If yes, which of the following do you use to check the impact: o __user studies, o __periodic monitoring, o __mid and annual evaluation, o __ex post evaluation, o __others: ______________________________
24. Do you have a summary of impact results? Yes __, No __ . If yes, could you please share a copy with us?
25. How do you set the budget for CSR? __% of profit the year before, __% of sales, __% fixed amount, __% of tax paid, __% of gross profit, __%of raw materials used, __ %of value added, whatever is needed, others, please specify: _____________________.
CSR IN THE FUTURE 26. What are your organization’s plans for CSR projects in the future? ______________________________________________________________________________ ______________________________________________________________________________ 27. Do you think your organization / company needs more support in CSR? Specific training Briefings Publications Workshops/ Conferences
Consultation Strategy formulation Internet plattforms Others, please specify:______________________
28. What needs to be done to encourage more CSR practice in Laos? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
Annex 2: Respondents‘ Directory
1. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM): Email Address: 2. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address: 3. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address: 4. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address: 5. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address:
Digital Divided Data Unit 21. Dongpalab Village, Chanthabuly district, Vientiane Capital www.digitaldividedata.org Mrs. Mai Siriphongphanh Chief Operating Officer (Oversee three offices in three locations; one in Laos and two in Cambodia) firstname.lastname@example.org
Lao Cement Industry 014 Kaisone Phomvihan Ave., Sivilay Village, Xaisettha District, Vientiane capital, Laos Mr. Namseng Sisomphou Financial Controller email@example.com
The Lao-American College Phonekeng Village, Xaysettha district, Vientiane capital, Laos Ms. Virginia Van Ostran Director firstname.lastname@example.org
Magic Lao Carpets Handicrafts(Fair trade) Ban Nongdouang Tai, Sikhottabong District, Vientiane capital, Laos Ms. Souvita Pasert Director email@example.com
MILICOM LAO CO.LTD 14 LanXang AV. PO. Box 4693, Vientiane, Laos Ms. Thipphaphone Tattanavong HR Executive firstname.lastname@example.org
6. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address: 7. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address: 8. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address: 9. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM): Email Address: 10. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM): Email Address: 11. Organization Name: Organization Address: Website:
Vientiane Steel Industry Km11 Thadeua rd, Hatxaifong district, Vientiane capital, Laos Mr. Sonesavanh Soukdala Deputy Director email@example.com
Lao Ford City Unit 6, LouangPhabang Road, Ban Khunta Thong, Vientiane Capital, Laos Mr. Chittakone Rajphangthong Marketing Manager firstname.lastname@example.org
Green Discovery GDL Head Office: Hang Boun Road, Ban Haysok, Vientiane,Laos Mr. Vianney CATTEAU Managing Director email@example.com
KPMG Lao Co; Ltd 3rd & 4th Floor K.P Tower, 23 Sinha Road, Phonxay Village, Saysettha District, Vientiane, Laos www.kpmg.com Mr. Ganesan Kolandevelu Country Director firstname.lastname@example.org
Lao Cotton State Enterprise (SOE) Suphanouvong Rd, Khounta Thong Village, Sikhottabong District, Vientiane, Laos www.laocotton.com Mr. Bounchanh BULYAPHOL Deputy Director, Textile Engineer email@example.com
Lao Airlines 2 Pangkham Road, Box: 6441, Vientiane, Laos www.laoairlines.com
Name: Designation (CEO, MD, SM): Email Address: 12. Organization Name: Organization Address: Name: Designation (CEO, MD, SM): Email Address: 13. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM): Email Address: 14. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM): Email Address: 15. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM): Email Address: 16. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM):
Mr. Noudeng CHANTHAPHASOUK MD (Country Director) firstname.lastname@example.org
Novotel Vientiane Unit 10, Samsenthai Road, P.O. Box 585, Vientiane Capital, Laos Mr. Khamsouk Dejvongphan HR Manager email@example.com
ST Bank 144 Samsenthai Rd, Anou Thong Village, Chanthaouly District, Vientiane, Laos www.stbanklaos.com Mr. Hansan HOMSOMBATH Manager of Admin Financial and HR Department firstname.lastname@example.org
Sunlabob- Renewable Energy Thai-Lao Road, Watnak Village, Sisattanak District, Vientiane, Laos www.sunlabob.com Andy Schroeter CEO email@example.com
Lao Soft drink company Thadeau Road, Vientiane, Laos www.pepsilao.com Vilayvanh Phimmachanh Training and Development Officer firstname.lastname@example.org
Birla Lao Pulp and Plantations Company Savannakhet Province, Laos www.birlalao.com Mr. Srey Manager of Community Relation Department
Email Address: 17. Organization Name: Organization Address: Website: Name: Designation (CEO, MD, SM): Email Address:
Lanxang Minerals Limited (MMG) Savannakhet Province, Laos www.mmgroupltd.com Mr. Warren Mayes Manager of Community Relation Department email@example.com
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