Ceres orporate Socia Responsibility - A Cor orale oe enshi= Ethical Business There is more to business than just profit, as the driver of the economy, businesses assume far-reaching responsibilities for the well being and development of society as a whole. The Industrialist looks at the application of corporate social respons orporate social responsibility (CSR) may come across to many as a cliché, an overused expression easly dismissed as a mere marketing gimmick. Bur looking beyond she superficial reveals that CSR is in essence ne the environments about sustain in which business and society operate, with conducive environments, both business and society can prosper. Despite being a relatively new phenomenon, the fandamental principles behind modern CSR are time immemorial, rooted in human empathy, ethics and good business sense. Both Kongei (Confucius) and Jesus said it best — do not impose on others what you yourself do not desire: ‘or words to that effect, succinctly underscore the basic ethics that form the cornerstone of modern CSR, In dealing with internal and external stakeholders, businesses that are capable of empathy and uphold ethical behaviour naturally build trust and rapport, which in turn feed back to farther strengthen the business, For business leaders who wish to dispense with lessons in ethics, they need co look no further than their accounts, as ethical and responsible conduct benefits their customers, investors and staff, directly determining profit: quae carhgeompany ity by Hong Kong businesses. Mixing Business and Ethics towards Sustainability Despite what skeptics may sy ethical business is not an oxymoron, in fict upholding ethical well entrenched and vital tothe survival of the business. This is clearly illustrated by corporate governance and the high-profile ngs during the past corporate fai is decade. Corporate governance primarily deals with the exercise of corporate power and can be viewed as an aspect of CSR, But in this globalised world economy, the effects DO ees Ree ns Ce of comporate actions go beyond the immediate stakeholders, ramifications that aversely affect society have the potential to come back and bite the business, damaging its reputation, ‘The broad nature of CSR makes constraining it with definitions difficult, nonetheless i is generally agreed upon that CSR is how businesses conduct operations so that they make positive contributions to corporate, social and natural environments. According to the Hong Kong-based NGO Community Business which orn Hongkong inure 13en Aer eed specialises in CSR, some practitioners see CSR as being synonymous with the term ‘triple bottom line’ or ‘people, planet, profit’, three areas that ensure sustainable development. There can be no CSR without a viable busines, while 4 viable business cannot be sustained without CSR, good business management that optimises the requirements of corporate objectives, ta, ‘customers, community and natural environment is what CSR is about. SS eee CU OC RU me Ce ae Ea cai ‘Yet for some purists, business should remain strictly business. Prominent economist, the late Milton Friedman, reasoned that the purpose of business is to maximise profit within the confines of law This argument elicits a whole host of isues that challenges CSR. particularly in a jurisprudential perspective. Corporate leadership, who are essentially agents acting in the best interests of shareholders are charged with delivering maximum financial benefits and not engage in activities that may jeopardise profit making Subsequently, CSR is often seen under the context of utilitarianism, where the moral worth of corporate altruism is assessed by its utility for the business, When viewed from an investment point of view, CSR makes much business sense, even circumventing jurisprudential complications. Investing in people and environment via CSR may not bring about immediate results, but itis a sure way to secure sustainability and long-term profitability and growth. Conversely if businesses are out to exploit staf, clients and environment in the face of cutthroat competition, it is guaranteed that everyone ends up losing, Hong Kong has embraced CSR, according, to Hong Kong Council of Social Services chief executive Christine Fang (le/i) “CSR awareness among the Hong Kong business community is high, in terms of CSR. evelopment we are highly ranked in the region, ‘yet as more and more Hong Kong businesses ‘operate across the boundary, we've been in contact with Mainland authorities via various channels to boost awarenes in the Mainland” Big conspicuous corporations cannot escape the public’ scrutiny, but what about resources constrained SMEs Can they make a difference? ‘The answer is a resounding yes, With individual SMEs doing their part, the vast number of SMEs makes sure that the contributions are significant. From a utilitarian viewpoint, perhaps SMEs have even more justification to engage in CSR. Ie is perhaps a no brainer that treating employees respectfully ensures employee loyalty, thus enhancing morale and reducing jab leavers, With higher morale and job retention, greater productivity is achieved while costs incurred from personnel loss and recruitment are minimised, In spite of this, treatment of employees remains an atea of concern in Hong Kong, Regulations to gatd against discrimination are in place, yet CSR. means more than just basie regulatory compliance, While a vast portion of Hong Kong businesses recognises that voluntary action can benefit both business and community, varying degrees of commitment mean there are still aps between words and action, “Perhaps there exists a misconception in Hong Kong, where CSR equates to just 14 rors Hongtong inurephilanthropy with businesses fulfilling their ‘responsibility’ by simply giving donations; CSR is much more than just giving, Instead of how the money’ is spent after itis made, good rR actice asks businesses how the money is sit made by and staff? Is profit made by especting community pecting the environment? CSR is essentially about how business is conducted,” explains Shali Mahtani, C executive officer mmunity Business chief The Corporate Social Responsibility y 2007, conducted by Community Business in conjunction wi Good Practice Surv Jhuman resources consultant Hewite Associates and the University of Hong Kong, was based on. responses from 97 corporations across industries aimed at finding out how businesses fare in four CSR principles’ ~ leadership, i Gemplas off Stetroballars — of CSR into organisational strategy and operations, engagement with stakeholders, and While 97 responses is not an accurate representative of CSR in Hong Kong, the survey nonetheless provides important pointers clements of CSR that corporations should take note of. Some 20 per cent of the responses came ftom the professional service sectors — banking, finance, information service, legal and accounting, while Give per cent came om manufacturing, From the surveyed, some 70 per cent indicated they are committed to CSR. while 67 pr cent stated active engage ent in promoting CSR internally. $8 per cent indicated that cheir 1 These four primp ae the ass ofthe Hong Kong CSR Charter, launched in 2005 by 2 group of asiness leaders (Community Business Leadership “Team in Hog Kong whoteogaisations bv tht tect othe snes ses, Wher thay want from a sompany anel the Impact thay hava Clean processes and products Non-Government ns (NGOs) ‘Transparency, better conditions, community investment Regular orders, prompt payments, dear guidelines Key: What stakeholders want from a company Employment bpportunities, community ievestment No discrimination and harassment, good working ‘conditions, training and development, work-life balance Quality products and services ~ safe, reliable and well priced ‘Compliance with the [aM paying taxes, employment ‘opportunities, public-private partnerships Return on investment, reduced risk Source: Community Business 2o1nsyMongtong ina 15leadership actively promoted external CSR. while 40 per cent stated they had a dedicated CSR budget. Under each of these, the survey also reported that 2 significant portion, ranging. from 25 to 37 per cent of respondents, plan to commit fo CSR. in varying degrees in che next 12 months and beyond.’These figures give a rough indication ofhow CRS is integrated into corporate strategy. Community service is a highly visible approach for busineses to externally engage in CSR to build trust within the community While they may boast volunteering and employing the disadvantaged, they may be neglecting overworked and overstressed staff at SEU and reputation for the business. Cash donations, volunteering and contributions in kinds are among the common external forms of CSR. demonstrated by companies with 69 per cent actively involved in cash donations and 67 per cent engaged in volunteering and contribution in kinds, I is also encouraging that of those surveyed, 67 per cent have programmes aimed 2 environmental protection, with 2 farther nine per cent planning such programmes in the next 12 months. Engagement with sakeholders is a CSR focal point as business can receive feedback that is crucial to busines strategy and operations, Some 54 per cont of respondents stated that stakeholder engagement policy is aleady in effece with 34 per cent indicating such policy is likely in next 12 months Perhaps there is litele surprise that businesses concentrated on ‘employees and customers, 67 and {61 per cent respectively, as part of their stakcholder engagement policy, However, only 51 per ‘cent had active dialogue with investors, while communications swith suppliers and community? NGOs were the least. As the survey reported, the fact that most Hong Kong businesses are family- operated SMEs may mean that engagement with investors as a formal aspect of CSR is ‘unnecessary, ‘The high recognition of staff engagement is further reflected by 84 per cent of respondents indicating they have programmes for staff training and development. Work flexibility is also highly recognised with 61 per cent adopting related policy and 32 per cent likely to do so in the coming year. However, one ‘major problem remains - Iong working hours.A majority of respondents at 73 per cent stated no policy on maximum working hours is in place, while some 20 per cent likely to implement such policy in the coming year. “There is undoubtedly increasing recognition of CSR by both big corporations and SMEs, yer there is the issue of businesses simply practising CSR. without a serious overview of theie business conduct, for example while they may boast volunteering and employing the disadvantaged, they may be neglecting overworked and overstresed staf at the same time?” comments Ms Mabtani. From various studies, work-life balance in Hong Kong has much room for improvement, ‘One study" reveals some disturbing facts ~ 61 per cent of employees work overtime, with 22 per cent doing so om a daily basis; 70 per cent 2 The State of Work-Life Balance in Hong Kong onmisioned by Community Busines and wnderaen dy the Unie of long Kong ns 2008. 16. 217s Hongtong inure‘of employees spend less than two hours per day fon personal or private activities with 11 per cent spending no time on such activities; 76 per cent of employees cite reasons for unhappiness at work, with relationships with supervisors, colleagues, pay benefits and workload as the Poor work-life balance chat causes stress and depression lead to prolonged fatigue, sleepiness and insomnia. In turn, these problems drastically reduced productivity and work quality. Other elude family neglect and health deterioration, which may not be immediately problems ‘obvious, but undeniably have long-term adverse impacts on business and society. ‘Thus it is no accident that around world, politicians, economists and investors ate now looking beyond GDP and other measures of wealth to quantify success and development; from Bhutan, Australia, mainland China to ‘Thailand and the UK, happiness is being assessed and indexed to gauge progress. At the core of this is work-life balance, a simply working haeder is fatile, wealth means litle if not accompanied by health, family and fiends, Jost as governments the world over are concemed about how happy their citizens are, businesses should focus on their employees’ happiness; it was Aristotle who remarked that happiness is the ultimate goal in life referring, to legitimacy of governments by upholding the happiness of their citizens, likewise business sustainability is rooted in the happiness and ‘work-life balance of employees. Caring Company Since 2002, CSR and business have formally converged with the establishment of Caring ‘Company, an initiative spearheaded by the Hong Kong Council of Social Services “We highlight co businesses that itis not dificult to engage in CSR and the motivation behind it is not to satisfy government regulations, rather in addition to contributing to a more harmonious society there are benefits for the businesses. Therefore to categorise and simplify CSR, six eriteria have been outlined for businesses to implement according to their capability and needs; businesses that fulfill any wo criteria are eligible for the Caring ‘Company award,” Ms Fang explains further. ‘These criteria are ~ Employing Vulnerable Family Friendly Volunteering Partnering Mentoring. Giving As the easiest of the criteria, giving, in the form of donations to social service organisations is the most popular with 84 per cent of participants engaged in this criterion Family friendly which involves providing flexible working policies such as job sharing, remote working and working from home ete as well as paid or partially paid marriage leave, examination leave, compassionate and emergency leave, i participated by some 79 perCoot) cont of businesses; essentially it means going beyond basic regulatory requirements to help ‘employees by reprieving the burden of special circumstances Our of the six, mentoring is perhaps viewed a8 the more challenging, with 24 per cent of participants engaged in it, Mentoring entails sharing of business expertise with social service organisations in areas such as IT, finance, aw, public relations, organisational and human resources management, Participants fulélling all six criteria will be considered for the Total Caring Award, which was won by CLP Power Hong Kong Ltd and che Hong Kong Police Force for 2006/07, Staff of all levels have opportunities to interact with people outside their organisation and industry, effectively expanding their network and CCR UCL CU Cie Ms Fang elaborates: “We hope the participants can lead by examples and inspire others with CSR. From the feedback we've received, in addition to enhancing corporate image, participating businesses have indicated that Caring Company has significant financial value particularly with recruiting and retaining staff and business development as staff of all levels have opportunities to interact with people outside their organisation and industry, a effectively expanding their network and communications with stakeholders!” Staf loyalty is bolstered assaf positively view their organisation as one that upholds social responsibility and not one that merely chases after profits. Also through social interactions, staff have the chance to demonstrate leadership and creativity and further bond with colleagues “These positive influences are obvious and widely recognised, since the start of the initiative we've seen a four-fold increase, to our present 1,200 participants, about half of which Caring Company as well as other frameworks offered by CSR NGOs provide 2 modern infrastructure to aid businesses formulate an clfective approach to CSR. Al the items associated with CSR. may seem overwhelming at fist, but a closer look reveals there are straightforward systematic ways to approach CSR. Modern CSR fiameworks offer business 2 methodology to integrate CSR into organisational strategy and operation with respects fo a business’ core competence, therefore a business can match its ssrengths with CSR. requirements “Incorporating CSR into the busines is never easy, leadership plays a key role in identifying, prioritising and driving CSR. policies based on the business's core competence, Then it must be committed to take action and implement the policies. Lastly, a review of the policies should bbe done to see how effective they are and what can be learnt from the experience,” Ms Mahtani farther says. Outstanding Issues CSR is acither a perfect proces: nor ist a aver bullet solution tothe il of society and challenges encountered by busineses.And the complexities of the corporate environment elicit different responses from businesses across industry. For Hong Kong manufictring operating in the Mainland, fulfilling CSR in the face of delivery deadlines and shrinking margins mean performing a delicate balancing act. As Mainland authorities are increasingly looking into CSR in addition to pressure Gom image conscious buyers, some manufacturers are caught in a predicament, while they 18. 20010 Honghong inure‘want to enhance their reputation via CSR, they cannot pass on associated costs to buyers who ‘want ro keep the price down, With labour shortages in the Mainland, it is normal for businesses wage and institute better work hours and conditions, Yet placing a work-hour ceiling for example may end up diving away workers, as they want to earn more money within the shortest time possible ‘So unless the entire reyion, say Guangdong, decides to implement consistent CSR. policies, individual factories that take up CSR initiatives may be disadvantaged. Despite of the easily comprehensible principles behind CSR, the real issues dusing implementation are dificult ng agendas emerge,” Ms Mabtani forther comments a8 conflict As CSR further develops, business will increasingly progress from CSR leadership and integration into strategy to engagement with stakeholders, Effective engagement with staff, buyers and authorities can help harmonise the different agendas at stake, ultimately, all parties should realise that business viability isa co pay above he inion CAFINQEOMpany prerequisite and every party along the supply chain is responsible, Calling for CSR without shouldering obligations ftom along the supply chain is iresponsible, if not hypocritical. In spite of the outstanding iswies, businesses and authorities alike have to be wary about regulatory intervention, Given the ageless principles of CSR, it is peshaps appropriate to complement CSR implementation with the ageless Taoist principle of non-interference. Grounded in ethies and human nature, CSR. does not necessitate forcefil interference. The seléregulatory characteristics of 4 competitive open marker allow CSR. to grow saturallyin accordance to local requirements and conditions. As Ms Fang highlights, seting the example by inspiration i key, especially in the context of Hong Kong's liberal economics, implementing CSR is best left done by industry and community, not by law. For further details, please browse: sun caringompany net sen commnstybusinessorg ike Unexpected |Gains} Despite the fit huge volumes of books and papers dewoted t0 the topic of CSR with detailed definitions and iusration, CSR. is by no means dificult to understand and practise Mr So, owner of a courier company, was unfamiliar with CSR when he started practising it 14 years ago. He employed six disabled persons referred from the Labour Department, with a simple intention of offering them the chance to earn a living. And his recruitment criterion is simple ~ have the ability to carry out the job of a courier Although some people believe he employs the disabled just co save money, Mr So i glad to explain his real intention and the imporance of a fiir lary. In his company, all aff, disabled or no, do the same job and are offered the same slay. Not only does Mr So offer the disabled a fair salary, he also treats them faisly, About 10 years ago, one of his clients requested him that he replace courier with cerebral palsy, a request that was readily rejected by Mr So, “If T accept this request, does it mean I have to replace those that are rnot good looking? What's crucial is whether the courier eee ae cerebral palsy has anything to de swith i” Me So says. His decision, athough cost him a ‘customer, won him 2 loyal employee who spent 10 years working for the company. “I think they perform = ‘even better than the able-bodied. 7 They treasure their job and are | willing to overcome difficulties. Indeed, they help me save the trouble of recruiting #1 constantly as they are loyal and diligent," he explains. Now, the company has four disbled staff who have worked in the ‘company for one to seven years Recently, Me So has extended his help to the disadvantaged farther. He is now a voluntary consultant at a career centre to help the disadvantaged enter the delivery industry by sharing. his experience of operating 2 courier company. Courtesy of HKCSS and iCable,