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regulars

6 global briefs
people - planet - profits

42 report: corporate governance


corporate governance and corporate social responsibility

48 csr talk
“the desire to not stagnate”

52 csr toolkit
my choice: a model for a sustainable future

54 survey: corporate diversity practices Editor-in-Chief


examining the cracks in the ceiling Zohare Ali Shariff

57 crossword Editorial Director


Khadeeja Balkhi

60 musings Managing Editor


yours humbly Rutaba Ahmed

Research, Distribution & Development


Mehfooz Aleem
features Zahra Baray
Alizeh Shariq
5 notes from our founder sponsors Raza Tahir

Creatives
12 the crisis and causes Kamran Rauf
the failure of good governance: how it led to the financial crisis Umair Anwar

Reprint
16 rules vs. relations In line with our mission, we encourage
pak-governance: parallel tracks reproduction of material, provided tbl and
content partners are given credit
18 futuralysis: the financial crisis and csr Publisher
corporate responsibility in the age of irresponsibility Asiatic Public Relations Network
(Private) Limited
20 csr in turbulent times
csr now needed more than ever before Printed at
Nikmat Printers, Karachi
24 strategic csr casuality Disclaimer
victims and winners: csr and the financial crisis The views expressed in tbl are the
authors’ and not necessarily shared by
tbl and/or APR
28 governance via internet
the internet: true government of the people Declaration
From the office of
District Coordination Officer,
30 opinion City District Government Karachi
csr in a recession: 10 reasons to keep doing it... NO.DCO/DDO/LAW/CDGK/109/2007,
Karachi
34 adult literacy Dated May 22, 2007
pursuing a lost generation or common sense csr? Subscription, advertising and
feedback at:
39 entrepreneurship
entrepreneur, anyone? tbl: triple bottom-line

46 global energy outlook Address: A-7, Street 1,


weo calls for global energy revolution despite economic crisis Bath Island, Clifton,
Karachi, Pakistan.
50 in hindsight Tel:
Fax:
(92-21)-5837674, 5823334
(92-21)-5867103
bull’s-eye? revisiting ‘07’s forecast for ‘08 E-mail: feedforward@tbl.com.pk
Web: www.tbl.com.pk
58 model for urban development
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tbl nov-dec 08 1
editor’s note

making a difference

W
e at tbl have devel- companies with no CSR programme or strategy for the
oped a new respect moment, so that the benefits of true CSR continue to
for the management spread to an ever-widening audience.
of daily newspapers. Here we
are, bringing out the sixth and Behind the success of tbl is a team of dedicated young
last issue of our publication for people, from researchers to designers, to sub-editors
this year and we know what and still others. But I would like to take the opportu-
trials and tribulations we had nity of this last editor's note of the year to acknowledge
to go through for each issue, the total commitment and ardour of two ladies who are
making it all happen. And this, truly the moving spirit behind this publication. Rutaba
mind you, for a bi-monthly publication. So newspapers Ahmed, our managing editor, who is ultimately
who manage to churn out 24 or more page editions responsible for putting it all together and Khadeeja
every single day have our admiration. Quite a Balkhi, our editorial director and a co-founder of tbl,
challenge even if we take into consideration the huge who is to tbl what the nervous system is to the human
number of people who may be involved in the process. body.

tbl has proved to be a unique publication in many I cannot end this note without thanking our two
ways. To start with, it is the first, and to our knowledge founder sponsors - EBM and National Foods Ltd,
the only specialized journal in Pakistan on the subject whose contribution meets a fair percentage of the cost
of CSR. Then, all writing in tbl is original content, of bringing out tbl. When the tbl team first finalized
especially written for tbl. From time to time we have the concept for this publication, it approached various
also re-printed previously published content from other companies for founder sponsor support. While several
sources, but every time permission has been sought showed interest, they linked potential support to
from the source and their support acknowledged. editorial coverage or laid down other pre-conditions,
Third, tbl is sent complimentary to a thoughtfully which we politely declined, as we were quiet clear in
compiled list of recipients and the approximately five our vision that tbl will be a fully independent and
thousand people who read it are people who can make transparent publication. Only EBM and National Foods
a real difference, be they from the corporate sector, came forward with unconditional support and we
government, NGOs, academia, international institu- believe this reflects their own conviction that CSR
tions active in Pakistan or other groups involved in any knowledge needs to be spread as widely as possible.
facet of CSR. At the risk of sounding self-congra- This is indeed a positive approach and if more
tulatory, I believe tbl is, by the end of its first year in companies extend support to tbl, or for that matter to
print, well on its way to furthering the cause of CSR any other awareness building initiative, then we can
tangibly. look forward to CSR becoming an integral part of cor-
porate life in our country across the board.
The six issues this year have examined a range of CSR-
related issues and the writings have been both food for Sincerely,
thought and a call for action. Practical tool-kits have
espoused how companies can structure and leverage
their CSR initiatives and case studies have illustrated
corporate success stories that others can customize and
replicate. Starting next year, with the January-February
2009 issue, we hope to build on the platform that has Zohare Ali Shariff
been established and provide guidance especially for Editor-in-Chief

This publication is sent complimentary to decision-makers and opinion-formers in the corporate sector, the government, NGO sector,
international institutions and academia, and has an estimated readership of 5,000 plus people. Recognising that your sphere of work
has the potential to compliment and reinforce the essence of our mission, we have taken the liberty to present tbl to you. It is also
available at selected outlets.

We would love to hear from you. Please do contact us at feedforward@tbl.com.pk with your thoughts, feedback and input from your
corporate or social practices.

tbl strongly believes in knowledge dissemination and sharing. Please feel free to share tbl contents with your peers and teams -
of course we know you’ll give tbl the credit when you share our work.

2 www.tbl.com.pk
letters to the editor Dear readers,

Thank you for sharing your


valuable feedback with us, as

Y
our publication is a wel- ing is perhaps the best way for- it is indeed what keeps us all
come new source of valu- ward as that part of Pakistan encouraged here at tbl.
able information and sub- gets the most amount of rain
ject knowledge. I can say with annually. I suggest that tbl Mr. Pasha, we appreciate
confidence that it is possibly the should include a contributions your compliments. In future
only magazine in Pakistan that section for those of us who wish issues, we will publish
comes up to an international to offer monetary assistance to material on practical
standard in terms of content and our brothers in the north who solutions for the environment
presentation. One area of continue to suffer and are as well as other CSR related
improvement that I feel you deprived of even life's basic issues in our country.
need to work on is more hands necessities.
on solutions for specific problem Ms. Khan, thank you for
areas in our society, specially Saira Khan taking the time to write to us.
those relating to conservation of Entrepreneur It is encouraging to read your
the environment. Lahore thoughtful feedback and we
have noted your valuable
suggestion.
Toufiq Pasha Mooraj

T
Consultant and Conservation here wasn't much I knew Ms. Taimur, thank you for
Activist about CSR before I started your compliments on tbl.
Karachi reading tbl. The effort you Creating awareness about
are putting in to create aware- CSR is indeed our main
ness about corporate social objective. It is to give
responsibility is truly exem- corporations a platform

Y
our article on Rainwater plary. Your last issue on through which they can
Harvesting was a very Hydroethics was a real eye benefit and gain knowledge
interesting read. It is opener. It made me realize how about what corporate
indeed very sad how people in we take water - this scarce citizenship is all about.
the mountainous areas have resource, for granted. Keep up
been affected by the 2005 earth- the good work! We look forward to our read-
quake and it is sadder still that ers' feedback which will help
we have not yet managed to Sana Taimur us make this platform a more
provide them with safe drinking Student effective source of debate and
water. I think rainwater harvest- Karachi interaction.

tbl Special Report


As we find ourselves amidst a global meltdown, this year-end edition of tbl brings to you a special
report on Governance, CSR and the Financial Crisis, comprising a series of articles and reports written
by eminent CSR experts and organizations from diverse parts of the world.

Following our interactions with several people including writers, CSR advocates, scholars and organi-
zations in this field, we found that a consensus may be emerging on the link between CSR and the
Financial Crisis and the direction in which CSR is headed. The articles explore the global financial
meltdown in depth - what are the factors that led to the crisis, what is the role of CSR and
Governance, and what is the likely impact on CSR.

Will CSR become more of a buzzword, used by the myriad of self-serving organizations as a veil, or
will it serve as the much-needed reality check - amidst the Crisis that the world is engulfed in? In the
upcoming year, tbl will bring comprehensive coverage on Pakistan's journey towards the true light of
CSR - where we stand, how far we have come and where we are headed.

tbl nov-dec 08 3
editorial advisory board
With this issue of tbl, we bring you the remaining profiles of our board members. We hope you are
enjoying getting to know them as much as we are.

Ayesha Tammy Haq Abrar Hasan


Member Founder Sponsor Member

With degrees in law (London School of Abrar Hasan is Chief Executive of


Economics, University of Kent and National Foods Limited, Pakistan’s
Gray's Inn, UK), Tammy is a Barrister-at- pioneering multi-category food
Law and, more recently, a media person- company. He joined NFL as Plant
ality. She has practiced law in the UK, Director in 1993 and served in that
Pakistan, the Philippines and the USA position for four years. He was elected Deputy Managing
and has worked on several international projects. Her area of Director in 1997 and then Chief Executive shortly after. Prior
expertise is project development and finance. to joining NFL, he was Plant Director at Precision Rubber
Products (Pvt.) Ltd., a sister concern, from 1990 to 1993.
In addition, she hosts a current affairs talk show on satellite
television, writes opinion pieces for several newspapers and Abrar enjoys playing golf, squash and cricket, and is an avid
publications and hosts a radio show on one of Pakistan's FM reader of books on management, leadership and technology.
radio stations. She currently also sits on numerous other
boards, committees, task forces and was a member of He holds a bachelors degree in industrial management and
Pakistan's 5 Year Plan working group in 2004. A civil rights industrial engineering from the Purdue University in
activist, she is involved with human rights and other rights Indiana. He is based in Karachi.
based organizations in Pakistan.

Habiba Hamid Vivian Lines


Member Member

Habiba Hamid currently works for the Vivian Lines is President & Chief
Dubai Government. In 2007 she worked Operating Officer of Hill & Knowlton's
in Baghdad's Redzone for a USAID- Asia Pacific region. He joined Hill &
OFDA and UN implementing partner Knowlton in 1984 and has worked with
on emergency response and economic the company in the UK, Bahrain, Dubai,
development throughout much of Iraq. Taiwan, Singapore and Hong Kong.
She has worked in various capacities for local and national
government and several lobbying groups in the UK. She also He has extensive experience in designing and implementing
served in an elected capacity in organisations which con- strategic communications programmes for a broad range of
tribute to educational development in the UK. multinational and local clients across multiple markets.

Habiba holds an M.Sc in Globalization & Development Vivian is an experienced crisis counsellor and undertakes
(SAS/SOAS, University of London) and a B.A. (Hons) in regular crisis training and crisis assessment programmes in
Politics, Philosophy and History (Birkbeck, University of Asia for a range of clients. He is based in Singapore.
London).

Anwar Rammal Khadeeja Balkhi Khawar Masood Butt


Chairperson Executive Member Founder Sponsor Member

vision and Vision: To steadily facilitate the germination of sustainable visions for organisational growth,
sharing specific triple bottom-line knowledge and tools

mission Mission Statement: To disseminate triple bottom-line knowledge to a diversified group including
corporate, social development and general business groups primarily through a specialised journal,
expanding in accordance with organisational capacity and market readiness

4 www.tbl.com.pk
notes from our founder sponsors

T N
here can be little doubt that in the global ational Foods Limited (NFL) has been
socio-economic setup today, it is the firm associated with tbl as a Founder Sponsor
responsibility of ethical companies to play a before its first issue was published in
key role in enhancing and shaping the economic and January 2008. We have enjoyed witnessing its
social progress of the countries they are operating growth since.
in. It must be understood that above all this makes
good business sense, as the sustainable development Regrettably, the scope of Corporate Social
of a company's business is today inextricably linked Responsibility (CSR) which tbl strives to espouse is
to the sustainable growth of society itself. And this still largely an alien concept for a lot of corpo-
can only be done by inculcating and practising core rations in Pakistan. The capacity building concept
values and best practices that contribute to the that CSR is essentially about is regularly missed
prosperity of companies and hence positively altogether and CSR is most often equated with
impact the growth of a country. image-building, philanthropic activities and corpo-
rate tax write-offs. At the same time, it can be said
Just as globalization is today a reality, whether you that the level of interest of the larger corporate sec-
are a proponent or an opponent of it, so is the need tor in CSR is rapidly rising. From this perspective,
to incorporate sustainable business practices. tbl is quite timely.

In times to come only the best will survive, whether 'Responsibility to society' is a misnomer. It is
it is in the manufacturing or the services sector. essential that the corporate sector recognizes that
The best will be those who strategically pursue the the responsibility element of a CSR strategy should
triple bottom line approach to business - that is a principally be related to the stakeholders in real
business growth model based on the welfare and terms - by promoting sustainable enterprise
growth of society at large (people), the preservation between the corporation and stakeholders, thus
of the environment and precious natural resources completing the real meaning of the triple bottom-
(planet) and the pursuit of profitability (profits) in line: people, planet and profits.
an ethical way.
For awareness in the right sense to be created, it is
It is to be noted also that pursuing the triple bottom- important to treat the achievement of tbl as a goal.
line by yourself in an isolated bubble is highly Its accomplishment should be targeted in phases
undesirable. The message needs to be spread which can, for example, include:
widely, for knowledge shared results in benefits a) Knowledge and awareness-building through
spreading even more widely. In this regard we were workshops and otherwise.
very pleased earlier this year to become one of the
founder sponsors of this publication, as tbl is indeed b) Correct concept definition, with real life
the vehicle for knowledge dissemination that meets examples.
our own vision and values. Now several issues later,
I am pleased to note that tbl is positively facilitating c) Creation of sustainable enterprise equations
a sustainability-entrenched culture in the country. and, again, real life examples of measurable
achievements by companies.
tbl is serving its Mission well and I believe that it is
a catalyst which will make a tangible difference in d) Enforcement of the triple bottom line approach
the times to come. at the SECP and corporate governance levels.

The standard of tbl and its content is impressive e) Corporations to be held accountable for
and at par with that of well reputed international exploitation of stakeholders through some
publications. It is a unique source of information means of regulatory controls.
and guidance for decision-makers and opinion-
formers across different sectors and not just the It is a pleasure for National Foods to support this
corporate sector. EBM is proud to be associated with initiative and we shall continue to do so, enabling
tbl and I take this opportunity to wish the entire tbl the tbl team to use the tbl platform to undertake a
team the very best in its future endeavours. broader range of activities that support its
mission.

Khawar Masood Butt Abrar Hasan


Chairman and MD, Chief Executive,
English Biscuit Manufacturers National Foods Limited

tbl nov-dec 08 5
global briefs

Publicly available reports based Director of International of the


PEOPLE on a robust data collection and
reporting framework can be an
Democratic Party in Thailand,
stating that governments will
excellent communication tool to have to tackle the systemic greed
inform stakeholders of CSR of the financial markets and over-
strategy, approach and paid CEOs if CSR is to be at all
performance. effective in future.
Shared by CSR International and CSR Asia Shared by CSR International, an online blog dedicated
to connecting and empowering corporate sustainability

Barometer Launched to Annual Summit Highlights Key Non-executive's Role in


Measure CSR Disclosure CSR Issues in Asia Corporate Governance More
The recently launched 'CSR Asia The annual CSR summit, Crucial than Ever
Business Barometer 2008' by CSR organized by CSR Asia, was held Independent non-executive direc-
Asia, compares the Corporate in November, at the Asian tors should help drive corporate
Social Responsibility (CSR) Institute of Technology, Thailand. responsibility - but how?
disclosure of the 20 largest listed Amidst a growing call for
companies in Hong Kong, companies to engage with CSR Non-executive directors play a
Malaysia, Singapore and initiatives in Asia, the event was vital role in shaping the strategy
Thailand. More companies are poised to explore hot topics and governance of UK companies.
seeing the value of making unique to the Asian context, Independence from management
commitments to responsible which would bring new insights should allow them to take a
business practices and disclosing for businesses, governments, broad, long-term view of strategy,
their practices. NGOs and other CSR and gives legitimacy to their role
practitioners. in scrutinising management plans.
Some of the findings include:
Company (codes and policies) The rise of CSR up the agenda in Corporate responsibility has
are the most reported CSR Asia was reflected in the become a board-level concern for
issue (scoring 59 percent), Summit's attendance. There were UK non-execs only recently, says
compared with workplace over 300 participants this year. Craig Mackenzie, senior lecturer
and people scoring only 19 CSR Asia itself reflected this in sustainable enterprise at the
percent. This seems to imply a growing interest in CSR, with 25 University of Edinburgh. "In the
continued lack of trans- staff in offices in Hong Kong, last five years it's become much
parency on Asia's thorniest Singapore, Shenzhen, Beijing, more formally significant for non-
CSR issue, namely labour Kuala Lumpur, Dhaka and Ho execs of big companies," he says.
conditions. Chi Minh City. The event
attracted a diverse group of UK corporate governance guide-
The companies' overall score organizational representatives - lines require London-listed firms
remains low (30 percent), but not only corporate CSR types, like to report on their performance
there is some national varia- the head of water for Coca-Cola against business ethics and corpo-
tion, with Hong Kong scoring and supply chain for Hewlett- rate responsibility standards - or
best (42 percent), as compared Packard - but also NGOs and explain why they do not. Boards
with Malaysia (29 percent), consultants focusing on are free to decide how they will
Thailand (25 percent) and corruption, HIV/AIDS, climate manage and oversee corporate
Singapore (24 percent). change and labour justice, to responsibility concerns, and what
mention a few. role non-execs play in the process.
The top companies - China
Light and Power and HSBC, Until fairly recently, CSR in Asia The breadth of experience non-
both listed in Hong Kong - was largely equated with philan- execs bring can be valuable in
scored 93 percent, as com- thropy and supply chain issues, pursuing ethical business agen-
pared with the poorest per- specifically labour conditions. das, particularly in cross-fertilis-
former - Hong Kong Land - Now, there is a marked shift to ing best practice between sectors
scoring only 3 percent. The environmental issues, specifically and bringing expertise and
top company in Malaysia was water, but also deforestation and insight from other walks of life,
BAT (British American climate change, as well as product head of corporate governance at
Tobacco) Malaysia; in responsibility. The relationship the UK's Institute of Directors
Thailand, it was Siam between the financial crisis and Roger Barker says. He adds that
Cement, and in Singapore, CSR has already emerged as a hot the increasing involvement of bili-
City Developments. topic, with Mr. Kasit Piromya, non-execs in corporate responsity

6 www.tbl.com.pk
is part of a general trend since the impact on the community A comparison between out-
government-commissioned report standing yet hardly known
by the late Sir Derek Higgs of Local or global sourcing buildings of socialist mod-
2003, which recommended ernism in Yugoslavia with
expanding the non-exec director Fairtrade contemporary architecture.
role to improve corporate gover-
nance. The role of supermarkets Since the collapse of the socialist
economic system in ex-Yugoslavia
Citing the complex financial prod- UK and international and Albania and the war that lead
ucts in the banking sector, Barker perspectives to the split of Yugoslavia, a new
suggests a lack of in-depth opera- form of urbanization typified by
tional knowledge may inhibit a This Conference was part of a extensive informal building activi-
non-exec's ability to ensure ethical sequence of five interactive, ty has appeared on the territory.
standards effectively. The ethical participatory one-day workshops Inhabitants have taken the issue
scrutiny role can create moral to be held over the next twelve of housing shortage in their own
dilemmas for non-execs when months. The workshops will focus hands, and they have started
there is a conflict between short- on the key areas of food produc- building new dwellings from
term profits and doing the right tion, supply and retailing. scratch and adapting existing
thing. edifice for their own purposes.
Attendees from all areas of food
Some may say grappling with production, distribution and In this context, the term
that moral dilemma is what being retailing as well as regulatory Balkanization takes a radically
a company director, executive or bodies and research will different meaning: it stands for
non-exec, is all about. There contribute and share their the improvisation and adaptation
seems little doubt that in the cur- experiences, views and beliefs. skills of architecture. Some of the
rent economic climate, the judg- many questions the exhibition
ment calls are only likely to New Architecture and Urban aims to raise include: how can a
become more frequent and diffi- Phenomena combination of governmental and
cult. Because it is non-exec direc- 'Balkanology, New Architecture social control offer the best possi-
tors who, more than any other and Urban Phenomena in South ble basis for a successful retro-
board members, are charged with Eastern Europe', an ongoing exhi- active 'post-regulation?
taking the longer-term view, their bition at the Swiss Architecture
role is arguably now more crucial Museum, in South Eastern These unregulated forms of urban
than ever. Europe, explores contemporary developments have often
architecture and urban design bypassed the expertise of archi-
Shared by Ethical Corporation, an independent media
firm from a trans-disciplinary perspec- tects. This makeshift architecture
tive, not just at national level as has nevertheless developed its
its title might suggest, it also puts own style and culture character-
Organic Food and Farming
architecture into a global context. ized by a new intermeshing of
Conference
spaces through visual worlds
A Conference on "Managing
Balkans generally refers to South communicated by the media,
Competing Values in Organic
Eastern Europe, a region with migratory movements and cash
Food & Farming" was held in
varying geographical definitions. flows.
November 2008 in Bristol. The
Conference focused on two key Going beyond clichés and the Shared by Worldchanging, a nonprofit media
subjects including: ‘How can pathos, the Balkanology exhibi- organization

organic farming contribute tion focuses on the impact of


towards the development of ‘sus- recent socio-political changes on
tainable communities’ in rural architecture and urban planning,
areas' and ‘How do farmers and drawing a variegated picture of
other actors in the organic food urban development in the region
chain define and work towards and the forces that determine it.
the protection of ‘non-market val-
ues’ - and what works against Curated by Kai Vöckler, the exhi-
them?’. bitions focuses on two main
themes:
In this conference, eminent The way inhabitants solved
researchers and professors high- the lack of housing and initi-
lighted issues such as ated construction projects on
Organic farming and its their own account.

tbl nov-dec 08 7
out of the country's Virunga wide, according to a joint
PLANET National Park, threatening the
safety of some 200 mountain
announcement from Germany,
Spain, and Denmark - the pro-
gorillas that live there. "There are ject's leaders.
documented cases of the gorillas
getting caught in the crossfire and Renewable energy is on the rise
getting killed," says a park worldwide as governments
spokesperson. "It's the chaos of attempt to reduce greenhouse gas
war and they are right in the mid- emissions and create domestic
Eco Redesigning for dle of it." Only about 700 moun- energy sources. Despite a variety
Devastated Communities tain gorillas remain in the wild. of international organizations that
Sustainability incorporates lessons are helping with the clean energy
leaned from history in order to The three African nations that still transition, IRENA's leaders said
improve on design to avoid fatal have mountain gorilla popula- that no single agency addresses
flaws and in this case, to prolong tions have agreed to cooperate on the local, national, and interna-
the lifespan of a structure as it a new plan to save the critically tional needs of both developed
relates to its surroundings. endangered primates. Rwanda, and developing nations.
Uganda, and the Democratic
The brand new, modern, eco Republic of the Congo hatched a The international organizations
homes being erected at a rapid 10-year programme to enhance that currently focus on renewable
pace are redefining the 9th Ward security in the parks and forests energy include the International
and are being built for the origi- that the gorillas call home, as well Energy Agency (IEA), World
nal home owners who were dis- as other measures. The countries Bank, Renewable Energy Policy
placed by Hurricane Katrina. The have also agreed to programmes Network for the 21st Century
focus of this project is on the aimed at mitigating the harsh (REN21), Renewable Energy and
impressive and innovative green poverty in communities sur- Energy Efficient Partnership
aspects of the project itself and rounding gorilla habitat, which (REEEP), and several United
how it serves as a model for often leads locals to poach Nations agencies.
building a new neighbourhood wildlife and clear more land. "For
from the ground up in a sustain- the first time, the three countries In the past year, global renewable
able way. The new home designs have decided to protect the great energy sources have increased
are by a combination of local, apes which are threatened with dramatically. More than 250
national, and international archi- extinction and insecurity in the gigawatts of capacity, excluding
tects. region," said Moses Mapesa of the large hydropower, exists globally.
Uganda Wildlife Authority. The Clean energy investments
Even though the new homes in multination plan is largely seen as surpassed $148 billion in 2007, a
the 9th Ward include solar panels, an important step, but plenty of 60 percent increase from 2006,
energy efficient everything, and challenges remain. Notably, according to the U.N.
other elements that we think of armed militants still control a Environment Programme.
when we think of sustainability, large part of the DRC's Virunga
perhaps the single most important National Park where over half of Several countries in charge of the
feature of these homes are their the world's remaining 720 moun- IRENA initiative, including
stilts. If the ocean should ever tain gorillas live. Germany and Denmark, are home
intrude again, these new homes to some of the world's leading
Shared by Grist, an online environmental news
could be high enough off the magazine producers of renewable energy
ground to clear the floodwaters, a technologies.
simple solution to end the debate
about whether or not to rebuild World's First International At a conference in Madrid last
the 9th Ward at all. Renewable Energy Agency month, IRENA's 51 participating
A consortium of European gov- nations agreed that the agency's
To date, the 84th house, out of ernments is developing the first projects would be presented
150, has been paid for through world's first International in January 2009. The involved
sponsorships and donations. Renewable Energy Agency. nations currently include nearly
all of Europe as well as Australia,
Shared by TreeHugger, an online media outlet dedicated
to driving sustainability mainstream The agency, known as IRENA, Argentina, Brazil, India,
will serve as a global cheerleader Indonesia, and the United Arab
Guerrilla vs. Gorilla for clean energy. It plans to offer Emirates.
Due to escalating violence, technical, financial, and policy
Congolese rangers have been run advice for governments world- Shared by Worldchanging, a nonprofit media
organization

8 www.tbl.com.pk
Rice Husks Generating friendly, low-cost energy that is deadly repeat of the 2004 Indian
Electricity in India's Villages dramatically improving the lives Ocean tsunami that killed 168,000
There are 350 million people in of over 12,000 rural Indians. people in Indonesia alone.
India without power living in
small villages; and those commu- Innovative and Sustainable But even as President Susilo
nities harvest 92 million tons of Design Structure Bambang Yudhoyono inaugurat-
rice harvested every year. In a The recently built Women's ed the system in Jakarta, officials
typical village, about 1500 tons of Healthcare Centre in Burkina conceded it would be several
rice is harvested every season, Faso is truly an innovative struc- years yet before it is fully com-
yielding 500 tons of husk and ture, driven by the ideas of sus- plete and the whole coastline pro-
1000 tons of edible product, states tainability and ethical awareness. tected.
Robert S. Katz, a Knowledge & It has been built by FARE Studio,
Communications Associate at a design production facility based According to Thomas Rachel,
Acumen Fund. The farmers either in Rome and also won the Health Germany's parliamentary state
burn the husk or allow it to rot in Category Award at the World secretary, in Jakarta: "We are
the fields. Rice husk is the outside Architecture Festival. starting the world's most
of a rice kernel. Rice husk is cellu- advanced tsunami early warning
losic, which means it can be heat- It mixes local materials, simple system able to issue the quickest
ed up and released for energy - technologies, careful siting and possible warnings with a high
the gas released is similar to control of sun and wind to build degree of reliability."
methane. It also contains silica, an off-grid, solar powered facility.
which is released as a waste prod- The entire complex is built on a Indonesia, with its 17,000 islands,
uct when burned. raised platform to allow ventila- remains especially vulnerable
tion under and to separate it from because it sits on the meeting
A rural electrification company, the dust and mud. Then the point of three of the earth's tec-
Husk Power Systems (HPS) is buildings are constructed from a tonic plates, leaving 60 percent of
using husk to make electricity. sun-dried brick cast on site. The the coastline at risk from
The gas that is made out of the bricks don't do well in contact tsunamis.
husk is filtered, and then run with a lot of water, so they sit on
through a diesel-like engine to the raised plane for protection The new high-speed warning sys-
generate power. HPS is operating from below, while above, a sun tem connects a series of seabed
in 5 villages, and currently pow- and water screen protects the sensors that detect the earth-
ers 12,000 people's homes. HPS buildings. quakes that may set of a tsunami,
utilizes a proprietary technology information that is relayed to
to run 35-100 kilowatt mini power Breezes can flow below the floor buoys on the surface. Deep-sea
plants, delivering pay-for-use and below the roof, keeping the pressure gauges monitor any sud-
electricity to un-electrified vil- buildings cooler without mechani- den variations indicating that a
lages in India's "Rice Belt." cal ventilation. The roof also gath- tsunami is in motion, data that is
ers rainwater. The buildings are enhanced by the notion of the sur-
The co-founder of HPS, Chip plastered and painted, with slo- face buoys that carry global posi-
Ransler says, "We're using an gans in five languages as a graph- tioning systems.
older technology - gasification - ic element.
which has been around since All the information is relayed by
World War II. We retrofit The Women's Health Care Centre satellite to the tsunami early
machines to work with multiple was built with local trades in fif- warning centre in Jakarta, which
types of raw material - not just teen months. is connected to 11 regional hubs
rice husk, but corn husk and across Indonesia.
Shared by TreeHugger, an online media outlet dedicated
wheat husk, too. We work with to driving sustainability mainstream Shared by Worldchanging, a nonprofit media
two Indian manufacturers to organization

build gasifiers with the right spec- New Tsunami Warning System
ifications." Launched
Indonesia launched a sophisticat-
According to Ransler, in the next ed new tsunami warning system
5 - 10 years: "We think we can designed to give coastal residents
power 2500 villages - 750,000 peo- enough time to flee or seek shelter
ple." To date, five pilot projects from an impending tidal wave.
have become operationally prof- The national system aims to pro-
itable within six months, deliver- tect the inhabitants of the archi-
ing sustainable, environmentally- pelago's vast coast and prevent a

tbl nov-dec 08 9
PROFITS According to David Bent, Head of
Business Strategies at Forum for
the Future and Vice Chairman of
companies in the UK and other
countries to make windfall profits
by raising electricity prices to
the ICAEW's Corporate cover the notional cost of having
Responsibility Committee and to buy permits, despite receiving
author of this report, "The reces- them free," reports the Financial
sion is a perfect storm warning of Times. The government said that
how sustainability issues are driv- the auctions should not result in
ing the context in which business- further electricity price increases,
es compete. High prices for ener- as the cost of permits had already
Sustainability can Enhance gy, food and commodities plus been factored in.
Competitiveness: Report unsustainable levels of debt are
In the current economic crisis, the the long-term drivers of unsus- The UK is pushing for power gen-
ability of companies and countries tainable development. When we erators to have to pay for all of
to be competitive has never been look at future trends it is plain their carbon permits in the third
more important. Sustainability that the questions of sustainability phase of the EU scheme, from
can enhance that competitiveness, are a fundamental part the com- 2013, arguing that electricity pro-
according to a news briefing pub- petitiveness of any company or ducers tend to be well-insulated
lished today by the Institute of country." from international competition.
Chartered Accountants in
England and Wales (ICAEW). Shared by CSR International, an online blog dedicated A late amendment to the climate
to connecting and empowering corporate sustainability
'Competitiveness and change bill is expected to receive
Sustainability: building the best royal assent by the end of this
future for your business' has been Auction of Carbon Permits in year. This initiative will make it
written by leading sustainable UK easier to obtain subsidies for
development charity Forum for The E.U.'s first carbon-permit auc- small-scale renewable energy
the Future. tion was held in November 2008, projects. Any project producing
raising some $80 million, as bid- up to 5MW of electricity - equiva-
The report is the first publication ders fought for the right to emit lent to about three to four wind
in a new series, which forms part greenhouse gases. Previously, all turbines - will qualify for a "feed-
of the ICAEW's broader thought of the emissions permits allocated in tariff" rather than the current
leadership programme "Sustain- to UK businesses under the subsidy system. Under such tar-
able Business". The series aims to European Union's trading scheme iffs, generators are guaranteed a
offer a platform for corporate were given out free. According to higher price than normal for their
responsibility and sustainability the Financial Times, "the govern- electricity for several years.
experts to express their views on ment has pledged to auction
issues which will be of interest to another 80m permits in the next
the business community. four years, which is likely to bring Greening the Supply Chain in
in revenues of more than £1bn." Emerging Markets
The paper outlines three deter- The identities of bidders has not A Report by the World
mining factors which companies been disclosed, but electricity pro- Environment Center, titled
will need to address: ducers are expected to be the "Greening the Supply Chain in
Industries at the start of sup- main buyers as they had their free Emerging Markets: Some Lessons
ply chains will have to pay allocation of permits cut by 30 from the Field." looks at success-
more to harvest, extract and percent. ful strategies for improving the
get access to many primary performance of supply chains
products. The government considers the throughout the developing world.
auctions as a model which it The report is second in the new
As ecosystem services hopes would be followed by other GreenBiz Reports series by
decline, the framework condi- European countries. According to thought leaders in the green busi-
tions within which businesses Angela Eagle, exchequer secretary ness arena. It examines the defini-
operate, will change. to the Treasury, "This is the most tion and scope of "Greening the
economic, efficient and effective Supply Chain" initiatives, discuss-
New business opportunities way of [making companies pay es the value they contribute to
will emerge. Demand will for their emissions]." business, identifies selected key
grow for more efficient ways factors to success, presents an
to use eco-system services for "The free allocation of permits in approach for managing successful
meeting needs or mitigating the first phase of the scheme, GSC projects and reviews what
impacts. from 2005 to 2008, enabled power remains to be done through busi-

10 www.tbl.com.pk
ness management, government private equity, and even public can be tied directly to climate-
policy making and financial man- equity. But the fear that cleantech sensitive sectors such as power
agement partnerships. projects may take a back seat to grids, water, buildings and public
economic recovery efforts ignores transport which present a vast
Greening the Supply Chain initia- the fact that cleantech is still being field for the creation of new
tives are part of a process for embraced by many forward- technologies and jobs."
implementing a sustainable thinking U.S. companies and
development plan for investors - and may just be the
corporate business strategy aimed driving force behind economic How to Create Green Jobs and
at achieving improved environ- stimulation. a Low-Carbon Economy
mental, health and safety per- A report "Green Recovery" by
formance; increasing efficiencies Bill Gates is one of the $100 economists at the University of
in the use of energy, water or million in investors for algae- Massachusetts Political Economy
other natural resources or raw based fuel technology company Research Institute was released in
materials; reducing the environ- Sapphire Energy. T. Boone October, by the Center for
mental and societal impact of Pickens has over one million sig- American Progress (CAP).
business operations upon local natures on his Pickens Plan peti-
communities and the global tion, and is investing $10 billion The report shows that a $100
biosphere; and expanding eco- to build the country's largest billion green economic investment
nomic and quality of life enhanc- wind farm. Even Warren Buffet is could create 2 million US jobs in
ing opportunities that result from seeing long-term value in General two years - not to mention the
the company's business activities. Electric by investing $3 billion in wonders it would do for breaking
the world's leading manufacturer our dangerous fossil fuel addic-
One of the lesser understood fac- of wind turbines, energy-efficient tion and cleaning up the climate.
tors in the governance of global hybrid locomotive engines and
companies, especially with other eco-friendly products. The A groovy new map on the CAP
respect to management of their bottom line is that these investors website illustrates how allocations
supply chains, is the limited are not philanthropists; they rec- to 34 states from this "green
number of their own employees ognize these as money-making recovery programme" would
that are located on-the-ground in opportunities in the long term. translate to net job creation and
developing market nations. the dent this would make on each
Greening the Supply Chain (GSC) Clean energy is also an excellent state's unemployment rate.
initiatives have emerged as one hedge against long-term down-
means to compensate for this side risk. Despite extreme turbu- The CAP programme proposes to
limitation; they also aim to assist lence in the short-term, carbon boost public investment (and
companies to achieve greater emission limits, public sentiment leverage private capital through
economic efficiencies and align- and climate change itself repre- loan guarantees) in six energy
ment of sustainability objectives sent significant financial risk to efficiency and renewable energy
across their operations while every company's bottom line. The strategies: retrofitting buildings to
working with hundreds and, at risk of increased regulation, improve energy efficiency;
times, thousands of independent combined with volatile energy expanding mass transit and
supplier firms with differing prices for oil and other fossil freight rail; constructing "smart"
objectives and capabilities. fuels, all favour clean energy in electrical grid transmission sys-
the future - and in some cases, tems; wind power; solar power;
already do. and next-generation biofuels.
Cleantech Investments and
Economic Stimulation
Shared by Worldchanging, a nonprofit media
The short-term blowback from the According to Mark Fulton, global organization
global financial panic has been chief of climate change invest-
pretty logical: A flight to value ment research at Deutsche Asset
and safety and reallocation of Management: "The current crisis
assets to deal with longer-term is making the necessity of tackling
risks of the new economy. So climate change an opportunity to
what does this mean for cleantech stimulate growth through invest-
investing? ment opportunities. Encouraging
investment in renewable energy is
While it is true that the short-term a key focus. Energy efficiency
panic means an interim dry-up of technologies are obviously highly
financing, the same can be said desirable in economies facing
for nearly all venture capital, recession. Infrastructure stimulus Compiled by Rutaba Ahmed

tbl nov-dec 08 11
the crisis and causes

the failure of good governance:


how it led to the
financial crisis
report by jia en teo
for tbl

The concept of good governance has typically been used in development


economics as a way to describe the system of aid-recipient countries - developing
economies. The recent economic crisis has brought this concept into light in
developed economies where governance, both public and private, has been
assumed to be sound. Euphemistically put, the unfolding of recent events has
proven that this is not always true.

12 www.tbl.com.pk
special report

Governments create the conditions for the function- and Exchange Commission (SEC) officials and the
ing of markets, operation of private firms, strength heads of the large investment banks. The investment
of civil society, and welfare of communities and banks wanted the SEC to exempt their brokerage
individuals. (Or at least that's what they're supposed units from an old regulation that limited the amount
to do.) Systems of governance affect the perform- of debt they could take on. The exemption would
ance of the state in executing its core functions and free up billions of dollars held in reserve as a cush-
through this, the performance of countries in meet- ion against losses on their investments. Those funds
ing their major economic and social goals. In the pri- could then flow up to the parent company, enabling
vate sector, the same concept applies - firms' leader- it to invest in the fast-growing but opaque world of
ship enables the functioning of various departments mortgage-backed securities, credit derivatives, and
and is responsible for the welfare of the firm's other exotic instruments. This meeting was sparsely
employees. A firm's leadership also largely deter- attended and went unreported in the media. It last-
mines the firm's performance and its ability to meet ed a total of 55 minutes, states The NY Times.
its goals.
In loosening the capital rules, which are supposed to
In recent months, developed economies around the provide a buffer in turbulent times, the SEC also
world experienced an unprecedented shock - credit decided to rely on these investment banks' own risk
markets froze up, equity markets tumbled to record models, essentially allowing them to monitor and
lows and major banks failed and whole countries regulate themselves. The 2004 decision was a chance
were on the brink of default. While the crisis cannot for the SEC to supervise the banks' increasingly
be blamed on one single entity because it came risky investments in mortgage-related securities, but
about as a result of greed and complacency of con- the agency never followed through on this and it
sumers, investors and businesses alike, it is widely remained a low priority, until now.
argued that the lack of good governance at the pub-
lic and private levels led to this meltdown. Inadequate Organizational Capacity: Failure of
the Fed?
PUMA's Six Pillars of Governance Another factor of good governance is organizational
Good governance, in the private and public sphere, capacity. Good governance has to be built on the
is the ability to exercise power, and to make good quality of organizations so that development is
decisions over time, across a spectrum of economic, based on this rather than simply relying only on the
social, environmental and other areas. There are political or personal will of a strong leader, which
many ways to define good governance, however, may not be sustainable over the longer term.
there seems to be a general consensus that key fac-
tors, as outlined by the OECD programme on Public Both government and private sectors firms proved
Management and Governance (PUMA) include: to be inadequate in this regard, and a case in point is
1) Technical and managerial competence the failure of the Federal Reserve under Alan
2) Organizational capacity Greenspan. The Federal Reserve under Greenspan
3) Reliability was operated by the will of one rather than by a sys-
4) Accountability tem of checks and balances. Stephen Roach, Chief
5) Transparency and open information systems Economist at Morgan Stanley said in an interview
6) Participation with the Financial Times that the Federal Reserve,
led by the "libertarian ideology" of Alan Greenspan
was "very reckless in condoning the excesses of com-
Technical and Managerial Competence plex financial information and setting the price of
Under Question in The Wake of Crisis risk far too low." Roach's views are echoed by many
Technical and managerial competence of leadership other economists who say that Greenspan encour-
is an obvious factor of good governance. In this aged the bubble in housing prices by keeping inter-
financial crisis, it is hard not to question the compe- est rates too low for too long and that he failed to
tence of the regulatory bodies responsible for over- rein in the explosive growth of risky and often
seeing the financial institutions, and the competence fraudulent mortgage lending.
of the financial institutions themselves. It became
obvious that neither public sector leadership nor pri- The Fed chairman had been one of the nation's lead-
vate sector leadership really understood the complex ing voices for deregulation, and there are past state-
financial instruments that were structured, packaged ments in which Mr. Greenspan had argued that gov-
and sold during the boom years. ernment regulators were no better than markets at
imposing discipline. The Fed slashed interest rates
Rewind to April 2004. Only after the crisis had from 2001 to mid-2004, which led to warnings of a
begun unfolding did the New York Times publish potential bust, but Greenspan brushed these worries
an account of the brief meeting between Security aside, according to the NY Times. Greenspan, along

tbl nov-dec 08 13
with most other banking regulators in Washington, markets. But perhaps this call for accountability is a
also resisted calls for tighter regulation of subprime case of too little, too late.
mortgages and other high-risk exotic mortgages that
allowed people to borrow far more than they could Financial Crises: Due to A Breakdown of
afford. Transparency
Transparency is another important aspect of good
The Freddie Mac and Fannie Mae Case: The governance. Governments have access to a vast
Case for Reliability Highlighted amount of important information. Dissemination of
Reliability is another factor of good governance. this information through transparency and open
Reliability requires governance that is free from information systems can provide specific informa-
distortionary incentives - through corruption, tion that firms and individuals need to have to be
nepotism, patronage or capture by narrow private able to make good decisions.
interest groups.
This financial crisis was a case study of the break-
The story of Freddie Mac and Fannie Mae is a classic down of transparency at many levels. Take for
case of policy capture that highlights the importance example, AIG and its 'small' derivatives unit, headed
of reliability in governance and the effects when it is by Joe Cassano. This unit was conveniently
absent. The Wall Street Journal and CBS have report- classified and located in London so to ensure
ed that Freddie Mac and Fannie Mae spent millions particularly lax oversight over the dubious accoun-
of dollars lobbying some influential members of ting and disclosure practices evidently abetted by its
congress, in exchange for, among others, lax capital chief. The insurance behemoth came to its downfall
reserve requirements. As a result of their lobbying because its leadership had made some very risky
prowess, these obsolete bets, hid them from regula-
institutions became virtually tory oversight, and moved
untouchable behemoths. Accountability is a convoluted the risky business abroad.
Congressman Ron Paul has concept with respect to this financial
said that "the special privi- crisis because of the global nature Capital markets depend on
leges granted to Fannie and of the financial system. Consumers information openness and
Freddie have distorted the transparency but the nature
housing market by allowing
are at fault for over-borrowing, of these complex derivative
them to attract capital they banks are at fault for over-lending, products made it difficult
could not attract under pure investment banks are to blame for for most people to under-
market conditions." over-securitizing, and regulatory stand, much less regulate.
institutions are at fault for allowing The collapse of the giant
Accountability: too little, investment banks and the
this excessive behaviour.
too late? financial system are due to
Accountability is a crucial the lack of transparency
way to ensure that the surrounding these products
power that is given to those in public office is used and the loss of confidence in the counterparties
appropriately and in accordance with public inter- involved. As a result, investors panicked, causing
est. Accountability requires clarity about who is the markets to tumble.
accountable to whom, for what, and that civil
servants, organizations and politicians are held Lack of The Right Kind of Participation Triggered
accountable for their decisions and performance. The Crisis
Another factor of good governance is participation.
Accountability is a convoluted concept with respect Participation involves consultation in the develop-
to this financial crisis because of the global nature of ment of policies and decision-making, elections and
the financial system. Consumers are at fault for other democratic processes. Participation gives
over-borrowing, banks are at fault for over-lending, governments access to important information about
investment banks are to blame for over-securitizing, the needs and priorities of individuals, communities
and regulatory institutions are at fault for allowing and private businesses. Governments that involve
this excessive behaviour. the public will be in a better position to make good
decisions, and decisions will enjoy more support
At some level, the leadership at the public and once taken.
private institutions that has been involved in this
crisis are being held accountable - top executives at Before the crisis happened, in boom times, partici-
these banks are being questioned and will be pation was everywhere. However, it was not the
missing out on some of their bonuses; Greenspan is right kind of participation - this was participation in
being called into question for his lax oversight of the a party of excess, complacency and greed, and the

14 www.tbl.com.pk
special report

participants were not just greedy investors, but large overcome the energy shortages and to receive a fat
banks and even regulators. As Professor at chunk from the investment that would be diverted
Columbia University, Joseph Stiglitz put it, "it was to surging economies of Asia."
all done in the name of innovation, and any regula-
tory initiative was fought away with claims that it But Pakistan has a crisis of its own to take care of for
would suppress that innovation. They were innova- now. While Mr Musharraf's prime minister, Shaukat
ting, all right, but not in ways that made the econo- Aziz, frequently likened Pakistan to a "tiger
my stronger. Some of America's best and brightest economy", the former government left an economy
were devoting their talents to getting around on the brink of ruin without any durable base.
standards and regulations designed to ensure the
efficiency of the economy and the safety of the No Bail
banking system." The Pakistan Rupee has lost more than 21 percent of
its value so far this year and inflation now runs at
The lack of the right kind of participation - participa- 25 percent - by conservative estimates. The rise in
tion in developing sound policy and regulation, has world prices has driven up Pakistan's food and oil
contributed to the unraveling of financial systems bill by a third since 2007, according to Wilkinson in
worldwide. the Telegraph. President Zardari told the Wall Street
Journal that Pakistan needed a bailout worth $100
Due to poor governance, America's financial system billion from the international community.
failed in its two crucial responsibilities: managing
risk and allocating capital. The industry as a whole President Zardari is expected to ask the international
had not been doing what it should have been doing community for a rescue package at a meeting in Abu
and it must now face change in its regulatory struc- Dhabi next month. This gathering will determine
tures. Regrettably, many of the worst elements of the whether the West is willing to bailout Pakistan.
US financial system were exported to the rest of the However, with developed nations vying for bailouts
world, according to Joseph Stiglitz. of their own, it is unclear if they even have the
capacity to provide this rescue package.
The global financial crisis, triggered by the mortgage
and financial derivatives debacle in the US, was not Whatever the outcome, it is clear that good
just a failure of dogmatic ideology, or of know-how, governance is key to steering Pakistan, and the rest
or of technical regulations. As illustrated at the of the world, out of a global recession. It will take
outset, powerful 'vested' interests, at the intersection cooperation at an international level and for many
between politics and business, and corruption, governments to not only make the decisions that are
played a role in shaping the flawed oversight, the right for their domestic situations, but also work
absence of transparency, the regulations, and their together with their counterparts abroad to find a
lax implementation. solution to mend this problem and reduce its trickle
down effect on real economies.
The Effect on Pakistan
In Pakistan, people watched from afar as the capital References
markets crashed in the US and Europe. According to
http://www.nytimes.com/2008/10/03/business/03sec.html?_r=1&oref
sources within the banking industry, the global =slogin Edmund L. Andrews. The NY Times.
financial crisis has not affected Pakistan yet because
http://www.nytimes.com/2008/10/24/business/economy/24panel.html
the country is not a large financial player in the (Joseph Stiglitz, The fruit of hypocrisy; Dishonesty in the finance
global economy. However, the SBP's First Quarterly sector dragged us here, and Washington looks ill-equipped to guide
us out, The Guardian, September 16)
Report issued last month states, "the domestic
economy is now more open and prone to external http://governanceblog.worldbank.org/capture-and-financial-crisis-ele-
phant-forcing-rethink-corruption
shocks than ever before".
http://www.dawn.com/2008/02/04/ebr17.htm
Former president of the Overseas Chamber of
Isambard Wilkinson. Pakistan Facing Bankruptcy. November 17,
Commerce and Industry, Zubyr Soomro believes 2008 <http://www.telegraph.co.uk/finance/financetopics/
that the primary impact for Pakistan would be tight- financialcrisis/3147266/Pakistanfacing-bankruptcy.html>
ened terms for access to international debt markets.
Some analysts view this crisis in the West as a
chance for Pakistan to establish a stronger economic About the Writer
foothold in the region. They believe that investment
Jia En Teo is an online entrepreneur and writer who cur-
will pour into the country as returns in developed rently resides in New York City. Aside from her online ven-
markets fall. According to the Head of retail banking tures, she has great interest in issues related to social
entrepreneurship, corporate social responsibility and the
of the National Bank of Pakistan, Amir Siddiqui, environment. She graduated from the University of Michigan with a
"We need to prepare ourselves on a war footing by Bachelors in Political Science and Economics.
getting floating barrages from the Middle East to

tbl nov-dec 08 15
rules vs. relations

pak-governance: parallel tracks


by ahsan ali mangi
for tbl

The term "good governance"


has increasingly been used to
describe the regulatory inter-
ventionist regime necessary to
support free markets in order to
reduce, minimize and dampen
suboptimal market outcomes
due to constraints present in
the real world. The concept was
also adopted by development
literature whereby it was
argued that better institutions
(that is, better governance) is
one of the vital factors which
differentiates a country's rela-
tive progress in social and eco-
nomic development. its implementation. Thus, the Key Factors of Good
more mature, responsible and Governance
educated the actors, the better the The distinguishing characteristics
What is Governance? results. Good governance is of good governance which have
Governance has been defined equally important in the interna- been commonly accepted and pio-
differently depending on the tional, national, sub-national and neered by UNDP (United Nations
context, however for clarity, lets corporate governance scenarios, Development Programme) are;
first understand what governance as all of them affect the general accountability, transparency, con-
is not. Governance is not synony- wellbeing and welfare of people. sensus orientation, participation,
mous with government. rule of law, efficiency and effec-
Therefore, there is always a dan- tiveness, equity and inclusivity.
Democratic Governance -
ger that a governance issue
Serving Citizens
maybe dubbed a 'government'
In terms of the state and citizens, The World Bank rates over 200
issue, with the corollary that the
governance is about provision of countries annually on its WGI
onus for fixing it necessarily rests
public goods to persons living (Worldwide Governance
with the government.
within certain parameters; it is the Indicators) to measure the level of
Governance has been defined by quality of these public goods that governance in these countries.
the UN ESCAP (United Nations distinguishes strong states from WGI includes six dimensions of
Economic and Social Commission the weaker ones. A well-governed governance; voice and accounta-
for Asia and the Pacific) as "the nation provides the rule of law, bility (VA), regulatory quality
process of decision-making and political and civil freedom, health- (RQ), political stability and
the process by which decisions care, education, arteries of com- absence of violence/terrorism
are implemented or not imple- munication, a banking and money (PV), government effectiveness
mented". An analysis of gover- system, a fiscal and institutional (GE), rule of law (RL), control of
nance processes reveals that it context within which citizens can corruption (CC).
involves a number of formal and prosper; support for civil society;
informal actors including govern- and a method of regulating the Governance in Pakistan
ment, private sector, civil society, sharing of the environmental Successive Pakistani Governments
religious leaders, NGOs, media commons. Together, the manage- have underscored 'good gover-
and others depending on specific ment, supply and delivery of nance' as an essential step
governance issues. some or most of these goods con- towards a prosperous Pakistan.
stitutes governance, states Trade bodies and the private
Better governance is the result of Rotberg, Director of the sector and businesses have also
meaningful and productive inter- Programme on Intrastate Conflict aspired towards and demanded
actions between the actors at Harvard University's John F. good governance which will insti-
involved in decision-making and Kennedy School of Government gate efficiency, reduce cost of

16 www.tbl.com.pk
special report

doing business and ensure the Rule-based versus Relation- gaining power which in turn is
implementation of contracts. based Governance dependent on ex-post institutional
This scenario is better explained arrangements and also the behav-
A look at Pakistan's performance in the framework of a rule-based iour of the government (for exam-
on WGI between 1996-2007 system of governance versus a ple, whether it is predatory,
reveals that not much progress relation-based system. Rule-based benevolent, partisan or other-
has been achieved on any of the governance is based on explicit wise).
six determinants of good gover- and clear contracts with clear
nance. In fact, Pakistan's ranking monitoring mandates. The Effects of Relation-Based
in the world has declined on all of Governance in Pakistan
these indices during the last two Maturity Indicator: Rule- Relation-based governance is
years. Governance common in countries where there
Rule-based governance consists of is lack of circular monitoring.
There is a genuine concern at all
a mature informational infrastruc- There is no clear separation
levels of elected representatives,
ture such as auditing, accounting, between judiciary, legislature and
public functionaries, civil society
rating agencies, legal codes, cases, executive levels - or one arm is
and among private businesses,
and efficient regulatory regimes. overwhelmingly powerful. In
about suboptimal governance in
Until universal informational such scenarios, business is carried
Pakistan, which results in ineffi-
sharing is possible; laws on paper out and contracts are made purely
ciencies in the economic sector,
are mere ink. All these accumu- on local and personal knowledge
implementation of basic rights
late with time as accountability and through personal 'rapport',
and security, and poor provision
processes take root in a continu- resulting in large individual gains
and quality of public goods and
ous and representative democratic at the cost of a maximization of
services.
system. gains.
Pakistan has gone through struc-
tural adjustment programmes Establishment of rule-based gov- The transaction cost is negligible
funded and endorsed by IFI's ernance in a country is a long evo- in these cases, unlike in the rule-
(International Financial lutionary process, since rules can based governance system, which
Institutions) with the aim of only be implemented if all deci- involves large total fixed transac-
improving governance, institu- sive players have mutually consis- tion costs. The average transaction
tions and the economy. During tent beliefs and they become com- cost however is high in the form
the last two decades, Pakistan has mon knowledge. of suboptimal use of resources
significantly reduced subsidies on and inefficient outputs.
food and fuels, liberalized its Dysfunctionality Indicator:
financial markets and is now Relation-Governance Quite recently relation-based gov-
implementing second generation In the absence of rule-based gov- ernance in Pakistan has manifest-
financial reforms. It has success- ernance, countries function under ed in the hoarding of food essen-
fully privatized the public-run a 'relation-based governance' sys- tials, speculation on commodities
banking sector, fertilizer plants, tem, whereby most transactions and currencies and a price bubble
its national telephone company, are based on personal and implic- in stock markets in the backdrop
public transportation and the it agreements. of hapless state regulation: Thus,
Electricity Supply Company of its yielding high inflation, devalua-
biggest city. Governments are usually not able tion of the rupee, depleting for-
to enforce contracts and regulate eign exchange reserves, a slow-
In spite of these efforts, gover- impartially. Players are more down in economy and rising
nance in Pakistan has seen mar- interested in getting a larger share unemployment. The result? Few
ginal improvement, if any. For in the pie rather than increasing winners - and the rest, all losers.
example, telephone services have the size of the pie. All decisions
not shown any improvement are made taking a short-term
since the management of the view and taking into account About the Writer
national monopoly has been immediate gains. The incentive
Ahsan Ali Mangi is Director
handed over to a private entity. matrix in this case resembles a Planning (Education) at
Amounts spent on the capacity prisoner's dilemma whereby col- Earthquake Reconstruction and
building of judicial officers, public laboration will result in value Rehabilitation Authority (ERRA)
and former Director Food,
officials and public representa- maximization while deviation is Sindh. His research interests include causes of
tives in three tiers of government unilaterally beneficial and results inequality between and within nations and its
impact on human well-being and the political
over this time period seem to in inefficiencies. Ex-ante behav- economy of Food. He holds a Bachelors in
have not affected them in a sub- iour of players is based on their Electrical Engineering and a Masters in
International Development from the UK.
stantial way. expectations for their ex-post bar-

tbl nov-dec 08 17
futuralysis: the financial crisis and csr

corporate responsibility in the


age of irresponsibility:
a symbiotic
relationship
between csr
“ This has been an age of global
prosperity. It has also been an era of
global turbulence, and where there has
been irresponsibility we must now
and the clearly say the age of irresponsibility


must be ended.
financial
crisis?
PM Gordon Brown, UN General Assembly (September 26, 2008)

by flavia thomé
for tbl

Trying to understand the future only be repaired by the re-estab-


impact of the financial turmoil of lishment of trust between compa-
the last few months on the many nies (especially those in the finan-
institutions and actors on the cial sector) and their stakeholders.
global stage, is a daunting yet fas- Logically, this presents a perfect
cinating process. The analysis entry-point for CSR to be finally
forces us to take a step back and recognized by the business com-
view whatever it is that we may munity as a force of necessary
be aiming to understand with good and long-term sustainabili-
rather critical eyes - in my case it ty. The emphasis placed by CSR
was through the lens of Corporate on the role of corporations in the
Responsibility. As an advocate of larger social and environmental
CSR, I often spend my time fight- contract is key in preserving an
ing the cause and countering its ideal equilibrium of confidence
many critics. However, as I and responsibility.
attempted to make sense of the
effects on CSR of the recent finan- However, in its current shape
cial crisis and potentially extend- CSR has opened itself to yet more
ed recession, I was able to see criticism with strong anti-CSR
more clearly how close the CSR arguments being voiced by busi-
industry may be to its demise if it nesses, academia and the media.
does not radically re-shape itself. Understandably, in a crisis
defined as one of corporate irre- What The Crisis Means for the
CSR Industry
sponsibility (and arguably also of
As we focus ahead, I can see three
Financial Crisis: The Causes & individual) it is only logical that
possible paths for the CSR
CSR's Role the inability of CSR to ensure
The causes of this turmoil are industry:
deep-rooted accountability and
multifaceted. Although many business governance is being
issues remain unclear, there are a Path 1: CSR Fad Fades
highlighted and condemned. Is
couple of conclusions to take from The business community will dis-
this crisis not the antithesis of the
the crisis. The first is that this was miss it entirely as a fad that
core principles of CSR?
a crisis of responsibility, or lack served a role in creating a market
thereof. The second is that it will for ethical and environmental

18 www.tbl.com.pk
special report

products but does not have a we face today. ly to our own approach, the crisis
wider purpose in society. As a currently impacting the banking
potential recession looms, busi- Path 3: Non-peripheral, Wide- industry is bypassing Triodos
ness expenses will be reduced scale Sustainable Practices Bank. This crisis is caused by los-
only to essential and CSR will be The third model builds upon the ing touch with the real economy."
considered a 'nice-to-have' but last two and benefits from my Embedded CSR targets good gov-
unnecessary outflow. Cost-cutting eternally optimistic view of the ernance, accountable leadership
will result in a number of corpo- world. In light of the shocks the and ethical practices so as to
rate activities and sponsorships world is experiencing and the crit- ensure that they create opportuni-
being axed. ical need to re-establish trust with ties and contribute to increased
stakeholders, companies will not performance. This is the opening
Philanthropic activities will be have a choice but to make CSR a for CSR to demonstrate its
confined to foundations rather main concern. strength and power to bring
than to corporations, which is a about the changes needed in the
shame because those in need of business and financial sectors pro-
Peripheral CSR, even if moting the adoption of sustain-
charity are particularly vulnerable
during times of crisis and weak strategic, will not be able practices on a wide scale.
economic prospects. Nonetheless, sufficient to minimize Sustainability, after all, is what
this kind of CSR was arguably risk and promote the will determine whether a business
unsustainable anyway as it had will outlive the actual and
long-term health of the
little to do with integrating inevitable crises of the future.
system.
responsibility and governance
into the core business model. Symbiotic Relationship Forged
As I look at these three paths
Path 2: Active CSR Survives - not In this model, I look beyond the
ahead, I realize that this crisis
Thrives CSR which encourages employees
forces corporations and CSR into
The second outlook for CSR is to plant trees in low-income hous-
the perfect symbiotic relationship.
that companies will come to real- ing areas or companies to donate
Businesses cannot afford to allow
ize just this and understand that computers to schools. Evidently,
for the demise of CSR, as it pro-
CSR must play an active rather these are valuable actions in their
vides the only way out.
than superfluous role which may own right; both in terms of the
be relinquished during hard benefits to society and the posi-
Embedding responsible action
times. Organizations may choose tive corporate culture it fosters.
and ethical conduct into the core
to engage in actions where their But peripheral CSR, even if strate-
business will go a long way to
products or activities are linked gic, will not be sufficient to mini-
re-establish trust and re-connect
to a wider social or environmen- mize risk and promote the long-
stakeholders. At the same time,
tal good. For example, a comput- term health of the system.
CSR must re-shape itself and
er manufacturer joining hands instill confidence in its funda-
with local schools by supplying As we look ahead to perhaps the mental importance to corporate
classrooms with computers. On largest crisis of business confi- and market sustainability. Only
the other hand, responsible dence, it is time to shift the focus by working together with the
actions should be recognized as away from short-term gains to same goals and priorities, will
not just necessary but a business longer-term economic, environ- business and CSR guarantee their
imperative. It is good business to mental and social successes. Even own survival - and, maybe even
understand the role that your in the catastrophically affected their victory. The economy,
organization plays in the broader financial sector, organizations environment and society will be
society and to leverage your such as the Dutch Tridos Bank much obliged.
resources in order to manage and and the UK's Co-operative Bank
satisfy your stakeholders. have proved robust due to their
Keeping CSR at the periphery of focus on transparency and About the Writer
the business model will go some responsible investing. Tridos
of the way towards improving Bank's CEO, Peter Bloom, Flavia Thomé has worked as a
consultant for Accenture and is
stakeholder relations and re- explained that "by lending to currently working as a
establishing much needed trust. businesses and projects that are Programme Administrator at the
International Institute for
However, this form of CSR will sustainable financially, as well as Sustainable Development (IISD), based in
do little to bring about long-term socially and environmentally, we Geneva. Born in Brazil, she has a BSc in
business and market sustainabili- balance a positive impact on soci- Economics and International Development and
an MA in Global Ethics from the University of
ty, consequently also little to ety with a healthy financial London.
avoid future crises like the one return." Hence, "by sticking firm-

tbl nov-dec 08 19
csr in turbulent times

csr now needed


more than ever before

by michael hopkins, julian roche and ivor hopkins


for tbl

Turbulent times: Financial storms in the US and UK will have implications for all
of us. Main Street and Wall Street cannot be separated. If the captains of those
financial companies, now in crisis or bankrupted, had acted more responsibly with
a proper Corporate Social Responsibility (CSR) strategy, then their vessels would
not have sunk nor would they be on the brink of foundering. Responsible business
will be the new mantra. Indeed, we go further, and suggest that the demise of
investment banks in their present form would be the best news possible for CSR!

What went wrong? continue to develop initiatives to CSR at award-winning Vodafone


Lehman Brothers stated in its focus on these challenges facing - but Lehman's announcement
2007 letter to its shareholders our environment now and in the showed that their focus was more
that: future." on environmental concerns than
"Strong corporate citizenship is a strategic CSR which examines all
key element of our culture. We key stakeholders.
actively leverage our intellectual They had corporate responsibili-
capital, network of global rela- ty too and noted in 2007 that: In fact we at MHC International
tionships, and financial strength "We are also looking inward. In Ltd had suggested to Lehman
to help address today's critical 2007, Charlotte Grezo, an expert Brothers early in 2007 to carry out
social issues." in socially responsible business a strategic CSR review and to
practices, joined the Firm as glob- examine all stakeholders. Our
al head of Sustainability and pres- proposal was not accepted. A
Regarding sustainability they ident of the Council on Climate careful stakeholder analysis could
stated: Change. In addition to oversee- well have discovered Lehman's
"As a global corporate citizen, ing the Council's activities, she problems in the sub-prime market
Lehman Brothers is committed to will further the development of and alerted top management.
addressing the challenges of cli- the Firm's own environmental Yet, as Mallen Baker noted, "Bear
mate change and other environ- policy and strategy." Stearns produced no CSR report
mental issues which affect our of any sort. Lehman Brothers did
employees, clients, and share- Charlotte, as many readers will not produce a CSR report, but
holders alike. It is critical that we know, was the former head of they produced a philanthropy

20 www.tbl.com.pk
special report

report. Even if they had gone Carbon trading is an excellent


further, it seems unlikely that the example. CSR would suggest
The investment banks
complex nature of how they voluntary curbs by individual
created wealth would have been a firms, backed up with strong have been the wizards
feature." regulatory control by responsible of market magic. If
Governments. What is the invest- investment banks are to
Recap on what investment ment bank solution? Carbon be truly socially
banks do trading, of course: let the rich buy responsible, they need
They earn their money through a the right to pollute, and let the
poor be obliged to pay transaction
to change what they do
mixture of means: trading and
broking stocks and shares - fees to investment banks to let it fundamentally.
including short selling and happen!
derivatives - providing advice on
mergers and acquisitions, and and more socially responsible
IPOs, investing in private equity How could CSR help? investment - and less, much less,
deals of one sort or another, and CSR is about companies sliding private equity, would be a start.
structuring deals such a into the role previously occupied
securitization and public-private by Governments in taking respon- The plain fact is that investment
partnerships. They have been sibility for making the world a in socially responsible business is
responsible, in large measure, for better place for all their stake- highly unlikely to exhibit the sorts
the current financial crisis. holders. Ban Ki Moon, Secretary- of returns that the shareholders of
General of the United Nations, investment banks seek, so a
What have they been doing to recently used his opening compact amongst the investment
achieve this? Their private equity remarks at the General Assembly banks and the analysts will be
investments have stripped to question the reliance on free needed. The new financial archi-
companies of jobs, merged them markets: "We need a new under- tecture, in which CSR could play
with their competitors, and standing on business ethics and a major role, will render such
stacked them up with risky debt governance, with more compa- attitudes socially unacceptable to
provided by eager bankers. The ssion and less uncritical faith in stakeholders and even subject to
debt has been securitized in the 'magic' of markets." How right judicial review.
tranched revenue deals that he was. The investment banks
ended up with pension funds have been the wizards of market A code of practice amongst
holding toxic securities they do magic. If investment banks are to investment banks limiting the
not understand, and then creating be truly socially responsible, they extent of their involvement in
exotic securities with payment need to change what they do fun- traditional private equity deals
profiles that defy even the most damentally. that slash jobs would be helpful
complex modeling. When they here - for instance, the UN
have not been 'rationalizing' com- What could investment banks do Principles for Responsible
panies, they have been pushing instead? Clearly, they need to be Investment. Such a code could
companies to accept external properly regulated. But more also limit the amount of debt
equity, or creating market solu- venture capital investment, infra- injected into any one deal to
tions for problems that defy mar- structure investment with guaran- prevent undue risk creeping back
kets. teed maximum rates of return, into the system as it did after the
failure of the junk-bond market -
never again, said the regulators at
the end of the eighties - yet look
what's happened now. A commit-
ment not to use certain types of
security altogether, such junk
bonds, could follow on.

More than that, such a code could


also be worked out in conjunction
with the rating agencies so that
there is far more disclosure of
risks than hitherto. The rating
agency models failed on
sub-prime. But if voluntary
disclosure by the investment

tbl nov-dec 08 21
banks were combined with responsible investments in such The Observer (Feb 3rd, 2002)
similar constraints on retail bank areas as alternative energy, food regarded this philanthropic form
lending, backed up by stronger technology and low-cost housing. of CSR as a 'figleaf' and 'of a piece
regulation, the raw material for Of that, not a word from with Enron's overall strategy'. In
the structuring which has led the Congress, not a word from Wall fact, CSR is an overall strategy for
global economy, at least in the Street. At times like these, invest- systematic management of all of a
West, into such difficulties would ment banks are not likely to turn company's stakeholders and is not
be in shorter supply. to CSR consultancies such as confined to philanthropy.
MHCInternational for advice. It's
Something also needs to be done a shame: if they had done when Third, CSR has not been given as
about securitisation, structured times were good, times would be much prominence on Wall Street
finance and tranching in general. a lot less bad now. as it should simply because of the
For instance, a general guarantee legal framework under which
by investment banks over all their most corporations operate. Robert
structured products - effectively What to do next? Hinkley argues , for the USA, that
forcing them to act as their own There are a number of steps as we the law, in its current form,
insurers? They would charge for noted in an article written by actually inhibits executives and
these services, of course, but it MHCi as far back as 2002! corporations from being socially
would prevent them from making responsible because the law
money out of securities over First, CSR can help. A major baldly states that the purpose of
which they have no future inter- stakeholder of a firm is its the corporation is to make money
est once issued, which has created employees. CSR does not imply for its shareholders. Any devia-
a situation of moral hazard time that downsizing should be tion from that could leave the
and again. prevented, that would be absurd. corporation open to a lawsuit. So
What it does imply is that Hinkley suggests simply adding a
CSR companies should have no companies must make an effort to phrase on CSR to corporate law
truck with moral hazard so this organise layoffs in a socially so as to enhance CSR. Law, he
alone as a yardstick of future responsible manner. This could advocates, would then read
investment bank behaviour include early warning, coun- something like: “Directors and
would be useful. Investment selling, re-training, temporary officers have a duty to make
bankers have long been able to financial assistance etc. The money for shareholders, but not
avoid the responsibility of actual tendency of US companies to give at the expense of the environ-
entrepreneurship, so tying their immediate notice is both ment, human rights, the public
rewards more closely to their distressing and can be counter- safety, the communities in which
deals would be a step in the right productive once re-hiring starts
direction. again. There is no doubt that
there is an unequal power
Sadly, however, all this is very between companies and
unlikely. With all the attention employees. A company can
being focused on the demise of recover, it has its own institutions
larger investment banks, what is such as banks willing to keep it
being forgotten is the quiet rise of going through hard times. A
numerous boutique organizations redundant employee has none of
specializing in M&A advice or these advantages and is in a very
one particular sector. Such small- weak position once he or she
er companies don't even need to leaves the confines of an insti-
cloak themselves in the veneer of tution.
respectability that the larger ones
did, and will be able to continue Second, CSR urges transparency
the relentless pursuit of share- of operations through socially
holder value for their often tiny responsible reporting of activities
shareholder base without the such as informing shareholders
glare of public attention. and staff about off-balance sheet
holding of debts. Enron, for
If Ban Ki Moon's vision is to be instance, may well have been in
realized, then governments need much better shape today if it had
to use corporate tax to deflect behaved in a socially responsible
investment away from financial manner. Even though Enron was
deals and towards socially a lavish donor, Simon Caulkin of

22 www.tbl.com.pk
special report

department store…", by the entre-


preneurial Masaru Ibuka. He cer-
Directors and officers have a duty to make money
tainly concentrated on his day to
for shareholders, but not at the expense of the day business essentials, yet, he
also took the time to formulate his
environment, human rights, the public safety, the core ideals for the company that
led the company for the next forty
communities in which the corporation operates or years and which are today still
part of the Sony Pioneer Spirit.
the dignity of its employees.
His ideals were very much CSR as
they embodied a focus on the
individual within the company
the corporation operates or the tom line. There is a positive link together with a mission that
dignity of its employees.” between social and financial per- impacted positively and was
formance especially when looking intended to continue to impact
Fourth, CSR has a positive impact at the increased relevance of positively - on the wider society
on the intangible assets of a com- intangible assets such as reputa- in which the company operated.
pany. A company's clear ideas on tion and knowledge networks. Crisis? Recession? CSR is a long
its identity and long-term goal, These turn into a source of market range strategic tool that if used
can help it to identify two sets of value and competitive advantage. and accessed prudently, would
variables: one a 'value creating give a hard pressed captain the
path' and the other a set of key Sixth, social responsibility is not guidelines and support that will
success factors (KSF) and indica- confined to corporations. help avoid, or weather, the
tors that are appropriate as per- Institutions that have a major sudden storms of crisis.
formance measurements. Such a impact on the way we live are
process is very similar to develop- also expected to behave in a
ing CSR in a company which, in socially responsible manner. References
turn, will have a powerful effect How, therefore, can we explain
http://www.lehman.com/annual/2007/letter/i
on developing intellectual capital, the continuing focus of the ndex4.htm, accessed 24 Sept 2008
a significant part of a company's International Monetary Fund
http://www.lehman.com/annual/2007/sus-
intangible assets. (IMF) on targeting inflation and tainability/
not on creating incomes and
Fifth, CSR has a long-term affect employment? Nor has the IMF Business Respect - CSR Dispatches
No#137 - 29 Sep 2008
on improving a company's bot- been very active in these turbu-
lent times. As Joseph Stiglitz, the MHCi article, 2002. <http://www.mhcinter-
national.com/corporate-social-responsibili-
2001 Nobel Prize winner for eco- ty/publications/csr-in-recessionary-
nomics noted, "...rather than pro- times.html>
viding needed liquidity to devel- 'How Corporate Law Inhibits Social
oping countries to enable them to Responsibility', Robert Hinkley, Business
Ethics, Jan. 2002
pursue full employment policies,
typically the IMF provides liquid- Joseph Stiglitz, "Employment, Social
ity to countries only on the condi- Justice, and Societal Well-being", Keynote
speech to ILO Global Employment Forum,
tion that they pursue contrac- 1-3 Nov 2001 see www.ilo.org
tionary policies." Contraction in
Collins & Porras, Built to Last (Random
the developing countries or in House, 2000), 'More than Profits..', p. 48
countries in economic crisis, such
was the case at the time for
Argentina, leads to smaller mar-
kets for a corporation's goods and
services.

In times of crises, business history


can be a source of inspiration.
Consider Sony founded, 'among About the Writer
the ruins of a defeated and devas-
Michael Hopkins is Managing Director of MHC
tated 1945 Japan' in 'an aban- International Ltd (MHCi) and is an economist
doned telephone operator's room specializing in socio-economic issues. He has
broad range of experience and almost two
in the hollow remnants of a decades of action in CSR.
bombed and burned-out old

tbl nov-dec 08 23
strategic csr casuality

victims and winners:


csr and the financial crisis
report by wayne visser
for tbl

Is the crisis the result of


irresponsible banking, financial
markets, corporations,
executives or capitalism itself?
And how will the impact vary,
depending on whether CSR is
philanthropic, strategic,
embedded or revolutionary?
This article examines the scale
of the financial crisis, the links
to CSR and the likely impact on
CSR.

24 www.tbl.com.pk
special report

The Scale of The Crisis The Links to CSR Irresponsible Executives


There is nothing small or trivial Irresponsible Banking The financial crisis has been fur-
about the global financial crisis. I'd like to suggest a multi-level ther inflamed, some claim, by
According to the Bank of approach to this. At the first and irresponsible executives, as evi-
England's recent Financial most obvious level, we can say denced by outrageous pay pack-
Stability Report, governments the financial crisis is a direct ages. In 2007, the CEO of a
worldwide have already pledged result of irresponsible banking. Standard & Poor's 500 company
more than $7 trillion in loans, According to the Mortgage received, on average, $14.2 mil-
guarantees, capital injections, and Bankers Association, the number lion in total compensation,
other assistance in their coordi- of sub-prime loans offered to according to The Corporate
nated effort to prop up the global risky borrowers increased more Library. United for a Fair
financial system. (Ironic since the than 15 times since 1998. Economy reports that, in 2006,
financial industry is the oft-glam- Essentially, the banks got greedy CEOs received more than 364
orous, jet-setting pinnacle of and compromised good banking times the pay of the average U.S.
many corporate circles). The ILO practices of credit risk assessment. worker (up from 42 times in
estimates the crisis will cost 20 1980).
million jobs by next year. Irresponsible Financial Markets
At another level, the crisis is the More specifically, it seems the
This is not the first financial crisis predictable consequence of irre- leaders of Wall Street's top banks
the world has seen over the past sponsible financial markets. Since are still in line to receive pay
century. The worst, of course, the deregulation of the 1980s, the deals in 2008 worth more than
resulted in the Great Depression derivatives market has grown to $70bn, a substantial proportion of
in the 1930s. But there have been around $600 trillion dollars, which is expected to be paid in
numerous others, all of which car- almost 10 times the value of our discretionary bonuses.
ried painful economic and human global GDP. This speculative trad-
costs. For example, the crises in ing (which some call the "casino "Many critics of investment
Argentina (1981-1990), South economy") is meant to hedge risk, banks," reports The Guardian,
Korea (1997-1999) and Thailand but it also increases the volatility "have questioned why firms con-
(1997-2000) all cost more than 30 and systemic risk of financial tinue to siphon off billions of dol-
percent of these countries' GDPs. markets. lars of bank earnings into bonus
pools rather than using the funds
But even by historical standards, We would do well to recall econo-
to shore up the capital position of
the 2008 crisis is, big. In what's mist John Maynard Keynes' warn-
the crisis-stricken institutions."
been dubbed "Wall Street's Red ing: "Speculators may do no harm
October", the S&P 500 plunged as bubbles on a steady stream of
16.9 percent, or 198 points, for the enterprise. But the position is seri- Irresponsible Capitalism
month. That's the worst-ever ous when enterprise becomes the Some would even go so far as to
monthly point decline for the S&P bubble on a whirlpool of specula- say that the current financial crisis
500. The Dow similarly dropped tion. When the capital develop- represents a systemic failure of
14.1 percent, or 1,526 points. And ment of a country becomes a by- shareholder-driven, free market
the ILO estimates that the crisis product of the activities of a casi- capitalism. Among such critics is
will bring the total unemployed no, the job is likely to be ill-done." European Central Bank President
figure to more than 210 million Jean-Claude Trichet, who argues
for the first time in history. Irresponsible Corporations that the current financial crisis is
Others argue that the crisis is the partly a result of the demise of the
The key difference is that, unlike inevitable consequence of irre- original Bretton Woods' agree-
the Asian and Latin American sponsible corporations. This is ment, after deregulation since the
crises in the 1980s, this crisis is linked to the short-termism of 1970s.
truly global. Some countries, like shareholder value driven public
Iceland and Pakistan, are threat- companies. At the extreme, Trichet's conclusion is unequivo-
ened by bankruptcy. Others, like authors like Joel Bakan suggest cal: "It's absolutely clear that
Japan, have been hit by huge that corporations have "a legally financial markets need discipline:
volatility in the markets. And defined mandate to relentlessly macroeconomic discipline, mone-
even the cash-rich, high-flyers like pursue - without exception - its tary discipline, market discipline."
China are seeing their growth suf- own self-interest regardless of the British Prime Minister Gordon
fering as a result. often harmful consequences it Brown and French President
might cause to others." This Nicolas Sarkozy agree, stating
But what does any of this have to behaviour in humans, he notes, that the turmoil has shown the
do with corporate social responsi- would be characterized as patho- world's post-Second World War
bility (CSR)? logical. financial architecture is not fit for

tbl nov-dec 08 25
the task of controlling today's closely tied to its core business for business growth and financial
global financial system. (which is, after all, mostly about profits. This is because CSR 2.0 is
selling huge volumes of sugar all about the creation of scalable
The Impacts on CSR water), that they cannot afford to solutions to the world's most
Irrespective of its causes, it is like- abandon this as a superfluous urgent and intractable problems,
ly that the financial crisis will CSR programme. They know that such as water stress and climate
have a substantial impact on CSR. if they are not perceived to be change. Unlike the defensive,
The question is, how will this responsibly managing the scarce incremental, risk-based CSR of
impact play out? Who will win water resources of the communi- the past (CSR 1.0), CSR 2.0 rides
and who will lose? According to a ties in which they operate, their the wave of emerging responsible
poll run on the CSR International business will ultimately fail (as and sustainable markets.
blog during October, 44 percent of they have already found to their
CSR professionals believe that detriment in India). For example, the demand for
CSR will increase as a result of renewable energy and low-carbon
the crisis. A further 26 percent Embedded CSR: Largely technologies now far exceeds the
believe it will change, while 22 Unaffected supply. And given the escalating
percent think it will weaken. This CSR can only be resilient if it is costs of climate change, the high
is a slightly surprising result and part of the DNA of an organisa- oil price and ambitious political
perhaps masks a more complex tion. In other words, CSR will targets (of up to an 80 percent
answer. In my opinion, the impact only survive the vagaries of fickle reduction in greenhouse gas emis-
on CSR will vary depending on markets, fluctuating profits, finan- sions by 2050), companies that
the type of CSR being practiced. cial crises and leadership whims have strategically positioned
if it is totally embedded in the themselves as clean technology
Philanthropic CSR: Worst Hit corporate culture, strategy and solutions providers will continue
I have little doubt that those who governance systems. The impend- to benefit from this $284 billion
have adopted an immature ver- ing recession will be the ultimate market, which is expected to
sion of CSR, in which CSR is pri- DNA-test for companies. A year grow to over $1.3 trillion by 2017.
marily about philanthropy (spon- from now, we will have a much
sorship, donations, charity and better idea of who has driven CSR Conclusion
employee volunteering), will suf- deep into the heart of their busi- Hence, the answer to the question,
fer substantial cut backs during ness and who has simply been "What is the relationship between
the coming recession. Irrespective wearing it as a mask. the financial crisis and CSR?", is that
it depends. It depends on your
of the fact that those most in need
One example may be the UK's Co- beliefs about how deeply the irre-
of charity will be worst hit by the
operative Bank. Although it will sponsibility behind the economic
crisis, companies around the
meltdown runs - is it banks simply
world will be forced into cost-cut- not emerge from the financial cri-
overextending themselves, or a far
ting and philanthropy budgets sis completely unscathed, its
more systemic failure in the corpo-
will be among the first to be deeply ingrained ethical approach rate, financial and capitalist models?
trimmed. to banking - introduced in 1992 -
is unlikely to change and may Similarly, the answer to "How will
Strategic CSR: Less Affected even have contributed to its CSR be affected by the financial cri-
It is likely that Michael Porter and robustness over the past 12 sis?" depends on how deeply CSR
Mark Kramer's concept of strate- months. As Jonathan Porritt, runs within the organisation - is it
gic CSR will pay dividends for its Chairman of the UK's Sustainable superficial philanthropic CSR, some-
Development Commission says, thing more strategic or embedded,
followers in the aftermath of the
"at the very least, the relative or even the more revolutionary CSR
financial crisis. They argue that
resilience of this business model 2.0 version? Either way, the reces-
"the more closely tied a social
should prompt both Treasury and sion ahead will not only be an acid
issue is to a company's business, test for companies' CSR commit-
the greater the opportunity to the sector's regulators to think
ment, but for CSR itself. It may very
leverage the firm's resources-and again about alternative ownership
well be that the time has come for
benefit society." Hence, compa- and governance structures in the
CSR to adapt or die.
nies that have aligned their phil- financial services sector."
anthropic and broader CSR efforts About the Writer
with their core business are more CSR 2.0 will continue to
Wayne Visser is Founder and
likely to protect these initiatives, strengthen CEO of CSR International. In
even during the recession. For those companies that are alive addition, he is Internal
Examiner at the University of
For example, the commitment to the opportunities of the CSR Cambridge Programme for
Coca-Cola has made to become a 2.0 revolution, even the recession Industry, where he previously held positions as
Research Director and External Examiner.
water neutral company is so will present large opportunities

26 www.tbl.com.pk
governance via internet

the internet:
true government of the people
by ramla akhtar
for tbl

One day in June 2006 I think for the first time in histo- step back and look at the content
I had a sudden realization: I am ry, humans across the globe of conversation and how it devel-
beyond borders and regulations have created a government that ops, we notice that:
on the Internet. Certainly, the reg- is truly a government of the 1. One person, using their terri-
ulations and norms of the "real people, by the people, for the tory (the blog) declared alle-
world" no longer applied to the people. giance to a new kind of gov-
virtual interactions of hundreds of ernment. This declaration
millions of people. A reader at the blog questioned: draws authority from another
"You're sure? Internet is only the virtual territory - Wikipedia -
From chatting to creating social medium…it is neither the mes- which has a self-governing
networking communities like sage nor the messenger. What system. That territory is able
Orkut and Facebook; from writing thrives here is the open and acces- to overcome differences of
emails to sussing out the real sible communication between far- race, class, geography, lan-
from the fraudulent on MySpace, flung human beings." guage, sexual orientation,
and taking citizen action through faith, etc. to create a thriving
blogs, using our networked com- My response: Exactly. What is system;
puters as our media centers - we government but a facilitator of the 2. This declaration is willful;
are semi-consciously creating a activities of human [societies]… a 3. Another person challenges;
new space with its own rules and servant that administrates the 4. And the first responds -
codes of conducts. complex function? That is why we demarcating their "law";
say, "like people, like govern- 5. If the challenger agrees, this
It struck me that the Internet had ment." By itself, the government is law is established between at
indeed become my de facto nothing. least two people. There are
government. also silent readers to count.
Governments do not represent the
It was then that I proposed this at people - rather they shape the Within this conversation, an evo-
the NEXT> blog: minds of the people. lution of governance has taken
place that is hard to emulate in
June 2, 2006: The Internet does not exist to rule. the physical world in speed and
If "government" means the "act It does not exist to create absurd authority. The power of such con-
of exercising authority," then I laws. It is a collaborative space. It versations in creating change is
must report that I believe my is inclusive, responsive, self- not to be underestimated, espe-
official government may not be organizing, and evolving. It is a cially where the virtual communi-
my official government. powerful source towards which ty is strong and led ably. Conver-
In its broadest sense, 'govern' the modern human is turning to sations change people. People
means the power to adminis- share and to listen. change spaces.
trate, whether over an area of
land, a set group of people, or In fact, in my opinion, never The Formation of a Government
an association." before in the history of One of the most powerful consti-
humankind has the democratic, tutions in the world is that of the
If this is really what govern-
human-centric definition of United States of America. It was
ment is - a body of influence,
government been seen in practice. the result of the conversations
whose rules and laws I form,
The Internet is not just any between the founding fathers of
obey and own - my government
people's government; it is the first that nation. The outcomes of their
is The Internet.
truly human government. thoughts were published in The
The Internet is the government Federalist Papers - 85 essays out-
of the commons, which has lev- The Power of Conversations lining how the new government
eled social, and class and racial Here is the reason why the details would operate and why that type
and other barriers. of this exchange are shared. If we of government was the best

28 www.tbl.com.pk
special report

choice for the USA. Back in the media can I use to send a message resistance movements in Pakistan,
days of print, the Federalist to an official in Barack Obama's Burma, Thailand - are often the
Papers meant to persuade New transition team? To the world via signs of territories changing.
York voters to ratify the proposed CNN (iReport)? Obama's victory is the first but
constitution.
This chart shows how the systems of governance have been
Internet: How It's Changing the changing in congruence with the enablers humans have put to use.
Territory
The process of writing a constitu- Human Knowledge: System of Source of Enabler
Evolutionary stages Governance Governance Power People
tion is germinated in conversa-
tions and willingness. Internet is Prehistoric Era Right of Might. Survival Instincts Elements
changing the way conversations Might. Agility.
take place. Humans are in a free Agricultural Era Feudal Contracts: Physical Strength. Land. Manpower
space communicating with each Slave & master relationship.
other. The once slow and costly
Industrial Era Economic Treaties. Natural resource ownership. Machines
services have been replaced with Scientific supremacy.
fast, agile, free, and universal
services. Information Era Breakdowns of traditional Information manipulation Traditional Media
government. Systematic
anarchy.
Let's step back in history and
examine how countries came to Intent & Attention Era Reformation of new, Integrity: Character, Internet:
idea-based tribes. Driven responsibility, vision, the supreme
be marked. In the most primitive by personal leadership. action. communication
times, it was oceans, rivers, network
mountains, forests, walls, wild
animals, and other natural phe-
More than 2 years after I first pos- not the last time in human history
nomenon that marked distances
tulated the idea, a relatively when the networked structure of
and differences. Soon enough,
unknown, young, multi-ethnic the Internet became a map for
humans began marking fields,
black man has been elected the real-life organization - and change
building walls, setting up
President of the United States. of government. It is a benevolent
colonies, and creating tribes.
Barack Obama's campaign change - one that is brought about
Over time, ideological boundaries machine made unprecedented use by acceptance, inclusion, and the
led to the birth of countries. What of the Internet by forming com- will of the peaceful citizens work-
separates the two sides of a no munity organizations, linked ing together to create a more posi-
man's land but the differences in through their leaders who net- tive world. (That is the intent.)
political constitutions and social worked online.
contracts? Passports, visas, restric- A Matter of Choice
tions, treaties are the products of Not everybody has to be online, Internet is not just a tool for pass-
very recent times with respect to only their community leaders. ing time. It is at once the product
the human history. The argument about the Internet of and the herald of a new era in
being elitist and non-effective has human consciousness, and there-
This development has run parallel little merit. At any rate, Internet is fore systems of governance that
to an evolution in human knowl- growing to become more inclu- are inclusive, self-reflective, trans-
edge. sive, not less. Obama's victory is parent and swift.
an affirmation to all believers in
November 2008: Generation-O the power of Internet to create a The choice is up to humanity to
has Chosen a Government true people's government. accept the power of this enabler,
There are many people who still and use it now to create benevo-
believe that Internet has no reach, lent governance from corpora-
it is a waste of time, and above all Making Sense of the Global
tions to communities to nations.
- it's an elite medium. Media are Governance Breakdown
Or, as it happens at times of all
relevant. Let's make it simple: Governance, in its widest sense, is
evolutionary shifts, be left behind
which of the following seems the not just a political-national insti-
and perish.
most inclusive? tution. From households to corpo-
1. Print: Few write, many read. rations, even down to the Self, the
2. Radio/TV: Literate and rules of governance apply. About the Writer
groomed produce, many are Ramla runs a consultancy,
"NEXT>", which is geared to
audience. What we are witnessing in this design fresh solutions for con-
3. Internet: Many produce, world as "breakdowns" - from temporary opportunities and
challenges. She can be reached
many engage. financial meltdowns of USA, at ramla@nextbyramla.com
As a Pakistani, which of these Europe and Asia to people's

tbl nov-dec 08 29
opinion

corporate social
responsibility in
a recession:

10 reasons
to keep
doing it...

by toby webb
for tbl

W
hile many corporate executives are wor- that well-thought-out programmes can be worth the
ried, rightly, about their budgets for next investment, given that, lets be honest, CSR is cheap
year, there are many good reasons for con- compared to advertising spend, or paying staff more
tinuing efficient responsible business initiatives in money.
2009. Here's a few of them. While I wouldn't claim
to be an expert on pretty much anything, I have While Matthew Bishop at the Economist calls CSR
been out and about talking to some big companies often "a cynical exercise in public relations", compa-
about what may be going on next year in the world nies do it because it can deliver, despite the chal-
of responsible business. lenges in measuring impacts or progress.

Clearly, all in the world of business ethics are con- Here are some reasons I have gleaned from talking
cerned about what they will be allowed to spend in to companies in the last month as to why the right
the next year or so. But smart companies will know CSR spend is still worthwhile:

30 www.tbl.com.pk
special report

1. It can be cheap. CSR 5. Regulators are up in 9. Think about the short-


that does not radically alter arms. Many are happy to use term future. Recessions
business models does not the business world as a don't last long, usually.
cost that much. And, as we all scapegoat for their own poor Imagine the benefits of NOT
know, can save money. As regulatory incentives. cutting back once all this is
anyone from Boots to Wal- Showing you are still focusing over. You'll be able to crow in
Mart will tell you, going green- on a bit more than just sales your CSR report, that unlike
er often saves money. CFOs and cost-cutting can help you others, you kept X and Y ini-
will like that. Make the case to reassure them that you care, tiative going when times were
them, convince them that and may help them stop over- tough.
what you are proposing helps reacting.
the bottom line. They may
have forgotten and started
thinking its all-socialist plot 10. Trim the fat. Become
again. Some stats on their 6. Green advertising has more evidence-based in your
desk might help. gone mainstream. People approach without upsetting
care about green if it delivers partners who may go to the
efficiency, particularly for media in better times. This
them. So communicating well time they may be more
2. Reputation and trans- is still key, and a green/effi- understanding. Being more
parency are still key. In fact, cient message may still res- rigorous will only help when
they are now even more onate well. things pick up again.
important. If you let people
go, you need those you keep
to understand why you did it.
Note
And how you did it in the best 7. Newspapers are even
way possible. You still need hungrier for copy that sells.
This article has been tailored for tbl and is
a copyright of Ethical Corporation 2008.
talent, and talented people And companies provide
want to know you are well excellent cannon fodder for Half-price subscriptions for new
regarded. editors. Ethics related cut- subscribers to Ethical Corporation
backs, poor customer service magazine are available for just €199 for
700 pages a year of articles such as this
and extended payment terms one.

3. Communities are feeling will all start making the news.


Go to: http://www.ethicalcorp.com/ to sign
Keeping an eye on over- up for half price or a free trial to the
vulnerable. They are looking
eager internal plans and how monthly print edition.
for local leadership on impor-
they might go against your
tant issues. Your company
values statements can help
may be able to help. Think
keep things consistent. No
about what you can do that's
board wants to see panic, so
different, and that caters to
re-iterating values in tough
their current concerns, not to
times may help keep things in
your volunteering plan from
check.
last year.

4. Customers are worried.


8. There is opportunity to
gain trust. This is particularly
They are wondering who they
true if others are cutting back.
can trust. Some readers may
Showing you can treat your
have seen the new Lloyd's
customers, suppliers and
TSB ads, which talk about
business partners fairly, even
how they are seen as solid
when times are right, may
(implying others are not).
help you build that bank
Help reassure customers with
account of goodwill, useful About the Writer
communications about any-
when you really need it.
thing from product safety to Toby Webb is Founder and Managing Director
reliability and good service of Ethical Corporation, ClimateChangeCorp.com
and Ethical Corporation Institute, UK.
awards. These things matter.
And yes, this is part of CSR.

tbl nov-dec 08 31
adult literacy

pursuing a lost
generation or
common sense
csr?
report by zohare ali shariff
for tbl

I
f you are reading this publication, you are a liter- tion. Of course the ALP enables them to continue
ate person with probably a minimum of 16 years with part-time education to perhaps a secondary
of formal education, till at least an undergradu- school level, which itself would substantially
ate degree level. Your life is greatly facilitated improve their livelihood further.
because of your advanced ability to read and write.
Now imagine what life would have been like if you Some eight years ago, in 2000, Abdul Majeed, the
did not have this ability, even if you were born with Chairman of National Foods Limited met with
a silver spoon in your mouth in a well-to-do family. Rayed Afzal, the founder of Literate Pakistan
You would probably have been heavily dependent Foundation, an organization imparting education to
on others, for all but the simplest chores, almost like illiterate adults. It was a decisive meeting, for at the
a handicapped person. That is exactly how adults end of it Abdul Majeed had decided to initiate a
who have now become literate felt, before the light programme to provide basic education to the largely
of literacy shone on them - disabled. illiterate and semi-skilled labour working in the
company's factories. To say that Majeed was
One factory worker who graduated from the Adult motivated by altruistic considerations would not be
Literacy Programme (ALP) run by National Foods incorrect. A self-made man himself, he strongly felt
Limited (NFL) even went as far as saying that he it was his moral responsibility to educate the people
feels as if all his life he had been blind and now, who worked for him and gave their best to the
after the programme, he had got sight for the first business he and his friend Waqar Hasan had set up.
time. Another expressed his newly acquired literacy By this time National Foods had grown from
capability as freedom from bondage. A third, a humble beginnings in 1970 as a single ingredient
female, described her ability to read post-pro- spices company, into a multi-category food
gramme as an awakening; joyous but in one respect company, producing over 110 products (over 250
also painful. Because now she realizes how much today) and employing almost 1500 employees,
she had been taken advantage of in everyday life including 1000 contract workers.
matters by others who exploited her inability to read
or write. Thus was launched the Adult Literacy Programme
Adult literacy is not about advanced education at an that has grown over the years both in its scope and
adult age. This is perhaps not even possible, given its coverage.
the fact that acquiring advanced education would
require a lot of time, and the majority of illiterate A number of corporate sector organizations are
adults are from the lower income segments, who supporting education in Pakistan at various levels,
cannot afford to stop work to pursue higher educa- from adoption of government schools, to sponsor-

34 www.tbl.com.pk
Chairman’s “There is a lower rate of their forgetting because
they can read instructions posted,” he elaborated.
Thoughts “We are creating awareness, and we are creating
literate people in Pakistan".
by khadeeja balkhi
The team asked Majeed if he felt that such pro-
grammes can be leveraged to make a widespread

M
r. Abdul positive impact on the lives of illiterate people in
Majeed shared the country. His response:
his vision with
Ronald Inayat and Khadeeja Balkhi of the tbl "Definitely!"
team.
The reasons?
"Since inception, we at NFL were aware of our "Our costs are very low," he shared. "The commu-
responsibility to the society we exist in," nities run the programmes".
Mr. Majeed shared. "Adult illiteracy is the main
cause of our (the country's) problems: the females "Corporate people should come forward, the gov-
especially are not literate - which means future ernment alone can't tackle this issue," Majeed
generations will be at a disadvantage also." stressed. "For example, we can make any one per-
son literate for Rs. 400." Afterwards, the trainees
When asked about the positive changes he wit- are requested to establish literacy centers in their
nessed in participants, he said, "Whenever they own homes, and charge nominal amounts - this
complete the programme, they show and they tell way these become community-owned pro-
how much they have gained. Most of them say grammes.
that when they were illiterate, they were just like
the blind. Now their eyes have opened - and they There is a need to create awareness and motivate
will bring their children up according to the mod- people to step forward and support this
ern environment." cause."What is 400 Rupees?" Mr. Majeed ques-
tioned both rhetorically and emphatically. "You
"I think the basic gain is that the children take the don't have to go to the United Nations to get it!”
message to their mothers and sisters who are not
educated and ask them to enroll in our pro- “We don’t need to look for big grants or anything
grammes in TCF schools," the Chairman said. like that. You, me, we can sit together and do it,"
he said with deep conviction.
There are obvious benefits of education, which go
far beyond just the learning that an individual "All we need is awareness."
gains.
About the Writer
"If your labour is educated, your efficiency will go
up, your productivity will go up," he emphasized. Khadeeja Balkhi is a Sustainability Consultant
“Cleanliness, handling, responsibility levels have who finds great joy in her work, whether it's
improved - if you give them instructions in writ- strategizing, hands-on implementation, field-based stakeholder
engagement or documentation and monitoring.
ing, or put labeling on the machines, they can read
it,” Majeed added.

ship of schools operated by NGOs like The Citizens Thus a better model for the long term is a CSR
Foundation (TCF) and CARE, to offering scholar- model whereby the support to education or for that
ships for higher education at various institutions matter any other worthy cause, has a strong linkage
and including top-rated ones like the Institute of into the business of the corporate sponsor. This
Business Administration (IBA) in Karachi and the ensures the continuity of the support as an ongoing
Lahore University of Management Sciences (LUMS) programme, as it in turn gives back to the compa-
in Lahore. All such initiatives are to be lauded ny's business also on an ongoing basis. The Adult
because these are helping to bridge the yawning gap Literacy Programme scores high on this count. Let
in our education system, caused by grossly insuffi- us examine how.
cient government attention to this vitally important
sector. But the possible drawback with philanthropic A factory employing a largely illiterate labour force
support is often that it is not sustainable after a few still expects that its labour will follow rules and reg-
years, as priorities for the philanthropic corporate ulations and standard operating procedures put in
may and do change for various reasons and their place to ensure consistent quality of product, meet-
budget for such social action may well be diverted ing a set of minimum requirements. These proce-
in time to more 'newsworthy' causes. dures are communicated to the labour force through

tbl nov-dec 08 35
training, verbal and printed instructions and signage more capable future workforce becoming available -
placed at strategic locations to create high recall. The and instances are common across industries where
procedures may be required by local or national sons have followed fathers into the same company
laws, by international standards like ISO, or by for- and often at a higher level than where their fathers
eign buyers (like EU) regulations in the case of had started off. A more literate society can also
exports. At a minimum a company may formulate mean higher earnings and hence higher spending
and institute its own standard operating procedures power.
that seek not only to maintain high product quality,
but also serve to control wastage, ensure higher out- The ALP of National Foods is being operated effec-
put or productivity and reduce or control other tively with two strategic partners. The programme
undesirable human resource related issues, like consists of four books (three Urdu and one basic
downtime due to any accidents at the workplace. arithmetic book) developed by the Literate Pakistan
Foundation - one of the partners. This course is
It should be quite obvious that even a semi-literate called Jugnoo Sabak and can be taught in a short
worker will be able to understand and comply with span of three months at two hours per day for six
the regulations and procedures in place far better days a week. On successful completion, a previously
than an illiterate worker. Even a simple task for illiterate person can read and write Urdu and do
example, of inserting a product the right way up simple arithmetic. This is possible via a special pho-
into a package can be a challenge to the illiterate netic system of teaching.
worker, especially if both ends look the same and
the distinction has to be made on the basis of letter- The other partner, The Citizen's Foundation (TCF)
ing or text. Example: a bar of soap which must be was brought onboard by NFL in 2005 to provide
inserted into its wrapper with the engraved brand much needed premises to expand the programme
name on the bar being the same way 'up' as the beyond NFL's own labour force. Thus, TCF schools
brand name on the wrapper into which it is going. (and teachers) came into the equation for holding
As the illiterate worker cannot even distinguish even the ALP classes in poor communities. The tripartite
between a single letter being 'up' or 'down', he or partnership is working with enviable results. TCF
she is more liable to make mistakes. Perhaps a sim- provides the premises which are mostly free during
plistic example, but nevertheless a valid one to illus- the evenings when the regular schoolchildren have
trate the point. finished for the day and the teachers, who are
trained by LPF. NFL picks up the tab for the books
Think also in terms of worker safety. Yes, a factory and for stipends to the teachers and other miscella-
management may train all labour on safety proce- neous expenses.
dures. But still, safety signage is placed all over the
premises as a constant reminder which studies have Thus starting off in National Foods factories, the
shown is essential to create frequent recall. Some ALP has been running for the past three years: the
signage may be simple graphics which presumably fourth phase has now started in Karachi. Normally
even an illiterate person will understand. But of two programmes per year are feasible. Most centers
necessity others need to be simple text based or at are for women and in the three phases so far, over a
least text included with graphics. thousand women have graduated.

And this is not all. At National Foods are examples Now the broad plan for this year is to activate a total
of workers who have gone through the ALP and of 100 TCF Literary Centers (TLCs) and run 4 ses-
have actually been able to rise within the organi- sions per year in each of these, with a target to edu-
zation to levels they could not have been dreamt of cate 12,000 adult learners on an annual basis.
before. Bashir Masih, an employee of NFL since 1988
and based in the SITE factory, is proud that he has Once thought by some cynics as pursuing a lost
risen from a cleaner in the factory to being a generation, the Adult Literacy Programme has
Janitorial Supervisor under the administration proved itself to be common sense CSR with
department, after successfully going through the far-reaching and long-term sustainable benefits.
Adult Literacy Programme and subsequently meet-
ing the promotion criteria.

An ALP is also good CSR at a holistic societal level. About the Writer
A literate worker is more inclined to educate his or
Zohare Ali Shariff is CEO of Asiatic Public Relations
her children, thus starting off education of the next Network Ltd. & Editor-in-Chief of tbl. A graduate of the
generation at an age when it should ideally start off. London School of Economics, he is a published author
and winner of National Book Foundation Awards. He is
A more literate society pays back into the company's based in Karachi.
business in several ways. For example, in terms of a

36 www.tbl.com.pk
feedback

feedback please!
As our readers, your thoughts are what should keep moulding our magazine.

In upcoming issues, the tbl platform will starting conducting surveys.


For starters though, we'd like to test our understanding of the baselines of CSR in
Pakistan. Please respond to the quick questions below and email it to us at
feedforward@tbl.com.pk You can also fax or mail us this survey page at the
APR address.

1. Is there anyone in your organization directly involved with CSR who


should also be receiving tbl? Please give name and full contact info below.

2. How many articles in tbl have you read to-date?


(It's ok, you can be honest…)

3. Do you think tbl is playing a role in creating awareness about corporate


social responsibility in Pakistan effectively? Please rate on a scale of
1 - 10, with 1 being the lowest and 10 the highest score.

4. What do you think are the major knowledge gaps in CSR understanding in
Pakistan?

5. To what extent do you agree or disagree that social responsibility is vital to


the long-term profitability of a company?

6. Does your organization report on corporate social responsibility? How?

7. Does your organization monitor CSR using specific benchmarks and


quantifiable targets?

8. tbl plans to carry out a range of activities during 2009 focused around CSR.
Who is the one person in your organization who is principally responsibl
for CSR whom we should interact with?

9. Which companies are you aware of that practice CSR?

10. Would you be interested in participating in cross-company CSR


programmes?

38 www.tbl.com.pk
entrepreneurship

entrepreneur,
anyone?
One can study facts and acquire
the expertise to even predict
events. But it is only when one
has control over certain factors,
that one can aspire to determine
one's destiny as a change agent
and choose which direction to
take. When you are in the
driver's seat, then only are you
able to choose this direction.
This seat exists in the realm of
entrepreneurship alone.

report by muhammad siddique sheikh


for tbl

History of Entrepreneurship percent - were entrepreneurs run- One of the main qualities expect-
Economist Joseph Schumpeter ning their own businesses. After ed in a professional is to be, enter-
(1950) defined an entrepreneur as 100 years - in the year 2000 - the prising. The ability to be creative,
a "person who is willing and able scenario was just the reverse with original, proactive and bold, that
to convert a new idea or inven- only 10 percent of the workforce is, enterprising, shall always rank
tion into a successful innovation. being self-employed and 90 per- high as an essential competence
Entrepreneurship forces 'creative cent in state and/or corporate for success in one's personal and
destruction' across markets and employment as salaried profes- professional life. Corporations are
industries, simultaneously creat- sionals. investing huge amounts and
ing new products and business effort into developing human cap-
models. In this way, creative A Driving Force in Growing ital and fostering a work environ-
destruction is largely responsible Economies ment that enables and promotes
for the dynamism of industries Is the field of entrepreneurship individual excellence as well as
and long-run economic growth." growing or becoming obsolete? team spirit.
In the year 1900, only about 10 There are a growing number of
percent of the U.S. workforce was economies thriving on small and The Knowledge-based
employed by the government and medium enterprises (SMEs) - a Economy
the industrial/commercial corpo- characteristic of flourishing Human capital coupled with
rate sector. The others -about 90 economies. innovative, cutting-edge technolo-

tbl nov-dec 08 39
gies are fast undermining the enough. The organized sector in UNDP, WORLD BANK, SIDA
value of material input and Pakistan is neither diverse nor (Swedish International
enhancing the weightage of large enough to accommodate Development Co operation
value-addition components in current and potential job seekers. Agency), a host of companies and
final products or services. This is Furthermore, Pakistan is confront- researchers such as, McKinsey
a characteristic of a knowledge- ed with the challenges posed by and Co (Unleashing the Full
based economy. the growing number of people Potentials of Entrepreneurs to
living below the line of poverty - Alleviate Poverty in Less
Recently, some segments of spe- 57 million Pakistanis - according Developed Countries, 2003) C. K.
cialization in the education sector to the Asian Development Bank Prahad (The Fortune at the
in Pakistan have been overem- (ADB). This necessitates the need Bottom of the Pyramid:
phasized, such as information for us to think differently, for a Eradicating Poverty Through
technology and business adminis- solution to the economic chal- Profit) and Hammond Allen
tration. lenges that our country is facing. (Serving the World's Poor
Profitably, 2002) have focused on
Abundance qualifies for superior- Many respectable segments of suggesting specific thematic,
ity only within the perspective of global wisdom assign great structural, policy and legal
a genuine need. If all that we have weightage to entrepreneurship as changes, effectively to promote
cannot be put to any lucrative a potential vehicle for alleviating pro-poor entrepreneurship.
use, then having too much is not poverty. Acumen Fund's philoso-
superior to having just enough. phy is: "a belief in the power of Physical conditions and human
Thus, resources invested in pro- innovation, in the power of a potentials vary from country to
ducing the unused surpluses are a good idea … in entrepreneurial country, along with specific advo-
sheer waste. solutions to global poverty." cacy about formula changes.
What the developing world today
An individual's educational career Acumen Fund is currently work- urgently needs is change agents:
choice is usually based either on ing to promote entrepreneurship entrepreneurs of all types.
guidance from parents or on in three major areas- water, health
peers' counseling. These are trig- and housing. This is being done What was Conrad Hilton back in
gered by the glory of professional in five countries and eventually the first quarter of the twentieth
success attained by recent gradu- aspires to help the four billion century, when he carried a picture
ates and the available job oppor- people earning less than US$ 4 a of the Waldorf Astoria Hotel in
tunities with local and multina- day to play a decisive role in the New York with him for years and
tional organisations. This trend alleviation of poverty. dreamt of owning it one day? A
has led to a mushroom growth of day dreamer? An entrepreneur?
institutions, some of high -and Entrepreneurial Initiatives
many of questionable- credibility. The UNDP Report 2004 What is Mehmood Bhatti? An
Consequently, the education sec- "Unleashing Entrepreneurship - artist? A world class designer? An
tor - both public as well as private Making Business Work for the entrepreneur? What was he in
- is mainly producing employees. Poor" has gone the extra mile: to 1977 when he left for Paris? A
the extent of drawing an elaborate graduate of Government College,
This slow and costly process is action plan for stakeholders in the Lahore? An adventurer? An
unable to arrest the widening and developing world - including entrepreneur?
deepening poverty, much less governments, philanthropy and
alleviate it. The Institute of the civil society organizations. What is Bill Gates? A researcher?
Business Administration (IBA), The purpose is to provide an A scientist? An entrepreneur?
Karachi, for example, has only enabling environment and oppor-
produced about 5000 graduates to tunities for skill development to We need to prepare an army of
date. Also, the large number of private sector entrepreneurs to enlightened, courageous and
incumbents coming from the bring them out of their plight. committed entrepreneurs,
Urdu-medium system of school- Contributors of this report - equipped to revisit the enormous
ing can simply not survive in the Commission on the Private Sector challenges scattered around them
English-medium education sys- and Development - include per- and to undertake projects. Not
tem. sonalities such as Paul Martin, the just to enrich their current jobs or
ex Prime Minister of Canada and seek new ones and get lost in the
Economic Challenges Facing A. Dello, ex- president of Mexico. same old glut. That very glut
Pakistan which has miserably failed to
In the current economic scenario A large array of high profile glob- empathize with the under-
prevalent in Pakistan, this is not al organizations like UNCTAD, privleged of society.

40 www.tbl.com.pk
Educational System Must Characteristics of an The findings must be contextual-
Focus on Developing Entrepreneur ized and collated into the 4T
Entrepreneurial Competence 1. Vision to conceive projects of model of Tradition, Talent,
The systems of almost all the useful and lasting value Technology and Trend, in order
educational institutions are through synergy of tradition to merge tradition with current
designed to produce first-class with technology and global- trends and demands of the mar-
professional managers, and they ization. ketplace.
are successfully churning them 2. Inquisitiveness and the pur-
out. But do these managers suit of knowledge. The certified GIs, TK and FL shall
essentially lack entrepreneurial 3. Integrity to consistently deliv- be registered under Intellectual
confidence? er good value for money and Property Rights and promoted in
to establish and promote their national and international mar-
Competence, personal experience own brands. kets as authentic originals, for
and readiness breeds confidence. 4. Courage to be creative, origi- which a premium price niche of
It seems that the education sector nal and bold. collectors and connoisseurs exist
needs to work closely with 5. Consideration of all factors, worldwide. Folklore can fetch
organizations like SMEDA, especially the human factor respectable royalties from art
Chambers of Commerce & for effective team-building. galleries, publishers and media
Industry and professional trade 6. Commitment and determina- producers, especially documen-
associations or Taameer (Shell), to tion to be a change agent, to taries, feature films and TV
develop educational plans that make a difference serials.
focus on inculcating entrepre- 7. Resilience to absorb the
neurial competence in addition to shocks and persevere in the This exercise will provide districts
strategic management skills. face of challenges and losses. a unique and genuinely well-
deserved opportunity to build
Taking these traits into account,
upon and add value to their
True, well-groomed competent educationists and practitioners, in
exclusive designs and skills
professional managers get consultation with successful
handed down through
promptly employed, thus success- entrepreneurs, must attempt to
generations.
fully meeting their personal state curricular objectives and
economic objectives. But an design a relevant syllabi focusing
Taking the unique opportunities
entrepreneur can achieve a lot on developing entrepreneurial
that exist in our country, the
better and a lot more by adding qualities and attitudes. The edu-
intervention by the breed of neo
value to the existing businesses, cational system needs to give
-professionals in Pakistan - the
exploiting untapped resources weightage to, and highlight the
educated entrepreneurs - should
and generating additional wealth immense opportunities present in
hence focus on resource
through new businesses, products traditional products and art and
mobilization, standardization of
and services. handicraft of Pakistan.
materials, design, quality
GIs: Entrepreneurial assurance practices, national and
To a large extent, the children of international marketing, among
Opportunities in Rural Pakistan
businessmen tend to opt for others. Improved quality,
This calls for the embodiment of
business and those coming from cost-effectiveness and intensified
an authentic National Register of
families with a professional marketing will certainly expand
Geographical Indications (GIs)
service background, choose to go the horizons of businesses - in
(peculiar products and services of
professional. Whereas the family terms of size and scale - as well as
different districts - such as the
environment does have an add to increasing profitability.
carved wood work of Chiniot,
influence on an individual's Which will in turn help alleviate
tiles of Hala, ajrak / ralli of
career choice, the educational poverty through increased income
Larkana and blue pottery of
system plays a vital role by generation and economic growth.
Multan, etc) traditional knowl-
enhancing weightage on the
edge (literature, treatments and
inculcation of entrepreneurial
recipes, etc.) and folklore (leg-
competence and confidence.
endary stories of wisdom, chival- About the Writer
ry, truth, beauty and romance).
Muhammad Siddique Sheikh is Chairman of
Given Pakistan's current Educationists and social scientists the Standing Committee on Education and
economic challenges, institutions need to take up this assignment Standing Committee on CSR at the Federation of
must teach: the conceptualization with the help of bodies such as
Pakistan Chambers of Commerce & Industry. He
is a Member of the National Think Tank on
of projects of relevance; the the FPCCI (Federation of Pakistan Education and the Federal Ministry of Education,
preparation of feasibility studies Chambers of Commerce and Islamabad.

from concept to launch. Industry).

tbl nov-dec 08 41
report: corporate governance

corporate
governance
and
corporate
social responsibility
ownership, management and accountability

report by peter l. walker


for tbl

“ Nothing is more central to an organisation's effectiveness than


its ability to transmit accurate relevant understandable information
among its members. All the advantages of an organisation…are of
no practical value if it's members are unaware of what other
members require of them and why

PIELLE Consulting Group conducted a research


Saul Gellerman

The results of this study were revisited in 2006 after
study in the United Kingdom among a self-defined the original work in 2004 and presented to a meeting
group from the FTSE 350 and international and of the World Council for Corporate Governance at
multi-national firms based in the UK taking or the 7th International Conference on Corporate
demonstrating 'a leadership role or position in Governance.
Corporate Governance and Corporate Social
Responsibility.' The objective was to research, and if
possible identify, common approaches to the owner-
The Overlap of Governance, CSR and
ship, management and forms of accountability for
Management
both Corporate Governance and Corporate (Social)
According to the website wisdom of one of the
Responsibility among this 'benchmark - lead group'
of companies. At the same time we set out to see leading institutions for directors, 'a non-executive
whether it was possible to identify: director's role is to provide a creative contribution
i) The extent to which 'international' operational by providing objective criticism'. Perfectly logical,
issues and accountability play a role in the but it comes close to suggesting that, between the
process. executive and non-executive directors, there is an
ii) What, if any differences existed between the intellectual and cultural battleground for the soul
views/responses of the three distinct groups of and direction of the corporation. It is not helpful
executives that participated viz: analysis when governance and CSR are part of a
Chairman/CEO; Company Secretary/Corporate mutual responsibility and, arguably the non-
Counsel; Public Relations/Corporate Communi- executives have a key role to play in embedding
cations Director/Advisor. CSR into the boardroom.

42 www.tbl.com.pk
Prof Bob Tricker, the doyenne of corporate gover- ability of most businesses through their non-finan-
nance and author of several books including cial or social reports is all too frequently self-serving
Essential Director, put accountability as the axis and smacks of the "what did we do well that we can
between management and 'governance and CSR' - highlight this year" approach. It may provide a basis
the point at which the roles of the executive and for a narrowcast judgement of a specific range of
non-executive directors are both clarified and com- activities or convey an impression of underlying
bined. commitment. Nowhere can we find a clear, concise
year-on-year report on operational CSR issues that
companies themselves see as important - let alone
for employee welfare and development (human
rights), environmental standards and observance
which the critics view as important.
Accountability is the rhetoric of reporting.
Judgements are made on the reality of comparing
historic performance against clearly identified stan-
dards. Stick to the self-regulatory principle but
require the international stock exchange and finan-
cial regulators to make consistent annual CSR
reporting a listing requirement so that the world can
make a proper judgement of what we actually do -
not just what we say.

From Corporate Governance to CSR - Corporate


(Social) Responsibility
For the purpose of research, PIELLE adopted an
inclusive definition for CSR as follows: "CSR -
(Corporate Social Responsibility) is about how
companies manage the business processes to
produce an overall positive impact on society."

1. 'Corporate social responsibility and social


reporting have been defined as corporate
governance in action' - do you agree or
Reality not Rhetoric disagree with this statement?
PIELLE's research study on the 'Patterns of
Ownership, Management and Accountability for
Corporate Governance and CSR' among leading cor-
porations based in the UK sheds light on some of the
issues that are feeding confusion and debate. Their
research shows that 69 percent of leading UK based
corporations see CSR as 'Corporate Governance in
Action' and 85 percent of them have clear and
demanding systems in place for measuring ethical
and social performance throughout the business.

Company Disclosure under the 7th EU Accounting


Directive (2004) enshrines the principles for non-
financial reporting. It is for directors to judge
whether this information is material to an assess-
ment of the company's past performance or future 69 percent of organisations surveyed
prospects. It will provide a good indication to the responded yes to this question.
extent to which corporate responsibility has become
'embedded in the boardroom'. Behind the Headlines - Taking Corporate (Social)
Responsibility Seriously…
Accountability and Judgement 2. Corporate Governance is now part of every
Until 2008, current evidence shows that the account- company's operating business strategy and every

tbl nov-dec 08 43
respondent business conducted a governance audit best practice criteria annually. For 43 percent it is
of some kind across all its business units. an annual rolling activity; for 50 percent it is part
of the business plan review. Only 10 percent con-
As can be seen in this graph, almost two thirds of duct any review on an ad hoc or 'as needed' basis.
respondents use an internal audit system to meet
their needs inviting the question whether the 39 per-
cent using an external audit process are anticipating
legislation.

6. How does your organisation evaluate the effec-


tiveness of CSR programmes?
3. Where does responsibility for corporate Through an external social audit 35%
governance reside within your organisation? By appraisal 18%
The Board 35% The audit procedures are evaluated 14%
Chief Executive 24% against a competency framework
The Chairman 21% Against pre-determined 11%
Specialist Committee of the Board 17% outcomes/measures
Company Secretary/Corporate Council 3% By continuously tracking a project 11%
There is no formal evaluation 7%
Specialist committees of the board are responsible for cor- Other 4%
porate governance in only 17 percent of businesses. In a
third of companies the board as a whole takes responsibil- Of those organisations that answered other,
ity while for 45 percent of businesses either the chairman methodologies identified included:
(21 percent) or the chief executive (24 percent) takes the o Using an AA1000 process
responsibility. o An external independent audit

4. Where does accountability for CSR activities rest Business has invested heavily in sophisticated and
within your organisation? systematic measurement and evaluation systems
and structures and established clear internal report-
Specialist committee of the board 23% ing systems for ethical and non-financial reporting
Corporate communications/ 24% to the board.
Public affairs
The board 19%
Chief Executive 14% 7. What systems do you have in place for measur-
The chairman 10% ing ethical and social performance?
Operating management 10%
The organisations that answered other,
Accountability to the board for CSR is vested in specified it as:
specialist committees of the board for 23 percent of o Annual CSR report
businesses and with Corporate Communications or Public o Disclosure of corporate donation and activities
Affairs in 24 per cent of businesses. o Social reporting, both centrally and at end
market level
o Dedicated board committee, targets and reporting
5. Over 90 percent of those businesses surveyed o Moving towards triple bottom line reporting
review their corporate governance standards and o Balanced business scorecard

44 www.tbl.com.pk
Influence Benchmarking 14%
Stakeholder dialogue is kept to a 0%
minimum with all groups except
shareholders
Stakeholder dialogue is always to 0%
a minimum

Those that answered other, listed:


a. Enhancement of long-term shareholder value
b. Ability to learn and respond to needs of
stakeholders
c. Advancing the corporate reputation
d. Identify changes to policy and practice in order to meet
stakeholder expectations

Over half the main benefits of stakeholder dialogue


8. What internal systems are in place for feed straight into public relations strategy and plan-
ethical/social/non-financial reporting to the board? ning and nearly a quarter of all businesses make the
corporate communication or public affairs function
Annual strategic review 42% to be accountable to the board for - Corporate
Part of a routine monthly or (Social) Responsibility - CSR. There is more comfort
quarterly reporting process 24% to be drawn from the 28 percent of businesses that
Other 24% use the process to 'evaluate and report on social per-
Stand alone 5% formance over time' and the 14 percent who use the
None 5% exchanges with stakeholders and stakeholder groups
to influence internal governance and CSR bench-
The organisations that answered other, marking.
specified it as:
o Regional corporate social committees and board CSR
committees
Note
o Dedicated board committee, targets and reporting
This report has been tailored specifically for tbl and is a copyright of
o Annual via a social reporting process
PIELLE Consulting Group 2006 .

For the majority of businesses formal systems exist


to drive improvements that result from the 'social
audit' through the organisation. The only surprise is
that there is such a significant minority of businesses
with no structures or systems in place to respond to
audit identified issues.

There is no question of information being for inter-


nal consumption only and stakeholder dialogue is a
pro-active process for every company surveyed. The
survey also asked whether the organizations' stake-
holder dialogue is proactive and 100 percent of
organisations answered YES to this question.

9. What do you see as the main benefits of stake-


holder dialogue for your organisation?

Identify key activities for public


affairs, areas of reputation management 30%
Other 28%
Evaluate and report on social
performance over time 28%

tbl nov-dec 08 45
global energy outlook

new energy realities

weo calls for


global
energy
revolution
despite
economic by OECD/International Energy Agency
for tbl

crisis
“We cannot let the financial and economic crisis per day now to 106 mb/d in 2030 - 10 mb/d less
delay the policy action that is urgently needed to than projected last year. Demand for coal rises more
ensure secure energy supplies and to curtail rising than any other fuel in absolute terms, accounting for
emissions of greenhouse gases. We must usher in a over a third of the increase in energy use. Modern
global energy revolution by improving energy effi- renewables grow most rapidly, overtaking gas to
ciency and increasing the deployment of low-carbon become the second-largest source of electricity soon
energy,” said Nobuo Tanaka, Executive Director of after 2010. China and India account for over half of
the International Energy Agency (IEA) at the launch incremental energy demand to 2030 while the
of the World Energy Outlook (WEO) 2008 - the latest Middle East emerges as a major new demand centre.
edition of the annual IEA flagship publication, held The share of the world's energy consumed in cities
in London. The WEO-2008 provides invaluable grows from two-thirds to almost three-quarters in
analysis to help policy makers around the world 2030. Almost all of the increase in fossil-energy pro-
assess and address the challenges posed by worsen- duction occurs in non-OECD countries. These trends
ing oil supply prospects, higher energy prices and call for energy-supply investment of $26.3 trillion to
rising emissions of greenhouse gases. 2030, or over $1 trillion/year. Yet the credit squeeze
could delay spending, potentially setting up a sup-
In the WEO-2008 Reference Scenario, which assumes ply-crunch that could choke economic recovery.
no new government policies, world primary energy
demand grows by 1.6 percent per year on average "Current trends in energy supply and consumption
between 2006 and 2030 - an increase of 45 percent. are patently unsustainable - environmentally,
This is slower than projected last year, mainly due economically and socially - they can and must be
to the impact of the economic slowdown, prospects altered", said Nobuo Tanaka. "Rising imports of oil
for higher energy prices and some new policy initia- and gas into OECD regions and developing Asia,
tives. Demand for oil rises from 85 million barrels together with the growing concentration of produc-

46 www.tbl.com.pk
tion in a small number of countries, would increase CO2 emissions are set to increase by 45 percent
our susceptibility to supply disruptions and sharp between 2006 and 2030, reaching 41 Gt. Three-quar-
price hikes. At the same time, greenhouse-gas emis- ters of the increase arises in China, India and the
sions would be driven up inexorably, putting the Middle East, and 97 percent in non-OECD countries
world on track for an eventual global temperature as a whole.
increase of up to 6°C."
Stabilising greenhouse gas concentration at 550 ppm
In addition to providing a comprehensive update of of CO2-equivalent, which would limit the tempera-
long-term energy projections to 2030, WEO-2008 ture increase to about 3°C, would require emissions
takes a detailed look at the prospects for oil and gas to rise to no more than 33 Gt in 2030 and to fall in
production. Oil will remain the world's main source the longer term. The share of low-carbon energy -
of energy for many years to come, even under the hydropower, nuclear, biomass, other renewables
most optimistic of assumptions about the develop- and fossil-fuel power plants equipped with carbon
ment of alternative technology. But the sources of capture and storage (CCS) - in the world primary
oil, the cost of producing it and the prices that con- energy mix would need to expand from 19 percent
sumers will have to pay for it are extremely uncer- in 2006 to 26 percent in 2030. This would call for $4.1
tain. "One thing is certain", stated Mr. Tanaka, trillion more investment in energy-related infrastruc-
"while market imbalances will feed volatility, the era ture and equipment than in the Reference Scenario -
of cheap oil is over". equal to 0.2 percent of annual world GDP. Most of
the increase is on the demand side, with $17 per
"A sea change is underway in the upstream oil and person per year spent worldwide on more efficient
gas industry with international oil companies facing cars, appliances and buildings. On the other hand,
dwindling opportunities to increase their reserves improved energy efficiency would deliver fuel-cost
and production. In contrast, national companies are savings of over $7 trillion.
projected to account for about 80 percent of the
increase of both oil and gas production to 2030", said The scale of the challenge in limiting greenhouse gas
Mr. Tanaka. But it is far from certain that these com- concentration to 450 ppm of CO2-eq, which would
panies will be willing to make this investment them- involve a temperature rise of about 2°C, is much
selves or to attract sufficient capital to keep up the greater. World energy-related CO2 emissions would
necessary pace of investment. Upstream investment need to drop sharply from 2020 onwards, reaching
has been rising rapidly in the last few years, but less than 26 Gt in 2030. "We would need concerted
much of the increase is due to surging costs. action from all major emitters. Our analysis shows
Expanding production in the lowest-cost countries - that OECD countries alone cannot put the world
most of them in OPEC - will be central to meeting onto a 450-ppm trajectory, even if they were to
the world's oil needs at reasonable cost. reduce their emissions to zero", Mr. Tanaka warned.
Achieving such an outcome would require even
The prospect of accelerating declines in production faster growth in the use of low-carbon energy - to
at individual oilfields is adding to these uncertain- account for 36 percent of global primary energy mix
ties. The findings of an unprecedented field-by-field by 2030. In this case, global energy investment needs
analysis of the historical production trends of 800 are $9.3 trillion (0.6 percent of annual world GDP)
oilfields indicate that decline rates are likely to rise higher; fuel savings total $5.8 trillion.
significantly in the long term, from an average of 6.7
percent today to 8.6 percent in 2030. "Despite all the WEO-2008 demonstrates that measures to curb CO2
attention that is given to demand growth, decline emissions will also improve energy security by
rates are actually a far more important determinant reducing global fossil-fuel energy use. But the
of investment needs. Even if oil demand was to world's major oil producers should not be alarmed.
remain flat to 2030, 45 mb/d of gross capacity - "Even in the 450 Policy Scenario, OPEC production
roughly four times the current capacity of Saudi will need to be 12 mb/d higher in 2030 than today."
Arabia - would need to be built by 2030 just to offset Mr. Tanaka noted. "It is clear that the energy sector
the effect of oilfield decline", Mr. Tanaka stated. will have to play the central role in tackling climate
change. The analysis set out in this Outlook will
WEO-2008 also analyses policy options for tackling provide a solid basis for all countries seeking to
climate change after 2012, when a new global agree- negotiate a new global climate deal in Copenhagen."
ment - to be negotiated at the UN Conference of the
Parties in Copenhagen next year - is due to take
effect. This analysis assumes a hybrid policy Note
approach, comprising a plausible combination of This article has been shared with tbl with permission from IEA and is
cap-and-trade systems, sectoral agreements and a copyright of OECD/IEA, November 12, 2008, London.
national measures. On current trends, energy-related

tbl nov-dec 08 47
csr talk

“the desire to
not stagnate”
Asif Qadir
CEO,
Engro Polymer & Chemicals Ltd.

by khadeeja balkhi
for tbl

F
or those of you who've interacted with me
recently, you know that among my current
CSR passions is almost anything to do with
value chain empowerment. And that's precisely
what the juicy parts of my conversation with Asif
Qadir, President and CEO of Engro Polymer, were
about. Now, at Engro Polymer, it's all about value
chain development, hard-core even. Upstream,
downstream, you name it. All the way to the farmer
who uses the drip irrigation that uses the PVC resin
his company makes. (Talk about a high for nerds
like me.)

tbl's interaction with Qadir started out in relatively began. "Prior to this, as far as the [three major]
romanticizable drip-irrigated farms in Gadap, so this shareholders were concerned, there was absolute
interview may reflect the breezy informality of the transparency. However even at that point in time,
cheeku orchards and kerala vines. we were following the SECP guidelines, in fact
slightly more than SECP requirements."
The interview - in his office of course, no longer at
Allah Buksh's farms - really got started with him "We were looking at a new business line," Qadir
asking us the right questions. continued. "We didn't pursue this line, because this
has the potential of exposing our people to a
After unabashedly asking what the triple bottom- business line in which there will be underhand
line approach really meant, he promptly re-ordered dealings".
tbl's 'people, planet, profit' tagline.
"This was about two years ago: a simple example of
"This is how the bottom line works," said Asif Qadir, a reaffirmation of our commitment to ethics".
firmly announcing profit as the first bottom-line. Of
course, we at the barely-breaking even tbl offices Biodegradability >?< Minimalistic Consumption
vividly understand this. But the 'how' behind profits So we've set the stage, you know we're more excited
must be just as crystal clear. about sharing the company's value chain (VC)
initiatives. At least, that's how tbl fondly refers to
"We're not just doing what the law requires, but Engro Polymer's market development work.
we're trying to do a little more," Qadir said when
asked about toasty areas such as governance and Now, if like us, Engro Polymer's value chain is a
transparency. little mystified for you too, here's the scoop: they
make the resin that is then used by a myriad of
"As of July this year, we're a listed company," Qadir industries to make PVC products. That includes

48 www.tbl.com.pk
everything from the ominous little 'sample' contain- Yet now, the customers are fairly open about their
ers the medical lab hands you to window frames. business needs or the areas they need help and sup-
port in. Of course, being a monopoly helps Engro
But first, we wouldn't be doing our job if we didn't Polymer be so benevolent.
tell you that we did ask Qadir about the weighty
environmental impacts of his products. We skipped Customers of Customers
through the lush green effluent pond and ongoing In addition to Qadir's passion for agriculture, that
operational efficiencies bit to this part. has been conducive to encouraging the company to
"The fundamental environmental impact comes from invest creative energy in developing a simple, user-
the nature of the product - it comes from chlorine", friendly drip irrigation system - and thus boosting
he candidly states. Of course, we knew that, PVC Pakistan's agricultural sector. Allah Buksh's farms,
after all stands for polyvinyl chloride. the hosting 'laboratory' for this model showcased the
almost fool-proof simplicity to us. One that will
"The net energy consumed, is still the lowest of all prove a harbinger of inter-connectedness of the
plastics," balanced out Qadir. "The quantum of ener- triple bottom line, and all actors in a value chain.
gy consumed is the least too.
Intriguing Numbers
And get this revolutionary idea: to Qadir, its non- Engro Polymer has also directly helped develop the
biodegradability traits are among his products eco- capacity of one of its major customer groups the
friendly traits. PVC pipe industry. Their processing capacity has
more than doubled over the last five years. Ten
"I don't take that as a criticism, I take it as a positive
years ago, the industry could manufacture pipes
effect". I'll admit, we weren't ready for that one. "I
with a maximum diameter of 4 inches.
find it to be more effective that a person will not be
consuming a new product every two to three years," "And this year they're producing 20 inch diameter
he said. (Yes, we have a lot more to say about this, pipes - and obviously enhancing the usages of it,"
but that'll be on tbl's online forum) "The basic beams Qadir.
advantage is that it has an unlimited life".
Another VC example: "We took an industry that had
"It's what you're going to use things for," he elabo- been killed in Pakistan: the cable compounding
rated. He estimates that 60-70 percent of the resin his industry," Qadir shared. Of the 10,000 tons of cable
company produces goes into long life cycle prod- compound that was previously being imported in
ucts, such as pipes. Pakistan, now approximately 8,000 tons are being
produced in Pakistan.
"What you need to know is, what's the chain?"

Grow Our Customers’ Businesses Business Karma


Really, now we're going to talk about the VCs that The best part: this not only comes full-circle, the TBL
don't necessarily have anything to do with chlorine, circle keeps growing.
promise!
If the cable compounding industry is producing
"Our customers are a wide range of people, from rel- 8,000 tons, half of their raw input is Engro Polymer's
atively larger to some who are very small," shared product. So this patient support to the industry has
Qadir. "We've had reaffirmations over time that we paid off with a 4,000 ton-strong market for the com-
are an organization which focuses on a desire to pany. No wonder Qadir thinks "there is a phenome-
grow our customers, to grow their businesses". nal link between social investments and business".

"So, on the value chain side," thought Qadir, "it's a "It's not the number that you're looking at today,"
very significant initiative we have, providing techni- Qadir emphasized, exhibiting just the kind of fore-
cal and managerial support to enhance our cus- sight that excites tbl, "it's the potential you're looking
tomers' business". at in the future".

"We work with all of our customers to … reduce With successes such as these, the company's sales
their power consumption, improve quality, reduce have more than doubled in eight years, inherent
wastages, and how to develop market access," said market growth and other factors included. In 2000,
Qadir. Of the roughly 400 businesses he counts as Engro Polymer sold 37,000 tons of PVC resin. With
customers, there's not a single one that Engro their market development (or VC development as
Polymer teams haven't visited. tbl might call it) taking shape in 2002, they will have
sold 100,000 tons this year, 2008.
The teams weren't always missed and invited - as
they are now. They were initially refused entrance. This, is Qadir's bottom-line.

tbl nov-dec 08 49
in hindsight

bull’s-eye?
revisiting ‘07’s
forecast for ‘08
by michael hopkins
for tbl

his special CSR update

T for the year 2008 has


been developed by MHC
International Ltd (MHCi).
Director MHCi Michael
Hopkins and his team take an
annual look at where CSR has
been, how did their own pre-
dictions make out and where
do they think CSR is going this
year.

A. Introduction
My in-tray tells me that CSR has
gone off the boil. The environmental
aspects of company and institutional
offerings have jumped to the fore.
Corporate Sustainability are the
watchwords, it would appear. It is
not surprising that the word 'sustain-
ability' would be preferred by CEOs:
who would not like to see their com- The poll by Ethical Corporation -
pany exist forever? I covered the never one to favour the phrase
issue of CSR and corporate sustain- CSR - shows that its readers still
ability (CSu) seven years ago and my prefer to use CSR. I have always
view today remains the same. believed that throwing out the
word 'social' and leaving 'corpo-
Terminology - CSR, CR, Citizenship or Sustainability? rate responsibility' weakens the
notion of business in society. I
have discussed this elsewhere,
Corporate social responsibility 33% where I re-state the definition I
have used for some years and
Corporate responsibility 25% mean social to include economic
(business case issues) and envi-
Sustainability 17% ronmental (including sustainabili-
ty). I also emphasize that CSR
Corporate citizenship 6% means treating key stakeholders
both within the company and out-
It doesn't matter, it's all the same thing 18% side in a fair and ethical manner.

Source: Ethical Corporation Poll as of September 25, 2007. I am, however, realistic enough to

50 www.tbl.com.pk
accept that the word 'social' has come to the following conclu- Henry Porter, will lead to
throws many company execu- sions: ever increasing restrictions on
tives. Eventually, I believe that Over the past 25 years CSR freedom and human rights.
just about all companies (and has evolved from a mainly
institutions) will accept the main philanthropic activity to a These three global trends,
tenets of CSR and behave well more mainstream approach depressing as they are, cannot be
with stakeholders, simply as a that integrates responsible ignored by proponents of CSR
survival strategy. A company can- business principles into core since companies and institutions
not be sustained without treating business activities. will be forced to grapple with
its stakeholders well -that is, ethi- European companies have these global issues and act accord-
cally and socially responsibly. well developed responsible ingly. It will mean that respect for
What is wrong, for example, in business practices across a human rights and concerns about
treating stakeholders well - con- broad range of issues. This is supply chain exploitation will be
sumers for instance? I have also due to a sophisticated respon- put on the back burner. The rise
often said that a CSR exit strategy sible investment market, of, and concerns about, China will
is obvious since CSR itself is obvi- NGO pressure and a strong not be affected as it tries through
ous. regulatory environment. massive PR to show a new face, at
Japanese companies demon- least temporarily, as Beijing hosts
strate strong performance on the summer Olympics.
B. CSR - 2007 to 2008
1. On the question of CSR, we environmental issues,
Companies will also have to face
said 'CSR is still the preferred although need to make
some restructuring as unemploy-
term among commentators, progress on other areas to
ment starts to rise to cope with
the Government and NGOs match European levels.
falling economies which may, or
although companies hesitate Beyond a core of companies
may not, experience a global
and prefer the term CR'. In which have adopted responsi-
recession. Will companies restruc-
2008, we would substitute ble business practices, North
ture in a socially responsible man-
corporate responsibility (CR) American companies signifi-
ner? There is not much evidence
with corporate sustainability cantly lag behind their
that companies will follow such a
(CSu). European counterparts across
route as argued, for instance, by
2. CSR is becoming greener, and all the areas researched.
luminaries such as George
this trend has continued Large companies are more
Starcher. Certainly, companies in
throughout 2007. 2008 will likely to adopt responsible
the West will respect national
also see companies struggling business practices than small-
labour laws on redundancies but
with the effects of the credit er companies.
even these are under attack -
crisis of last year and the wor- Will these trends continue into
sometimes justifiably as in
ries of recession. Bank credit 2008?
Sarkozy's new France.
will be difficult to obtain and
that will dampen investment D. CSR in 2008 The move from CSR departments,
and down-the-line profits. This year will be dominated by and their clones, to mainstream-
Issues of CSR will still be three key concerns: ing CSR issues throughout com-
important but will not be as The rise of oil prices and the panies and institutions will falter
important a driver for compa- rapid substitution of food as the above concerns dominate
ny policy as has been seen in crops for bio-fuel production. company policy this year. So a
the past two years. This, in turn, will lead to difficult year ahead for the CSR
3. This year, CSR as PR may still sharp rises in food and con- community is in prospect, espe-
be on the agenda as economic sumer price inflation. cially those whose main focus is
problems dominate. The sub-prime credit crisis not the environment. Therefore,
4. This year, an issue which has will feed more and more into by year's end, we shall see the
increasingly become impor- the real economy as banks term 'sustainability' used so much
tant in CSR is global warm- become tighter in their ability that, like CSR, it may also be the
ing. Another issue of growing to lend even as interest rates subject of questioning and even-
importance is how to deal fall. This will lead to a fall in tual sidestep.
with human rights in global investment and lower output
operations. and employment. About the Writer
The gradual trend toward
Michael Hopkins is Professor of Corporate and
C. CSR Review by EIRIS authoritarianism coupled Social Research at Middlesex University
In their review of CSR in the past with rising instability caused Business School, and Managing Director of the
CSR advisory company and think-tank MHC
two years, EIRIS' (a think tank on by poverty as often written International Ltd.
socially responsible investment) about in The Observer by

tbl nov-dec 08 51
csr toolkit

my choice
a model for a sustainable
future
by kurt archer
for tbl

My Choice! is a project that


aims to raise awareness
among the youth about
Sustainability. We offer a
holistic understanding of
sustainability taught through a The picture shows a circle of people connected by a web. This activity looks at interdependence of
simple model known as global issues.
Society, Economy and
Environment.

The Environment is impacted Stage 1: Around 20 motivated classrooms and deliver a 1-1.5
by our human footprint; this individuals are selected and hour presentation on sustainabili-
footprint is the result of diverse trained as mentors ty. Topics can be focused or
community interactions This number can vary depending broad; the idea here is to make
(economy, leisure, family) in on how many schools or students sure the kids leave with a strong
any given society. Social you want to reach out to. The understanding that sustainability
activism, or civil society, is point to remember here is to means making smart choices now
shaped by embedding values recruit individuals, who are fun, so that we don't suffer the nega-
in the people that are part of can relate well with kids, and tive consequences in the future.
the society and who will take have an interest in learning about
up responsibility for that Sustainability. The big bonus here Topics you should cover:
society. It is therefore vital for is that through being a mentor, Defining sustainability.
youth to grab this inclusive the individual actually learns Understanding the Venn dia-
picture of sustainability to more about him/herself and their gram of People, Business and
ensure a positive future personal actions in sustainability Nature (Society, Economy,
generation of prosperity and by going through this process. Environment).
increased quality of life. Grasp the idea that all actions
It is important to establish rules of
and events in the world are
conduct, and training on material
This toolkit aims to provide an interrelated and interdepen-
before hand so that the next stage
overview for the programme dent - there are no such
can run smoothly.
and how it can be run in not things as isolated actions and
only colleges and institutes, Stage 2: They share an under- response.
but also in companies of any standing of sustainability
size. through a workshop in the Stage 3: The most interested
school. students get a deeper under-
All that is required is a The best part of this programme standing through a simulation
committed team to organize is interacting with the kids; they game.
some logistics, and a series of end up being our greatest teach- Are we having fun yet? If not,
individuals with a passion for ers. This stage is when the newly then we surely will now! Stage 3
sustainability. trained mentors will go into the represents a simulation game

52 www.tbl.com.pk
with a duration of 3 - 4 hours. The My Choice! Model
Here the mentors will plan and
facilitate a series of activity-based
learning games that will help
develop soft skills while teaching
them core ideas of sustainability.

Topics you should cover in the


simulation include:
Understanding the big pic-
ture of sustainability (that is,
global warming, pollution,
security, overpopulation -
nature, business and society).
Introduce the concept of
'Tragedy of the Commons'.
Guide them through a prod-
uct life cycle of their favourite
things, move from linear
product life cycle to closed School Supplies and Books Stage 6: Taking our learning
loop product life cycle. Paper Usage virtually!
What is a network or system, Transportation Yes that is right, we have a special
how can we simplify it if it no Food sixth stage not represented in the
longer makes sense and is diagram, but ever more impor-
overly ineffective? Make sure you start the projects tant. It is taking the learning of
Understanding interdepend- with an audit of the school, so the this programme and giving the
ence from the perspective of kids can identify unsustainable students and mentors an online
various decision makers practices, then come up with platform to connect with other
(Government, NGOs, ideas, and measure the ideas youth across the globe, who are
Companies, and Individuals). based on the Venn diagram passionate about sustainability.
What is their vision for a sus- model. Does it make Business,
tainable future in 20 years People and Nature sense? If not, By accessing the My Choice social
time? how can we improve it? network, participants gain access
to networks of young people,
fresh media and resources to help
Stage 4: Through mentorship Stage 5: The projects are show- them learn more about sustain-
students will execute a project cased and rewarded, raising ability, and best of all: contribute
in their school. awareness in the community to the discussion.
This is the most magical stage, as about sustainability.
anything can happen when you The last stage of this programme You're done! You've made a great
put good intentions into the is the most glamorous, as you contribution to society, you've
hands of creative children. By want to invite the public, part- learnt a lot along the way, and
mentoring a group of kids, you ners, other schools and dignitaries you've networked with others
get to see a project and change to the event. This event can be building the same vision and pro-
happen over the span of 3 weeks imagined in many ways, but it moted your brand every step of
to 1 month. The kids will surprise should aim to capture the excite- the way.
you with their creativity and abili- ment of the kids in presenting
ty to grasp the concept of sustain- their projects ideas, and reward- What could be more satisfying?
ability. The goal of the project is ing them thoroughly for all their After all, it's your choice for a
simple: Make one change in your hard work. The benefit of inviting sustainable future!
school that can help it become so much public is that they too
closer to being zero-waste. get to play a hand in learning About the Writer
about sustainability.
Project areas that kids can work Kurt Archer originates in Canada and lived in
Karachi, Pakistan for two years where he estab-
on include: Prizes should further the kids lished international internship programmes for
Waste and Disposal development in understanding both AIESEC and the Aga Khan University. He is
now on an eco-travel tour of Asia where he aims
Water Conservation about sustainability, such as to share his experience in working with and
Soil and Plants nature retreats or educational learning about the top sustainability solutions in
Asia.
Energy Efficiency books.

tbl nov-dec 08 53
corporate diversity practices

examining the cracks


in the ceiling
report by calvert
for tbl

Overview
While the current landscape of diversity
in the corporate workplace evidences
cracks in the glass ceiling, women and
minorities continue to face barriers in
their quest for advancement. Nowhere
is this more evident than in the board
room, where men continue to occupy
the vast majority of board seats of
Fortune 100 companies - approximately
83 percent, compared to 17 percent for
women.

In 2006, Calvert initiated a survey of the


corporate diversity practices of the 636
companies in the Calvert Social Index
reveals that the majority of companies
have much yet to accomplish in
developing a comprehensive diversity
strategy; in fact, not a single company
earned a perfect score in this report's
analysis.

Rather than focusing exclusively on


diversity leaders, Calvert's diversity
ratings identify leaders, average
performers, and laggards, while
providing companies a road map that
can guide them as they seek to identify
and address gaps in their own internal
practices.

54 www.tbl.com.pk
Key Findings the importance of board policy and director selection
In evaluating the companies' diversity and have at least one criteria-represent areas where
diversity practices, ten indicators woman and/or minority on Calvert has been focusing its
were considered, including: Equal their board, a disappointing diversity advocacy over the
Employment Opportunity (EEO) 62 percent demonstrate no past five to ten years.
Policy, Internal Diversity evidence of women and/or
Initiatives, External Diversity minorities in their top five Performance varies by sector.
Initiatives, Scope of Diversity highest paid positions - On average, companies in the
Initiatives, Family-friendly positions that are most often technology sector performed
Benefits, EEO-1 Disclosure, the pipeline from which the best, closely followed by
Highest Paid Executives, Board future directors are chosen. companies in the consumer,
Diversity, Director Selection cyclical sector. Companies in
Criteria, and Overall Corporate Despite significant room for the energy sector, on average,
Commitment. The analysis improvement, innovation significantly underperformed
reveals the following key and creativity abound. the rest of our rated compa-
findings: Diversity leaders in particular nies.

Increased disclosure is need-


ed. Poor disclosure on a num-
ber of indicators hindered our
ability to fully assess and por-
tray women and minority
representation at various lev-
els of the workplace, as well
as our ability to assess the
quality of certain diversity
initiatives.

- EEO-1 disclosure is the


worst performing indica-
tor, with 93 percent of
companies lacking any
public EEO-1 disclosure.
This is truly disappoint-
ing, as disclosure of
detailed demographic are demonstrating innovation Market cap matters - at least
data is critical to demon- in leveraging employee diver- in most instances. Not sur-
strating how successfully sity to reach out to new prisingly the higher the mar-
women and minorities are demographic and geographic ket capitalization of the com-
advancing throughout a markets and are evidencing pany, the better its perform-
company's ranks, and unique approaches to recruit- ance, at least on nine of the
identifying potential ment and outreach, among ten indicators, the exception
weaknesses in diversity other diversity practices. being the five highest paid
initiatives that may be executives.
preventing them from Corporate commitment is the
moving up the pipeline. X factor. Top scores in corpo-
- Overall disclosure of rate commitment translate to The survey reveals that the major-
internal and external higher scores in the nine other ity of companies are not currently
diversity initiatives indicators, demonstrating a providing the wealth of informa-
remains weak, with 48 strong commitment to inclu- tion investors need. With the
percent of companies sive EEO policies, a variety of increasing importance of diversity
scoring zero on these indi- diversity initiatives and fami- in the workplace and market-
cators. ly-friendly benefits, and exec- place, investors expect far greater
utive and board level repre- disclosure from companies in
A disconnect remains sentation. order to understand their capacity
between diversity on the to fully manage both the risks and
board and in the executive Advocacy makes a differ- opportunities inherent in operat-
suite. While 83 percent of ence. Two of the best per- ing in our increasingly global
rated companies understand forming indicators - EEO economy and society.

tbl nov-dec 08 55
ance by honestly reflecting the 9) Director Selection Criteria
Methodology landscape of current corporate 53 percent of rated compa-
The Calvert Social Index is a performance and providing a nies had some mention of
broad-based, rigorously con- road map that can guide compa- diversity in director selec-
structed benchmark for meas- nies as they seek to identify and tion criteria.
uring the performance of address gaps in diversity policies,
large, U.S.-based sustainable programs, and performance. 10) Overall Corporate
and responsible companies. Commitment
The Index measures the per- 1) Equal Employment 28 percent of rated compa-
formance of those companies Opportunity (EEO) Policy nies demonstrate an over-
that meet the social invest- 66 percent of rated compa- all corporate commitment
ment criteria selected from nies support EEO policies to diversity.
the universe of approximately inclusive of sexual orienta-
the 1,000 largest companies in tion. Conclusion
the U.S., represented by Significant opportunities remain
stocks listed on the NySE and 2) Internal Diversity for all companies in the Calvert
NASDAQ and AMEX (not Initiatives Social Index to improve their
including closed-end mutual 37 percent of rated compa- diversity practices, particularly
funds, ADRs, REITS and non- nies offer training/devel- regarding increased disclosure of
common shares). For this opment and/or mentor- existing diversity policies, pro-
analysis, a snapshot of the ing/Employee Resource grammes, and performance.
Index as of September 21, Group (ERG) programmes. Greater disclosure is essential to
2007 was used. further progress on diversity.
3) External Diversity Once companies have reviewed
How We Obtain the Initiatives and reported on current diversity
Information 43 percent of rated compa- practices, they can use this report-
We base our analysis and nies offer recruitment/out- ing to identify areas of opportuni-
research on a number of pub- reach and/or supplier ty and risk and in turn set man-
lic sources, including compa- diversity programmes. ageable, measurable goals to
ny websites, SEC filings, cor- address these areas.
porate social responsibility 4) Scope of Diversity
and sustainability reports, Initiatives Employees should be recruited,
and direct feedback from 70 percent of rated compa- hired, promoted, and retained
companies. We also use third- nies disclose no evidence based on competency, not chro-
party sources such as of diversity programmes mosomes or the colour of their
Diversity Inc., Working targeting one or more skin. Their should be a level play-
Mother, and Human Rights groups ing field, where merit and hard
Campaign Foundation's work - not bias and stereotype -
Corporate Equality Index. 5) Family-friendly Benefits are what count in workplace
59 percent of rated compa- opportunities. Companies that
nies offer at least one fami- fully embrace this challenge and
Examining the 10 Key Indicators ly-friendly benefit. commit to providing a fair and
Rated companies scored across equitable working environment
the entire spectrum of our 6) EEO-1 Disclosure will recognize gains in both the
Diversity Ratings scale. Most 93 percent of rated compa- workplace and marketplace.
companies performed at the bot- nies have no EEO-1
tom half, and only 3 percent of Disclosure. Note
the companies demonstrated
excellent diversity performance. 7) Highest Paid Executives
This survey has been tailored specifically
for tbl and is a copyright of Calvert.
While only nine companies 62 percent of rated compa- To read complete survey, please visit
showed no public commitment to nies had no women or
http://www.calvert.com/pdf/CorporateDivers
ity2008.pdf
diversity, all companies have minorities in their five
room to improve. highest paid offices.
Rather than weakening our indi- 8) Board Diversity
cators to compensate for the lack- 83 percent of rated compa-
luster performance of the majority nies had at least one
of rated companies, we hope to woman and/or minority
raise the bar of diversity perform- on their Board of Directors.

56 www.tbl.com.pk
crossword

CROSSWORD
Across
1. What it’s all about! At least in the world of tbl
2. If I was as strong as your ability to account, your
organization would exist at a higher plane
altogether
4. This tbl issue’s current thematic focus!
6. Not the indecent kind. Just so public knows what
you’ve been up to in areas that do happen to
concern them
8. Do we really need all that talking?
11. An official raid on your company’s existence
13. The skewed concept that ever-expanding consump-
tion of material goods is advantageous to - any-
thing at all under the sun?
15. A system of values we all like to think we live by
16. Not the kind from a fresh green apple, but the one
the world’s in right now
17. Without these, how would we know we had quan-
tifiable success?

Down
1. Think of them as one among a group of many
stakeholders, but those that happen to hold the
strings to some of your purses
3. The spirit of which is what keeps all economies
fuelled
5. More with less (this was part of tbl’s third issue’s
title)
7. This sometimes translates into unbridled profiteer-
ing, if there isn’t a robust governance mechanism
in place
9. If you take me literally, your attire might be rather
objectionable but without me, governance doesn’t
mean anything to the public
10. If you’re on the cutting edge, you’re bound to have
some up your sleeve
12. By the bureaucracy, for the common people
14. One who muses in tbl

tbl Issue 5 Crossword Hints


Across
1. A situation favourable for attainment of a goal 5. ...Of change
7. Too many of these, but it is all for their sake 11. To enable or permit
13. What we must do to keep everyone on board
16. Make more of this, to do more
17. The effort to increase the well-being of humankind
18. Without this function, your CSR may go wild

Down
2. Bottomlines corporate citizens usually have
3. A person or group that has an investment, share etc
4. Exercising authority
6. Social and cultural forces that shape the life of a person
7. The difference between ethical and non ethical returns
8. Power derived from the force or energy of moving water
9. Combination or interaction of social and economic factors
10. To keep up or keep going, as an action or process
12. To treat or process so as to make suitable for reuse
14. Save it, to save yourself
Think you got it? Tell us at feedforward@tbl.com.pk
15. The only CSR magazine in Pakistan
and see what surprises we have in store for you!

tbl nov-dec 08 57
model for urban development

sustainable cities:
a model for the future
by kurt archer
for tbl

I
n October 2008, the Foreign Policy Magazine of the near future. So if design plays such an important
Washington D.C. published a list of the most role in how we make certain things run in a certain
global cities in terms of business activity, human way, the same can be true for cities.
capital, access to information, cultural identity and
political engagement. In this list, the city of Karachi So What Does a Sustainable City Look Like?
was ranked number 57 out of a total of 60 cities In 2007, e2 design shot a PBS documentary on
reviewed. In an embarrassing communications error, Enrique Peñalosa, the former mayor of Bogota,
officials mistook the rankings of the 'mayor of the Colombia from 1999-2001, as a best case practice for
moment' as referring to Syed Mustafa Kamal of urban transformation. The film, titled 'Bogota:
Karachi as the number 2 mayor in the world. For Building a Sustainable City' is narrated by Brad Pitt
many this was joyous news, until the mistake was (it just got steamier) and goes through the process of
uncovered. explaining the achievements and challenges that
Bogota faced in becoming more sustainable.
This mishap has brought a lot of attention to
Karachi's current development plans, and although Bogota, like many developing countries was faced
progress is underway, many citizens are not happy with the problem of rapid population growth, most-
with the way things are, or are moving towards. ly due to urbanization. This led to ineffective infra-
Lahore, Pakistan's second largest city is not far structure for many parts of the city, which was con-
behind on public discontent with how things are nected to rising crime rates. Overall, Bogota's quality
run. The good news is that neither of these two cities of life was pretty low.
are alone in facing these issues.
Key Elements for Building a Sustainable City:
All over the world, developing countries' cities Vision and Leadership
struggle to meet the gross demands of urbanization In the words of Peñalosa, "I've never known a city
and rapid expansion. Little has prepared them to where their people hated it so much."
manage such growth, and the results are higher than
normal crime rates; high levels of pollution leading What was lacking in the city was vision and leader-
to an increased risk of respiratory disease, cancer ship. Peñalosa was the man who had both - the
and skin problems; long lines of traffic jams, noise vision and leadership - for his city. His philosophy
pollution and an infrastructure that clearly separates was simple, sustainable design equates to social jus-
the economic classes. tice so he looked upon the cities infrastructure and
thought to himself: "Like fish need to swim, people
Could it be that all of these are caused by poor need to walk; not to survive, but to be happy"
design management during the last forty or more
years when Karachi and Lahore have faced their Hounded by design plans to build overpasses and
biggest population growth? widen highways, Peñalosa couldn't justify spending
such exuberant amounts of money to benefit only
To draw an example of this: if a plane was poorly the top 15 percent of the city, so he decided to focus
designed, would it fly? It might fly, but chances are his efforts on the majority of the citizens where he
much higher that it will crash - if not now, then in suspected the result would trickle up to a better

58 www.tbl.com.pk
quality of life for everyone, even at the top of the roads themselves to include bigger sidewalks, and to
economic pyramid. remove cars in general from most sidewalks, making
these areas more walkable.
As Peñalosa commenced his journey to create a sus-
tainable design, he faced some challenges, which he The backlash came from the business owners who
successfully overcame. feared that the cut to vehicle traffic would affect
their business. For some it was true that vehicle
Design Challenge #1 access resulted in loss of clientele.
Peñalosa's first design challenge was to transform
the thinking that cities are for cars, to cities are for The challenge, says Peñalosa, was in improper nego-
people. tiations with the businesses in the area to get their
buy-in to the vision. Many neighbourhoods were
He did this by spending money in lower income transformed and businesses adjusted to the change
areas to build parks and sidewalks. He shut down a in clientele by appealing to more of the walking
major road artery in the city for 8 hours on a Sunday pedestrians that rose in the area instead. But it
afternoon so pedestrians could walk, cycle or come became a very unpopular a move. As a result, the
together for various reasons. This now attracts over opposition party used it to win back a majority seats
a million people who come out to enjoy the day and in the next election.
socialize. This move alone has been credited with
lowering the crime rate by over 70 percent over ten However the results are bearing fruit now. Eight
years, simply by making areas of the city more years later, and more than ever, Colombians look
accessible and more social. back to Peñalosa as a hero for what he did for the
city.
Design Challenge # 2
The next task Peñalosa tackled was to create a public A Successful Model: Bogota's Urban
transport system for the city to replace the current Transformation
one. Peñalosa now travels to various countries in the
world to share his success story of urban transfor-
The problem with the current transport system was mation and has advised cities such as Cape Town,
that it was not very safe for the average commuter Denver, Berkeley, Seattle, Melbourne, and Sao
due to non-existent policies and standards, so typi- Paulo. He has been featured by The New York
cally only the lower economic classes would use it, Times, Herald Tribune, PBS Television, BBC and
out of necessity. many others for his stewardship of urban develop-
ment.
The transport industry was also run by a mafia,
which would do anything, including shut the entire On September 19, 2008 The LUMS School of Law
city down in a strike if they so chose. Peñalosa then and Policy invited Mr. Peñalosa to give a talk to the
decided to bring the mafia into the deal and give students and public about his experience, and how it
them control and input into the system as long as can be applied to the Pakistani reality. The talk must
they adhered to standards and policies set by the have been influential to the audience because on
government. December 2, 2008, the Provincial government of
Punjab announced that it is going to launch a new
This now means that the government has full access transport company called the LTC (jazzy acronym
to control emission standards of the buses, and to baptism, eh…?), which will include all other trans-
ensure safety measures are enacted to protect citi- port unions in the city in a move to bring up the
zens, thus returning the trust of the system to the cities overall effectiveness in transportation.
higher-class commuters - those with choices.
The bad news, however is that Mustafa Kamal from
Real Game: New Name Karachi had other priorities and declined to meet
One strategy that Peñalosa says worked well was to with Mr. Peñalosa during this visit.
call the new transport system something other than
a 'bus' because of its old associations with safety; the
new transport system is called the Transmilenio
(Trans Millennium) after the fact that it was intro- About the Writer
duced as we shifted from the 20th to 21st century.
Kurt Archer originates in Canada and lived in Karachi, Pakistan for two
years where he established international internship programmes for both
Design Challenge # 3 AIESEC and the Aga Khan University. He is now on an eco-travel tour of
The third task, which ended up being more of a Asia where he aims to share his experience in working with and learning
about the top sustainability solutions in Asia.
challenge than an achievement was to transform the

tbl nov-dec 08 59
musings

yours humbly
by praetor
for tbl

G
ood governance at the nation-state level is and interaction, like sensitivity, understanding and
measured in a variety of ways, with research even basic courtesy. Companies which lack these
based rankings by independent agencies attributes will sooner or later have serious issues
being a popular methodology. And so you have the with their stakeholder groups.
Corruption Index, Ease of Doing Business Ranking
and so forth. Good governance is seen as being inte- If, for example, there was an arrogance measure-
gral to economic growth, the eradication of poverty ment tool, you would find that many highly
and hunger and sustainable development. successful companies in financial terms are also high
on arrogance, which permeates into the day to day
Corporate good governance on the other hand has behaviour of their employees. Is then arrogance a
as yet no universally practiced measurement tool, pre-requisite of financial success? Or is it the
although there are efforts under way to have nations inevitable outcome of such success? A worthy
agree to quickly adopt the IAS - International question to ponder over! What is sure is that
Accounting Standards - as their accounting stan- arrogance one day could very well spell the death
dard. This move will make it easy to compare the knell for these successful companies and we have
performance of corporations, in an industry, across plenty of examples on hand to support this belief.
countries.
Examining arrogance at an international level, there
At the core of corporate good governance are of seems to be an east-west geographical divide, with
course two inter-related issues - transparency and Pakistan on the dividing line. Are we not arrogant
accountability. Elsewhere in this issue of TBL are as a nation? But go east from Pakistan and the
undoubtedly sufficient explanations of what corpo- arrogance of the general public sharply reduces.
rate good governance is, why it is needed and what First stop India and you have the humble greeting of
companies do to enact it. Praetor will therefore not submissive folded hands that indicate a lack of arro-
examine these facets, but as usual, will comment on gance. Go further east, into Malaysia or Thailand
the more metaphysical manifestations. and the level of humility rises even further. No one
seems to be arrogant and everyone shows great
Corporate good governance is expected to result in a courtesy to others in daily life. On the other hand,
company's growth and longevity. However growth go west from Pakistan and arrogance rises in the
alone cannot be the yardstick or the 'proof' if you Middle East. Keep going west and at a nation-gov-
will, of corporate good governance. Otherwise we ernment level at least, the arrogance perhaps peaks
would not have had the Enrons, Worldcoms, in the United States, with this superpower con-
Lehmann Brothers' of this world collapsing in spite vinced it can walk into and take over any country on
of great growth over the years. Post-mortems of this planet.
these and similar other corporate failures have
brought out a whole set of reasons why these mega Coming back to corporate good governance, one
entities went under; corruption and malpractices would really like to see major companies introduce
being at the fore. policies and practices that cultivate positive values
in their employees, besides taking measures to
But there is more. Something less tangible and enhance productivity and performance. If corporate
auditable than say corruption. And that is what you arrogance is controlled and the bigger you are the
can call ethos or culture. An integral goal of corpo- humbler you become, then surely your longevity is
rate good governance has to be to build a company assured, for the simple reason that you will be liked
wide ethos of the finer qualities of human behaviour and trusted more.

60 www.tbl.com.pk