Wednesday, November 21, 2007

Companies need expert advice in CSR programs

At a training session on social corporate responsibility (CSR), a trainer asked participants to ponder over how they would spend Rp 500 million from a company to meet the requirements of a new law that obliges limited liability companies, particularly those in the natural resources sector, to conduct CSR programs.

New to the CSR idea, most of the participants suggested buying food for street children, orphanages and nursing homes. Certainly, most of them thought that CSR translated into short-term charity work for the sake of charity itself or to comply with the new law. It is not unusual to come across such an erroneous idea among boards of directors or commissioners of various companies. The in-house public relations departments in those companies are often quick in spending the money and inviting the press to ceremonies where donations are handed over to needy parties.

Here the role of CSR consultants or specialists, whether from among the staff or an external consulting agency, is very critical in explaining what CSR is all about. It is the role and the task of the CSR specialist to advise companies about a solid, comprehensive and effective CSR program. Their role encompasses coaching companies to understand and identify their key stakeholders and to formulate the vision, mission and short-term and long-term goals of the companies' CSR program. Further down the line it includes guiding the implementation, monitoring and evaluation of the CSR programs, including measuring the program's deliverables and identifying areas for improvement.

CSR consultants or specialists have a critical role in opening the eyes of many corporations' boards of directors and commissioners that CSR is not just doing good for its own sake or for the sake of meeting legal obligations. A good CSR program is part and parcel of boosting the company's bottom line. Corporations need to be made aware that implementing a CSR program is actually working for the interests of the corporations themselves. This may sound selfish but nobody denies the fact that corporations are not charitable non-profit institutions.

Therefore, there is nothing to be ashamed of in helping others for the sake of furthering one's own interests as long as such assistance benefits those who are being assisted in a real and effective way. There is no need to pretend that spending money on CSR is an act of altruism. With this idea in mind, the CSR consultants or specialists can start working together with the corporations to engage their stakeholders in developing the CSR program. Stakeholders include all parties directly or indirectly affected by the company's operation.

The stakeholders certainly include the company's own employees, communities in the company's area of operations, and its chain of suppliers, government with its own programs and concerns, and even the non-governmental organizations (NGO) concerned with the environment and/or people's empowerment.

Partnerships with stakeholders such as NGOs, university agencies and relevant government institutions can be very critical to the process and success of a CSR program. In collaboration with CSR specialists and stakeholders, the company will be able to identify the short-term and long-term deliverables of the CSR program, which should somehow go hand in hand with the corporate objectives. But a good CSR program does not stop here since it will not reach its corporate objectives if it is not effectively communicated to the stakeholders. It is in effectively communicating this program that companies truly need professional advice.

Communication is not limited to press releases and coverage of the launching, updating the progress and success of the CSR programs but also in designing and writing a good and transparent sustainability report. Nowadays, the sustainability report that a company publishes annually has become an increasingly important means of corporate communications for stakeholders. A good sustainability report transparently discloses corporate accountability in meeting its economic, environmental and social obligations. These three aspects are known as the Triple Bottom Line.

In Indonesia, winning the Indonesia Sustainability Report Award (ISRA) boosts a company's reputation among its stakeholders. The ISRA is issued by the Indonesian Accountants Association in collaboration with the Stock Market Supervisory Agency, the Jakarta Stock Exchange and the State Ministry for the Environment.

Winning such a reward will have a positive impact on the corporate bottom line as shown by the Edelman Stakeholder Research 2007. Operating in offices throughout the world, this public relations firm conducts this survey annually in Asian countries, including China, Hong Kong, India, Singapore, Indonesia, Korea and Australia. The Stakeholder Study shows that Asians are starting to appreciate socially responsible companies.

When asked about what they are inclined to do when they consider a company to be socially responsible, 44 percent of them said they would purchase the company's products or services, 14 percent said they would recommend the products and services to others, 12 percent said they would invest in them or buy their stock, 8 percent said they would pay a premium for the company's products or services, while 8 percent said they would do business with the company.

Interestingly, 5 percent of the people said they would forgive the company for occasional blunders, another 5 percent said they would work for such a company, and 2 percent of them said they would forgive such a company for inferior quality products or services. For Indonesian companies, such findings may wake them up to the fact that such a trend among stakeholders is approaching. Without the expert advice of CSR consultants or specialists and the implementation of good CSR programs and CSR reporting, they run the risk of being left behind. (Rudijanto)

The Jakarta Post, November 21, 2007

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