Wednesday, November 21, 2007

Leadership, involvement, communication key to CSR

CSR has become one of the biggest corporate fads in Indonesia, and armies of CSR consultants have been thriving lately, capitalizing on the trend. Nevertheless, to some, CSR remains contested terrain, though the majority believe that CSR has become the mainstream business philosophy of today.

Back to the basic thinking underlying CSR, which is the concept that a corporation' responsibilities are to all its stakeholders, nowadays more and more CEOs realize that companies must engage in issues that their stakeholders care most about. Conceptually, the long-term interests of business are best served when its profitability and growth are accomplished alongside the development of communities, the protection and sustainability of the environment and the improvement of people's quality of life. The big question is, of course, how to go about it.

Observation of CSR best practices (in Asian countries and in Indonesia in particular) reveals the following:

Address a relevant issue and provide a business case
No business can solve all of society's problems, or bear the cost of doing so. Instead, each company must select issues that intersect with its particular business. The essential test that should guide CSR is not only whether a cause is worthy but whether it presents an opportunity to create shared value - that is, a meaningful benefit for society that is also valuable to the business (doing good and doing well). An example is an integrated health promotion program initiated by a company producing personal care products that promotes a healthy lifestyle for community members and simultaneously supports its brands' reputation.

A flour producer empowers noodle-maker SMEs through training, financial and marketing support. Another example is an integrated farming system that aims to create economically self reliant communities and provide an alternative source of income to illegal logging, initiated by a pulp and paper producer. And a popular best practice conducted by many companies in the Asian region is "greening the supply chain".

Involve relevant stakeholders as partners
To demonstrate responsibility to stakeholders, involving them as partners in CSR programs to capture the spirit of sharing is the best strategy. Smart companies realize that building partnerships with relevant stakeholders results in synergy, which in turn adds value to society. Moreover, by being involved in partnerships, stakeholders will also take ownership of the program, hence success is better secured. An example is the Surabaya Environmental Program in 13 villages, the objective of which is to improve the environmental condition by changing the community's paradigm on environmental issues, especially waste management and greening, using the bottom-up approach.

This involves the government sanitation office, a state university, NGOs and the mass media. A beverage company that is very much into supporting education by providing a good number of learning centers in Indonesia involved not only local government officials and NGOs, but also invited the public to not only become the program's beneficiaries but also active players for community learning.

Communicate well
CSR means different things to different people, and in Indonesia we can say that understanding of CSR is still poor and patchy. There is always the perception that CSR is just a marketing gimmick, or undertaken by a company as corporate greenwashing. Effective communication with various stakeholders is therefore of paramount importance. CSR is not only about doing good and doing well; CSR is also about doing good and telling it well!

Leadership is critical. Business leaders play a central role in championing CSR in ways that are consistent with the company's principles, values and purposes and are responsive to the expectations of its various stakeholders. The CEO and senior management should assume responsibility by acting as champions in pushing forward the CSR goals and agenda, support and commit company time and resources for it. It does mean a lot to have a CEO wholeheartedly say: "CSR is a pillar of our business," doesn't it?

Corporations may get inspiration from the above tips. However, for any corporation, strategy must go beyond best practices. It is about choosing a unique positiondoing things differently from competitors to better address a relevant issue or stakeholder concern. (Chrysanti Hasibuan-Sedyono)

The Jakarta Post, November 21, 2007

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