EVALUATION OF THE STATE OF CSR
IN PAKISTANI COMPANIES
Advisor: Sir Omer Aziz Babar
Group Members:
Ayesha Arshad
Farhan Munawar
Hina Bukhari
Sarfaraz Nawaz
Ujala Aftab Wyne
07-0392
07-0388
07-0387
07-0437
07-0395
Date :3rd June .2011
FAST School of Business
National University of Computer & Emerging Sciences
ACKNOWLEDGEMENTS
First of all, we would like to thank Allah Almighty for His Blessings and Mercy and then our
parents for putting up with the long hours we had to spend in the University (FAST) and
providing us with the resources that were needed to do justice with the project. We wish to
express our sincere gratitude to Ms. Ambreen Waheed, CEO of Responsible Business Initiative
and Sir Omer Aziz Babar, our advisor for their direction, assistance, and guidance. We thank Sir
Ahmad Qayyum and Ms. Fatima Saman for rendering their help during the period of our project
work. And also we are grateful to the companies’ representatives for their kind co-operation and
precious time in filling the questionnaires and giving interviews for our research. Last but not
least we wish to avail ourselves of this opportunity and express a sense of gratitude and love to
our friends for their moral support.
2
Table of Contents
ACKNOWLEDGEMENTS ................................................................................................................................. 2
Table of Contents .......................................................................................................................................... 3
List of Figures and Tables .............................................................................................................................. 8
List of Abbreviations ..................................................................................................................................... 9
SUMMARY ................................................................................................................................................... 10
1. INTRODUCTION TO CSR .......................................................................................................................... 12
1.1 Key Drivers for CSR are: .................................................................................................................... 13
1.2 Is CSR the same as Business Ethics?.................................................................................................. 14
1.3 A Summary of Free Market View ...................................................................................................... 15
1.4 The Free Market Case against CSR.................................................................................................... 15
1.5 The CSR View..................................................................................................................................... 16
1.6 Arguments for Socially Responsible Organization’s Behavior .......................................................... 17
1.7 Theories Underpinning CSR .............................................................................................................. 18
1.7.1 Social contract theory ................................................................................................................ 18
1.7.2 Instrumental theory ................................................................................................................... 19
1.7.3 Legitimacy Theory ...................................................................................................................... 19
1.7.4 Stakeholder theory .................................................................................................................... 20
1.8 Perspective of Organizations in Pakistan .......................................................................................... 21
1.9 CSR and Islam .................................................................................................................................... 22
1.11 Benefits of CSR A Process for Value Creation ................................................................................. 23
Figure 1 ................................................................................................................................................... 23
Process for Value Creation ...................................................................................................................... 23
1.11.1 Stronger Financial Performance and Profitability.................................................................... 24
1.11.2 Improved Relations with the Investment Community and Better Access to Capital .............. 24
1.11.3 Enhanced Employee Relations, Productivity and Innovation .................................................. 25
1.11.4 Stronger Relations within Communities through Stakeholder Engagement ........................... 25
1.11.5 Improved Reputation and Branding ........................................................................................ 26
1.12 A Word on CSR as an Investment ................................................................................................... 26
2. METHODOLOGY ...................................................................................................................................... 28
3
Figure 2 ................................................................................................................................................... 29
Four Steps: Thought to Action ................................................................................................................ 29
Perception: .............................................................................................................................................. 29
Preparation: ............................................................................................................................................ 29
Practice: .................................................................................................................................................. 30
Performance: .......................................................................................................................................... 30
Figure 3 ................................................................................................................................................... 31
Responsible Business Framework ........................................................................................................... 31
Figure 4 ................................................................................................................................................... 31
RBF Cube ................................................................................................................................................. 31
2.1 RBF Six Pillars and Results of Non-Compliance: ................................................................................ 32
2.1.1 Pillar One: Governance and Management................................................................................. 32
2.1.2 Pillar Two: Principles and Values ............................................................................................... 34
2.1.3 Pillar Three: Compliance and Disclosure.................................................................................... 36
Example ............................................................................................................................................... 38
2.1.4 RBF Pillar 4: Stakeholder Involvement and Social Investment .................................................. 38
Stakeholders and Stakeholders........................................................................................................... 38
Example .............................................................................................................................................. 40
Stakeholders Drive Social Capital ........................................................................................................ 42
Example .............................................................................................................................................. 42
2.1.5 Pillar Five: Product Integrity and Consumer Focus .................................................................... 43
Product Integrity ............................................................................................................................. 43
Example .............................................................................................................................................. 44
Customer Focus............................................................................................................................... 45
Claims versus Performance ............................................................................................................. 45
2.1.6 Pillar Six: Financial Viability and Capitalization .......................................................................... 47
3. ANALYSIS OF COMPANIES BASED ON RBF .............................................................................................. 48
3.1 DESCON Engineering Ltd: .................................................................................................................. 48
Vision................................................................................................................................................... 48
3.1.1 State of CSR at DESCON ............................................................................................................. 49
Governance and Management ........................................................................................................... 49
Principles and Values .......................................................................................................................... 49
4
Compliance and Disclosure ................................................................................................................. 50
Stakeholder Involvement and Social Investment ............................................................................... 50
Product Integrity and Consumer Focus .............................................................................................. 51
Financial Viability and Capitalization .................................................................................................. 51
Recommendations .............................................................................................................................. 51
3.2 D.G. Khan Cement Company ............................................................................................................. 52
3.2.1 State of CSR at DG Cement ........................................................................................................ 53
Governance and Management ........................................................................................................... 54
Principles and Values .......................................................................................................................... 54
Compliance and Disclosure ................................................................................................................. 54
Stakeholder Involvement and Social Investment ............................................................................... 55
Product Integrity and Consumer Focus .............................................................................................. 55
Financial viability and Capitalization ................................................................................................... 55
Recommendations .............................................................................................................................. 56
3.3 The Resource Group (TRG)................................................................................................................ 56
3.3.1 State of CSR at TRG ........................................................................................................................ 57
Governance and Management ........................................................................................................... 57
Principles and Values .......................................................................................................................... 57
Compliance and Disclosure ................................................................................................................. 58
Stakeholder Involvement and Social Investment ............................................................................... 58
Product Integrity and Consumer Focus .............................................................................................. 58
Financial viability and Capitalization ................................................................................................... 59
Recommendations .............................................................................................................................. 59
3.4 Pak Elektron Limited (PEL) ................................................................................................................ 60
3.4.1 State of CSR at PEL ..................................................................................................................... 61
Governance and Management ........................................................................................................... 61
Principles and Values .......................................................................................................................... 62
Compliance and Disclosure ................................................................................................................. 62
Stakeholder Involvement and Social Investment ............................................................................... 63
Product Integrity and Customer Focus ............................................................................................... 63
Financial Viability and Capitalization .................................................................................................. 63
Recommendations .............................................................................................................................. 64
5
3.5 Muslim Commercial Bank (MCB) ...................................................................................................... 65
Vision Statement ................................................................................................................................. 65
Mission Statement .............................................................................................................................. 66
Key CSR Activities ................................................................................................................................ 66
3.5.1 State of CSR at MCB ................................................................................................................... 66
Governance and Management ........................................................................................................... 66
Principles and Values .......................................................................................................................... 67
Compliance and Disclosure ................................................................................................................. 67
Stakeholder Involvement and Social Investment ............................................................................... 68
Product Integrity and Consumer Focus .............................................................................................. 68
Financial viability and Capitalization ................................................................................................... 68
Recommendations .............................................................................................................................. 69
3.6 Kohinoor Energy Limited (KEL).......................................................................................................... 70
3.6.1 State of CSR at KEL ..................................................................................................................... 70
Governance and Management ........................................................................................................... 70
Principles and Values .......................................................................................................................... 71
Compliance and Disclosure ................................................................................................................. 71
Stakeholder Involvement and Social Investment ............................................................................... 71
Product Integrity and Consumer Focus .............................................................................................. 72
Financial Viability and Capitalization .................................................................................................. 72
Recommendations .................................................................................................................................. 72
3.7 Mobilink ............................................................................................................................................ 73
Mobilinks vision: ................................................................................................................................. 73
3.7.1 State of CSR at Mobilink:............................................................................................................ 74
Governance and Management: .......................................................................................................... 74
Principles and Values .......................................................................................................................... 74
Compliance and Disclosure ................................................................................................................. 75
Stakeholder Involvement and Social Investment: .............................................................................. 75
Product Integrity and Consumer Focus .............................................................................................. 76
Financial viability and Capitalization ................................................................................................... 76
Recommendations .............................................................................................................................. 76
5. CONCLUSION ........................................................................................................................................... 78
6
6. RECOMMENDATIONS.............................................................................................................................. 79
6.1 Increase Strong Conceptual Knowledge ........................................................................................... 80
6.2 Link CSR to Competitive Advantage .................................................................................................. 80
6.3 To Increase the Effective Participation of Stakeholders ................................................................... 81
6.4 Harmonize and standardize CSR performance ................................................................................. 81
6.5 Define and Promote Clear Incentives ............................................................................................... 81
6.7 Promote CSR Projects ....................................................................................................................... 82
6.8 Dynamic National Forum .................................................................................................................. 83
6.9 Groom Future CSR Leaders ............................................................................................................... 84
7. Project Limitations .................................................................................................................................. 85
8. APPENDIX ................................................................................................................................................ 86
8.1 QUESTIONAIRRE ................................................................................................................................ 86
8.2 EXPLANATION OF TERMS ................................................................................................................. 95
9. REFERENCES ............................................................................................................................................ 99
Bibliography ............................................................................................................................................ 99
7
List of Figures and Tables
Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
Figure 7
Figure 8
Figure 9
Figure 10
Figure 11
Figure 12
Process of Value Creation
Four Steps Thought to Action
Responsible Business Framework
RBF- Cube
State of CSR at Descon
State of CSR at D G Cement
State of CSR at TRG
State of CSR at PEL
State of CSR at MCB
State of CSR at KEL
State of CSR at Mobilink
Overall Analysis
page 23
page 29
page 31
page 31
page 49
page 53
page 57
page 61
page 66
page 70
page 73
page 77
Table 1
Table 2
Summary of Company Analysis
Aggregated Analysis
page 11
page 78
8
List of Abbreviations
1
2
3
4
5
6
7
8
9
10
11
12
CSR
G&M
P &V
C &D
SI & SI
PI & CF
FV & C
AVG
TRG
PEL
MCB
KEL
Corporate Social Responsibility
Governance and Management
Principles and values
Compliance and Disclosure
Stakeholder Involvement and Social Investment
Product Integrity and Consumer Focus
Financial Viability and Capitalization
Average
The Resource Group
Pak Electron Limited
Muslim Commercial Bank
Kohinoor Energy Limited
9
SUMMARY
Corporate Social Responsibility (CSR) is generally used to describe business’s efforts to achieve
sustainable outcomes by committing to good business practices and standards. Lately, this
concept has become popular because giant corporations have evolved with extreme power and
influence on the consumers and the governments. Thus, it is extremely necessary for them to
behave responsibly in order to protect the interests of the societies as they have the ability to
affect the world to a great extent. Besides being only money making machines, the concept of
CSR forces these separate legal entities to contribute to the welfare of the society. Today
consumers, investors, governments and even employees have become more sophisticated and
more aware of good corporate behavior, or lack thereof. All of this indicates that CSR’s time has
come not only is it necessary to protect the interest of masses but it is vital for business survival.
We have mentioned in the report the cases of companies like Nike, Rooh Afza, MCI-Worldcom,
Enron etc which at some point in time failed to fulfill the criteria of responsible business and
thus had to suffer the consequences.
Many companies have vanished from the market because of the socially irresponsible manner in
which these firms were run. On the other hand, the firms which are perceived to be responsible
are taking advantage of their image and it is clear that companies considered responsible are
competing effectively against those considered less so. In UK 100% of young buyers express a
preference for ethically-sourced product, even if the company charges a premium for them,
indicating awareness about responsible business. Sales of products labeled for being
environmentally friendly have increased causing brands like Nestle to add fair-trade products to
10
their portfolios. And local companies like PEL to flaunt that there product are produced using
environmentally friendly ways.
We have selected a sample size of eight companies using non- probability sampling technique
called Convenience sampling. The companies we have selected include: Descon, PEL, D G
Cement, TRG, MCB, Mobilink and KEL. The methodology revolves around a model known as
Responsible Business Framework (RBF) which recognizes six pillars of CSR: Governance and
Management, Principles and Values, Disclosure and Compliance, Stakeholder Involvement,
Consumer and Product Focus and Financial Viability and Capitalization. For a company to be
socially responsible it should exhibit proficiency in all six pillars equally. Thus, each pillar is
measured separately for every company we have selected to analyze through a questionnaire.
This model suggests that usually four distinct steps from thought to action are required in
becoming responsible: Perception, Preparedness, Practice and Performance.
After finding the state of CSR in each company and identifying the stage in which it is operating
we have analyzed the reasons for the gap between the companies’ actual performance in CSR
with the ideal practice suggested by the model and made recommendations to each company
specifically and then in general to improve the overall state of CSR in Pakistan.
Table 1
Summary of Company Analysis
Company
DESCON
PEL
DG Cement
TRG
MCB
G&M
3
3
3
3
4
P&V
3
3
3
2
4
C&D
2
3
4
2
3
SI & SI
2
1
3
2
2
PI & CF
1
4
4
2
3
FV & C
1
1
4
2
2
Average
2
3
4
2
3
MOBILINK
3
3
3
1
4
1
3
KEL
4
4
4
2
1
1
3
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011).
Stage
Preparedness
Practice
Performance
Preparedness
Practice
Practice
Practice
11
1. INTRODUCTION TO CSR
Corporate Social Responsibility (CSR) is an obligation, beyond that required by the law and by
economics, as it is a survival issue for both firm and society in the long term. It is a continuing
commitment by business to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as well as that of the local
community and produce an overall positive impact on society at large. Thus CSR broadly
encompasses:

Conducting business in an ethical way and in the interests of the wider community

Responding positively to emerging societal priorities and expectations

A willingness to act ahead of regulatory confrontation

Balancing shareholder interests against the interests of the wider community

Being a good citizen in the community
(UBL CSR Report, 2009)
CSR’s time has come because
in the recent past giant corporations with extreme power have
emerged with the ability to influence on the consumers and the governments at a large scale. For
instance Wal-Mart annual sales alone exceed that of entire Pakistan’s economy. Thus, we can
well imagine the impact they have on the society. It is extremely necessary for them to behave
responsibly in order to protect the interests of the societies as they have the ability to affect the
world to a great extent. In US, lobbyists and special interest groups representing corporations
have mushroomed and so has their influence. The recent Supreme Court ruling of Citizens
United v. Federal Election Committee has given corporations even more power over the electoral
12
process than they have already had. They are now able fund political commercials and
documentaries to influence a campaign. This has led to the government representing corporations
more than it represents people. (what really happened.com)
And also, when companies, lack CSR not only do they harm the society but they also endanger
themselves. Many of the biggest firms in the market space have vanished due to the socially
irresponsible manner in which these firms were run. For instance, consider the decision by top
officials of the now vanished Enron Corporation to engage in business practices that put not only
them, but the entire company at risk. A short-term profit maximization mind-set without socially
oriented guidelines i.e. without CSR, is a moral issue for individual employees and more
importantly a survival issue for an organization.
Ban Ki-moon, Secretary General of the United Nations, told business leaders gathered at the
World Economic Forum in Davos, Switzerland, in January 2009 that they needed to embrace
“global co-operation and partnership on a scale never before seen” and should abandon shortterm thinking in favor of long-term solutions to climate change and other pressing global
challenges.
1.1 Key Drivers for CSR are:

Enlightened self-interest: It is about creating a synergy of ethics, a cohesive society and a
sustainable global economy where markets, labor and communities are able to function
well together. The concept also covers increased present costs in hope for long term
benefits.

Social investment: It’s related to contributing in physical infrastructure and social capital
and is increasingly seen as a necessary part of doing business.
13

Transparency and trust: Normally, businesses have low ratings of trust in public
perception. There is increasing expectation that companies will be more open, more
accountable and be prepared to report publicly on their performance in social and
environmental arenas.

Increased public expectations of business : globally companies are expected to do more
than merely provide jobs and contribute
1.2 Is CSR the same as Business Ethics?
There is clearly an overlap between CSR and business ethics, both concepts concern values,
objectives and decisions based on something other than the pursuit of profits and all socially
responsible firms must act ethically. The difference is that ethics concern individual actions
which can be assessed as right or wrong by reference to moral principles whereas CSR is about
the organization’s obligations to all stakeholders – and not just shareholders.
There are four dimensions of corporate responsibility

Economic - responsibility to earn profit for owners

Legal - responsibility to comply with the law (society’s codification of right and wrong)

Ethical - not acting just for profit but doing what is right, just and fair

Voluntary and philanthropic - promoting human welfare and goodwill

Being a good corporate citizen contributing to the community and the quality of life
14
1.3 A Summary of Free Market View
The role of business is to create wealth by providing goods and services. According to Milton
Friedman an American economist “There is one and only one social responsibility of business- to
use its resources and engage in activities designed to increase its profit so long as it stays will the
rules of the game, which is to say, engages in open and free competition, without deception or
fraud.” According to this view giving money away in activities like those mentioned above is
like imposing a tax on oneself. Similarly, the managers who are in charge of a business have no
right to give away the money of the shareholders, managers are employed to generate wealth for
the shareholders - not give it away. In the past, free markets and capitalism have been at the
centre of economic and social development and improvements in health and longevity have been
made possible by economies driven by the free market forces. The free market view proposes
that to attract quality workers incentives like better pay should be applied and this will itself lead
to a rise in standards of living and wealth creation as well. Free markets contribute to the
effective management of scarce resources. It is true that at times the market fails and therefore
some regulation is necessary to rectify the balance, but the correcting of market failures is a
matter for government - not business. Governmental regulation should be kept to a minimum
since regulation suppresses initiative and creates barrier to market entry.
1.4 The Free Market Case against CSR
Following are some important points that are against CSR from the perspective of free market
discussed above:

The only social responsibility of business is to create shareholder wealth which will
eventually result into wellbeing of the society as a whole
15

The efficient use of resources will be reduced if businesses are restricted in how they
can produce

The pursuit of social goals dilutes businesses’ primary purpose ( profit maximization)

Corporate management cannot and is unable to decide what is in the interest of the
society at large

Costs related to CSR activities will be passed on to final consumers

Economic efficiency and profits are obviously reduced

Directors have a legal obligation to manage the company in the interest of
shareholders – and not for other stakeholders

CSR behavior imposes additional costs which reduce competitiveness

CSR places unwelcome responsibilities on businesses rather than on government or
individuals
1.5 The CSR View
Accordingly following are some important points related to actual CSR view:

Businesses right to operate in a society should not be unquestionable , that is businesses
should not be allowed to operate as they wish

Dependence on the society should be recognized and considered by the managers as well
as shareholders of the businesses
16

Inputs from society and on social institutions should be integral part of business decision
making process.

There is a social contract between business and society involving mutual obligations that
society and business recognize that they have to each other
The basic premise is that business organizations have responsibility to various groups in society
(the internal and external stakeholders) and not just the owners/ shareholders. The responsibility
includes a responsibility for the natural environment, resources and society at large. It is
therefore required that business decisions should be made wider interest and not just the narrow
shareholder interest.
1.6 Arguments for Socially Responsible Organization’s Behavior

It improves the firm’s public image and has the potential of becoming a competitive
advantage

It is necessary in order to avoid excessive regulation

Socially responsible actions can lead to profitability and sustainability

Improved social environment will be beneficial to the firm

It will be attractive to some investors

It can increase employee motivation

It helps to corrects social problems caused by business

It aids the attraction and retention of staff
17

It attracts green and ethical investment

It attracts ethically conscious customers

It can lead to a reduction in costs through re-cycling

It differentiates the firm from its competitor and can be a source of competitive advantage

It can lead to increased profitability in the long run
This is the practice of acting in a way that may be costly and/or inconvenient at present but
which is believed to be best for long term interests. The term used for this purpose is
“Enlightened Self Interest” and is summed up in this quotation from Anita Roddick (founder of
the Body Shop):“Being good is good for business”
1.7 Theories Underpinning CSR
The discussion so far has described the emergence of CSR as a framework for the role of
business in society, setting standards of behavior to which companies must subscribe so as to
impact society and environment in a positive and a productive manner. This section explains
some of the major theories (other than classical view discussed above) that support the practice
of CSR.
1.7.1 Social contract theory
The central idea of the social contract theory is how to relate a corporation to society. According
to this theory, business must act in a responsible manner not only because it is in its commercial
interest to do so, but because it is part of how society implicitly expects business to operate.
Furthermore, according to the social contract paradigm, a business is regarded as a social
18
institution and should join with other social structures like the family, educational system and
religious institutions, to help enhance life and meet needs. In other words, the corporate social
contract theory holds that business and society are equal partners, each enjoying a set of rights
and having reciprocal responsibilities. There is direct and indirect mutual need between business
corporations and society. While the former requires continuous support from the latter in terms
of resources and sales, the latter might expect the former to operate in a socially responsible
manner since the corporations control huge amounts of economic and productive resources such
as technology, finances and labor power, which directly or indirectly may affect the society in
which they operate.
1.7.2 Instrumental theory
In an attempt to further legitimize the role of corporations in society, an instrumental theory has
developed CSR as a strategic tool to achieve economic objectives. The proponents of this theory
assert that the business may choose to support some social programs for reasons of good image
(public relations), competitive advantage or other strategic reasons without jeopardizing the
interests of its primary stakeholders, namely the shareholders. Proponents of this theory argue
that maintenance of a good corporate reputation through CSR initiatives may add to reputational
capital, by which companies may be profitable in the long run since market forces provide
financial incentives for perceived socially responsible behavior.
1.7.3 Legitimacy Theory
This theory on the other hand states that CSR is a response to the environmental pressures
involving social, political and economic forces. According to the theory, organizations look for a
balance between their actions and how they are perceived by outsiders and what is thought by
19
society to be appropriate. Society's perceptions of the organizations are crucial and may affect
their survival if they have breached their 'social contract'. In the event that society is not satisfied
that a firm is operating in an acceptable or legitimate manner, then society will effectively revoke
its 'contract' to continue operations .
1.7.4 Stakeholder theory
A different approach in defining and developing CSR is provided by stakeholder theory, which
has indeed become one of the most important and frequently cited theories in the literature.
According to this approach, paying attention to the needs and rights of all the stakeholders in a
business is a useful way of developing socially responsible behavior by managers. A socially
responsible organization is seen as one in which obligations to stakeholders figure prominently
in the decision-making of managers. Stakeholder theory is also an attempt to broaden the
perception that there is only one dominant interest -namely, the shareholders -in public
companies.
As the foregoing discussion shows, there is much overlap between the theories used to explain
CSR and justify it in business operations. These theories together serve as the main justifications
for CSR practices in the West. In sum, firms engage in CSR to secure their 'license to operate'
(legitimacy), whereby the firms are required to meet the interest and demand of the multiple
stakeholder groups and honor both the explicit and implicit contracts with various constituents.
As a result of honoring contracts, a company develops a reputation, which in turn secures a
competitive advantage in the market and ultimately gains long-term profitability and viability of
the firm.
20
1.8 Perspective of Organizations in Pakistan
Corporate social responsibility is represented by the contributions undertaken by companies to
society through its core business activities, its social investment and philanthropy programs and
its engagement in public policy. In recent years CSR has become a fundamental business
practice and has gained much attention from chief executives, chairmen, boards of directors and
executive management teams of larger international companies. They understand that a strong
CSR program is an essential element in achieving good business practices and effective
leadership. Companies have determined that their impact on the economic, social and
environmental landscape directly affects their relationships with stakeholders, in particular
investors, employees, customers, business partners, governments and communities.
The Pakistan context is distinct. On the one hand, there are long-standing traditions of respect for
religion, family and social networks, and high value is placed on their interdependence on each
other. Our religion and culture also bring distinct attitudes towards community social behavior
and engagement as well as support and philanthropic contributions. Governments in the region
also play distinct roles – often stronger in terms of influence on economic and social priorities.
This has resulted in the drivers for corporate citizenship being very different from those in other
regions.
Many of the large corporations in Pakistan are private, and they do not have the same public
pressures on corporate behavior that public companies in Europe and North America have for
progress on corporate social responsibility, although this is changing. Yet many of the larger
companies in Pakistan have strong localized philanthropic programs. Also, regional companies
who are engaged in supply chains of major global corporations and local affiliates of global
21
corporations from Europe and America have significant pressures and a strong business case to
develop socially responsible policies and practices within the region.
1.9 CSR and Islam
CSR does not borrow anything directly from the Islamic Teachings. The purpose of CSR is to
make this world a better place to live for all stakeholders and for the longevity and durability of
the environment around them while the objective of Islam is to guide Mankind and Jinn to the
pleasure of Allah Almighty. Islam is a ‘Deen’ and the literal meaning of the word ‘Deen’ is to
audit, to judge. This implies that the purpose of following Islamic teachings is to gain reward in
Hereafter and not to achieve worldly gains. However, CSR is rooted from ethics and is a holistic
concept so naturally its parameters overlap that of the Islamic teachings.
However, within the area of CSR it is often claimed that organized religion has played a
significant role in the development of personal values and behavior which influences many areas
of business. And also. Islam favors fair and ethical business as the best source of income. It aims
to promote mutual benefit in business interactions. Islam reinforces transparent and corruption
free written contracts, acceptable working conditions, fair exchanges for both natural resources
and human effort. It advocates “Tazkiyah”23, through active participation in this life and by
behaving ethically in the midst of the tests of this dunia (world). Muslims prove their worth to
Allah by upholding Huquq-ul-Ibad (Individual Rights) and care for society, and sharing wealth
with poor and underprivileged. Actions and decisions are judged to be ethical depending on the
intention of the individual. God is omniscient, and knows our intention completely and perfectly.
Good intentions followed by good actions are considered as acts of worship. Halal (good)
intentions cannot make haram (bad) actions halal)24. Islam allows an individual the freedom to
believeand act however he/she desires, but not at the expense of accountability and justice.
22
1.11 Benefits of CSR A Process for Value Creation
Figure 1
Process for Value Creation
(Source: Wikipedia)
The above figure shows us that how business can achieve maximum value from their spending
on CSR. At each stage the spending on CSR is shown, which has a different impact and yield to
various benefits for the business.
While there are different ways to frame the benefits because they are interrelated, they generally
include the following
1.11.1 Stronger Financial Performance and Profitability
Businesses can use CSR and corporate sustainability to produce direct benefits for the bottom
line. For example, operational efficiencies can be achieved through reducing energy and
materials as input factors for production. Wastes can also be reduced and materials can be
recycled. These sorts of actions from eco-efficiency can produce concurrent environmental and
economic benefits for the company and thereby contribute to stronger financial performance and
more positive profitability. Operational efficiencies can be achieved in other facets of CSR such
as streamlining the way that information is provided to the investment community as well as to
other stakeholders that demand increased transparency. Managing potential risks and liabilities
more effectively through CSR tools and perspectives can also reduce costs. Using corporate
responsibility and sustainability approaches within business decision-making can result not only
in reduced costs but can also lead to recognizing new market opportunities such as when new
manufacturing processes are developed that can be expanded to other plants, regions or markets.
There are various studies that have examined the relationship between CSR and corporate
financial performance and most of the evidence suggests that the links are positive.
1.11.2 Improved Relations with the Investment Community and Better Access
to Capital
The investment community has been exploring the links between corporate social responsibility
and financial performance of businesses. There is growing evidence through indices such as the
Dow Jones Group Sustainability Index (DJGSI), the FTSE4 Good indices that companies that
embrace the essential qualities of CSR generally outperform their counterparts that do not use
features of CSR. This information is being translated into action within the investment
community (e.g. with creation of funds such as Socially Responsible Investment, Domini Social
24
Equity Fund). An increasing number of mutual funds are now integrating CSR criteria into their
selection processes to screen in sounder companies and/or screen out businesses that do not meet
certain environmental or social standards. Thus, a CSR approach by a company can improve the
stature of the company in the perspective of the investment community, a company’s stock
market valuation, and its capacity to access capital from that community.
1.11.3 Enhanced Employee Relations, Productivity and Innovation
A key potential benefit from CSR initiatives involves establishing the conditions that can
contribute to increasing the commitment and motivation of employees to become more
innovative and productive. Companies that employ CSR related perspectives and tools tend to be
businesses that provide the pre-conditions for increased loyalty and commitment from
employees. These conditions can serve to help to recruit employees, retain employees, motivate
employees to develop skills, and encourage employees to pursue learning to find innovative
ways to not only reduce costs but to also spot and take advantage of new opportunities for
maximizing benefits, reduce absenteeism, and may also translate into marginally less demands
for higher wages.
1.11.4 Stronger Relations
Engagement
within
Communities
through
Stakeholder
A key feature of CSR involves the way that a company engages, involves, and collaborates with
its stakeholders including shareholders, employees, debt holders, suppliers, customers,
communities, non-governmental organizations, and governments. To the extent that stakeholder
engagement and collaboration involve maintaining an open dialogue, being prepared to form
effective partnerships, and demonstrating transparency (through measuring, accounting, and
reporting practices), the relationship between the business and the community in which it
25
operates is likely to be more credible and trustworthy. This is a potentially important benefit for
companies because it increases their "license to operate", enhances their prospects to be
supported over the longer term by the community, and improves their capacity to be more
sustainable. Companies can use stakeholder engagement to internalize society’s needs, hopes,
circumstances into their corporate views and decision-making. While there are many questions
about how far a company’s responsibilities extend into communities relative to the roles of
governments and individual citizens, there is a strong argument that CSR can effectively improve
a company’s relations with communities and thereby produce some key features that will
improve business prospects for its future
1.11.5 Improved Reputation and Branding
A potential benefit of CSR is that it can improve a company’s reputation and branding and this in
turn improves the prospects for the company to be more effective in the way that it manages
communications and marketing in efforts to attract new customers and increase market share.
CSR as a concept with various tools can help a company to position itself in the marketplace as a
company that is more responsible and more sustainable than its competitors.
1.12 A Word on CSR as an Investment
CSR can be viewed by businesses as a form of investment that helps to differentiate a company
and its goods and services.
What then is the right way to look at CSR as an investment - particularly given that it frequently
involves intangible and less quantifiable domains? The bottom line is that a prudent business
may tend to regard CSR in the same way it treats most investment decisions. It would be inclined
to use the same systematic approach to assess the anticipated benefits and related revenues
26
relative to the costs that it employs for investment proposals. A rigorous and systematic approach
to CSR investment is likely to yield the most positive results for both the business and society as
it is likely to demonstrate the most efficient allocation of resources from the perspective of both
the firm and society.
.
27
2. METHODOLOGY
We have selected a sample size of eight companies using non- probability sampling techniques:
Convenience sampling. The methodology revolves around a model known as Responsible
Business Framework (RBF) which shows a systematic approach to CSR by recognizing a set of
expected behaviors that is linked closely with responsible business. These are summarized into
six categories called the ‘Six Pillars of Responsible Business’: Governance and Management,
Principles and Values, Disclosure and Compliance, Stakeholder Involvement, Consumer and
Product Focus and Financial Viability and Capitalization. This model is internationally accepted
and renowned to measure the CSR activities and its perception of organizations. It is approved
and administered by ACCA (Globally accepted accountants body).
Each pillar represents feature that can be worked upon for making an organization more
responsible. Each of these is discussed in detail in the report.
This model suggests that usually four distinct steps from thought to action are required in
becoming responsible. These four steps or stages are the 4 Ps discussed below:
28
Figure 2
Four Steps: Thought to Action
Four Steps
PERFORMANCE
PRACTICE
PREPAREDNESS
PERCEPTION
Importance is
Understood
Specific Policies
Available
Specific Procedures
Operational
Embedded in day
to day Decisions
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011).
Perception:
Importance of Responsible Business is understood as the company reflects on its own
values and understands how these values relate to it business goals. It is a company’s
values that determine the ethical point of reference for business decisions that affect the
creation and delivery of particular products or services to customers, including
determining what is a fair profit. Common ethical values include: honesty, integrity,
dependability and sometimes altruism.
Preparation:
After realization the next step is to prepare for responsible action, which starts from using
the realized values to document company policies and procedures as written down values,
29
policies, and procedures are easy to incorporate into the system. It also involves creating
awareness and execution capacity among the staff members, and then finally to install
appropriate reporting communication systems for stakeholders.
Practice:
The top management needs to lead by example, and also make sure that policies are being
practiced by giving rewards or employing sanctions on staff members in order to
integrate these policies into all the decisions made by the company. The behavior should
coincide with the policies made.
Performance:
In this stage the company needs to demonstrate capacity for sustained responsible
behavior. It is a state where staff members and management share a clear set of values
integrated into the company’s business model without ambiguity, take decisions
according to the policies and values, spot any contrary action confidently, and take pride
in communicating their company values through words and action.
A company may not exhibit proficiency in all six pillars equally i.e. it may be stronger in one
pillar than others. But the model suggests that each pillar is equally important. Thus, each pillar
is measured separately, and a company is considered responsible only when it shows
performance in all six. After placing the six pillars against the 4-Ps, we get a grid that called the
30
Figure 3
Responsible Business Framework
Source: RBI, 2010
Figure 4
RBF Cube
Source: RBI, 2001
31
The model identifies separate checklist for each of the pillar which have transformed in form of a
questionnaire to evaluate the state of CSR in each of the companies we have selected in our
sample size. Through this questionnaire we will find in what stage of CSR each selected
company falls. We would then quantify the gap between the companies’ actual performance in
CSR with the ideal practice suggested by the model and analyze it. Afterwards we would make
suggestions and give recommendations to each of these companies on how to improve their CSR
strategy.
2.1 RBF Six Pillars and Results of Non-Compliance:
2.1.1 Pillar One: Governance and Management
Company governance and management are the face of a company. These basically means “to
steer” and “handle” respectively and spell out the job of a company decisions-makers. Decision
makers include directors and managers and they should always make those decisions that
ensure profit. And decisions must be implemented according to the culture, tradition and social
values within which the company operates.
Hence Governance comprises of Board of directors that provides the framework for business
decisions and Management comprises of people who implement these decisions at the
operational level.
Key to this governance role is the principle of accountability, which means accepting
responsibility and being answerable for the decisions affecting business. The business leaders or
managers accountability is the proportional to their seniority in an organization. The
responsibility of CEO is the greatest in terms of assuring profitability and that work is being
32
done in accordance with the law and regulations, the market and the society. When CEO signs an
annual report, he takes personal responsibility to face consequences of business decisions and
can be held accountable.
Another concept is Transparency, which is equally important as accountability. Transparency
means that the managers and CEO should not only assume responsibility but they should convey
their reasons of decisions, within and outside the company to stakeholders. This way the
employees, shareholders and consumers know what decisions are being taken by the board and
can evaluate whether he designs behind those decisions as wise and responsible or not.
Transparency can be implemented by:

Annual general meeting of shareholders

Through websites

Company newsletters

Media messages
Both, accountability and transparency measures a company’s governance and through the
policies that cater these two concepts a company can easily guarantees, a responsible governance
and management.
Example
MCI-WorldCom illustrates this well. Occurred in 2002 and was the biggest corporate collapse in
the US history. In this CEO was religious, focuses on church and his senior mangers did fraud
entries, show losses as investments, give wrong information to investors with the help of stock
33
market analyst and accountants. When this collapse occurred both, the CEO and managers were
held accountable. But as the CEO has the highest responsibility and he signed financial statement
he got more punishment. He was sentenced to 25 years in prison and his senior managers
sentenced to 5 years each. (World Com Case Study)
2.1.2 Pillar Two: Principles and Values
Principles and values are needs to be articulated in a prudent manner that are clearly understood
by all without any ambiguity, as they build trust in the eyes of the company’s customers and
critics. Thus a company should not state those claims that are not supported by evidence.
Furthermore, these values must be converted into policies and practices in order to claim a
responsible business. Decision- makers can only do this conversion process.
These values are then displayed prominently in offices as policies. And they are also reflected in
practices of company leadership. For instance, if leaders show zero tolerance for issues like
bribery mangers will find ways to do businesses without doing corrupt practices but if
company’s governance is accepting bribery mangers will do corrupt practices in their decisions
of purchasing, tax reporting etc. moreover, there should not be a contradiction between the
policies and practice as it could be harmful or even fatal for the company.
Example
A famous example of how an inconsistency between what a company claims and what it actually
does can lead to disastrous results is Arthur Andersen, which is technically still in existence but
cannot approach the market after its public humiliation and degradation and court reprimand for
being part of two of the major corporate scandals in the past. In 1913, the company was founded
on a reputation of reliability, integrity and professional excellence. By 2001, Andersen had
34
grown to 85,000 employees worldwide, with annual revenues of almost a billion dollars. This
immaculate public reputation remained unharmed regardless of a decade of internal trouble.
Then the Enron and MCI-WorldCom scandals broke, with Andersen’s name decisively
associated to their accounting misconduct or malpractices and to other well-publicized financial
misadventures at Sunbeam Inc., Asia Paper and Pulp, and the Baptist Foundation. A decade
later, even after the U.S. Supreme Court overturned a prior conviction, Andersen faces rejection
by the business community as a company that violated its own principles of integrity and had to
pay the critical price. (ENRON AND ARTHUR ANDERSEN:THE CASE OF THE CROOKED E
AND THE FALLEN A)
Another example of such breach is Taj Company, which was incorporated in 1929 and was once
known as best the publisher of the Holy Quran, well-regarded by large number Muslim
customers that trusted them with authentic reproduction of their holiest text. Unfortunately, Taj
management used this pristine reputation to attract 2.55 billion rupees in the name of the holy
Quran but utilized this money into an illegal investment scheme. The scheme targeted small
depositors predominantly, but a number of prominent institutional investors also participated.
The scheme collapsed in 1989, and Taj’s assets of 539 million rupees were found insufficient to
pay 23,090 investors. In 2004, 15 years later, the government concluded a 361 million rupee payout scheme for the neediest small investors, mostly widows and pensioners, returning merely 2040 percent of the original deposit amounts. The courts ruled Taj shares to be transferred to
uncompensated depositors, and the company was allowed to function under professional
management in order to “generate profits as a going concern”. (HASSAN NAEEM & CO)
35
2.1.3 Pillar Three: Compliance and Disclosure
There are wide range of legal requirements that are relevant to corporate compliance and
disclosure in Pakistan. In general, compliance means conforming to a rule, such as a
specification, policy, standard or law. Regulatory compliance describes the goal that corporations
or public agencies aspire to in their efforts to ensure that personnel are aware of and take steps to
comply with relevant laws and regulations.
Due to the increasing number of regulations and need for operational transparency, organizations
are increasingly adopting the use of consolidated and harmonized sets of compliance controls.
This approach is used to ensure that all necessary governance requirements can be met without
the unnecessary duplication of effort and activity from resources.
In case of business, there are a number of forms of compliance which include attaching revenue
stamps on attested documents, filing of returns on sales tax, certified quality standards or signing
disclosure statements for banking or commercial transactions. The most common form of
compliance in business world is financial reporting, because it is highly regulated under the laws
of all countries.
There are international regulations for businesses dealing with their clients overseas. They
usually require disclosure of value, origin and content and they additionally address social
responsibility, environmental safety, and even fair trade and security issues. Therefore there is a
strong need to establish a compliance system within companies, the purpose of which is to track
the operations of the organization and can generate data that can be reported according to law.
This system also helps to safeguard against fraud or misappropriation by employees as well as
managers and to avoid breach of law and safeguards against its costly results.
36
After the Enron scandal in 2001, many government world over have acted to take care of
loopholes in regulatory compliance which enabled manager to indulge into huge frauds against
their clients. The U.S. Congress passed the Sarbannes-Oxley Act in 2002 which states that
corporate leadership is now personally liable in the case of misrepresentation of corporate
compliance disclosures. A number of countries have followed suit with tighter regulatory
controls on corporate reporting for example Pakistan through the release of the Code of
Corporate Governance. This global effort reflects governments desire to regulate bodies to build
investors confidence in the face of rising lack of trust.
Product labeling is another common form of compliance. It is common law in many countries
that require the disclosure of information related to content origin and use. The most commonly
regulated products are:

Dietary supplements and food

Drugs and medicines

Cosmetics

Consumer equipment and devices
In addition to all this laws in number of countries require safety or care labels on products
specially textiles, electronics and toys. Among the articles of daily use, the most frequent
regulatory disclosure requirement is conformity labeling to the “CE” mark, followed by ecolabels. There are energy ratings and safety markings with which appliances are required to
comply.
37
International organization on standardization addresses the issue of compliance with quality and
specification to promote standardization.
Therefore it is important to consider compliance as an important aspect of business in corporate
performance as well as in product and service quality. A responsible company therefore must
understand all compliance requirements related to its business and ensure that credible disclosure
mechanisms are in place.
Example
Recently in Pakistan, there is a greater focus on compliance because Securities and Exchange
Commission and Competition Commission of Pakistan took note of corporate behavior
particularly corporate reporting and unfair trade practices. Examples of publicized cases of 2009
include:

CCP’s censure of Zong for its “8-Anna call”

Similarly U-fone for its “world’s cheapest call” advertisement (CCP terms Zong, Ufone
advertisements illegal & misleading)

Similarly CCP found 20 cement companies guilty of forming a cartel (Pakistan cement
companies fined for forming cartel)
2.1.4 RBF Pillar 4: Stakeholder Involvement and Social Investment
Stakeholders and Stakeholders
Shareholders are stakeholders in a corporation, but stakeholders are not always shareholders. A
shareholder owns part of a company through stock ownership, while a stakeholder is
38
interested in the performance of a company for reasons other than just stock appreciation.
Stakeholders could be:

employees who, without the company, would not have jobs

bondholders who would like a solid performance from the company and, therefore, a
reduced risk of default

customers who may rely on the company to provide a particular good or service

suppliers who may rely on the company to provide a consistent revenue stream
Although shareholders may be the largest stakeholders because shareholders are affected
directly by a company's performance, it has become more commonplace for additional groups to
be considered stakeholders, too.
The term stakeholder gain importance in the business community in the early 1980’s, before that
it was confined to academic debate on whom really matters to business. The shareholder has
traditionally been the center of business decision making. There importance is due to the modern
economic theory which has its roots in profit maximization; this creates an incentive for
shareholders to push the management to generate most returns at minimum cost. This keen desire
of the shareholders has changed the global business model. It is evident from the multinationals
move of shifting their production facilities to countries where wages are much lower and weak
control on implementation of financial controls, human rights, child labor and work place safety.
This has been a successful formula for maximizing profits in the last century. However from the
last two decades the press has started to high light the wrong and unethical practices of these
39
multinational, which include child labor, poor working conditions, extended working hours these
matters are unacceptable by Western workers and their law does not allow any of these.
Example
This led to the entry of the term Stakeholder into the corporate business world. The reason might
be the story about Taiwanese managers mistreating local workers in Nike’s footwear factories in
Vietnam or reports of children stitching the Adidas footballs in Sialkot, Pakistan. In the wake of
public outrage and community campaigns against the offending brands, there was a movement to
monitor the practices of multinational companies more closely in the developing world. Public
campaigns such as “Foul Ball Campaign” demanding a ban on sports products from Sialkot, and
similar other campaigns started across the world. It is important to note that Stakeholders
sentiments were reflected in Shareholders value; as a result of above mentioned issue Nike’s
share value fell sharply. Companies realized that stakeholder is becoming more and more
powerful and no amount of media image advertisements or celebrity endorsements would
distract them. (Foulball Campaign)
Therefore, the current business thinking evolved by time, the main principle may be the same of
profit maximization but companies are becoming more conscious of keeping a balance between
the relative power of various stakeholders within and outside the company. However, the role of
manager has still not changed that is being in-charge of decision making process, so the results
are affected by profit maximizing mechanisms that are attractive for the stakeholders as well as
acceptable to shareholders. In the case of small businesses the owners are managers as well, and
have much more influence to change company’s behavior towards social responsibility. On the
other hand, general stakeholders have a much more powerful role in the case of large companies
40
who need the confidence of a large consumer or stakeholder network. The share price show high
volatility when it comes to public opinion. Therefore we can successfully challenge the classical
view that a company is only answerable to shareholders. As defined, stakeholders are all those
with something to gain or lose as a result of companies activities. Governments are encouraging
stakeholders to become vocal and engaged. So we can say that shareholders are becoming more
vulnerable to stakeholders demands.
Emerging Power of Stakeholder
This power is actually an individuals or a group’s ability to introduce risk in the business plan of
the company. This power exists for both internal as well as external stakeholders. There can be
clashes between these two kinds of stakeholders when the motivation behind their specific
actions differs. For example internal stakeholders may try to find ways to maximize profits and if
those ways are against the benefits of external stakeholders they will try to resist those actions by
threats of public campaigns
Example
Coca-cola bottling unit was sealed in Kerala because there were allegations that they are using
excessive water and polluting it as well. The Indian parliament banned Coca-Cola; this had local
as well as international adverse consequences for the beverage giant. (Coca-Cola shifts Kerala
bottling unit to Orissa)
Another example of global impact is ban on Danish products by Arab Nations due to publication
of cartoons in media ridiculing Muslim beliefs. So no decision in today’s business is internal
41
anymore because of the power of social media therefore businesses must acknowledge the
emerging power of stakeholders. (The Danish Man Who Had Insulted Our Prophet (pbuh))
Stakeholders Drive Social Capital
The importance of corporate stakeholders has grown to an extent that it is difficult to separate
their influence from that of shareholders. Stakeholders have an influence on decision makers to
choose methods that are beneficial for the owners of the company as well as for the customers.
This trend of listening to stake holders will rise and it will have beneficial effect on a company’s
brand image in the mind of employees, customers and the community as a whole. This kind of
engagement with stakeholder builds social capital that is network and support for business to
draw strength from. These supports can be observed in following ways:

Availability of credit in competitive market

Workforce stability

Customer loyalty

Investor confidence
In short, the company’s goodwill is the consequence of giving importance to its stakeholders
resulting in sustainable wealth creation capacity.
Example
Target Vs Wal-Mart
Firms that are known for their corporate social responsibility can benefit from lower costs in
setting up operations, for example, they are not challenged by “not in my back yard protests”.
42
This term refers to the objections raised by people who are against plans for new developments
or projects near them, e.g., a nuclear power station. One example is Wal-Mart versus Target
where Wal-Mart often faces stiffer legal challenges when attempting to site new stores and has
been unable to enter some locations, despite costly and extended legal battles, where Target has
gained entry easily in places such as Manhattan, New York (Target vs. Wal-Mart: The Next
Phase)
2.1.5 Pillar Five: Product Integrity and Consumer Focus
Product Integrity
A company’s most visible impact on the society is through its product or service which if impart
integrity i.e. by giving customer quality performance, satisfaction, and value for money then that
product name become closely associated or synonymous with trusted companies. Thus a
company can often manufacture a product or provide a service in a way that it can become a
model of responsible business. Such a product or company guarantees itself repeat business by
gaining confidence of the society and become profitable in long term. There is a power in
product integrity that is beneficial for both, the customer who gets a quality product and the
company by making more money. Product integrity can establish a business, but a loss of it can
also cause the organization to collapse.
A product can be safely considered the reflection of a company’s perception of itself as a
corporate citizen. Swiss watches, German cars, French perfume, even Pakistani footballs are all
a reflection of their producers’ quality and integrity. Another astounding example of this is
Japan, which was once fighting to survive against established and competitive brands from
Europe and the United States. Its products were being sold at a lower price as were considered
43
inferior or of low quality than those of the West. However, with the passage of time Japanese
products came to be known for reliability, and became symbols of product integrity.
Once a
customer turns away because the product fails to perform, the damage has been caused; it is
unlikely they will ever return. It is very difficult to change his or her perception then.
Example
For instance Toyota ordered a recall of 4.3 million vehicles in response to an August 2009 fatal
accident caused by a stuck accelerator pedal. This has been followed by another recall of 2.3
million vehicles in 2010. The company’s president, Akio Toyoda, ordered extensive testing for
all models, saying: “We are grasping for salvation...Toyota has become too big and distant from
its customers”, and therefore conveying that the company was responsible for its product and
that such faults were the result of it not listening closely to customers. The repair or replacement
costs for 6.6 million vehicles mean a loss of billions of dollars. But compared to the financial
loss, Toyota has a much larger problem i.e. 40 years of stakeholder goodwill which may have
been wasted otherwise. (Toyota Recalls)
On the other hand a cold response or no response at all to product failure can destroy a business,
as in the case of Dow Corning. In 1991, it was reported that their silicon surgical implants could
cause injury and death, putting 1.5-2 million implant recipients at risk. The company’s board
declined the Business Conduct Committee’s suggestion that Dow Corning declare an immediate
suspension of the product until conclusive evidence emerged. As a result, class action litigation
by 12,000 affected individuals cost Dow Corning $4.25 billion by 1994, while the company
suffered $287 million in revenue loss. Despite its reputation as one of America’s most ethical
companies, Dow Corning ended up losing the battle for public opinion and filed for bankruptcy.
(autotrophgrowth)
44
Customer Focus
The secret of successful company is their customer orientation, for example Toyota and other
companies who have followed Japan’s model. Hey focus on customer needs closely before they
design a product. Studies disclose the method by which successful companies first win the trust
of their employees, technicians, and sales team so that internal stakeholders believe their product
is the best. Consequently, the product is sold in market is bound to satisfy the customer.
Research reveals that product integrity and customer focus complement each other. Companies
with a history of product integrity invest heavily in finding customers’ needs before designing
the product. In the service sector, companies with the highest profitability are those that put a
sound knowledge of the client to work in designing their products or service.
Claims versus Performance
Product integrity means delivering promises and also striving to promise the best that can be
delivered. Other than just product quality, an effort needs to be made to make sure that the
product is made in the most ethical way possible every step of the way.
Product Integrity means a company ensures that the product reaching the consumer is the same
as it was promised in the advertisements and other commitment statements like quality standards
etc. It is an outcome of the supply chain monitoring as well as in-house quality systems. It
encompasses a wide variety of issues like environmental and social impacts of the production
process. For example, an organization needs to pay attention to the like environment is not
damaged, harmful materials are not emitted, labour is not pressurized, technology employed is
sustainable, efficient and safe.
There are cases in which companies do not accept responsibility for poor craftsmanship, awful
45
performance and disregard customer needs and wants. Such companies have a relatively short
life. While we see responsible companies for last generation after generation, irresponsible
companies fade away just as rapidly as they appear. This indicates that there is more to product
integrity than simply customer satisfaction. There are legal penalties for misleading claims.
Example
For instance, Rooh Afza‘s label once claimed medicinal properties. When its shipment reached
United States a few decades ago, it was challenged by the U.S. Food and Drug Administration,
the agency responsible for monitoring the safety of edibles, to prove that the drink actually had
the medicinal qualities. Fortunately, the company was able to re-label the bottles without the
medicinal claims and eventually sell in the U.S. market. The alternative would have been to
submit to costly and lengthy testing to verify the labeled properties and in all likelihood pay fines
for false claims. (Understanding Government)
Enforcement of product integrity is not common in Pakistan, but with more stringent consumer
courts and the Competition Commission of Pakistan taking effective action, it is likely that in
near future companies in Pakistan will have to validate claims and promptly respond to client
complaints regarding product integrity. Moreover, strict labeling laws in the EU, United States,
and the Gulf States also influence laws in Pakistan to demand responsible product labeling to
ensure product integrity.
Product integrity means delivering promises and also striving to promise the best that can be
delivered. Other than just product quality, an effort needs to be made to make sure that the
product is made in the most ethical way possible every step of the way.
46
2.1.6 Pillar Six: Financial Viability and Capitalization
A company’s ultimate goal is shareholders wealth maximization and therefore it has to remain
profitable. But businesses fail to realize that they can maintain profitability without necessarily
extracting an unfair cost from the environment or workers.
Perhaps the most dependable benchmark of a company’s financial viability is the market itself
i.e. evaluating the sustainability of a company by the amount confidence investor’s show
regarding it. The popularity of socially responsible investment (SRI) indexes over a short period
indicates that rational people have a preference to invest in responsible companies. Moreover,
during the eight years since SRIs emerged, social investment has increased twenty times and SRI
capital value has increased in proportion, significantly in excess of traditional investments.
It is clear that companies considered responsible are competing effectively against those
considered less so. In UK 100% of young buyers express a preference for ethically-sourced
product, even if the company charges a premium for them, indicating awareness about
responsible business. Sales of products labeled for being environmentally friendly have increased
causing brands like Nestle to add fair-trade products to their portfolios. And local companies like
PEL to flaunt that there product are produced using environmentally friendly ways.
Only making profits is not enough, making profits in long-term is emphasized for corporate
success.
Prevailing wisdom shows that the break-even point for a business determines its
trajectory of success over the long term. This break-even point is determined by more than just
the ability to pay bills. Analysts, particularly those who measure sustainability indicators, look
at a company’s societal footprint to predict success. As it done by going beyond traditional
evidence (such as audited accounts and financial performance and to also statements, budgets,
47
business strategies, growth projections, etc.) look at newer indicators such as the environmental
footprint, adherence to labor laws and health and safety regulations, employee benefits, credit
ratings, and records of litigation.
3. ANALYSIS OF COMPANIES BASED ON RBF
3.1 DESCON Engineering Ltd:
The company was founded in 1977 and operates as an engineering, manufacturing, and
construction company in Pakistan. It is engages in industrial, energy, and infrastructure projects.
Provide services like project management services; engineering services, such as process, piping,
mechanical, electrical, instrumentation, and civil design; procurement services; construction
services; automation services; plant maintenance services. It also manufactures process
equipment for the oil and gas, chemical/petrochemical, power, fertilizer, tanks, cement, and
infrastructure sectors. (Company Profile)
Vision
“Our vision is to become the most competitive and dynamic knowledge-based corporation in the
world, capable of sustainable economic growth and greater social cohesion”. The core issues in
their CSR strategy are:

Compliance to core and operating value

Environment

Corporate Governance

Contribution to educational programs
48

Promoting multicultural workforce

Protecting Human Rights

Honesty and integrity (Company Profile)
3.1.1 State of CSR at DESCON
Figure 5
State of CSR at DESCON
DESCON
PERFORMANCE4
PRACTICE3
PREPAREDNESS2
PERCEPTION
1
0
G&M
P&V
C&D
SI & SI PI & CF FV & C
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011).
Governance and Management
The graph indicates that the DESCON is in “Practice Stage” as far as its Governance and
management pillar is concerned. The reason is that although the board of directors performs
regular management reviews efficient and can be held accountable for negative social and
environmental impacts of their decisions but directors fail to interact with stakeholders other than
the shareholders effectively. Moreover there are procedures that make their decisions transparent
and open but this transparency is not deeply embedded in company’s day-to-day operations. So,
the accountability aspect is followed religiously while the transparency aspects lag behind.
Principles and Values
DESCON is in “Practice Stage” of the second pillar Principles and Values. Although from
information from questionnaire suggest that the company has a clear code of conduct that
determines its core values and also has identified business principles standards such as bribery
49
policy etc but somehow they are unable to cope with UNGC 10 principle. DESCON has well
defined process to communicate Principles and Values to internal stakeholders and they review
their policies for hiring, firing, training and appraisal. They also use specific procedures at
operational level to disapprove unethical behavior.
Compliance and Disclosure
The company lies in the “Preparation stage” of Compliance and Disclosure. This shows that they
know the importance of Compliance and Disclosure and have given specific polices to their staff
for this issue as well. But haven’t done any work at operational or day to day decision level.
When we dig in questionnaire we found out that they have got certification on SA8000, iso14000
and OSHA. They also are doing projects at practice level like worker benefits, employee
benefits, health and Safety issues. But their buying decision is not based on recyclability or
energy efficiency techniques. They lag behind in waste minimization issue.
Stakeholder Involvement and Social Investment
The company lies again in the “Preparation stage” of Stakeholder Involvement and Social
Investment .they have clear cut policy that documents the importance of stakeholder involvement
in making CSR strategy and buying decision. And this policy is applicable at operational and day
to day decision as well. They use Feedback and Focus group process for external stakeholder
involvement. This feedback is then shared formally with employees and this feedback is
reflected in business plans as well. And for satisfying internal stakeholders they use awareness
session, feedback system and Grievance system. All these systems of both external and internal
stakeholder involvement are embedded at operational level and they have well placed system for
monitoring Grievance and Feedback.
50
Product Integrity and Consumer Focus
The company lies on the “Perception stage” of Product Integrity and Consumer Focus.
DESCON know the importance of Product Integrity and Consumer Focus but they haven’t made
any polices to cater this issue and neither any policy is working at operational stage. They have
no documents that mention strategies on environmentally safe products, consumer rights or
ethical marketing and advertising issues. They have clear understanding that product innovation
should be based on environmental and social concerns but haven’t made any polices for staff to
deal with these issues. Hence they lie in first stage of Product Integrity and Consumer Focus.
Financial Viability and Capitalization
The company is in the “perception stage” according to financial viability and capitalization. The
company has no awareness of SRI index neither has mechanisms to reach any benchmarks like
RC Index, FT4Good. They just understand the significance of cost effective mechanisms for
environmental compliance, ethical marketing as well supply chain verifications but employed it
practically. They don’t have any system that avoids potential “damaging events” or mitigate the
after-effects of a crisis.
Recommendations
DESCON Company has to take certain steps in order to improve its image as Corporate Social
Responsible business. The company should give specific polices to their staff regarding the
interaction of Director/Board members with stakeholders other than company shareholders and
they should also embed UNGC 10 Principle in their operational and day to day decision making
level. They should also incorporate guidelines of UNGC COP and ISAR. Both these benchmarks
can help DESCON in improving its CSR image. UNGC COP is related to human rights. Labor
51
rights and ISAR is devoted to corporate transparency, accounting issues and reliability of
corporate reports. The procurement and buying decisions of the company should be based on the
four characteristics Energy Efficiency, Recyclability, Environment, and Friendliness. This will
also boost the CSR image. In order to have more interaction with their external stakeholders they
should introduce concept of Interactive website and Survey. This will enable them to have first
hand information of the satisfaction level of external stakeholders regarding their decision
making.
The company lies in first stage i.e. “PERCEPTION stage” in last two pillars. It has to really work
hard in product integrity, consumer focus issue and in financial viability and capitalization. For
product integrity and consumer focus they should have a policy that mentions Environment safe
products and ethical marketing advertising issue. As far as financial viability and capitalization is
concerned they should have mechanism in order to evaluate financial benefits of Social
investments and Environmental investments. They should also incorporate systems to avoid
“potential damaging events” and “mitigate the after affects of a crisis” at operational level.
3.2 D.G. Khan Cement Company
D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the largest cementmanufacturing unit in Pakistan with a production capacity of 5,500 tons clinker per day. It has a
countrywide distribution network and its products are preferred on projects of national repute
both locally and internationally due to the unparallel and consistent quality. It is list on all the
Stock Exchanges of Pakistan.
52
It was established under the management control of State Cement Corporation of Pakistan
Limited (SCCP) in 1978. DGKCC started its commercial production in April 1986 with 2000
tons per day (TPD) clinker based on dry process technology. Plant & Machinery was supplied by
UBE Industries of Japan.
DG Khan Cement Co. Ltd., production processes are environment friendly and comply with the
World Bank’s environmental standards. It has been certified for “Environment Management
System” ISO 14001 by Quality Assurance Services, Australia. The company was also certified
for ISO-9002 (Quality Management System) in 1998. By achieving this landmark, DG Khan
Cement became the first and only cement factory in Pakistan certified for both ISO 9002 & ISO
14001... (D.G. Khan Cement Company Ltd)
3.2.1 State of CSR at DG Cement
Figure 6
State of CSR at D G Cement
D G Cement
5
PERFORMANCE4
PRACTICE 3
PREPAREDNESS 2
PERCEPTION1
0
G&M
P&V
C&D
SI & SI
PI & CF FV & C
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011)
53
Governance and Management
The graph indicates that they are at practice of Governance and Management CSR activities.
This means that the board conducts regular management reviews and their decisions are
transparent and open and they can be held accountable for negative social environmental impacts
of their decision but they lag in interacting with stakeholders else than company shareholders.
The company has specific policies available for operational procedures but they are not
embedded in day to day decisions.
Principles and Values
The graph show us that the company lies in practice stage for Principle and values CSR
activities. This means they have well written policies for principles and values and the
procedures are operational but are not embedded in day to day decisions. The company has spate
code of conduct and business principles standards but it is not familiar with UN GC 10 principle
standard. It also implements principles for countering bribery and corruption. The company has
well defined process to communicate Principles and Values to internal stakeholders. The
company policies are reviewed for hiring/firing and appraisal as well as training.
Compliance and Disclosure
The company lies at performance level in Compliance and Disclosure. It has strategies in place
for social equity and environment and is also familiar with the international disclosure of
frameworks and guidelines such as GRI. The company has certifications for example; ISO14000
and OSHA. The company has initiated procedures for health and safety, recycling, waste
minimization and energy efficiency.
54
Stakeholder Involvement and Social Investment
The company lies in the practice stage of Stakeholder Involvement and Social Investment
because they have got policy document which mentions the importance of stakeholder
involvement in making business decision and taking effective community initiatives. They have
formal process for external stakeholder involvement in the form of stakeholder map and
review/feedback but they do not have interactive website and they do not conduct focus groups
and surveys. The company has got communication mechanism for satisfying internal
stakeholders. They conduct awareness sessions for policy and procedures. They have well placed
system for monitoring grievance and feedback.
Product Integrity and Consumer Focus
The company lies on the performance stage of Product Integrity and Consumer Focus. The
company documents mentions strategies on consumer rights, environmentally safe products as
well as ethical marketing and advertising. The customer hotline responsible for consumer and
shareholder feedback is in the policy but not operational. The company mechanism for product
innovation and process improvement are based on social and environmental concerns.
Financial viability and Capitalization
The company is in the performance stage according to financial viability and capitalization. The
company has awareness of SRI index and has mechanisms to reach international benchmarks.
They have got cost effective mechanisms for environmental compliance ethical marketing as
well supply chain verifications. The company also has systems for avoiding potential “damaging
events” and mitigating the after-effects of a crisis.
55
DG cement is doing very well in four out of six of the pillars of CSR. It is slightly weak in
Principles &Values and Shareholder Involvement & Social Investment. These two pillars seem
to be operational and being enforced by the management but until now is not deeply embedded
in day to day operations. In order to be a socially responsible business, an organization needs to
perform proficiently in all six pillars however DG cement is near to be a socially responsible
business as aggregately it falls in the Practice Stage.
Recommendations
DG Cement needs to take certain steps to improve the level of the CSR activities in it. The
company needs to make policies operational regarding the interaction of Director/Board
members with stakeholders other than company shareholders. The company policy document
should mention the importance of shareholder involvement in the CSR strategy and should also
make an interactive website for the stakeholder involvement. At the end the company should
make its hotline/person actively responsible for accurate and prompt consumer and shareholder
feedback.
3.3 The Resource Group (TRG)
The Resource Group (TRG) Pakistan is the country’s largest provider of BPO services and the
first listed IT-enabled services company of Pakistan. It set up its operations in 1999 with 50
employees. Today, TRG Pakistan is over 1,200 employees and its team of professionals is
providing unparalleled support to Contact centre, IT services, Finance & other back office
functions. (About TRG Pakistan)
56
3.3.1 State of CSR at TRG
Figure 7
State of CSR at TRG
TRG
PERFORMANCE4
PRACTICE 3
PREPAREDNESS
2
PERCEPTION1
0
G&M
P&V
C&D
SI & SI PI & CF FV & C
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011)
Governance and Management
The company is at practice stage for the governance and management CSR activities. It means
that they have specific operational procedures for directors/board members to interact with
stakeholders other than company shareholders. The board also conducts regular management
reviews to check the progress of the company but the board decisions are not transparent and
open. That is why there is only a perception that the board can be held accountable for negative
social and environmental impacts of their decision.
Principles and Values
The company is at its preparation stage in the principle and values activities of CSR. The
company does have the understanding of the importance of code of conduct but they lack in
principle standards. Similarly the company has awareness of principles for countering bribery
and corruption but does not have any applied policy for it. The company does not review policies
and procedures to ensure values which make its lack behind and we find no specific operational
procedures by the company to improve ethical behavior.
57
Compliance and Disclosure
The company is at preparation stage in its compliance and disclosure activities of CSR because it
has only the perception of separate policy for social equity and environment but not any kind of
specific operations embedded in day to day decisions. Similarly they are familiar with the
disclosure framework and guidelines i.e. UNGC COP, but they lack in applying these guidelines
in their operations. The company works to improve Health and Safety and Waste minimization.
The procurement and buying decisions are based on friendliness but they lack in the environment
and recyclability.
Stakeholder Involvement and Social Investment
In stakeholder involvement and social investment the company is in its preparation stage which
means that it has specific policies available to all staff for it. The company policy document
mentions stakeholder involvement in CSR strategy and business decisions but lack in community
initiatives. The company has formal processes for external stakeholder involvement primarily
through survey and interactive website but they lack in focus group. It is acceptable for TRG
particularly because its network is across the globe and focus groups would cost the company a
big deal. Shareholders feedback is not shared with employees so formally and openly.
Product Integrity and Consumer Focus
The company lies in its preparation stage of product integrity and consumer focus. It has policy
for consumer and shareholders right but it is not embedded in day to day decisions. Secondly the
company has a customer hotline for consumer feedback but it is not operational and formally
taken care off. The company has awareness for product innovation based on environmental
58
concerns but it does not follow it up with specific operational procedures. In the end it also lags
behind in mechanism to demand social compliance from supply chain.
Financial viability and Capitalization
Unfortunately TRG fails to fulfill the criteria of a Socially Responsible Business as the only
pillar in which it is performing well is Governance and Management the rest are all in the
preparedness stage indicating that there are policies to support the activities but no proper
mechanism have been developed to engrave them into the organizational culture. After
considering all pillars, we conclude that TRG falls in the preparedness stage of the RBF Cube.
Unfortunately TRG fails to fulfill the criteria of a Socially Responsible Business as the only
pillar in which it is performing well is Governance and Management the rest are all in the
preparedness stage indicating that there are policies to support the activities but no proper
mechanism have been developed to engrave them into the organizational culture. After
considering all pillars, we conclude that TRG falls in the preparedness stage of the RBF Cube.
Recommendations
TRG as company requires taking certain actions to improve its image as Corporate Social
Responsible business. Firstly it has to state clearly its vision/mission/strategy mentioning code of
conduct and business principles (e.g. bribery policy). Secondly it has to well define the process
to communicate principles and values to internal stakeholders. This would allow the company to
improve its principles and values overall.
The company needs to take initiatives to improve Health and Safety measures and reduce waste
minimization. This would have a positive impact on the worker and employees. The procurement
and buying decisions of the company should be based on the four characteristics Energy
59
Efficiency, Recyclability, Environment, and Friendliness.
The policy document of the company should not only just mention the importance of the
Shareholder involvement in CSR strategy and business decisions but also be embedded in daily
operations. Secondly the company should have formal processes for external stakeholder
involvement such as stakeholder map, review feedback and surveys. And this feedback then
should be openly shared with the employees so that recognize the image of the company from an
external point of view.
The company should have documents mentioning the strategy to follow consumer rights,
environment safety product, process responsibility and ethical marketing. This would make the
company image to be known as product integrity and consumer focused. Secondly it should also
improve ways to get the feedback from the stakeholders like for example active customer
hotline. Thirdly the company can improve its product innovation and process improvement by
considering on social and environmental concerns.
3.4 Pak Elektron Limited (PEL)
PEL is the pioneer manufacturer of electrical goods in Pakistan. In 1956, the Company was set
up between Malik Brothers in technical collaboration with M/s AEG of Germany (“AEG”) to
manufacture transformers, switchgear, and electric motors. AEG exited from the venture and
sold their share of PEL to the Malik Brothers in the late 1960s, which was subsequently acquired
by the Saigol Group of Companies (“Group” or “Saigol Group”) in 1978. Until the acquisition
by the Saigol Group, PEL was solely catering to the power equipment market. The Company
60
ventured into home appliances market in 1981 after acquisition as a part of the Group’s long
term strategy of diversification.
PEL is comprised of two divisions

Power Division

Appliances Division (PEL Contents)
3.4.1 State of CSR at PEL
Figure 8
State of CSR at PEL
PEL
5
PERFORMANCE 4
PRACTICE
3
PREPAREDNESS2
PERCEPTION 1
0
G&M
P&V
C&D
SI & SI
PI & CF
FV & C
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011)
Governance and Management
Overall PEL’s Governance and Management is catering to concepts of accountability and
transparency well as the company falls in Practice stage. However, there are no effective
mechanisms in place that allow Directors/ Board members interact with stakeholders other than
company shareholders as well, and nor does it conducts regular management reviews. But
according to the information collected by the questionnaire, Board decisions are transparent and
open and it can be held accountable for negative social and environmental impacts of their
decisions.
61
Principles and Values
PEL’s vision and mission defines a clear code of conduct based on core values and also mentions
important business principle standards like bribery policy. But international principles like UN
GC 10 Principle is only said to be in theory and not in practice. Although there are processes in
place to communicate Principles and Values to internal stakeholders but these are not integrated
properly in the system. Unfortunately PEL also fails to review policies and procedures to ensure
values are consistent with Procurement, Hiring, firing and training. People with strong references
are given priority over others in hiring. Massive downsizing was carried out recently only
because owners wanted to cut costs and did not consider the fact that where would the jobless
employees go while the economic conditions of the country are not very favorable. No official
training is provided to employees and internees are also not given much consideration and thus
PEL fails to fully perform its duty towards interns and employees. There are incentives of ethical
behavior and mechanism to discourage unethical actions and employees’ track record is
monitored very closely and is taken into consideration before promotions. Hence is in the
practice stage of the Pillar ‘Principles and Values’.
Compliance and Disclosure
The strategy of the company has separate policy for social equity and environment, which are
followed as well. However, the international guidelines like UN GC COP, GRI, UNCTAD/
ISAR are in only theory and not practiced religiously. Similarly, PEL also has certifications on
SA8000, ISO4 000 but these are also not embedded in day to day decisions. While initiatives to
improve health and safety, recycling, waste minimization and energy efficiency are carried out
very seriously. But the initiatives to provide benefits to workers and improvement of working
environment only exist in books. Procurement and buying decisions have also been taken
62
irresponsibly in the recent past causing high carrying coats, energy inefficiency. Though, the
decisions are usually made considering friendliness and recyclability. So, again PEL falls in the
Practice Stage of third pillar.
Stakeholder Involvement and Social Investment
In this pillar PEL has only managed to be in the Perception Stage as there are policies written
down mentioning the involvement of Shareholders in decision making but these are not
practiced. Moreover, there are no mechanisms for external stakeholder’s involvement. The only
stakeholder given significance is the customer. Shareholder feedback is neither collected
seriously nor shared with the employees or reflected in the business plan. Communication with
internal stakeholders is also weak and the grievance or complaint system is not taken seriously at
all.
Product Integrity and Customer Focus
The policy on consumer rights is in books but enforced where as the policies on environment
safe products, process responsibility and ethical marketing are operational. Consumer complaints
are taken into consideration and there are mechanisms to collect consumer feedback.
Environment and society are taken into account for product innovation and process development.
But the mechanism to demand social compliance from supply chain is weak. So, PEL is in the
Practice Stage as far as this pillar is concerned as the concept of Product Integrity is string and
the companies claim and performance does comply but customer focus is weak.
Financial Viability and Capitalization
Unfortunately, PEL is not aware of any of the Social Responsible Investment Indices and does
not formally communicate social and environmental responsibilities to financial institutions.
63
However, system for cost effective mechanisms for environment compliance, ethical marketing
and supply chain verifications are in place and operational. The company usually does evaluate
performance and financial benefits of its social and environmental investments. But systems are
being developed to avoid potential damaging events and to mitigate after-effects of crisis.
According to this information PEL falls in the Perception Stage of the Sixth Pillar, which shows
that this company is more focused towards short term rather than long-term success.
According to the RBF cube, PEL is in the Preparedness stage of CSR. The only pillar in which
the company seems to reach the performance level is Product integrity and customer focus,
otherwise it lags behind in all other aspects. The pillars of Stakeholder involvement & Social
Investment and Financial Viability and Capitalization seem to be very weak. Thus the company
fails to fulfill the criteria of being a responsible business.
Recommendations
PEL would have to develop and integrate proper mechanisms for interaction and involvement of
all stakeholders including the shareholders and should also conduct regular management reviews.
In addition to this the company should also collect shareholder responses, feedback and opinions
and take it in to account very seriously in decision making i.e. Shareholders’ views being shared
with the employees at all levels and being reflected in the business plan. Communication with
employees also needs to be improved by conducting proper awareness sessions on policies and
procedures and developing and integrating a proper operational complaint system.
PEL being weak in the financial viability pillar indicates that it needs to shift its focus from
making profits in short term and broaden its vision by taking decisions that provide long-term
success. Analysts, particularly those who measure sustainability indicators, look at a company’s
64
societal footprint to predict success. As it done by going beyond traditional evidence (such as
audited accounts and financial performance and to also statements, budgets, business strategies,
growth projections, etc.) look at newer indicators such as the environmental footprint, adherence
to labor laws and health and safety regulations, employee benefits, credit ratings, and records of
litigation. Thus, the company needs to be aware of the Social Responsible investment Indices
and have mechanisms in place to achieve the benchmarks. And also, it should formally
communicate social and environmental responsibilities to financial institutions to make its
contributions known to all stakeholders as it is proven that companies considered more
responsible are preferred by investors. Is should also evaluate the performance of the
environmental and social investments made because sometimes a company might make huge
investments in welfare projects but the outcome that these generate might not justify the
investment being made.
3.5 Muslim Commercial Bank (MCB)
Its main banking components are commercial, consumer, corporate, and Islamic Banking. Its
name of external auditors is M/s A.F Ferguson and Company and its regulatory body is State
Bank of Pakistan
Vision Statement
To be the leading financial services provider, partnering with our customer for a more
prosperous and secure future.
65
Mission Statement
We are a team of committed professionals, providing innovative and efficient financial solutions
to create and nurture long-term relationships with our customers. In doing so, we ensure that our
shareholders can invest with confidence in us.
Key CSR Activities

funding schools and hospitals

playing key role in disaster relief activities

monitoring stakeholder satisfaction (Our Vision and Mission - MCB)
3.5.1 State of CSR at MCB
Figure 9
State of CSR at MCB
MCB
PERFORMANCE
PERFORMANCE
PRACTICE
PREPAREDNESS
PERCEPTION
G&M
P&V
C&D
SI & SI PI & CF FV & C
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011)
Governance and Management
The graph indicates that the company is in “Performance stage “as far as the first pillar
Governance and Management is concerned. Their Board conducts regular management reviews
and in order to have transparency their decisions are transparent and open. Furthermore the
Board interacts with stakeholders other than company shareholders and they have a policy that
66
they can be held accountable for negative impacts of their decision on environment. All of the
above polices are embedded in operational and day to day decisions as well. This shows that
overall MCB Governance and Management are catering concepts of accountability and
transparency.
Principles and Values
The company again is in “Performance Stage “of the second pillar principle and values. They
have strategy that have a clear code of conducts, incorporates Business Principles standards e.g.
Bribery policy, familiar with UNGC 10 Principle and Principle for countering Bribery and
Corruption. All staff of the company is aware of these above strategies and they use them while
working and also incorporates them in their daily decisions. They effectively communicate their
Principles and Values to internal stakeholders and they review their polices for ensuring that
values are consistent with hiring/firing and Training. The only point that they lag in is this that
they do not give any incentive for ethical behavior and we find no specific operational
procedures by the company to improve ethical behavior.
Compliance and Disclosure
The company is at “Practice stage” in its compliance and disclosure activities of CSR. They
have made a separate policy for social equity and environment and they also use these polices at
operational and in their daily decision making. But they are not familiar with the guidelines of
UNGC COP, ISAR, SA8000 and OSHA. All these above benchmarks are very important for
company in boosting their CSR image. Like UNGC COP caters four issues that are related to
human rights, labor, education and anti-corruption.but they have no certification in any of these
67
benchmarks. The company works to improve Health and Safety and Waste minimization. Their
procurement and buying decisions are based on friendliness, recyclability and energy efficiency.
Stakeholder Involvement and Social Investment
In stakeholder involvement and social investment the company is in its preparation stage which
means that it has specific policies available to all staff for it. They have clear cut policy that
documents the importance of stakeholder involvement in making CSR strategy and buying
decision. And this policy is applicable at operational and day to day decision as well. For
external stakeholder involvement they use only Feedback system and this feedback is shared
formally and informally with employees. The feedback is reflected in business plans and for
satisfying internal stakeholders they use awareness session, feedback system and Grievance
system.
Product Integrity and Consumer Focus
The company lies on the “Practice stage” of Product Integrity and Consumer Focus. They use
polices that mentions consumer rights, process responsibility and ethical marketing issue.
Furthermore they have a clear understanding that their product innovation must be based on
environmental and social concerns. They not have only realize the importance of it but also
incorporates these polices in practice and performance stage. They make sure that their new
product and their raw materials are environment friendly.
Financial viability and Capitalization
The company lies in “preparation stage” in the last pillar financial viability and Capitalization.
They have no awareness of SRI index neither has mechanisms to reach any benchmarks like RC
Index, FT4Good, UNGC COP.
They formally communicate social and environment
68
responsibilities to financial institutes like Environment reporting and sustainability reporting.
They also have mechanism for environmental compliance, ethical marketing as well supply
chain verifications. They also use systems that avoid potential “damaging events” or mitigate the
after-effects of a crisis at operational level. Thus in this pillar they just have incorporates
benchmarks in order to improve their CSR image and in showing others as responsible bossiness.
Recommendations
MCB Bank has to take certain steps in order to improve its image as Corporate Social
Responsible business. They just have to be familiar with the framework and guidelines of UNGC
COP, GRI, SA 8000, OSHA, FT4GOOD and SRI INDEX. These benchmarks enhance the image
of company as responsible business. Like FT4 Good is an anti bribery criteria, SA8000 and
UNGC COP is devoted to labor rights, employee rights, corruption, education and child labor
issues. If a company incorporates these above benchmarks they can seriously boost their image
as Corporate Social Responsible business.
For involvement of stakeholders in decision making and in making CSR strategy they only use
feedback system. They should use other process like interactive website, focus group and
surveys and these measurements will help stakeholders to affectively participate in decision
making.
69
3.6 Kohinoor Energy Limited (KEL)
KEL was incorporated in April 1994 with the aim and objective to take part in the prosperity of
the country through power generation. KEL having paid-up capital of Rupees 1,695 million and
is a joint venture of Saigols Group of Companies (a well-known multi-industrial group of
Pakistan) and Toyota Tsusho Corporation (an eminent consortium of multi-industrial
undertakings of Japan.) (KEL - Profile)
Figure 10
State of CSR at KEL
KEL
5
4
PERFORMANCE
PRACTICE 3
2
PREPAREDNESS
Kohinoor
1
PERCEPTION
0
G&M
P&V
C&D
SI & SI
PI & CF
FV & C
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011).
3.6.1 State of CSR at KEL
Governance and Management
The graph indicates that the KEL is in “Performance Stage” as far as its Governance and
management pillar is concerned. The reason is that although the board of directors performs
regular management reviews efficient and can be held accountable for negative social and
environmental impacts of their decisions but directors fail to interact with stakeholders other than
the shareholders effectively. Moreover there are procedures that make their decisions transparent
70
and open, this transparency is deeply embedded in company’s day-to-day operations. This tells
us that the governance and management of the company is doing an excellent job to maintain
good CSR activities in its organization.
Principles and Values
KEL is in “Performance Stage” of the second pillar Principles and Values. The information from
questionnaire suggests that the company has a clear code of conduct that determines its core
values and also has identified business principles standards such as bribery policy etc but they do
not incorporate it into there day to day decisions. KEL has well defined process to communicate
Principles and Values to internal stakeholders and they review their policies for hiring, firing,
training and appraisal. They also use specific procedures at operational level to disapprove
unethical behavior.
Compliance and Disclosure
The company lies in the “Performance stage” of Compliance and Disclosure. This shows that
they know the importance of Compliance and Disclosure and have given specific polices to their
staff for this issue as well. But haven’t done any work at operational or day to day decision level.
When we dig in questionnaire we found out that they have got certification on SA8000, iso14000
and WRAP. They also are doing projects at practice level like worker benefits, employee
benefits, health and Safety issues. And their buying decision is based on recyclability.
Stakeholder Involvement and Social Investment
The company lies again in the “Preparation stage” of Stakeholder Involvement and Social
Investment .they have clear cut policy that documents the importance of stakeholder involvement
in making CSR strategy and buying decision. And this policy is applicable at operational and day
71
to day decision as well. They use Feedback and Focus group process for external stakeholder
involvement. This feedback is then shared formally with employees and this feedback is
reflected in business plans as well. And for satisfying internal stakeholders they use awareness
session, feedback system and Grievance system. All these systems of both external and internal
stakeholder involvement are embedded at operational level and they have well placed system for
monitoring Grievance and Feedback.
Product Integrity and Consumer Focus
The company lies on the “Perception stage” of Product Integrity and Consumer Focus. KEL
know the importance of Product Integrity and Consumer Focus but they haven’t made any
polices to cater this issue and neither any policy is working at operational stage. They have clear
understanding that product innovation should be based on environmental and social concerns but
haven’t made any polices for staff to deal with these issues. Hence they lie in first stage of
Product Integrity and Consumer Focus.
Financial Viability and Capitalization
The company is in the “perception stage” according to financial viability and capitalization. The
company has no awareness of SRI index neither has mechanisms to reach any benchmarks like
RC Index, FT4Good.They don’t have any system that avoids potential “damaging events” or
mitigate the after-effects of a crisis.
Recommendations
KEL has to take certain steps in order to improve its image as Corporate Social Responsible
business. Though they have good governance and management regarding the CSR, they have to
incorporate these policies in all departments of the company to improve the CSR image. For
72
involvement of stakeholders in decision making and in making CSR strategy they only use
feedback system. They should use other process like interactive website, focus group and
surveys and these measurements will help stakeholders to affectively participate in decision
making. From our analysis KEL needs to shift its focus from making profits in short term and
broaden its vision by taking decisions that provide long-term success. Analysts, particularly
those who measure sustainability indicators, look at a company’s societal footprint to predict
success and improve its Financial Viability and Disclosure.
3.7 Mobilink
Mobilink is a telecommunication service provider in Pakistan. Founded in 1994 and it is a public
limited company with a subscriber base of 31.5m and market share of 31% in October 2010.
Mobilinks vision:
"To be the leading Telecommunication Services Provider in Pakistan by offering innovative
Communication solutions for our Customers while exceeding Shareholder value & Employee
Expectations”.
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3.7.1 State of CSR at Mobilink:
Figure 11
State of CSR at Mobilink
Mobilink
5
PERFORMANCE 4
PRACTICE
3
PREPAREDNESS2
PERCEPTION 1
0
G&M
P&V
C&D
SI & SI
PI & CF
FV & C
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011).
Governance and Management:
The company is at practice stage for the governance and management CSR activities. This means
that Board decisions are transparent and open and it can be held accountable for negative social
and environmental impacts of their decisions. But there are no effective mechanisms in place
that allow Directors/ Board members interact with stakeholders other than company shareholders
as well, and nor does it conducts regular management reviews.
Principles and Values
The graph show us that the company lies in practice stage for Principle and values CSR
activities. They have well written policies for principles and values and the procedures are
operational but are not embedded in day to day decisions. The company has separate code of
74
conduct and business principles standards but it is not familiar with UN GC 10 principle
standard. It has only implemented principles for countering bribery and corruption. The company
has well defined process to communicate Principles and Values to internal stakeholders and they
also review their polices for hiring/firing and appraisal as well as training. In order to improve
ethical behavior they also have procedures working at operational level.
Compliance and Disclosure
The company is at practices stage of the third pillar of CSR i-e compliance and Disclosure. They
have a separate policy that mentions social equity issues and they are familiar with the disclosure
framework and guidelines i.e. UNGC COP, but they lack in applying these guidelines in their
operations. They also has certifications on SA8000, ISO4 000 but these are also not embedded in
day to day decisions. The company has initiatives to improve Health and Safety and Waste
minimization and their buying decisions are based on environment and recyclability.
Stakeholder Involvement and Social Investment:
In this pillar Mobilink has only managed to be in the Perception Stage as there are policies
written down mentioning the involvement of Shareholders in decision making but these are not
practiced. The company policy document mentions stakeholder involvement in CSR strategy and
business decisions but lack in community initiatives. The company has formal processes for
external stakeholder involvement primarily through survey and interactive website but they lack
in focus group. Communication with internal stakeholders is also weak and the grievance or
complaint system is not taken seriously at all.
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Product Integrity and Consumer Focus
The company lies on the performance stage of Product Integrity and Consumer Focus. The
company documents mentions strategies on consumer rights, environmentally safe products as
well as ethical marketing and advertising. The company mechanism for product innovation and
process improvement are based on social and environmental concerns and they also have
incorporate a mechanism in order to ensure social compliances from supply chain. Because of all
these above mechanism Mobilink is at performance stage in this pillar.
Financial viability and Capitalization
Mobilink lies in at perception stage of financial viability and capitalization. They are aware of
FT4 Good and RC Index and they have incorporated these indexes in day to day decision level.
However, they do not formally communicate social and environmental responsibilities to
financial institutions like UNGC COP. They have systems in order to avoid potential damaging
events or mitigate the after affects of crisis.
Recommendations
Mobilink needs to take certain steps to improve the level of the CSR activities in it. The
company needs to make policies operational regarding the interaction of Director/Board
members with stakeholders other than company shareholders. They should also make an
interactive website, focus group system for the stakeholder involvement and this feedback should
be shared with employees. In order to satisfy internal stakeholders integrate a proper operational
complaint system and in the end the company must start incorporating international benchmarks
like UNGC 10 principles in operational and day to day decision level.
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4. AGGREGATED ANALYSIS
Company
G&M
P&V
Descon
PEL
DG cement
TRG
MCB
MOBILINK
KEL
3
3
3
3
4
3
4
3
3
3
2
4
3
4
Table 2
Aggregated Analysis
C&D
SI & SI
PI & CF
2
3
4
2
3
3
4
2
1
3
2
2
1
2
1
4
4
2
3
4
1
FV & C
Average
Stage
1
1
4
2
2
1
1
2
3
4
2
3
3
3
Preparedness
Practice
Performance
Preparedness
Practice
Practice
Practice
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011.-
Figure 12
Overall Analysis
1
2
Perception
Importance is
unde rstood
3
Preparedness
Spe cif ic policie s
available to all staf f
4
Practice
Spe cif ic procedures
ope rational
Performance
Embe dde d in day to
day de cisions
(Source: Report prepared for the Final Year project by the students of BBA-A, Nu-Fast in April 2011).
77
5. CONCLUSION
It is evident from the research findings that the states of CSR in many Pakistani companies need
to be supported. It is very necessary to bridge the gap between their present state and the rapidly
evolving CSR environment that is creating new benchmarks of corporate performance and
customer acceptance. The country needs to move forward from its present level of CSR into the
current paradigm because the perception of CSR, once and for long, as an extra effort made by a
company, is now undergoing a sea change.
Moreover, we have global standards to guide such a leap and professional linkages to help along
the process over a relatively short period. Experts consider as CSR as the main hedge against the
negative tendencies of globalization. With a well thought-out strategic CSR action plan, Pakistan
can come into sight from being a likely victim of globalization to a potential beneficiary. In order
to make this work, every stakeholder has a role to play. The Government should be creating
regulatory environment with clearly defined policies and guidelines, fair and transparent rating
and reporting mechanisms and tangible incentives and penalties for companies who wish to
demonstrate their commitment to sustainable environmental or social investments. Businesses
would have to adopt a culture of compliance, integrity and technological research as dictated by
current CSR precepts. And finally both government and business need to include civil society as
represented by academia, consumer groups, enablers, the media, and experts in their activities to
build a multilayered social consciousness that quickly rewards ethical behavior by business in
the marketplace and just as readily condemns irresponsibility.
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6. RECOMMENDATIONS
There is an urgent need to improve the quality and quantity of corporate social responsibility. An
awareness
campaign
and
large-scale
multi-levels
should
be
organized
to
make
various stakeholders and businesses understand the need and benefits of CSR and
dispel any misunderstandings related. From this increased awareness, cross stakeholder
dialogue
between
governments,
business,
civil
society
and
academia
is
a
necessity.
Results of this dialogue must inform policy, which must then be strictly observed by the
regulator, certifiers, universities and the media. Companies have to feel encouraged to adopt
CSR, know that the helps to achieve profitability, human development and progress, and
regulators, government officials, investors, shareholders and union representatives all
accountability and transparency value. Companies need to know that CSR is not an option but
a survival issue for our businesses, and ultimately our society. Also crucial are facilitator
organizations that can groom small and medium enterprise in building socially responsible
process, and advise the larger businesses in leveraging the advantages of CSR and sharing
lessons and best practices.
Another important area that needs investment in terms of money, time and education is consumer
awareness. All this is achievable, but requires a strategic approach and a process step by step for
Pakistan companies can emerge stronger in the paradigm of CSR. The following are the areas
requiring attention as part of a CSR strategy
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6.1 Increase Strong Conceptual Knowledge
The first step in a national CSR should be seen as an effort to educate and knowledge about what
constitutes the minimum CSR in Pakistan. A working group could be formed with
representatives of the Government of SECP, business and select CSR experts to suggest a
Pakistan-specific "definition of CSR policies with accompanying guidance for the government to
implement and process indicators for companies to evaluate their initiatives and concept and
frameworks to be included in business school programs. These could then be introduced
gradually, with the necessary opportunities for the national debate in legislative and regulatory
mechanisms.
6.2 Link CSR to Competitive Advantage
Businesses in Pakistan, especially the small and medium enterprises that form supply chains of
major businesses need to develop a link between CSR and profits to become more efficient and
pass on savings and value all along to the customer. Companies need to shift CSR focus in
improving efficiency internally. This can be achieved by using CSR as management tool by
linking SMEs with their larger corporate counterparts in knowledge transfer and capacitybuilding partnerships that develop responsible cost effective solutions to create a ripple effect.
Associations like SMEDA and Technology Institutes and engineering firms could be linked in
these projects, also taking help from trade associations and chambers of commerce. Companies
could contribute with their thinking and financial capabilities supported by government
motivation and favorable policies.
80
6.3 To Increase the Effective Participation of Stakeholders
CSR should to be introduced as a topic in business discussions starting from business and
commerce education to the highest level of trade negotiations. This domain calls for perhaps the
most stakeholder involvement, with academia, lobbying groups, the media, Trade Unions etc, all
taking up and reflecting the idea in their inquiries and debates. Social Investments needs to be
based on community and societal needs assessed through stakeholder’s involvement at
community and national level. Also learning from successful and unsuccessful investments can
provide feedback into more relevant policies and procedures.
6.4 Harmonize and standardize CSR performance
Pakistan urgently requires a CSR tool taking into account our national limitations and strengths
for gaining competitive advantage while focusing on Global CSR debate and getting it
recognized globally. It is suggested to begin work of establishing the national CSR standard or at
least a voluntary best practice guideline against which companies can benchmark their activities
and be accepted in the global market. Simpler CSR reporting guidelines need to be devised and
encouraged through CSR Report Awards by Government agencies like SECP in collaboration
with civil society organizations having technical expertise in CSR reporting standards.
6.5 Define and Promote Clear Incentives
Currently the government allows tax exemptions and preferential treatment of businesses that
contribute to philanthropic causes. Other incentives include awards and public recognition
granted to individuals and companies by the government, representative bodies, trade
associations and public interest organizations. All this is done to promote the interest of business
in certain activities and to gain aspiration to achieve higher standards. CSR should be
81
encouraged by such incentives too. Social reporting can be encouraged by establishing minimum
disclosure requirements as a part of the licensing and compliance process for businesses.
Furthermore,
social
investments
can
be
recognized
as
tax
relief
contributions
6.6 promote a Shared Strategic Vision
While the previously mentioned initiatives build the context of the action, the country needs a
clear and compelling strategic vision of CSR, cogently articulated by champions who practice
religiously what they preach. SECP as a regulatory body has a major responsibility in steering
other stakeholders towards a developed vision. In Pakistan there are many remarkable examples
of socially responsible entrepreneurs, experts in CSR and conscientious citizens who can help
promote national CSR strategy. Again, a working group of these citizens led by SECP would be
well equipped to move forward with the active collaboration of academia, experts in CSR and
the media.
6.7 Promote CSR Projects
CSR interventions that seek to meet community needs such as health or sanitation or
education are often not seen by their sponsors as social investment and as such is not
open to the kind of review reserved for financial investments. Perhaps this is the reason why
these projects often do not last long. Businesses need to be convinced that social investments are
not distinct from those of other purely financial investments and thus need to be measured and
gauged like them. A true contribution to the CSR that companies can do is go beyond providing
resources and instead spread of the "business" thinking about their social interventions. This will
encourage social enterprises models that provide sustainable economic competitiveness projects
and lead to community building through profits and entrepreneurial skills. One approach to
82
achieving this objective would be to pair large organizations comply with mentoring
relationships with small local businesses that are the network of suppliers of large companies,
leading to a gradual ratcheting socially responsible thinking that is not hostile to profits but to
unethical practices. Good mentorship programmers can be recognized and replicated. Examples
can be documented and covered through the media. A helpline support and online newsletters
can provide basic information and CSR guidelines for companies. So they can be developed and
disseminated on a cost recovery basis.
6.8 Dynamic National Forum
CSR has quickly emerged as a key management concern for businesses, and from there to
government, due to widespread citizen movement action by activist judiciaries. Recent years
have witnessed a wave of condemnations of world-renowned business leaders for ethical
practices of the UN, which indicates the shape of things to come. However, the world has also
seen that the confrontation between former antagonists among business sector and citizens is
changing to a common and strategic partnership for sustainable development. Governments and
partner companies now regularly partner civil rights and development groups guided by experts
on CSR to develop and implement sustainable interventions in an ever growing range of
environmental and social issues. In Pakistan, there is room for a national CSR forum where
knowledge can be shared informally and best practices honed to the country on the next plane
performance
in
CSR.
SECP
can
lead
this
forum
with
secretariat
housed
in
an institution such as the Institute of Corporate Governance, or any other university
appropriate institution or organization of citizens of the area. The forum could become a member
body and handle the tasks described above, such as publishing newsletters and dissemination of
good practices values from a regular series of national dialogues.
83
6.9 Groom Future CSR Leaders
There is no shortage of Pakistani responsible and creative leaders in the world of business. These
innovative entrepreneurs can act as a catalyst for the creation of a larger pool of future leaders.
These leaders must take a leap forward for information on responsible behavior and present the
issues of CSR and ethics within their own organizations. They can also collaborate with other
experts and officials to provide a learning forum for the youngsters. The young generation can be
encouraged
by rewards and recognition by the representative bodies such as chambers of commerce
84
7. Project Limitations
The sample size might not be a true representative of the State of CSR in Pakistan as we have
targeted only local companies.
We had to face constraints like limited access to information and thus had no way of verifying all
of the information provided to us by the company representatives , which in some cases might
have overstated their company’s activities
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8. APPENDIX
8.1 QUESTIONAIRRE
1. Identification Part (for official use)
ID No: _______
Date:__________
Interview No:______
Time Start:______
Name of Interviewer:______
Time End:_______
Request for cooperation
Assalam o Aalikum. I am ____________, a student from FAST- NUCES. I represent my Final Year
Project group. We are conducting a research to evaluate the state of Corporate Social
Responsibility in the organizations of Pakistan and accordingly categorize them in one of the
four stages: Perception, Preparation, Practice and Performance. The questionnaire is designed
according to the internationally approved model of CSR i.e. Responsible Business Framework,
developed by Responsible Business Initiative. This model evaluates the state of CSR taking six
key variables in to consideration: Governance & Management, Principles & Values, Compliance
& Disclosure Stakeholder Involvement & Social Investment, Consumer & Product Focus and
Financial Viability & Capitalization. Kindly spare some time to fill our questionnaire and choose
the most appropriate response for your enterprise. There is no right or wrong answer- rather
the answer should be prompt consideration of actions you take. We will be grateful to you for
your cooperation.
86
87
88
Key:
P- Principles
V- Values
89
90
91
Key:
SH- Stakeholder
Envy- Environment
92
Key:
SRI- Socially Responsible Investment
93
7. Key activities of the organization regarding CSR
9. Interviewee Information
Interviewee Name:_____________________
Company Name:_______________________
Designation:___________________________
94
8.2 EXPLANATION OF TERMS
GC 10 Principle
Human Rights:
Principle 1: Businesses should support and respect the protection of internationally proclaimed
human rights; and
Principle 2: make sure that they are not complicit in human rights abuses.
Labor:
Principle 3: Businesses should uphold the freedom of association and the effective recognition of
the right to collective bargaining;
Principle4: the elimination of all forms of forced and compulsory labor;
Principle 5: the effective abolition of child labor; and
Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment:
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies
Anti-Corruption
95
Principle 10: Businesses should work against corruption in all its forms, including extortion and
bribery.
The Global Reporting Initiative (GRI)
It is
a network-based organization that pioneered the world’s most widely used
sustainability reporting framework. GRI’s core goals include the mainstreaming of disclosure on
environmental, social and governance performance.
International Standards of Accounting and Reporting (ISAR)
Was established by the United Nations Economic and Social Council in 1982.it is devoted to
corporate transparency, accounting issues and reporting with a view to improving the global
comparability and reliability of corporate reports.
Social Accountability (SA) 8000
It is released in October 1997, with objective to ensure ethical sourcing and production of goods
and services. Consumers and other stakeholders have become increasingly concerned about
whether products have been manufactured under conditions of violation of human rights, child
labor and discrimination issue. In order to cater these above issues SA 8000 was developed.
ISO 14000 is a series of standards, and guideline reference documents, which cover the
following:

Environmental Management Systems

Environmental Auditing
96

Eco Labeling

Life Cycle Assessment

Environmental Aspects in Product Standards

Environmental Performance Evaluation
Occupational Safety and Health Administration (OSHA)
It was created on December 30, 1970 by Congress of the United States under the occupational
Safety and Health ACT. Its mission is to prevent work-related injuries, illnesses, and
occupational fatality by issuing and enforcing standards for workplace Safety and health.
Waste & Resources Action Programmed (WRAP)
Its objective is to help businesses and individuals reap the benefits of reducing waste, develop
sustainable products and use resources in an efficient way.
Through promoting waste prevention, recycling and the use of recycled materials, WRAP plays
an exclusive role in supporting resource efficiency of the businesses.
SRI index
An SRI index refers to an index for social responsibility investment, whose key criteria for
investment decisions include not only the financial performance of a company, but also its
corporate social responsibility (CSR)
97
Ft4good
It is an anti bribery criteria.
Chamber of Commerce and Industry (CCI)
It provides advice and assistance to businesses in areas of Occupational Safety and Health,
Events Networking, Business training services, Apprenticeships and Employee Relations.
98
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References for Appendix
http://www.unglobalcompact.org/aboutthegc/thetenprinciples/index.html
http://www.globalreporting.org/AboutGRI/WhatIsGRI/
http://www.unctad.org/templates/Page.asp?intItemID=2905&lang=1
http://www.bsigroup.com/en/Assessment-and-certification-services/managementsystems/Standards-and-Schemes/SA-8000/
http://www.14000.org/
http://en.wikipedia.org/wiki/Occupational_Safety_and_Health_Administration
http://www.wrap.org.uk/wrap_corporate/about_wrap/index.html
http://www.marubeni.com/csr/004366.html
http://www.cciwa.com/
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