Corporate Responsibility agenda still tops

| 24/09/2009 | Reply

Companies
must continue to invest in corporate responsibility initiatives in an
economicdownturn and embed them into their business strategies for
long-term sustainability andsuccess.

That was the
highlight of the recent StarBiz-Institute of Corporate
Responsibility(ICR) Malaysia forum, which comprised panellists CIMB
Foundation chief executive officerDatuk Mohd Shukri Hussin, Media
Chinese International Ltd and Sin Chew Media Corp Bhd executive
director Rita Sim, Microsoft (M) Sdn Bhd managing director Yasmin
Mahmood and Nestle (M) Bhd managing director Peter Vogt.

The
forum, held in conjunction with the StarBiz-ICR Malaysia Corporate
Responsibility Awards 2009, was moderated by ICR Malaysia chairman and
PricewaterhouseCoopers Malaysia executive chairman Datuk Johan Raslan.

Q: Does corporate responsibility (CR) still matter in a global financial crisis?

Datuk Mohd Shukri Hussin:
Yes, CR matters especially in an economic downturn compared with a
booming economy. Our group CEO has stated that CR will be accelerated
at CIMB.

Our biggest CR initiative is the setting up of CIMB
Foundation, the vehicle for the group’s CR activities, in 2007,
focusing on three pillars namely, education, community development and
sports development.

The CIMB group has pledged RM100mil to the foundation for the next three years.

We are moving from ad hoc, event-driven and donation-based initiatives to more impactful and sustainable activities.

In
2008, the foundation funded 128 projects with RM8.5mil grants approved
and in 2009, we expect to fund over 150 projects with a projected
budget of RM16.5mil.

The
Panelists from left, Datuk Johan Raslan (moderator), panellists Datuk
Mohd Shukri Hussin, Rita Sim, Peter Vogt and Yasmin Mahmood at The
StarBiz-ICR Malaysia forum.

Q: What is your comment on the perception that CR is a one-way investment and just a cost?

Peter Vogt:
There is a big risk that once things get tough, you might cut back on
CR if you finish your business strategy and then think later about
doing CR.

At Nestle, we embed our shared value strategy with our
business strategy. We look at all our value chains to see where we can
integrate CR into the business.

CR is not an afterthought at
Nestle; whether business is good or bad, we will still do it. Combining
CR and business strategies is good for the business and community and
enables us to have better sustainable long term initiatives.

What
could be emphasised more in a crisis is getting costs under control and
a good way is to look at reducing or eliminating waste as it is a cost
and an environmental problem. As a food company, Nestle’s focus is on
nutrition, water and rural development.

Q: Small and
medium enterprises (SMEs) have felt severe stress in the current
crisis. Does CR have any place in their corporate agenda?

Rita Sim:
SMEs do not have large resources like public listed companies (PLCs)
and multinational corporations (MNCs), so protection of their business
in a crisis is most important to them.

Companies that survived
recessions were those that protected their employees and helped their
suppliers, thus protecting the supply chain and this is linked to CR.
Companies cannot start their business again without employees.

In
a crisis, suppliers may go out of business and this will affect the
supply chain especially if the supplier is a critical one.

In the current crisis, the supply chain is critical as many suppliers were affected and went out of business.

Managing CR in a downturn

Q: How do global companies such as Microsoft view CR in the workplace in these difficult times?

Yasmin Mahmood: CR in Microsoft has a very unique flavour.

The approach that Microsoft takes towards CR is to integrate it in our business philosophy in two ways.

First, our mission statement talks about realising people’s potential and collectively, the nation’s potential.

Second,
the heritage from our founder Bill Gates, as someone who gives back to
society and this is inculcated in Microsoft’s DNA.

We chose
three pillars to focus on in difficult times – education and developing
human capital; building the local software economy and driving
innovation as well as bridging the digital divide.

Microsoft
invested RM3bil in the Microsoft Dreamspark Programme to further
develop technology skills and spur innovation among tertiary students
in the country.

To drive innovation in the local software
economy, we are investing RM300mil in the Microsoft BizSpark Programme
over three years to catalyse start-ups.

In difficult times, we must go back to the basics.

We
need to strengthen fundamentals not only in business leadership but
also employee engagement as a reminder that there is a longer term
vision.

During an economic downturn, CR is not only relevant but
crucial to ensure that business leadership and the spirit of the people
are anchored in the long term for a more sustainable impact.

Tackling corruption

Q:
Should trying to stop corruption be part of a company’s CR and what
should companies do to reduce the amount of corruption in the system?

Yasmin:
As a MNC, we have strict corporate governance and standards of business
conduct. For us, it is zero tolerance no matter where you operate. It
goes beyond CR into corporate compliance.

This covers issues
such as fair business practices, security policy, harassment and even
ensuring diversity of talent in a particular country.

In these
times, we have to be cautious that in the zest of being creative while
doing business, the creativity can push the limits of CR and our
standards of business conduct guidelines.

We ensure there is increased awareness and provide reminders to all our people to adhere to our values.

Sim:
I sit on the board of an oil and gas company that has very strict
policies – clear whistle-blowing policies internally, ethics policies
and anti-corruption policies.

It has a whole department managing
this and comes out with booklets on business practices to be given out
every year to its partners.

All the staff will be given handouts to carry in their pockets as well.

Vogt:
We have a compliance steering committee that I chair, compliance
champions in each unit to ensure that all laws and regulations are
followed as well as local and group/global auditors to check all issues.

No corruption is one of the elements. If we follow all the regulations correctly, I believe there is no need for corruption.

There may be a need for corruption only if a company tries to cut corners.

Q: What is the CR message for Malaysian companies expanding abroad?

Yasmin: To become global companies, we have to adhere to global values.

Compliance
and ethical business conduct is a must, not an option. We must put a
stake to the ground that we do not want to participate in what is not
in line with our corporate philosophy.

We can still be successful by doing it the right way.

Sim:
The private sector can do a lot but when the private sector and the
Government have such a close relationship, the Government must also
take steps in the same direction.

Who governs the Government as it is not subject to stock exchange rules?

For
example, Sin Chew Media Corp did a merger and dual primary listing on
the Hong Kong Stock Exchange (HKSE) and the local bourse.

Compliance
was very strict on the HKSE and we had to follow. This is a way for
Malaysian companies to lift their standards in terms of governance.

For Malaysia, it is the public sector that needs a lot of work and someone must drive this.

The
private sector is affected by corporate governance rules from the stock
exchange but the next minute, you read in the newspaper about things
that are wrong in the public sector. It is really tiring to run PLCs.

We have to comply with the regulations from the stock exchange.

Improving efficiency

Q:
During a downturn, cost efficiencies are also very important. Can the
panel share some of the CR initiatives put in place to enable these
cost efficiencies?

Vogt: We have a big
initiative worldwide called Nestle Continuous Excellence programme,
where we look at the value chain and all areas where we can eliminate
waste.

We look at the whole flow of goods and how we can
maximise and optimise the flow of food from the farm to the consumer in
the most efficient way to cut cost and reduce discharge to the
environment.

There are targets to achieve and measured by key performance indicators.

Everyone
is generally very positive and enthusiastic about this. It is only when
there are too many initiatives that people get cynical.

Shukri:
At CIMB, cost efficiencies are done through leveraging and smart
partnership. For example, choosing more efficient equipment as a
solution.

This year, CIMB formed a strategic partnership with HP
Malaysia to roll out more environment-friendly technology throughout
CIMB’s branch network and it has been effective.

Yasmin: At the start of the downturn, Microsoft rolled out a campaign to help customers save money globally.

The
highest cost of technology is in the data centres to manage the many
servers, so we rolled out a cost efficient technology which also helped
save carbon footprint and electricity by a significant amount.

Another
technology we rolled out was unified communications that enabled
tele-conferencing, video-conferencing and voice-conferencing and this
reduced travel costs significantly in Microsoft and for our customers.

Sim:
We formed a cost reduction initiative team and it was very successful.
There is print waste and non-print waste so we have to look at the two
to decide where to bring down costs.

About 50% of the cost in a newspaper company is on printing.

So
we focused on the newsprint and chemistry of producing a newspaper. We
used recyclable newsprint. We also had a big programme on ink.

Q: To take CR to the next level, should policy makers introduce more incentives, green taxes or investment allowances?

Shukri: We are already in a highly regulated industry. I think it is the corporates that have to be burdened with the bulk of it.

However, we do not mind tax incentives. Moreover, Malaysians like awards, so there should be more awards given out.

Vogt: I understand that the National Green Technology Policy was just launched and that is very good.

I
believe the Government’s role is to incentivise and push the private
sector to utilise all kinds of modern technology to improve especially
on environmental issues.

That will create more jobs and give
Malaysia an edge. It will be good for exports as well. That is the
opportunity for the country in future.

Green technology

Q:
Governments are pushing for more green technology using incentives and
disincentives and penalties Do you think being green retards the
competitiveness of companies?

Vogt: The Government should look at positive incentives rather than penalties and disincentives.

We also have quite a lot of laws and regulations; it is more important to make sure they are really enforced.

There has to be more resources allocated to enforcement rather than preparing new laws.

Sim: Companies have many stakeholders and we must still return dividends to shareholders.

We should not be taking over the role of the Government in CR.

It
should be complementary. One of the things Malaysia should be looking
at is reducing corporate tax when companies have a certain amount of
spending in CR.

Yasmin: Environmental sustainability is
an agenda that is not high enough in the country. Green technology is
still at a low in terms of awareness, sensitivity and appreciation
around the world.

If there is Government intervention, this is one area to accelerate awareness.

Q:
PLCs are implementing CR partly to comply with Bursa Malaysia’s
requirement. Would there be an impact on bottomline if companies don’t
implement CR? What is the formula for your CR budget?

Shukri: We have never been big on CR. In our case it’s not really compliance but rather a restructuring of the whole group.

We looked at the mission statement, vision and corporate philosophy and asked “What is it that we want to do?”

This is where we identified four stakeholders – shareholders, employees, community and regulators.

That’s
how the idea of the setting up a foundation came about. CR is also a
function of the profits that you make or the revenue that you raise.
However, I am not at liberty to disclose the amount.

Yasmin:
Yes, it will affect bottomline in the long run provided the pillars of
your CR programme are aligned to business-relevant initiatives.

If
you just put aside money and use it based on whatever donations are
requested and disbursed on an ad hoc basis, then it becomes purely an
expense.

However, if you were to align it with things that really matter for the organisation, it’s a win-win situation.

Vogt:
If we want to be successful in the long term, we have to contribute.
You can’t just do business and walk away. We have to contribute to
society and to the nation building agenda as well.

An example is
the National Plan of Action For Nutrition of Malaysia by the Health
Ministry. There are a number of points in the plan where our
nutritional, health and wellness strategies are fully aligned.

I
think this alignment is absolutely critical. On the CR budget, I don’t
have a budget that I sign off for CR as it is all embedded in different
parts of the company.

Sim: The Sin Chew Daily is 80 years old this year. We are very connected to the Chinese community.

In
fact, even before the word CR came about, we were already doing work in
the community. We have done work in education and embarked on
initiatives on crime. We have an internal budget for CR but it is
programme-driven.

Supply chain management

Q: How would you manage your supply chain especially the small and medium enterprises (SMEs) in a downturn?

Vogt: We have been mentoring SMEs in good manufacturing practices (GMP) and quality improvement initiatives for many years.

We
have also worked with the SMI Association of Malaysia and now we have a
new co-operation with Small and Medium Industries Development Corp
(Smidec) and the Halal Development Corp.

There is an opportunity
to export halal products and we believe this is where we can use our
knowledge and resources to help SMEs.

Yasmin: The best
help we can give the SMEs is to ensure that payment is (taken care of)
to help ease their burden. That’s in a small way. The bigger part is
more towards SME development in general.

The level of technology
adoption for SMEs in Malaysia is still very low compared with other
countries. We will launch a programme with our partners to empower
Malaysia’s SMEs with the right technologies to be globally competitive
soon.

Sim: One of the things we did with our vendors was
to develop a software to help them improve their business. The supply
chain is very important because if anyone of them goes out of business,
it will affect you. So, you have to identify who your critical
suppliers are.

·To participate in the StarBiz-ICR Malaysia
Corporate Responsibility Awards 2009, contact starbiz-icrm@csr-asia.com
or call 03-2072 2130. Online submission has been extended to Sept 30.
For more information, log on to www.thestar.com.my/starbizicrm/

Category: Asia

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