Can CSR Help Heal Social Fissures in the Middle East?Published February 19, 2013 in Arabic Knowledge@Wharton
Until 2011, Bahrain was considered the Gulf region's most liberal economy. Its real gross domestic product growth reached a peak of 8% in 2008, and its capital of Manama was a regional banking and legal hub. But after the Arab Spring provoked pro-democracy protests and a tough government response, the Gulf country's economy is estimated to have lost billions, and businesses fled.
Despite ongoing patches of unrest, business has begun to start up again in Bahrain. As one finance professional in the country explained, the majority of the country's residents understand that the economy must get going, even if social relations remain tense.
But there is an opportunity for the business community to help to ease some of those tensions through a greater application of corporate social responsibility measures, says Leena Al Olaimy, founder of 3BL associates.
"Companies can play a significant role in disrupting the cycle of intergenerational disadvantage that plagues many marginalized communities -- be it economically, or otherwise," she says. "For example, while many banks in the region focus on youth financial literacy, few focus on financial literacy and financial inclusion of low-income communities through offering tailored products and services, [such as] microfinance or micro-insurance."
Other regional companies have worked to provide support to communities caught in the middle of ongoing conflict in the region, noted Rama Chakaki, founder of social entrepreneurship firm Baraka Ventures.
Aramex, the regional logistics company, is using its supply chain to deliver aid to the victims of the civil conflict in Syria, Chakaki says, mobilizing employees to volunteer their time to help, while working with communities to gather food and clothing to ship to refugee camps. "It's about being responsible, they're not being paid to do it," she says.
As a Bahraini consultancy seeking to engage the business community in corporate social responsibility, Al Olaimy's 3BL Associates set out to map an understanding of the practice in the tiny Gulf country, producing this month the first responsible business survey for Bahrain. One of the study's findings was that while there was large support for CSR, far less had found ways to put it into practice.
"I think two important shifts need to take place," Al Olaimy says. "One is an increased awareness and understanding that strategic CSR not only maximizes social return on investment in terms of impact; it can also add value to the bottom line through being a tool for innovation, risk mitigation, optimization, efficiency and even revenue generation. The second is the gradual shift away from fossil fuel energy subsidies -- which ultimately encourage over-consumption by individuals and companies, postpone the post-oil economy and detract from necessary R&D and investments in renewable energy."
What Al Olaimy and Chakaki agreed upon was that CSR as a practice is still largely seen as a public relations tactic or marketing initiative in the region. Chakaki says that was because of how the concept was first introduced to the region. "PR firms and marketing agencies took the term and ran with it, and convinced organizations of what CSR is," she says. "I don't think it has to do with the value system."
"In the West, consumer activism has almost forced CSR to evolve," Al Olaimy notes. "Organizations must do more than simply atone for their 'corporate sins' and integrate social responsibility and sustainability throughout their entire value chain. Whereas in the Middle East, corporations are expected to support society out of a sense of moral and religious obligation. Therefore, rather than being viewed as a strategic opportunity for business, CSR has not really evolved much beyond donations, sponsorships and weekend beach cleanups."
One corporate that stands out in the region for its CSR work, though, is the Savola Group in Saudi Arabia, Chakaki says, noting that the foodstuffs and investment conglomerate employs a CSR officer and lists an annual report what it has done in its CSR efforts.
There is a religious component to some people's perspectives on CSR in the region, Chakaki adds, recalling how one client cited verses from the Koran that exhorted believers to take care of the needy, but also through other means, such as providing for education and acts that would be of long-standing benefit to others.
But for herself, she sees the need for CSR regardless of creed or nationality. "I see people as human beings, irrespective of where they are or where they have come from," she said.
It is not just those under fire who are in need of help that CSR efforts can provide, Al Olaimy says. "Persons who are differently-abled (physically or mentally) are also largely excluded from our societies," she says. "Rather than donating money to causes, companies should leverage these individuals as an untapped resource with unique skills.
"For example, Specialisterne in Europe, partners with the private sector to provide equitable labor market opportunities for individuals with Autism Spectrum Disorder and similar challenges such as ADD, ADHD, OCD and Tourette's syndrome. Specialisterne leverages the characteristics of sufferers as a competitive advantage. These characteristics include attention to detail, zero tolerance for errors and persistence. Therefore they are referred to as "specialist people" rather than those with a mental or cognitive impairment.
"It also depends on how companies approach CSR," she adds. "If the process is collaborative, then cooperation between different cross-sector groups can lead to greater social capital, stronger networks, and enhanced social relations, which ultimately fosters more socially cohesive societies."
According to the report by 3BL, educational reform tops the list of challenges facing Bahrain, and elsewhere in the region. But on the surface, there seems little room for private industry CSR in a domain that is tightly controlled by authorities.
"The private sector can play a role in lobbying for certain education policy changes by framing them in the context of meeting labor market needs," Al Olaimy suggests. "But beyond that, there is a sizeable impact that can be made in extra-curricular or informal education. Particularly in nurturing innovation, critical thinking, and even instilling social responsibility. Many banks in the region, for instance, play a role in youth financial literacy and entrepreneurship through programs like INJAZ."
INJAZ is non-profit created to help develop young Jordanians, and is a member of Junior Achievement Worldwide. Other country-specific organizations have developed along its model, and Chakaki notes that in the United Arab Emirates, for instance, CSR training is available to interested locals through chambers of commerce. There are over 150 businesses with CSR components in the region, she adds.
"One of my favorite examples of education-related CSR is the Williams F1 team's Race to Learn," Al Olaimy notes. "They have developed a cross-curricular teaching resource that promotes group learning through educational activities based around Formula One racing. For example, designing a team logo, understanding aerodynamics, calculating lap times, balancing the team's budget, and pitching for sponsorship. It's such a unique and engaging way for students to touch on a wide-range of areas including math, science, literacy and art, using an inter-disciplinary approach."
Nearly all of the 3BL survey respondents suggested the private sector should engage in CSR. Al Olaimy suggested that based on the issues facing Bahrain, programs related to education, entrepreneurship and innovation should be the focus.
"However, there is no one issue that lends itself to receiving private sector CSR efforts," she says. "Social issues are crosscutting by nature. Therefore, no single entity can solve challenges around education, or climate change or health or renewable energy, for example.
"Moreover, it is the societal and environmental eco-system that provides private sector organizations with the conditions in which to operate, such as the unrest in Bahrain, which affected businesses. All organizations are inextricably linked to these conditions and have a role to play in addressing them… different organizations can contribute to certain issues more strategically than others. It would not be strategic for a hotel to focus on financial literacy programs, nor for a bank to focus on migrant worker rights."
There is always the concern among multinational corporations about maintaining a neutral social presence in the region. But Chakaki says that CSR can be done without fear about making a political statement, for instance.
"It doesn't have to be done by boasting about it in the media," she says. "CSR is not cause marketing. You can do it because as an institution you care about society."