Floods and the business of responsibility

It is the responsibility of companies to participate in and finance projects that address the long term needs and social welfare of the flood victims.

Saqib Omer Saeed September 14, 2010
These days Pakistan is going through the worst flooding in its history. Even before the floods, most people living in rural areas that have been affected were living in abject poverty. It is the responsibility of companies to participate in and finance projects that address the long term needs and social welfare of the flood victims. Occasional distribution of cheques and commodities is good but much more has to be done - and on a regular basis.

The concept of Corporate Social Responsibility (CSR) is not new in Pakistan. Companies across the country participate in and arrange welfare activities to help the needy by providing them with access to better education, health and shelter.

However, for some companies the CSR programmes are merely  publicity campaigns. This means they organize one event but there is no follow up of any kind. We cannot generalize and say that the same is true for all companies in Pakistan but it is a valid concern.  I think that CSR should not be based solely as a profit venture in the annual report of a company. This is an activity that should be considered completely charitable in nature and not be measured in terms of profit or loss.

What companies need to do

Companies should establish schools, healthcare centers, women empowerment centers and provide entrepreneurship promotion soft loans schemes to assist the people - the consumer base of Pakistan. In the long run this will help promote and strengthen various businesses across Pakistan.

I recommend the following key measures with regards to CSR:

  • Establish a proper CSR-SU (strategic unit). This unit needs to have professionals that must be dedicated to the task of designing projects and implementing them.  This unit must be formed in a way that funding will be recognized as a regular cost of the company and run it as their regular operation.

  • Companies must assign their employees on CSR assignments on a rotation policy of 15 to 30 days on a an annual basis. This will help develop a sense of responsibility in management. This will also enable every employee to be aware of how the company is involved and employees can connect with their consumer base directly.

  • Sometime large funds cannot be generated by a single company. With a CSR Union, the corporate sector can start a fund that needs to be managed by various fund managers. This is how they can multiply their allocation by investing the fund’s money in different profitable and moderately risky businesses. This can be turned as a smart investment and financial solution for CSR budgets to have monies always ready to address any big disaster or an opportunity for social welfare.

  • It has been observed that during national disasters companies provide large funds but they are wasted because NGOs are not equipped to efficiently provide relief since they don’t have easy access to a transportation network, audit of funds supplied and distribution of relief goods etc. In this regard CSR-SU can pool in their top engineering, management, audit and supply chain professionals from various companies to work for rescue, relief and rehabilitation efforts. They need to organize training sessions of their employers to manage this with the national rescue and defense authorities.

  • Companies have to take an aggressive part in education, healthcare and antipoverty efforts. They can run schools, hospitals and research activities for the welfare of society as an integral part of their business. They have to consider this the same cost as the running their factory, mill or workplace otherwise consistency is not be possible.

All of the above suggestions cater to a new mindset for corporate units whereby they consider CSR as an integral part of their business plan rather than merely a substance for corporate social responsibility statement or publicity measure. This shall be beneficial for everyone including companies because a growing population base and social progress leads to a greater consumer base with spending power which in turn is good for businesses.

This article has been revised to reflect the following correction:

Correction: October 11, 2010

An earlier illustration by artist Paul Fitzgerald used in this post has been removed.
Saqib Omer Saeed A financial researcher, analyst and adjunct faculty in CBM, SZABIST, BIZTEK & University of Karachi and blogs at http://www.bizomer.com
The views expressed by the writer and the reader comments do not necassarily reflect the views and policies of the Express Tribune.

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