Corporate social responsibility – how should it be in Uzbekistan?
Illustration: Eldos Fazylbekov / Gazeta.uz
What is the essence and principles of corporate social responsibility (CSR)? Why it cannot be equated with charity and how best to implement projects useful to society? Together with a CSR specialist, founder and director of the consulting company CARE CSR, Malika Sharipova we wrote a joint op-ed at Gazeta.uz to provide answers to all these questions in the context of Uzbekistan. Below I provide an English translation of the article.
The contribution of business structures to the development of society is undeniable, and this positive contribution becomes even more significant when a business takes on social and environmental obligations to its employees and society. Taking on these responsibilities may seem like an overwhelming burden – but you can start small, supporting the initiatives and interests of workers or helping your native mahalla (community leadership structure led by a council of respected elders; Uzbek ‘neighbourhood’).
Now more than ever, the role of CSR in achieving business success is growing. More and more companies are implementing social and environmental policies and standards, being certified and audited for compliance with international standards, and issuing their annual CSR reports. Globally, multinational corporations are learning to meet the ever-increasing demands of all stakeholders. Special journals (The CSR journal, 3BL, Triple Pundit) dedicated to the development of CSR have even appeared recently.
In his recent address to CEOs, Lawrence Fink, Chairperson and CEO of BlackRock, a multinational investment management corporation, highlighted the role of CSR in investment decisions. He mentioned that in 2020, companies with the best Environmental Social Governance (ESG) were outperforming their competitors by attracting investor interest. In addition to making a profit, business structures must contribute to the development of society by ensuring the rights of their employees and fulfilling their obligations to all stakeholders, thereby contributing to the solution of social problems in society.
Responsible business attitude to environmental protection and social protection of employees, compliance with legislation, accountability along the supply chain, etc. – these are all the basic requirements of CSR.
By practising CSR principles, business structures attract investors and gain public trust, improve their reputation, and, thereby, attract new loyal customers and highly qualified employees due to their responsibility for social protection and the realisation of employees’ rights. Sounds great, right? But it’s not that simple! Practice shows that implementing successful CSR initiatives is not easy, requiring careful planning, leadership, and correct and effective communication skills.
CSR is not charity
Unfortunately, there are dishonest companies that use CSR solely for selfish purposes. Surely, readers have heard about such concepts as “whitewashing” and “greenwashing”, or “green PR”, which refer to the attempts of companies to mislead consumers by convincing them that their products, services or working methods are socially and environmentally responsible. In fact, the company has not implemented appropriate standards and policies.
But some companies simply misunderstand the principles of CSR. It should be noted right away that CSR is not charity or touching commercials in which the company gives gifts to children with disabilities or arranges a holiday for them. A survey conducted among companies in Uzbekistan showed that a significant share of business in our country views CSR through the prism of charity. Some entrepreneurs practice is based on religious beliefs or altruistic motives. Some, having heard about the CSR strategies of other companies, try to imitate the same methods in their work.
Let’s look at the cases of ineffective implementation of CSR projects in Uzbekistan (all coincidences of events and circumstances are accidental).
Unsuccessful case No. 1: “orphanage tourism”
Company “A” organises a holiday to bring New Year’s mood to the children at orphanages. Representatives of the company visit orphanages, distribute New Year’s gifts, food, arrange a concert and take pictures with children. Then the PR employee posts photo and video materials about the charity action “as an advertisement” in popular Internet media. At first glance, there is nothing wrong with such an action – the children were happy!
Company “A”, perhaps, was guided only by good intentions, organising this charity campaign. However, if you look at progressive international practice, many developed and developing countries are abandoning institutions for children in favour of alternative family forms of care (foster families). Gifts for children are good, but what they need most are family care and love. By resorting to “orphanage tourism” and not dealing with the deinstitutionalisation of children, the company is increasingly strengthening institutionalisation and “legitimising” orphanages in the public mind.
At this time, dysfunctional and low-income families in need of financial assistance and social services are forced to send their children to orphanages because they themselves cannot cope with their proper maintenance. In 2019, only 14% of inmates of Mehribonlik children’s homes were full orphans. During the president’s visit to Namangan, four children in the house of mercy # 26 were returned to their mother, who left them due to financial difficulties. But why does this return require a visit from the president? Social services, the mahalla committee, companies promoting CSR, philanthropists – very many could support in time and prevent the disintegration and separation of children from their families experiencing financial difficulties.
Of course, the company does not have time for individual social work with vulnerable families – and this is not the responsibility of the business. Arranging a holiday in an orphanage is a well-established scheme that can, at minimal cost, immediately give its fruits to “improve” the company’s reputation. However, this charitable approach is not sustainable and serves only as a one-time whitewash of a company with minimal interest in deinstitutionalisation reform.
Sustainability of CSR projects
It should be noted that there is no specific CSR strategy that would suit everyone equally. The correct CSR strategy should be developed following the company’s development strategy. It should be effective both for society and for the company and not be a stencil taken out of the context of other enterprises. It is necessary to deeply understand the goals and objectives of the company, its values and needs of stakeholders, and existing problems in society.
No company can be 100% green, but every company must have specific environmental and social goals. For example, you can advocate for sustainable development, human rights, women’s rights and help people with disabilities integrate into society. You can do charity work. But! The most important point here is that all these actions must be continuous and successive.
CSR is not just a one-time help, but a well-defined long-term strategy.
A good example is Solo Eyewear, founded in 2011 in the United States, which makes handcrafted eyewear from recycled bamboo, wood and other materials. The company cares about people – donates 10% of the profits by providing glasses for free or funding eye exams and cataract surgeries. Solo Eyewear has restored vision to more than 13 thousand people in need.
The company is also committed to protecting the environment by using recycled material, such as repurposed bamboo and wood or recycled plastic, to make sunglasses. In this way, it prevents the use of hundreds of kilograms of raw materials annually. Through partnerships with Aravind Eye Care System and Restoring Vision, Solo Eyewear’s vision restoration efforts have expanded to 32 countries.
You, too, can start by supporting or partnering with a non-governmental, non-profit organisation of your choice that aligns with your values and supports them not to repeat the mistakes of the next unsuccessful CSR case.
Unsuccessful case No. 2: “charity approach”
Company “B” provided charitable assistance to the organisation of people with disabilities for the Independence Day of Uzbekistan. Company employees distributed food kits to over 100 members of the organisation and photographed the process of handing over bags or boxes with company logos. Further, the press service of the company publishes a photo and a “kind” text about how important it is to help people with disabilities, as a commercial ad in one of the popular Internet media. Again, when distributing food, Company “B” could only be guided by the goal of helping people in need of social protection.
“If you want to help a person, don’t give him fish, but teach him how to fish,” says an ancient wise proverb.
Most likely, Company “B” is not well aware of the fact that people with disabilities are four times less likely to find decent jobs than people without disabilities. Instead of handing out “fish,” Company “B” could make its recruitment process inclusive and provide jobs, training or internships for persons with disabilities.
In this case, of course, it is much easier to distribute charitable aid than to adapt workplaces for workers with disabilities and conduct vocational training for them. Moreover, the distribution of food to more than 100 members of an organisation of people with disabilities is a notable event that can be photographed for quick coverage of the work done in the media. However, a purely charitable approach is not sustainable. It turns persons with disabilities into passive recipients rather than active citizens who can also contribute to developing the country’s economy. Moreover, charity creates unequal giver-recipient relationships, where givers usually “decide” themselves what recipients need.
A social partnership of business with the civil sector
To implement effective and sustainable CSR projects, companies can start by forging long-term social partnerships with their chosen NGOs and other representatives of civil society who advocate identical or similar values. Unfortunately, the new version of the law “On Social Partnership”, which the Legislative Chamber of the Oliy Majlis (Parliament) reviewed in May last year, has not been adopted. Then the deputies from the People’s Democratic Party and UzLiDep proposed “expanding the institution of social partnership”, ensuring the participation of entrepreneurs and business entities in this field.
For example, Nestlé is the first global food company to implement the Starling (Global Verification System) to monitor 100 per cent of its global palm oil supply chains. Starling was developed in partnership with the non-profit organization The Forest Trust to ensure that the palm oil used by the company does not contribute to the illegal logging of tropical forests and peatlands.
A similar successful example of CSR in Uzbekistan could be the reduction of the environmental impact of packaging of local companies’ products. For example, a manifestation of CSR can be a partnership with Hashar Week’s waste recycling project or supporting scientific research by students and scientists on sustainable waste disposal.
Instead of following the path of Company “B” with the distribution of basic food, you can use the recruiting services of the public association of people with disabilities in Tashkent, the NGO Sharoit+, to select suitable employees with disabilities within the framework of a disability-inclusive employment project, or offer accessible vacancies on the specialised portal www.ishplus.uz.
The localisation at the mahalla level
CSR initiatives will be more effective if they are localised. Regardless of the size of your company, your CSR programme must meet the needs of your local community. This is the same “mahallabay” approach, that is, activities on the scale and aspect of the mahalla and aimed at solving the problems of the community of a particular mahalla.
For example, in 2011, the well-known company Levi Strauss & Co launched a revolutionary initiative called Worker Well-Being (WWB) to create a more resilient supply chain, providing good conditions for workers throughout the production chain. The company partners with its suppliers and local organisations to implement programs to empower workers, improve the health and well-being of their families, and promote equality and tolerance.
WWB takes a unique approach to meeting worker needs, starting with listening to workers. Before taking any initiative, the suppliers of LS & Co. start by interviewing factory workers to find out firsthand what they need. After identifying the needs of LS & Co. and its suppliers, work with local and national NGOs to implement programs that meet the needs of workers. Levi’s expanded its WWB program in 17 countries to include 190,000 workers, accounting for 65% of its total production. Remarkably, WWB has raised the profitability of some programs to a 4: 1 ratio!
Honesty and transparency
In CSR, honesty and sincerity in intentions are essential attributes. Both the individual and the company shouldn’t do what they really don’t care about or try to appear as what he/she really is not.
Simulating CSR can provide short-term benefits, but it will severely undermine the company’s business reputation if such deception is discovered. We all remember the bitter experience of Volkswagen in introducing new diesel engines as environmentally friendly. It was subsequently revealed that the engineers and dignitaries of the German automaker deliberately tried to hide the fact that they secretly equipped 11 million “green” engines in their cars with software that hid the true performance when testing. The deception cost the company billions of dollars in lawsuits and fines, not counting reputational losses.
It is important to determine what you really care about and how you can genuinely help the community. If it turns out that there is nothing, then it is better to refuse fake CSR. Since CSR is still a new direction in Uzbekistan, the help of specialists is needed to develop a correct CSR strategy. Investing in effective and sustainable CSR programs will enable the company to demonstrate how serious and profound it is to address important social and environmental challenges.
Domestic business should be ready to spend time and money on CSR research. Only by working in partnership with experts from the civil sector, whether locally or internationally, can success be achieved. CSR specialists will help develop a long-term CSR strategy based on a materiality assessment, the needs of all stakeholders, and ensuring compliance with the needs and goals of the business.
To ensure transparency and correct communication with society, it is also necessary to prepare periodic CSR reports, which is an important factor if a business really wants to demonstrate its long-term social responsibility. After all, CSR is not about how a business spends its money but about how it earns it.
