Corporate conscience

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Last month, the United Nations and the World Bank released global performance reports on private sector immersion and country level achievements in the crucial areas of social responsibility and governance.

The UN corporate citizenship initiative for joint efforts with the private sector business community goes by the name of Global Compact. According to the organization’s first worldwide annual report and survey (published last month), participation has widened to over 4,000 entities in 116 countries, including more than 3,000 corporate participants.

The largest increases in participation were recorded in Europe and Asia, whereas MENA response rates accounted for only 2% of the total. The Compact mentioned Egypt as the country where it found the strongest resonance in the region and a local network has been crafted. Jordan and the UAE were listed as countries where networks are under formation; even more limited presence exists in Syria, Lebanon, Qatar, and Kuwait as well as Tunisia and Morocco.

Promoted by the UN, multilateral agencies such as the World Bank, and a sea of civil society and academic organizations, concepts such as corporate social responsibility (CSR) are today entrenched in the vocabulary of industrial decision makers.

Where do the MENA business communities stand today in realizing corporate governance, environmental policies, and CSR?

When they started promoting Corporate Social Responsibility in countries of the region, organizations such as the UNDP found that companies in the Middle East often respond to social sponsorship requests and commit resources to their communities.

However, an important qualifier in declaring charitable activities to be CSR is treating it strategically, meaning that companies do not merely respond to needs from the community and answer to appeals for aid, but incorporate this activity into their core giving it comparable importance to their investor relations and production.

Compared to the Western business world, some of the largest Middle Eastern companies have incorporated CSR references into their identity but without the immediacy and weight of their multinational peers. Sabic, the Saudi petrochemicals producer, hints at CR content with a homepage button labeled “our commitments” that shows social action examples from 2004. Regional telcos MobiNil and MTC reference their commitment but also present only dated material.

The sites of Lebanon’s Banque Audi and Saudi bank Al-Rajhi are void of CSR statements or related news. The homepage of Emaar Properties is exclusively loaded with sales and marketing, one has to dig deep into the “About Us” section to find some board room basics as corporate governance info; Solidere presents a citizenship angle with its Garden of Forgiveness, although its relevant information is limited to a 41-month-old CEO speech.

What these leading Arab companies and most others in the region do have in common is that they hint at their corporate responsibility awareness but apparently still place CSR several notches below the strategic presence of corporate citizenship in developed and leading forward-thinking markets.

Also on national parameters, benchmarks such as the World Bank’s Worldwide Governance Indicators (WGI) support the view that Arab countries have much catching up to do in the overall global competitive environment.

This, however, must be seen in the context of an overall timid progress of governance issues worldwide where the IMF has made it a point to note that it has not been able to detect a uniform worldwide uptrend in governance since it started gauging national governance factors in 1996.

But good things take time and more than that. While the seven-year-old Global Compact expounds that in an ideal world all companies would comply with its principles, the current corporate membership is but a very hopeful drop in a huge bucket, even when postulating an impact bonus for the significant presence of F-500 companies.

One thing not to forget in regional CSR issues is that the primary measure for this responsibility is the relationship between the company and its workforce. In this aspect, the region is impacted by increasing challenges, evidenced through labor disputes that express wage inequalities and growing social pressures on many employees which are accompanying the eminent boom in corporate activity in the GCC.

In Lebanon, conversely, labor rights are presently extra reason for concern because of economic hardships that forced companies to cut expenses but also saw some bosses take advantage of the high competition for jobs in the tight market and unjustifiably beat down the salaries of existing or new employees.

Taking stock of CSR in the Middle East today goes to restate that good things are notoriously difficult to achieve — even if they reflect the ultimate common sense, such as the reality that there is no such thing as pure self-interest, corporate or otherwise.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail