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Issue 16, May 2008 |
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Emerging as an issue for APEC's agenda to promote economic development and improve the business environment in the region, the concept of corporate social responsibility also provides an opportunity for APEC member economies to address the social dimensions of trade and investment in the region.
For companies to compete in the 21st century, policies that support CSR will become an increasingly important component for improving profits said a report that was distributed to APEC Senior Officials in March.
Seen as an important element of overall corporate governance, a strong approach to CSR is important for ensuring that large scale projects are both environmentally sound and directly benefit local communities. Contributions made by private enterprise to economic development in the region encourage employment creation, technological development and many associated benefits of commerce.
In the UN Global Compact's report, "Who Cares Wins," chief executive officers from financial institutions such as ABN Amro, Goldman Sachs and Morgan Stanley are convinced that in a more globalized, interconnected and competitive world the way that environmental, social and corporate governance issues are administered is integral to the quality of a companies' overall management approach. Performing better in this area allows companies to increase shareholder value by properly managing risks, anticipating regulatory action or accessing new markets, while at the same time contributing to the sustainable development of the societies in which they operate.
APEC member economies agreed with this assessment when they discussed the issue in Lima. Reflecting on and responding to the concerns of consumers, investors, and other stakeholders is good business strategy because investors and financial analysts often view a sophisticated approach to CSR as a sign of sound, long term corporate planning and risk management.
Encouraging dialogue at an APEC Seminar on Corporate Social Responsibility at Lima's Chamber of Commerce in February, CEMEX's Director of CSR, Ms Martha Herrera-Gonzalez, asked delegates how "to integrate the social environment within deeply rooted business processes and how does this integration translate into growth for the company and the development of communities?"
By addressing issues such as increasing its competitiveness, reducing impacts and contributing to society, CEMEX hopes to create a "virtuous circle" in which operations improve, costs are reduced, and positive relationships develop with its stakeholders, which include local communities, governments, regulators and non-governmental organizations.
"CSR is a reflection of how business is conducted and that at the same time, promotes the relationship between communities and companies," Ms Herrera-Gonzalez added.
Many companies in the Asia-Pacific region have already incorporated social responsibility concepts into their operations. But a comprehensive approach to sustainable development involves both government agencies and private firms working together to incorporate sustainability principles as well.
"Companies, for far too long, assumed they had nothing to add. But to learn about what's needed in the community, companies can ask their employees," said Trialogue Assurance Services Director, Michael Rea, a former senior manager for Sustainability Services for both KPMG and PricewaterhouseCoopers. Mr Rea emphasizes that it is no longer the sole responsibility of government to manage socio-economic welfare.
A comprehensive approach to sustainable development involves both government agencies and private firms incorporating sustainability principles into their operations. "Actually, government has a lot at stake," added Mr. Rea. "If you want to bring in direct investment from foreign companies, it is important for all companies to play by the same rules."
But while large companies face a whole set of standards to implement corporate social responsibility initiatives, small and medium-sized enterprises have a better opportunity to bring about a full scale change in practice.
The issue will be included on the agenda when APEC Economic Leaders meet in Lima in November 2008.
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