“CSR is on the rise among top businesses in Georgia”

The FINANCIAL — According to Ketevan Vashakidze, Country Director of Eurasian Partnership Foundation, CSR is on the rise among top businesses in Georgia however overall there is very little awareness and limited practice of social responsibility among business community in the country.

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“I believe volume of CSR activities has been increasing in the recent year in Georgia,” Vashakidze said. “Local foundations, non-profits and international organizations promoting CSR have encouraged businesses to adoption socially responsible practices. Nowadays more companies in Georgia function with internationally recognized management practices including CSR that helps them in running their business successfully.

“CSR policies are usually two-fold: internal and external. I believe top Georgian companies have been improving on developing their socially responsible internal practices such as staff professional development. Some companies have started to go beyond that and increasingly socially invest externally, e.g. support socially vulnerable groups like IDPs, children with disabilities, arts and culture.”

Q. Do you think that interest in CSR as a business model is low in Georgia?

A. I believe that there is a rising interest in CSR in Georgia. However overall there is a lack of knowledge about strategic social investment. In general business in Georgia is quite young and still needs to do better in terms of developing modern management systems. CSR is more advanced in larger corporation which are quite few in Georgia. The CSR activities of the well-established Georgian banks and telecommunication companies are quite visible in the recent years. I believe this is rooted not just in availability of financial resources but well-run management systems and strategic planning. The political and legal environment is very important as well. When you have very centralized government that sends direct messages to business community where to invest socially, it is very difficult to make strategic decisions that would benefit strategic interests of both vulnerable communities and businesses.

Q. You mentioned that CSR is more developed in large companies. Is this a global practice or only in Georgia?

A. I think that this is a general trend. Larger companies lead the way in CSR activities and they have resources to develop it better and invest more. However there are millions of small companies around the world that start operating with this model as they launch business. There is a growing trend internationally of social enterprises, companies that generate profit to reinvest in a social mission.

Q. What are the latest trends in CSR? Are they entering the Georgian market as well?

A. I think the general trend is that companies, even small ones, are becoming more and more international. We are leaving in a globalized world that affects the way we do business or deal with social issues. Especially large international corporations understand that they can no more afford to tackle problems only locally. I think that international corporations have a clear understanding that global problems need to be solved with global approaches. Borders play fewer role in CSR activities. Another trend in CSR is investment in innovations that can come from anywhere in the world as well. Today’s world is all about innovations in every sector of economy, art or culture and of course science. The big factor nowadays is the financial crisis that certainly affects CSR volume and the ways it’s done.

I have not seen much of emphasis on global outreach or innovations among CSR activities in Georgia. I think even the most visible social investments in the arts and culture are somehow focused on traditional forms rather than experimental art. There is no much investment from business community in science either.

Q. Do you think that the CSR message is only being heard and acted upon by large companies? Why should small and medium businesses implement CSR activities?

A. If well planned and executed CSR is rewarding both for company and community they invest in. The main benefits of CSR are usually expanding customers’ base and making them loyal, and reducing risks. . These factors are essential for small and large businesses alike.

Just to bring an example. A company is opening a hotel in a mountainous rural area. This company might want to invest in training local community to equip them with skills to be employed or produce goods that will be procured by the hotel or attract more tourists to the location.
Q. What is your general advice to companies in terms of CSR?

A. Probably the only advice I can give is to be strategic about social investment as they are about their general business practice. They have to evaluate how to get maximum social impact and also gain business-wise from their strategic social investments. Often companies decide not to run external CSR activities themselves but trust their funds to non-profits that are experience in delivering social impact.
Q. Which direction of CSR is the most important for Georgian companies?

A. I think this should be strategically decided by each and every company. However, overall one of the most pressing problems in Georgia is unemployment. One of the main aspects of this issue is lack of marketable skills. I believe businesses in Georgia can play very important part in investing both financially and technically in developing entrepreneurial and other employable skills.

Q. Which are the best and worst CSR practices in Georgia?

A. The most basic practice is when a company decides to place CSR functions under a sales department. As far as I am aware this is quite a common practice in Georgia. . Companies do a little better when they place CSR under their marketing departments. There is general acknowledgment that social investment should not merely benefit communities but business itself as well. However it looks really indelicate when company links it CSR activities directly to sales. It becomes clear that there is lack of strategic thinking in such a company.

Q. Do you think that CSR should be compulsory by law? This is an accepted practice in many countries.

A. I am not a supporter of “compulsory” investments even if they are socially oriented. I think at this stage we need to promote the concept of CSR as widely as possible among Georgian businesses. They should acknowledge that being socially oriented is both their responsibility as members of Georgian society and also is beneficial for their business. After the CSR is more practiced and better develop, business community itself can advocate for special guidelines to regulate the rules of the game. Right now there are certain clauses in the tax code that in theory encourage corporations to make charitable donations, however they have not motivated businesses to invest more and they have not been used widely either.

Q. How can CSR be further popularized in Georgia?

A. With multi-stakeholder public-private partnership efforts. The government, international organizations, non-profits and of course the business community in Georgia should more actively and rigorously work on promoting CSR and sharing good practices. I believe the role of business associations is very important in encouraging their members to disseminate knowledge about CRS practice and share their best experience.

Q. What kinds of activities does Eurasia Partnership Foundation implement in terms of CSR?

We have implemented many activities in this direction. In partnership with business associations we have held introductory presentations and trainings for company representatives. Right now we are trying to involve them more actively in our social projects. Most recently EPF’s Social Enterprise project activities resulted in a multi-stakeholder public-private partnership project of four leading business school students vigorously engaged in finding profitable business solutions for NGO community and social mission oriented enterprises (EPF partner NGOs promoting the concept and non-profits working on disables' issues), business community (Magticom, Alliance Group Holding and Aldagi BCI) contributing by recognizing student teams’ achievements by providing prizes and internships, business chamber (Association for Small and Medium Enterprises) providing free tax and legal consulting services to the participating student teams and social enterprises, and Tbilisi municipality’s commitment to provide the newly established social enterprise with funding in the form of low interest credit under the municipality’s special program.