The FINANCIAL — “Business ethics is still a must”. According to Michael Cowgill, President of Georgian-American University, Eurasia Partnership Foundation is supporting the development of a new CSR course which will be taught in the leading Business Schools in Georgia.
AmCham is now the official representative of the UN Global Compact Georgia Network aimed at fostering a sound CSR culture throughout Georgia. The United Nations Global Compact is the largest corporate social responsibility initiative in the world, encompassing about 7,700 members in 130 countries.
“To estimate CSR activities in Georgia, first, let’s define CSR. On the simplest level it is an organization “doing the right thing”. That includes doing the things that ensure success for the organization itself and most assuredly includes being profitable if that is the objective of the organization. It includes legal and ethical behavior and making decisions and using organizational resources in ways that enhance societal well-being – both in the short and long-term”.
Given that simple definition, I definitely see a growing trend in CSR awareness and activities from the actions of individual organizations, NGO’s, associations, UNDP’s Global Compact and the media attention, such as this special edition by the Financial.
Q. How companies in Georgia can benefit from Social Responsibility projects?
A. First, realize that although most of the CSR activities visible to society are implemented through projects, CSR should be thought of as a long-term strategy and process.
On a macro level, companies all benefit by a stable and healthy society – which can be enhanced by such socially responsible projects. Although individual company returns from CSR projects are harder to quantify, there is certainly a brand differentiation that comes from these activities.
Q. How does CSR affect on companies’ financial success and generally can responsible business prevent the recession? How Georgian society can support or encourage the development of Social Responsibility among Georgian businesses?
A. I believe that society can help by giving more business to those companies that are more socially responsible, which in turns also sets a standard of acceptance for all businesses.
As to preventing a recession, there are too many external factors in play which outweigh the positive impact of CSR.
Q. How society can benefit from Social Responsible Companies?
A. Society, especially through responsible organizations such as NGO’s, has a role in the success of CSR. In addition to what has been mentioned above in supporting socially responsible companies, the relevant NGO’s need to ensure a coordinated effort in determining the real societal needs, the priorities of those needs, and how best then to use the corporate resources available to meet those needs. Further, NGO’s should make sure that they qualify for the Government-approved list of NGO’s that are eligible to receive corporate funding.
Q. What are the key directions of CSR which should be definitely implemented? Why?
A. There needs to be more awareness of what other companies are doing, both here and abroad. There needs to be more of a focus on corporate governance, not just charity. As I mentioned above, I would also like to see more coordination among the NGO’s in determining societal needs and the best ways to meet those needs.
Q. Do you think that companies should invite representatives of international NGOs to provide a more informed understanding of corporate responsibility?
A. The more companies understand what is possible, the more will actually be done. I do believe that it is more effective if such international NGO’s collectively work through organizations such as UNDP’s Global Compact and business associations such as AmCham.
Q. Social responsibility of companies in Georgia is often expressed in Charity actions and it does not include benefits of company itself. What is the solution for switching existing social projects into sustainable activities?
A. You are correct that philanthropy gets the center stage. But remember that charitable giving cannot occur unless the company is making sufficient profits. More attention should be given to corporate governance.
As to sustainability, the companies need to really need to know that the social projects are effective – both to their individual success and to meeting societal needs. This feedback is another function the NGO’s representing society can provide.
Q. CSR might be considered a way of the brand differentiation. What are the ethical values that companies should use based on CSR? What are the corporate values that a company stands for in terms of CSR?
A. Ethics and values are intrinsic to a society – and are also dynamic. What was acceptable 50, 25 or even 10 years ago is not what is acceptable today. Most often the companies (and values) in Georgia are known and identified by their owners or senior management. None of us have the exact same concept of what is the right thing to do in any given situation.
Knowing what is the right thing to do – being socially responsible is not easy. Senior managers have difficult decisions to make every day and the outcome of a decision is not always known. For example, does the brand recognition/differentiation that comes from diverting resources to CSR activities provide a better long-term return than just the providing the owners more short-term dividends?
Q. How should companies build sustainable success in terms of CSR?
A. It must become a part of the corporate culture – even as the company changes ownership, management and staff.
Q. How should companies develop employees and the future workforce to build successful working lives?
There is a concept in business called internal marketing which means treating employees as clients. Be aware of their needs and wants. Involve them in the CSR activities. Encourage them to volunteer whenever and wherever possible. Employees are well aware of their company’s actions. When they are a part of something good – they are also happier and more productive.
Q. What actions should companies take to reduce climate change and prepare for a low carbon economy?
A. Most companies do not engage in activities that have a major affect on climate change or a low carbon economy. However, every organization can begin by at least thinking of ways to be more energy/environmentally conscious: efficient lighting, turning off devices when not in use, recycling paper, conservative water use, etc. Understand what you really can do – and do your part.
Q. Reporting is one of the main principles of social responsible business. Though very few companies in Georgia make public their financial information. In your view what can encourage companies to start making pubic reports?
A. I don’t agree that “financial” reporting is crucial to effective CSR. However, responsible PR is. What I mean is that for a company to benefit from the brand differentiation discussed above, it needs to make the public aware of its values and CSR activities. At the same time it must be very careful in ensuring it is not perceived as exploiting the very parts of society it is trying to help.
Q. What are the main challenges and obstacles of CSR in business nowadays?
A. Understanding or estimating the return to a company’s bottom-line for CSR activities is very difficult. Every decision has trade-off’s – and the uncertainty in how that decision affects short-term vs. long-term results and profitability is often just a guess.
Q. What kinds of changes are necessary to be made within the company in order to make CSR the part of business?
A. It must be made a priority from the top down and understood throughout the entire organization. As such, it should be part of the company’s mission & goals and appropriately addressed in the strategic and operational plans and budgets.
Q. Do you think companies in the same sector (law, consultancy, mining etc) which compete in the marketplace should cooperate together more in matters of social and environmental need?
A. When I was in the energy business, I belonged to an association of energy companies that believed safety was an industry-wide priority that was above the competitive level of individual companies. I see a similar need in CSR and one of the reasons AmCham has a CSR committee and why AmCham acts as the secretariat for UNDP’s Global Compact.
Q. Do you think the CSR message is being heard and acted upon only by large companies? Why should small and medium businesses implement the CSR activities?
A. I don’t think that is the case in Georgia. Admittedly, we hear more in the press about CSR activities in the larger companies, yet I know that many small and medium businesses are just as involved. And for companies with limited resources, employee-sponsored programs are very effective. Industry-specific associations can also help in coordinating activities of smaller companies.
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