Why there is much more to CSR than just corporate charity
The term corporate social responsibility (CSR) has recently been widely heard across different business sectors. It has been the main focus of many events and conferences, and there is fierce competition among companies to adopt and apply this concept. It is a key component in the culture of corporate governance and the regulatory frameworks that affect both the corporate sector itself and the whole community.
To begin with, what exactly is corporate social responsibility? Briefly, it is a commitment by a company or institution to developing the economy, supporting communities and their environment, and making the public interest a primary objective.
Most people believe, erroneously, that CSR is limited to charitable donations by a company to society. In fact, the concept is much more complex and extensive than that. CSR may manifest itself in the nature of a company’s investments (since there may be beneficiaries in the community); its employment policies (which may play a role in increasing national competencies and reducing unemployment); and in its business dealings with other companies.
The CSR standards set by the World Bank are the clearest of the various definitions that have been emerging since 1962. They include firm and transparent management of the company, full commitment to employee rights, and a prominent role in community development and the surrounding environment.
As for the benefits to society of CSR, they are almost endless because of society’s great capacity to harness companies’ efforts to develop the national economy, provide opportunities to young people, sponsor forums and educational conferences, and many other examples. There are also important benefits to companies: CSR strengthens a company’s position, draws in qualified and outstanding employees, attracts capital and stimulates the investment environment.
Although corporate social responsibility is included in the corporate governance regulations issued by the Capital Market Authority (CMA), which emphasize the principles of CSR and the need to adopt transparency in the disclosure of community initiatives, there is a legal gap that accompanies the concept, and the commercial competition it may generate.
As a legal consultant, I see legal institutions as appropriate platforms to apply a new concept in community responsibility, that of free legal aid or pro bono. I am proud to be a member of the Takamul legal aid initiative, which establishes the concept of social responsibility in the legal profession. It achieves two aims at once, by providing free training to the trainee lawyer, who then has to repay those free hours by providing free legal aid for the community.
I strongly believe we are moving in the right direction to build a proper and decent social responsibility entity in the Kingdom, starting from the Council of Social Responsibility established by the Riyadh Chamber of Commerce and Industry. An attempt to create a legal framework for CSR was presented by the Committee of the Family and Youth to the Saudi Shoura Council, and was rejected last month because of reservations about how it was drafted. The proposed framework focused mainly on regulating CSR and the role of the private sector in sustainable development and community service.
I suggest that transparency in the disclosure of community-based business initiatives should be accompanied by advantages that would definitely encourage these companies and stimulate honest competition among them.
Finally, philanthropy is rooted in our religion and in our society too, so we should focus more on changing the perception of social responsibility as merely a charitable act or a facade to show off. I aspire to see it as an integral part of a board of directors’ strategic plans, rooted in a company’s internal policies and its initiatives toward society.
• Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif