CSR reporting has been in vogue in many multinational and progressive national organizations for quite some time now. However, this is still a new idea for many organizations and they are either unaware of the concept or don?t know how to report on the triple bottom line (TBL).
Penned below are the major challenges for TBL reporting as part of a corporate strategy towards image building, marketing, transparency, as a stakeholders’ management tool and for other purposes. The points below are based on the writer’s experience with the Programme for Industrial Sustainable Development and opinions thereof.
1. Informal Work Culture
The business community is culturally introverted in Pakistan and does not like to share or demonstrate their good work. The scaling up of progressive initiatives is therefore restricted. Small and medium businesses are typically afraid of proper documentation given the trust deficit with government agencies and their tendency to evade taxes and practice financial transparency. ‘Seth’ organizations, as they are notoriously called, are run as family entrepreneurships and don’t consider it necessary to adopt fair practices, working ethics and legal obligations as corporate citizens of Pakistan. Bribery and corruption as business lubricants are avowedly and frequently used in their dealings with government departments. The distinction in corporate philanthropy and personal philanthropy of the owner is rarely distinguishable in their accounts books.
Collective bargaining through formal workers’ union is taboo even in big corporations. The dealings with the employees are based mainly on the mood and personal decisions of the owner or top management. Workers’ hiring, firing, training, safety and health issues are not subject to any prescribed and written code of organizational rules. A majority of the workforce is hired on a temporary basis even in big industrial and agricultural enterprises through external contractors and even basic human rights are sometimes violated in such arrangements.
Unless work culture are formalized and proper documentation, monitoring and record-keeping become usual business practices, TBL reporting will remain a farfetched idea.
2. Lack of Top Managements’ Understanding
The educational profile of the owners and top managers is an epic in most cases. The sophisticated concepts and ever changing terminology introduced by development sector agencies or academia are not always warm and welcoming. There is a need to make the discourse understandable and the terminology as much vernacular as possible. In order to avoid panic and fear among the owners and top managers, every effort should be made to avoid bombardment of fashionable words and phrases and the focus should be to bring them on board and win their commitment. Without their commitment, no action is possible from other tiers of management and workers. Professional ethics as consultants and privacy should be guaranteed also as tools to secure top management?s trust among such companies.
3. Lack of Capacity of Human Resources
As discussed above, workers are not obtained, retained or maintained in general as the companies’ most valued assets. They are rather often borrowed on a makeshift basis. Therefore, the majority of professional staff and workers are not properly educated and trained to carry the kind of paper work and record keeping required to prepare TBL-based reports. They need special facilitation and training to enable them to develop CSR reports. Due to the absence of the spirit of innovation, enterprise and ownership of their employer company, the staff and workers most likely offer resistance when change is required, in behaviour, working ethics or tools.
4. Lack of Government and Development Agencies’ Support
There are very few development agencies and NGOs working on the promotion of transparency and CSR reporting. The development projects have their own limitations as well. They are time and resource bound and as a general practice fail to meet sustainability criteria for project interventions. Moreover, these projects can reach and enable only a few companies and cannot bring about a cultural change in the whole small and medium sector. The government?s leverage is also very limited and doesn?t have any promotional scheme or facilitation mechanism to promote voluntary tools like TBL-based sustainability reporting in Pakistan.
5. Religious Notions
A very important factor is the interpretation of some religious injunctions which presumably shy away from the publicizing of philanthropic expenditure. There is a need to make the distinction between personal and corporate philanthropy understandable to people and the scaling up and catalytic effect that philanthropic ‘advertising’ can produce. TBL reporting can serve as a means to develop a better image of Pakistani manufacturers to the external and internal stakeholders and can air the fact that all is not bad with Pakistan’s corporate culture. One should make it clear that in an increasingly competitive business environment, CSR reporting can at least be used to offset negative publicity and can help improve the distorted image of ?local? companies with respect to their poor legal compliance record, allegations of corruption and malpractices such as child labour and environmental damage against them.
6. Resistance to Reveal Financial Information by Private Listed Companies
Public-listed companies have a more transparent profile and tend to belong to larger manufacturing and industrial groups. They conduct their financial audits regularly and make them available to the public and other stakeholders. Small and medium, privately owned companies are more hesitant to reveal their financial indicators of performance on a TBL format. And perhaps rightly so. Therefore, as a first step, only public listed companies and groups should be encouraged and facilitated to develop their sustainability reports on TBL.
7. Voluntary Tool
TBL reporting is a voluntary reporting tool. In most countries, including in Western Europe and North America, the quality, design, language, format, frequency and accuracy of indicators are also not universally standardized or, more importantly, made mandatory . There is limited public pressure on companies to develop their TBL reports on a regular basis. Consumers, for instance, are more price conscious than quality or brand sensitive. They are not willing to shift to ethical and sustainable consumption patterns themselves; therefore, companies don’t consider it necessary to portray their sustainability profiles. It’s a negative cycle of few people ‘putting their money where their mind/mouth maybe’.
8. Expenditure on Reporting
TBL reporting poses additional financial and human resources burden on the companies. As a general principle, private companies are least willing to spend on apparently non productive and qualitative items on their agenda. Many companies either don?t have their brand names or they rarely bother about generating the brand loyalty among the consumers. A cheaper (and more environmentally-friendly) alternate may be to generate electronic versions of TBL reports and upload on the corporate website for the general public, but most Pakistani companies of considerably big stature haven?t yet felt or considered to reap the benefits of a strong cyber presence.
9. Resource Constraints in SMEs
The financial and human resources constraints are the major problem in progressive yet entrepreneurial businesses. As this type of business is most hit by global and local competitive pressures, they are often struggling for their very existence. They believe that environmental or social care is a kind of luxury they an’t afford; some however, are learning the hard way, that this too is an investment which, if not made when the time is right, will translate into a cost that they really can’t afford.
10. Lack of Public Service Orientation
Businesses in Pakistan don’t seem to know or assume their roles and responsibilities as corporate citizens or as a responsible entities. In a cultural setting where the public enterprises are far from accepting their role as customer-focused organizations, the business community can hardly be blamed for their secretive practices or their unwillingness to channelize more resources to philanthropic activities and documentation of philanthropic activities.
Recommendations?
Following are a few recommendations to address some of the above mentioned issues with respect to transparency:
- The government could: a. take initiatives to improve governance structures of societal institutions to control rampant corruption, bribery etc. b. enforce legal frameworks and national and local laws.
- Employers should invest in awareness raising and training of their workforces. Development projects can facilitate the training of their staff and professionals to enable them to develop CSR reports.
- The media is liberal. It can promote change in public images and behaviors including financial, environmental and social responsibility of individuals and organizations.
- Practitioners could try to make the discourse understandable and simplify the terminology and concepts to make them as accessible as possible.
- Companies need to understand that documentation is the first step to performance monitoring, benchmarking and compliance of laws. Development agencies could start appropriate strategic programs for the capacity building of SME leadership.
