Friday, November 18, 2005

How can a company grow by giving back?

Published on Sunday, September 04, 2005

Elvera N. Makki, Contributor, Jakarta

Ironically, this is still a question frequently asked not only by new emerging companies but also by big multinational ones, amid the era of what we call corporate social responsibility (CSR).

Nowadays people talk about it although some have no clue as to what it is and how to implement it properly, and how to make it in line with corporate business objectives.

In the United States, the CSR concept has been deeply rooted in the life of the people. According to the U.S-based Natural Marketing Institute, almost 90 percent of the American people believe in the importance of corporations paying attention to their impact on the environment and society rather than solely focusing on profit.

According to the survey made by the institute, 70 percent of consumers say they prefer to buy products produced by companies that pay serious attention to CSR activities, and nearly 50 percent stated that they would be more likely to buy stocks from such companies, rather than from those which do not really care much about the impact of their operations on the environment.

Larry Parnell, the principal of Canada-based Nomad Strategic Communications has said that most businesses, not just natural resources-based companies, need social license to operate and expand. The social license can be obtained only if the companies have a strong commitment to protecting the environment and the society from the impact of their business activities.

In Indonesia, the concept of CSR is considered new although it has actually been implemented here for a long time, such as through donating food from employees to an orphanage; fund-raising to donate consumer goods or clothes in the fasting month.

There are, however, weaknesses in those activities; first, the programs only gives momentarily support and there is almost no long-term benefit in it.

The type of help the company provides should be toward sustainability; that way, there will be strong engagement between the company and the community around it, thus, a company and its stakeholders.

One bad example of what corporations did was when they tried to take the advantage of the tsunami tragedy in order to boost their image.

Second, a good reputation cannot be achieved over night. It requires continuous commitment from the company's management and employees. Just giving food or clothing especially on a once-off basis will not enhance the company's image in the long term.

With that in mind, one of the key ingredients in formulating CSR programs is to firstly make it a business priority and make it a part of a comprehensive communication strategy. Public relations as the communicator should lead the way in doing and communicating the programs effectively.

Some corporations, both local and foreign, reluctantly communicate their social programs to the public and stakeholders, partially due to a belief that doing good expects no reward hence, no communication is needed. Of course such a perception is misleading.

This can be due to a lack of creativity in packaging the programs and the medium in sharing the information. CSR programs should be done seriously, innovatively and with full commitment over the long term so that they are strong enough to draw public attention.

Why is it so important to communicate CSR activities to others?

Dita Amarhoseya, Corporate Affairs Head of Citibank in Indonesia, has said that communication is a huge part of conducting CSR programs because the audience has the right to know what the company is doing for the community, especially if the company invites its customers to be involved in donating funds to, for example, communities affected by the tsunami.

She says that communicating CSR activities can create a snowball effect where people, including prospective employees or potential investors who read or hear about the programs may be encouraged to do the same and be part of the company.

The basic principle in CSR programs is to create long-term CSR activities in order to achieve the maximum impact for both the company and community.

She notes that it took approximately five years for Citibank to achieve recognition from the public and its stakeholders for its CSR activities under the umbrella of Citibank Peka (Peka is an acronym of peduli (care) and berkarya (to do good). The word peka itself means to be sensitive).

Initiated in February 1999, Citibank Peka (CP) focuses on education, communication development and natural disaster relief.

Another good example of a corporation that takes CSR seriously is PT Astra International (Astra). The setting up of Posko Banjir Astra (Astra Flood Post) in some key places during the massive floods in 2001 created an immediate and tremendous awareness among Jakartans.
Astra has developed comprehensive CSR programs ranging from community development, providing loans for SMEs, focusing on environmental, health and safety issues to giving scholarships and automotive entrepreneurship training.

One thing that needs to be improved is the provision of regular and current updates on its CSR programs to stakeholders, "That is what I see lacking in Astra and other major corporations," says a CSR consultant Eva Muchtar.

So how to measure the success of CSR programs?

Logically, the measurement will be how far the expectations agreed upon are executed and whether the programs were completed according to the plan or not.

Parnell has suggested corporations start developing comprehensive CSR programs by conducting a thorough audit of the needs facing their communities; making resource commitments consistent with their business skills and corporate strategy; to follow through and then communicate the results both within and outside the organization.

CSR will do absolutely no harm to a company's reputation (as long as it is done ethically), employee morale, product sales or market valuation to use CSR guidelines as a leading indicator of what investors, the government and the general public expect of corporation today.
In the long run, the corporations may well benefit as much as the people and communities their support.

Remember, actions do speak louder than words.

The writer is a full time member of Public Relations Society of America. She can be reached at

1 comment:

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