Although the concept of sustainability is still in the early stages in the Arab world, the notion of giving is not. The Islamic moral foundation encourages businesses to have a sense of duty towards their craft and towards each other. It stands to reason, then, that Arab companies can identify with a model that appreciates this foundation and takes into account the socio-cultural nuances of the region.
Below, some dos and don’ts of creating a compelling case for corporate social responsibility and sustainability in the Arab world.
According to estimates, almost 80% of all businesses in the region are family firms. These businesses are quickly adapting to the new rules of the game. Money that used to simply go to charity is now being invested through corporate foundations or solid CSR programs. Although the governance systems of these businesses is not as sophisticated as public joint stock companies, they now have executive committees, independent audit committees, and independent advisory boards, all of which have led to more transparent and efficient business processes.
The most interesting feature of family businesses is what is called a family constitution or charter, a document that spells out families’ corporate values, their stance on ethics and philanthropy, and guidance on the use of charity funds. When trying to make a business case for sustainability, this unique governance system combined with the family constitution can actually work to one’s advantage. Rather than trying to introduce an unfamiliar model that may or may not gel with the family values, why not work with what you have and make it better?
There is a sense of ambivalence in the region following the Arab Spring. Volatile times such as these demand that possible risk as well as opportunities are factored in when making a case for responsible corporate actions. For example, the prospect of continued unrest in the region could mean a higher consumer expectation for the corporate sector to step up to the challenge of addressing social issues. How would this impact the way companies approach social challenges? What other “inescapables” are expected? More stringent regulations in your industry or the Arab Spring decreasing investor confidence in regional markets? Like all business decisions, a case for sustainability requires factoring in the future and being prepared for possible scenarios that could impact the direction and outcomes of the proposed action.
Finance often poses the biggest challenge when it comes to selling sustainability. It is best to have someone in finance as a confidante so that you get a deeper understanding of the business and are ready with the answers and financial justification for the proposed action.
Most people in the region still assume that sustainability, environmental performance, and social responsibility will inevitably cost money. The notion of CSR as an investment is still rather alien to the region. When pitching CSR and sustainability to companies in the region, do think of solutions that result in benefits in more than one dimension. One example is the focus on programs that employ the local work force. Nearly 60% of workers in the region are expats, while 25% of the local nationals are unemployed. About 80 to 90 million new people will be entering the working-age pool in the region over the next 10 years, so the situation demands the input of the corporate sector. By creating local hiring programs, businesses lower their reliance on foreign labor, resulting in lower human resource costs and winning brownie points with governments while at the same time creating economic opportunities for the local community.
According to this report, the region spends $2.7 million per quarter on advertising and other promotional activities. This demonstrates that the market has accepted PR and advertising as a business imperative. CSR and sustainability does not enjoy the same status and when positioning sustainability as an image-building exercise, one common mistake is ignoring the other possible uses of these funds. Be ready to demonstrate how your proposed actions will benefit the business and society in a more meaningful way than that beach-cleaning activity proposed by the PR team.
In a study done by Barclays Wealth that looked at attitudes towards philanthropy globally, Saudi Arabia, the largest economy in the Arab world, ranked 3rd out of 20 countries in considering philanthropy as a top priority. This attitude towards “doing good” is prevalent in the region, though it is often guided by religious directives. The socio-religious context demands some level of social service from companies and by reducing sustainability to a purely profit-driven action, you risk losing rapport with the decision makers.
CSR programs in the Middle East are heavily skewed toward developing programs for companies’ fence-line communities rather than more macro-level approaches. This stems from the belief that the primary responsibility of a company is to be a good neighbor. When initiating contact with a company on a sustainability agenda, try and make it as simple as possible. This is not to suggest that it should be shallow and cosmetic but that it should be easy to grasp and fit in well with their perception.
The market is not that responsive to sustainability issues and the business benefits may not translate as readily as one would expect (although it is showing signs of improvement). Positioning sustainability as the magic bullet can actually prove to be counterproductive. As tempting as it may seem at the time, avoid the urge to pitch your idea as the solution to all of a company’s financial woes. The return on investment often takes years to be realized and you risk losing credibility when the client doesn’t see immediate benefits.
It is best to start with an initiative or program that falls under the definition of a “quick win” and for which you do not foresee much resistance. Sustainability is still uncharted ground for most businesses in the region and by opening too many fronts, you risk facing reprisal or even rejection.
The social issues are often radically different from other developed economies and issues such as women’s empowerment and labor rights are still sensitive due to lack of governmental endorsement. The mainstreaming of sustainability practices into the overall business strategy should not be done in a generic manner. They should be pursued in a culturally sensitive way.
Trying to make a business case is hard, especially in a region that does not appreciate the intrinsic benefits of a responsible approach. Peter Drucker is quoted as saying “the proper ‘social responsibility’ of business is to … turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth.” Sustainability champions can make lives easier for all involved if they can remember this basic premise while pitching the cause to management.