FEATURE – CSR

Responsible Business And Sustainable Development

Corporate Social Responsibility (CSR) has emerged as a top priority for businesses, with more and more companies moving beyond the traditional concept to incorporate significant aspects required to make their businesses more responsible and sustainable, especially in the context of a circular economy that the world is now placing emphasis on. There is also growing expectation from businesses in terms of their contribution to society as well as environmental sustainability. Swaliha Shanavas speaks to some of the key industry players across sectors to understand their approach to CSR and how they are addressing the social and environmental impacts of their activities, and contributing positively to sustainable development through this business approach.

While CSR has become a familiar term in general, “the more novel and fundamentally different practice of Creating Shared Value, or CSV, remains less understood despite its growing adoption by leading multinational companies all over the world,” says Karine Antoniades, Creating Shared Value & Public Affairs Manager, Nestlé Middle East. CSV is the “fundamental way Nestlé does business across the entire value chain,” and to achieve success the company creates value not only for shareholders, but also for the society at large including farmers who supply its products, its employees, as well as consumers and the communities where it operates, she adds.

Agility’s business is guided by a CSR policy “rooted in an ethical code that prescribes how we work with our employees, engage communities and safeguard the environment. Our culture of responsibility and giving back strengthens our relationship with customers and shareholders,” states Frank Clary, Director, Corporate Social Responsibility, Agility. Their CSR team works across their subsidiaries and company functions like operations, HR, IT, etc., to identify avenues to drive in and grow sustainability from within, and the team’s efforts benefit their customers, their bottom line and the broader community, he notes.

Philips Lighting is committed to driving the sustainability agenda as part of their “pledge to improve the lives of three billion people a year by 2025” and CSR is a major part of their sustainability programme “Brighter Lives, Better World”, says Luiza Salvino CSR Leader Middle East and Turkey, Philips Lighting. “We focus on delivering human-centric light, which helps people to see, feel, and function better. We provide off-grid and underserved communities with access to light, enhancing safety, improving quality of life and facilitating opportunities for financial empowerment. We also actively work towards creating a safe and healthy workplace for our employees. For a Better World, Philips Lighting aims to deliver 80% of its total revenues through sustainable products,systems and services by 2020, with an operational commitment to be carbon neutral by the same time,” she adds.

Air Arabia, the leading low-cost carrier (LCC) in the Middle East and North Africa, “was among the first in the industry to introduce a sustainable CSR initiative by launching ‘Charity Cloud’ in 2007” in collaboration with Sharjah Charity International to support the socio-economic development of underprivileged communities globally, says a spokesperson for Air Arabia. The CSR programme aims to raise funds for various initiatives through on-board donations. The fund is raised, collected annually and re-invested in educational and medical care establishments in needy countries across Air Arabia’s network.

Additionally, in 2015, the airline collaborated with Bee’ah, the region’s leading environmental management company, to share knowledge in key areas relating to both commercial activities and CSR projects. The partnership supports sustainable environmental practices and helps promote a more prosperous and greener Sharjah, says the spokesperson, also expressing that “Air Arabia remains committed to managing and recycling waste in an eco-friendly manner.” The staff are encouraged to get involved in various activities and projects supported by the company. The company also follows a policy of minimising printed paper and heavily depends on recycling to implement green practices such as the ‘Reduce, Reuse and Recycle’ awareness campaign to encourage employees to be mindful of wastage, as per the spokesperson. Furthermore, Air Arabia has adopted a policy of adding only brand new aircraft to its fleet to reduce emissions to the minimum.

Emerging trends

Among evolving trends in CSR is the growth in the number of organisations offering services and solutions to companies to help them understand the positive economic impact of company operations, says Frank Clary. Another trend, he says, is that companies are emphasising the economic impact in their CSR reporting and they are also placing greater emphasis on economic and social impact from jobs created and shared value generated from company activities.

“There’s also a growing interest in understanding and harnessing positive impact from trade-enabled development,” he notes. For instance, when they develop a new warehouse, distribution facilities or other operations in emerging markets, there is a net positive impact in operations like the reduction of food spoilage and product availability in the marketplace. Product availability is critically important for industries like medicine, pharma, IT, engineering & construction, etc. “Agility has made a large number of supply chain infrastructure and technology investments in emerging markets because we see real opportunities from these investments and the overall value they generate in terms of trade-enabled local development,” Clary comments.

The UN’s Sustainable Development Goals (SDGs) aim to achieve the 2030 global sustainable development agenda. While governments will tackle the SDGs implementation at a national level, there is a need for collaboration and contribution from all other segments of society, and the goals will not be achieved without meaningful action by business, Karine Antoniades emphasises. Globally, she says, they are framing their Creating Shared Value agenda closely with the UN’s SDGs 2030. “Having had the opportunity to participate in developing the SDGs, the private sector has also assumed responsibility towards delivering those goals.”

An important fact is that consumers no longer accept unethical business practices or buy from organisations who act irresponsibly, Luiza Salvino says. “In fact, multiple studies show that a majority of consumers are more likely to engage with companies that actively contribute to a better world. This is particularly the case for millennials who are shaping purchase decisions more and more. In this context it is easy to understand why CSR is being embraced by all parties; companies, non-governmental organisations and consumers,” she remarks

Commitment to society and environment

Nestlé’s aim is to enhance the quality of life and contribute to a healthier future, and nutrition, health and wellness are at the core of their business, says Karine Antoniades. “Globally, we have defined three overarching global ambitions to support the 2030 Agenda through the following activities: Help improve 30 million livelihoods in communities directly connected to our business activities; Help 50 million children live healthier lives; Strive for zero environmental impact in our operations.”

Nestlé Middle East was first in the region to publish forward-looking commitments to CSV in the areas of nutrition, responsible sourcing, water, environmental sustainability, and people & compliance, she says, and 11 out of their 20 commitments are focused on nutrition, to build nutrition knowledge with science and research, offering healthier products choices and “inspiring people to lead healthier and happier lives.”

Agility is working to ensure their Fair Labour programme that focuses on protecting the rights of their employees and contract workers continues to grow, says Frank Clary. Since 2010, they have trained more than 10,000 employees as part of this programme and they are also working with the employees globally to help them engage with their communities on issues related to youth and education, community health, environment and humanitarian logistics. He says they provide more than 150 grants a year and have reached over a million people in 80 countries since 2006 through their Community Volunteer Programme; and they are working to raise awareness about environmental issues, reduce their environmental impact and provide green solutions to their customers.

A commitment to CSR will surely help support environmental, social and economic aspects of a particular community, Luiza Salvino opines. Within their CSR initiative, they have four main areas of action, she says. These include: Lighting lives–Philips Lighting partners with NGOs in Brazil, Lebanon, Africa, Indonesia and other regions, to bring quality lighting to communities which are off grid or underserved; Light entrepreneurs–They transfer business and technical skills to local entrepreneurs who can influence communities and enable sustainable lighting solutions; Energy awareness–Their employees volunteer at schools to raise awareness about energy efficiency amongst children; Humanitarian Light–The company supports communities impacted by, or vulnerable to natural or manmade disasters and donate products for emergency relief.

“One project I am particularly happy about is the one we are executing together with Jusoor, an NGO which helps refugee Syrian children continue their education outside Syria. We will install close to 200 LED lighting fixtures in three of the schools managed by Jusoor, saving energy, supporting the children’s learning and contributing to the wellbeing of teachers and staff. We have also committed to donate 4,000 solar lamp kits to the families in Beqaa who are now living with very limited access to electricity,” Luiza Salvino comments.

In the last 10 years, Air Arabia’s ‘Charity Cloud’ has built multiple clinics and schools in various communities in the region, spreading across Sudan, Yemen, Bangladesh, India, Sri Lanka and Egypt as well as many aid campaigns across various communities, says the company spokesperson. Over 70,000 patients have received medical treatment across the initiative’s clinics so far and over 30,000 patients are treated annually. Each ‘Charity Cloud’ school caters to some 300 students every year. In addition, the programme has launched over 70 aid campaigns in over 12 countries across the Middle East, North Africa and Asia regions.

Environmental responsibility and accountability – Positive trend

Agility has measurable and reportable goals and their major environmental reporting goals are related to their own operational CO2 footprint from fuel and electricity consumption, and business air travel, says Frank Clary. They also estimate the CO2 emissions from customer shipments in their outsourced transportation operations. “About 93% of emissions from our business come from outsourced, non-owned transportation supplier assets that we use for our transportation business. The remaining 7% comes from our warehouse and owned asset operations. We also track the percentage of our workforce that is working in ISO 14001 certified operations, and right now that’s about 53% of employees in our core logistics business.” Regarding the Community programme, he says they track employee participation, projects undertaken and the number of people that are positively impacted by the programme.

Philips Lighting’s sustainability strategy and achievements are reported quarterly through their Investor Reports and they have six main goals, says Salvino. They include: Sustainable revenues – measures revenue from the sale of products, systems and services that have a positive impact; LED lamps sales – they had achieved 628 million LED lamps by end 2016 avoiding over 15,000 kilotons of CO2 emissions; Carbon Footprint – energy saving initiatives, on-site renewable electricity generation and purchase of renewable electricity helped reduce carbon footprint by 54% since 2007; Waste to Landfill – aims to ensure their industrial sites become more effective in reducing, recycling, and re-using waste, with the ultimate objective of achieving zero % waste to landfill; Safe & Healthy workplace – injury prevention programme creates a safe workplace for their employees. The main KPI is the total recordable cases of injuries and accidents; The Sustainable Supply Chain goal consisting of auditing and certifying their partners against sustainability performance indicators like waste management, disposal of regulated substances and overall operational efficiency.

Targets and objectives are realistically set to meet growth standards and benchmarks, says the Air Arabia spokesperson. “The ‘Charity Cloud’ programme is a key pillar of Air Arabia as it fosters a strong link between the company’s strategy and its commitment to supporting sustainable business practices.” Some of the CSR projects that the company supported in 2016 are: Morocco–Staff visit and donation by Air Arabia Maroc staff to the SOS Children village, and assisting widowed women by distributing necessities in Nador; Bangladesh–Educational training Centre and new charity cloud children’s clinic; Sri Lanka–New charity cloud rehabilitation centre for woman; Egypt–New charity cloud dialysis centre, New charity cloud children’s school in Sohag, and Staff participation in an awareness marathon for the 57357 children cancer hospital; Bosnia and Herzegovina–Children’s Garden renovation project in Sarajevo, Water system renovation; Sudan–Buying new fishing boats, Medical awareness campaign; Oman–School bags distribution.

Nestlé works directly with more than 5,600 suppliers in the Middle East and they ask suppliers to adhere to the company’s supplier code that defines responsibility standards, says Karine Antoniades. “Today, more than 50% of our sourcing is from compliant suppliers. We perform more than 40 responsible sourcing audits per year to both demonstrate and further improve compliance with the Nestlé Supplier code. We continue to educate suppliers to commit to source responsibly through the 4 pillars: Labour Standards, health and safety, environment and business integrity.”

Dell Inc. recently reported the first 2020 Legacy of Good update that recognises key CSR achievements for the combined company following Dell’s merger with EMC. The plan outlines Dell’s long-term commitment to society, team members and the environment. As a result of the merger, the company has a broader technology portfolio, more engaged team members and greater resources to address the world’s most pressing challenges, says the company.

“Bringing together Dell and EMC in September 2016 gave us an opportunity to reflect on our progress and establish a core set of commitments that represent the best of both companies,” said Trisa Thompson, Chief Responsibility Officer at Dell Inc. “We have a newfound energy as we think about the opportunity we have to put our combined portfolio, expertise and resources to good work. It’s already encouraging tremendous innovation that will benefit our customers and our world.”

The updated plan and goals reflect how Dell and EMC came together with a shared commitment to people and the planet. For example, the combined company has increased its investment in STEM education for underserved youth. To help cultivate an inclusive culture, the company has extended its flexible work programme to legacy EMC team members. As a combined company, Dell achieved part of its American Business Act on Climate Pledge to plant 1 million trees to offset carbon emissions and restore natural habitats around the globe.

As per the report, Dell has, as part of their community initiatives offered expertise and technology for 2.3 million underserved children directly and over 10 million people indirectly through strategic giving programmes; Since FY14, Dell employees provided over 3.3 million hours of community service in the areas in which they live and work; Dell’s partnership, funding and technology enable TGen to accelerate and improve treatment plans for cancer patients.

In terms of the environment, Dell highlights they exceeded the initial 2020 goal of using 50 million pounds of sustainable materials in its products and adjusted the goal to use 100 million pounds of recycled-content plastic and other sustainable materials. The company began shipping the XPS 13 2-in-1 in packaging made from ocean-bound plastics and made a public commitment to increase annual usage 10x by 2025 as well as open source Dell’s supply chain to encourage broad use of ocean plastics by other companies. The company has recovered 1.8 billion pounds of electronics, 88 percent of the way toward its 2020 goal to recycle 2 billion pounds of used electronics. Further, Dell says they are committed to tracking suppliers’ adherence to standards for working hours, human rights, health and safety, and environmental conditions and work together to resolve issues.

Moving towards a circular economy

“Since 2010, Nestlé has reduced waste by 99% in our manufacturing sites, while our production volume increased by 57%. By 2020, we aim to achieve zero waste for disposal in all our sites globally,” Karine Antoniades underscores. They are committed to helping reduce food loss and waste and in 2016, Nestlé CEO Paul Bulcke joined Champions 12.3: a coalition of government, industry and non-governmental organisation influencers dedicated to accelerating progress towards halving food waste by 2030, she says. “This will enable us to contribute to a circular economy and allow us to secure our agricultural supplies while having a positive impact on society.” In many countries though, they face challenges to improving their resource efficiency due to a lack of public material recovery and recycling infrastructure, and instances where they are required by local legislation to send certain materials to landfill, she emphasises.

Waste management and recycling are critical functions within a circular economy, which is dependent on resource availability and smarter supply chains, so having the right ‘waste’ materials integrated into the supply chain, and having visibility of those materials, is important, says Frank Clary. “We think there are several challenges in creating a full circular economy. The first of these is behavioural. Not everyone understands that this is an imperative and a market opportunity, but that will change over time. A second challenge is technology. Not all materials that are recoverable in a circular economy are being recovered. There are gaps in physical process and information management technology that need to be closed if we want to get to a fully circular economy. The technology hasn’t caught up to the need – partly due to costs. But as technology capability improves, we expect this to change.

Agility has invested in a materials recycling company in Kuwait that specialises in recovery of scrap metals and plastics for re-sale in the international marketplace, says Clary. “We have also developed closed-loop solutions that have been implemented in our operations, including in the technology hardware industry where we manage product returns for re-manufacture and recycling. There is also considerable re-use of packaging materials in our operations. In some operations we use the revenue from recycling for employee welfare programmes. We see the circular economy as an important part of the future of supply chain management as well as manufacturing.”

Finite resources coupled with population growth are creating a huge environmental challenge; and over the next two decades, it is estimated that the middle class will expand by another three billion people, which will drive demand for energy, materials and goods. For a sustainable future, the transition from a linear to a circular economy is essential, says Luiza Salvino. “Through our Circular Lighting strategy we adapt the way our products are designed and offered to the market, providing economic benefits to customers, and environmental benefits to society. Our products are now designed with components which can be individually replaced. This will reduce maintenance costs and means that the entire fixture does not have to be recycled, resulting in the greatest possible reduction in raw material consumption,” she notes.