vineri, 1 aprilie 2016

Shariah-based CSR

The four volumes of The World Guide to Sustainable Enterprise are a continuation of The World Guide to CSR, published 5 years before. A continuation, not a sequel, as the two books are part of the same ambitious project: creating a ready-reference compendium of the most responsible economic entities all around the world for the use of sustainability practitioners.

Without having read The World Guide to CSR, I can confidently say that the sustainable enterprise guide is a much larger work in size, scope and ambition. The need for this updated and upgraded work was obvious to the author and it also seems evident for everyone involved in the field: it is not just an expansion of the size (the four volumes encompass 101 countries as opposed to the CSR's guide 58), but it is also a necessary review of a very fast changing field. For the sake of comparison, it's like a better picture of the same individual 5 years later.

The shift in the title, from CSR to sustainable enterprise, is a subtle, yet important one: practitioners of the field have noticed that CSR understood as investment of part of the profits in charity projects, as a mostly unwanted add-on tacked on top of the business-as-usual chase for share value maximization is just a highly inefficient corporate white washing. Going the full length in social responsibility means striving to eliminate the negative impact of the business and sometimes even tackling and finding solution to existent social and environmental issues. The second shift is the dropping of the C for corporate as social responsibility is not the exclusive domain of corporations, but a matter that concerns everyone. In business terms, solutions for sustainability can be found at the SME level as well as corporate, and often the small business level proves to be more fertile when it comes to turning social and environmental issues into business opportunities. 'We want to showcase companies and projects that are bringing disruptive solutions to our global challenges, rather than code-compliance or incremental change.' says Wayne Visser in the introduction to the book, and we are soon to find out that, while 'disruptive solutions' are possible in corporate environments (like SABMiller plc did with the sorghum beer in Uganda), large companies are rather slow to adapt and changes are incremental rather than revolutionary.

The project is valuable and salutary and it should be acknowledged by any sustainability practitioner. The only doubt I have about it is that the book format is the most appropriate one: things are moving at a fast pace in sustainability and whilst a book can be a great snapshot , an excellent state-of-the-art, it cannot capture the fluid nature of the changes in this field. To my mind, an online portal would make much more sense: it can be constantly updated, it can be permanently expanded and in today's highly digitized world it can also be much more accessible for a greater number of people. I'm not aware of any similar initiative in the online, but I feel it would be most welcome.

Past the general considerations about the four-volume work, I do have another objection specific to this first volume addressing Africa and the Middle East: despite their geographical closeness, the two regions are so vastly different in culture, social issues and economic development that treating them together in alphabetical order paints a very heterogeneous picture. Lebanon and Lesotho have as little in common as do Saudi Arabia and Senegal. Separating the countries by region rather than by letter would have provided the reader with a much more consistent picture of the regional issues and developments.

The main conclusion to be drawn from the sub-Saharan Africa's country profiles is an optimistic one: the narrative on Africa is changing. The continent is no longer torn by endless civil wars and genocides, human rights infringements have dropped substantially. Clearly, much work is still to be done: there is still widespread corruption, a significant percentage of the population are still living under the poverty line, access to water is still difficult for millions of people throughout the continent and while the low average age of the population is cause for optimism, low access to education and a very acute skills gap are hindering economic development.

I have selected two cases to illustrate my point: Eritrea, where 'President Isaias Afwerki has remained in office since independence in 1991 and the People's Front for Democracy and Justice (PFDJ) is the only political party in Eritrea.' and where, under such an uncontested regime people's empowerment is still just a bed time story, and Rwanda, a country that has made significant progress in terms of ensuring a stable political climate for the economic development to take of but where, however, 'businesses struggle to find skilled workers, with 48% illiteracy and only 5.7% of the population tertiary educated. Malnutrition affects large sections of the population and has detrimental impacts on productivity.' There is little the government can do in terms of investment when 'Tax revenues are limited, since the income of most Rwandans is below the taxable threshold. In fact, 75% of taxes in Rwanda are paid by just 200 taxpayers. (The Economist, 2012)'

The MENA region tells a completely different story. Although just an eclectic a mosaic as the Southern part of Africa and with some countries struggling to get over civil wars (Iraq, Syria) or very recent revolutions (Egypt, Lybia), on average the MENA countries have higher GDPs, stronger governments and tend to rank better on the Human Development Index. The main issues are environmental, with desertification a permanent threat, and shifting the economical paradigm from a heavy reliance on fossil fuels extraction to a diversified and primarily knowledge based economy.

The success story that most appeals to me in this first volume is Jordan, a country roughly half the size of South Carolina, but with a very forward thinking policy:

'According to the UNHCR (2014), approximately 618,420 registered Syrian refugees have settled in Jordan as of November 2014, currently making up over 9% of the Jordanian population. Jordan has a long history of hospitality towards refugees; it also hosts 28,809 Iraqis as of June 2014. Similarly, the UNRWA (2014) reports that the country is currently hosting approximately 2,070,973 registered Palestinian refugees as of January 2014 (of which approximately 370,000 live in camps) making up over 18% of the Jordanian population.
In addition to its commitment to open borders, the Jordanian government decided early on to allow Syrian refugees access to public services, such as health facilities and schools, and subsidies extended to Jordanian citizens, such as those on energy, water, bread and gas.'

While this open border policy must surely put a strain on the country's resources, it also ensures a great payback in the medium and long term: Jordan will benefit from an influx of the most precious resource, the human capital, the one that the European Union seems to be so scared of nowadays, and it will emerge as a beacon of stability and a regional power.

Another quote to appeal to the current European wave of islamophobia comes from Saudi Arabia, about an asset management company: 'SEDCO Capital only had to shift under 1% of its already Shariah-compliant investment to ensure ESG compliance (Environmental Social and Governance). Both, for instance, negatively screen industries such as alcohol, weapons and pornography.' While personally I would dispute the negative screening of alcohol industry and, to some extent, even of commercial pornography, it is interesting to see how close Shariah compliance comes to the Western-centric CSR standards.

Another success story to attract attention is the Lebanese-born Sarah's Bags, and I will close my review with another two quotes, the first one drawn from a very Chomskian perspective of the Iranian company Tam Iran Khodro, and the second one from the author's introduction, summing up his main creed, to which I fully subscribe:

'Companies must identify their role and admit their liabilities towards the society. Financial gains must not be the sole objective of the company and we must invest for the development of the society.' (Tam Iran Khodro)

'We desperately need to reinvent capitalism to help smooth the transition to a low-carbon, more equitable and sustainable society' (Dr. Wayne Visser)