Companies must continue to invest in corporate responsibility initiatives in an economicdownturn and embed them into their business strategies for long-term sustainability andsuccess. That was the highlight of the recent StarBiz-Institute of Corporate Responsibility(ICR) Malaysia forum, which comprised panellists CIMB Foundation chief executive officerDatuk Mohd Shukri Hussin, Media Chinese International Ltd and Sin Chew Media Corp Bhd executive director Rita Sim, Microsoft (M) Sdn Bhd managing director Yasmin Mahmood and Nestle (M) Bhd managing director Peter Vogt. The forum, held in conjunction with the StarBiz-ICR Malaysia Corporate Responsibility Awards 2009, was moderated by ICR Malaysia chairman and PricewaterhouseCoopers Malaysia executive chairman Datuk Johan Raslan.
That was the highlight of the recent StarBiz-Institute of Corporate Responsibility(ICR) Malaysia forum, which comprised panellists CIMB Foundation chief executive officerDatuk Mohd Shukri Hussin, Media Chinese International Ltd and Sin Chew Media Corp Bhd executive director Rita Sim, Microsoft (M) Sdn Bhd managing director Yasmin Mahmood and Nestle (M) Bhd managing director Peter Vogt.
Q: Does corporate responsibility (CR) still matter in a global financial crisis?
Datuk Mohd Shukri Hussin: Yes, CR matters especially in an economic downturn compared with a booming economy. Our group CEO has stated that CR will be accelerated at CIMB.
Our biggest CR initiative is the setting up of CIMB Foundation, the vehicle for the group’s CR activities, in 2007, focusing on three pillars namely, education, community development and sports development.
The CIMB Group has pledged RM100mil to the foundation for the next three years.
We are moving from ad hoc, event-driven and donation-based initiatives to more impactful and sustainable activities.
In 2008, the foundation funded 128 projects with RM8.5mil grants approved and in 2009, we expect to fund over 150 projects with a projected budget of RM16.5mil.
Q: What is your comment on the perception that CR is a one-way investment and just a cost?
Peter Vogt: There is a big risk that once things get tough, you might cut back on CR if you finish your business strategy and then think later about doing CR.
At Nestle, we embed our shared value strategy with our business strategy. We look at all our value chains to see where we can integrate CR into the business.
CR is not an afterthought at Nestle; whether business is good or bad, we will still do it. Combining CR and business strategies is good for the business and community and enables us to have better sustainable long term initiatives.
What could be emphasised more in a crisis is getting costs under control and a good way is to look at reducing or eliminating waste as it is a cost and an environmental problem. As a food company, Nestle’s focus is on nutrition, water and rural development.
Q: Small and medium enterprises (SMEs) have felt severe stress in the current crisis. Does CR have any place in their corporate agenda?
Rita Sim: SMEs do not have large resources like public listed companies (PLCs) and multinational corporations (MNCs), so protection of their business in a crisis is most important to them.
Companies that survived recessions were those that protected their employees and helped their suppliers, thus protecting the supply chain and this is linked to CR. Companies cannot start their business again without employees.
In a crisis, suppliers may go out of business and this will affect the supply chain especially if the supplier is a critical one.
In the current crisis, the supply chain is critical as many suppliers were affected and went out of business.
Managing CR in a downturn
Q: How do global companies such as Microsoft view CR in the workplace in these difficult times?
Yasmin Mahmood: CR in Microsoft has a very unique flavour.
The approach that Microsoft takes towards CR is to integrate it in our business philosophy in two ways.
First, our mission statement talks about realising people’s potential and collectively, the nation’s potential.
Second, the heritage from our founder Bill Gates, as someone who gives back to society and this is inculcated in Microsoft’s DNA.
We chose three pillars to focus on in difficult times – education and developing human capital; building the local software economy and driving innovation as well as bridging the digital divide.
Microsoft invested RM3bil in the Microsoft Dreamspark Programme to further develop technology skills and spur innovation among tertiary students in the country.
To drive innovation in the local software economy, we are investing RM300mil in the Microsoft BizSpark Programme over three years to catalyse start-ups.
In difficult times, we must go back to the basics.
We need to strengthen fundamentals not only in business leadership but also employee engagement as a reminder that there is a longer term vision.
During an economic downturn, CR is not only relevant but crucial to ensure that business leadership and the spirit of the people are anchored in the long term for a more sustainable impact.
Q: Should trying to stop corruption be part of a company’s CR and what should companies do to reduce the amount of corruption in the system?
Yasmin: As a MNC, we have strict corporate governance and standards of business conduct. For us, it is zero tolerance no matter where you operate. It goes beyond CR into corporate compliance.
This covers issues such as fair business practices, security policy, harassment and even ensuring diversity of talent in a particular country.
In these times, we have to be cautious that in the zest of being creative while doing business, the creativity can push the limits of CR and our standards of business conduct guidelines.
We ensure there is increased awareness and provide reminders to all our people to adhere to our values.
Sim: I sit on the board of an oil and gas company that has very strict policies – clear whistle-blowing policies internally, ethics policies and anti-corruption policies.
It has a whole department managing this and comes out with booklets on business practices to be given out every year to its partners.
All the staff will be given handouts to carry in their pockets as well.
Vogt: We have a compliance steering committee that I chair, compliance champions in each unit to ensure that all laws and regulations are followed as well as local and group/global auditors to check all issues.
No corruption is one of the elements. If we follow all the regulations correctly, I believe there is no need for corruption.
There may be a need for corruption only if a company tries to cut corners.
Q: What is the CR message for Malaysian companies expanding abroad?
Yasmin: To become global companies, we have to adhere to global values.
Compliance and ethical business conduct is a must, not an option. We must put a stake to the ground that we do not want to participate in what is not in line with our corporate philosophy.
We can still be successful by doing it the right way.
Sim: The private sector can do a lot but when the private sector and the Government have such a close relationship, the Government must also take steps in the same direction.
Who governs the Government as it is not subject to stock exchange rules?
For example, Sin Chew Media Corp did a merger and dual primary listing on the Hong Kong Stock Exchange (HKSE) and the local bourse.
Compliance was very strict on the HKSE and we had to follow. This is a way for Malaysian companies to lift their standards in terms of governance.
For Malaysia, it is the public sector that needs a lot of work and someone must drive this.
The private sector is affected by corporate governance rules from the stock exchange but the next minute, you read in the newspaper about things that are wrong in the public sector. It is really tiring to run PLCs.
We have to comply with the regulations from the stock exchange.
Q: During a downturn, cost efficiencies are also very important. Can the panel share some of the CR initiatives put in place to enable these cost efficiencies?
Vogt: We have a big initiative worldwide called Nestle Continuous Excellence programme, where we look at the value chain and all areas where we can eliminate waste.
We look at the whole flow of goods and how we can maximise and optimise the flow of food from the farm to the consumer in the most efficient way to cut cost and reduce discharge to the environment.
There are targets to achieve and measured by key performance indicators.
Everyone is generally very positive and enthusiastic about this. It is only when there are too many initiatives that people get cynical.
Shukri: At CIMB, cost efficiencies are done through leveraging and smart partnership. For example, choosing more efficient equipment as a solution.
This year, CIMB formed a strategic partnership with HP Malaysia to roll out more environment-friendly technology throughout CIMB’s branch network and it has been effective.
Yasmin: At the start of the downturn, Microsoft rolled out a campaign to help customers save money globally.
The highest cost of technology is in the data centres to manage the many servers, so we rolled out a cost efficient technology which also helped save carbon footprint and electricity by a significant amount.
Another technology we rolled out was unified communications that enabled tele-conferencing, video-conferencing and voice-conferencing and this reduced travel costs significantly in Microsoft and for our customers.
Sim: We formed a cost reduction initiative team and it was very successful. There is print waste and non-print waste so we have to look at the two to decide where to bring down costs.
About 50% of the cost in a newspaper company is on printing.
So we focused on the newsprint and chemistry of producing a newspaper. We used recyclable newsprint. We also had a big programme on ink.
Q: To take CR to the next level, should policy makers introduce more incentives, green taxes or investment allowances?
Shukri: We are already in a highly regulated industry. I think it is the corporates that have to be burdened with the bulk of it.
However, we do not mind tax incentives. Moreover, Malaysians like awards, so there should be more awards given out.
Vogt: I understand that the National Green Technology Policy was just launched and that is very good.
I believe the Government’s role is to incentivise and push the private sector to utilise all kinds of modern technology to improve especially on environmental issues.
That will create more jobs and give Malaysia an edge. It will be good for exports as well. That is the opportunity for the country in future.
Q: Governments are pushing for more green technology using incentives and disincentives and penalties Do you think being green retards the competitiveness of companies?
Vogt: The Government should look at positive incentives rather than penalties and disincentives.
We also have quite a lot of laws and regulations; it is more important to make sure they are really enforced.
There has to be more resources allocated to enforcement rather than preparing new laws.
Sim: Companies have many stakeholders and we must still return dividends to shareholders.
We should not be taking over the role of the Government in CR.
It should be complementary. One of the things Malaysia should be looking at is reducing corporate tax when companies have a certain amount of spending in CR.
Yasmin: Environmental sustainability is an agenda that is not high enough in the country. Green technology is still at a low in terms of awareness, sensitivity and appreciation around the world.
If there is Government intervention, this is one area to accelerate awareness.
Q: PLCs are implementing CR partly to comply with Bursa Malaysia’s requirement. Would there be an impact on bottomline if companies don’t implement CR? What is the formula for your CR budget?
Shukri: We have never been big on CR. In our case it’s not really compliance but rather a restructuring of the whole group.
We looked at the mission statement, vision and corporate philosophy and asked “What is it that we want to do?”
This is where we identified four stakeholders – shareholders, employees, community and regulators.
That’s how the idea of the setting up a foundation came about. CR is also a function of the profits that you make or the revenue that you raise. However, I am not at liberty to disclose the amount.
Yasmin: Yes, it will affect bottomline in the long run provided the pillars of your CR programme are aligned to business-relevant initiatives.
If you just put aside money and use it based on whatever donations are requested and disbursed on an ad hoc basis, then it becomes purely an expense.
However, if you were to align it with things that really matter for the organisation, it’s a win-win situation.
Vogt: If we want to be successful in the long term, we have to contribute. You can’t just do business and walk away. We have to contribute to society and to the nation building agenda as well.
An example is the National Plan of Action For Nutrition of Malaysia by the Health Ministry. There are a number of points in the plan where our nutritional, health and wellness strategies are fully aligned.
I think this alignment is absolutely critical. On the CR budget, I don’t have a budget that I sign off for CR as it is all embedded in different parts of the company.
Sim: The Sin Chew Daily is 80 years old this year. We are very connected to the Chinese community.
In fact, even before the word CR came about, we were already doing work in the community. We have done work in education and embarked on initiatives on crime. We have an internal budget for CR but it is programme-driven.
Supply chain management
Q: How would you manage your supply chain especially the small and medium enterprises (SMEs) in a downturn?
Vogt: We have been mentoring SMEs in good manufacturing practices (GMP) and quality improvement initiatives for many years.
We have also worked with the SMI Association of Malaysia and now we have a new co-operation with Small and Medium Industries Development Corp (Smidec) and the Halal Development Corp.
There is an opportunity to export halal products and we believe this is where we can use our knowledge and resources to help SMEs.
Yasmin: The best help we can give the SMEs is to ensure that payment is (taken care of) to help ease their burden. That’s in a small way. The bigger part is more towards SME development in general.
The level of technology adoption for SMEs in Malaysia is still very low compared with other countries. We will launch a programme with our partners to empower Malaysia’s SMEs with the right technologies to be globally competitive soon.
Sim: One of the things we did with our vendors was to develop a software to help them improve their business. The supply chain is very important because if anyone of them goes out of business, it will affect you. So, you have to identify who your critical suppliers are.
·To participate in the StarBiz-ICR Malaysia Corporate Responsibility Awards 2009, contact email@example.com or call 03-2072 2130. Online submission has been extended to Sept 30. For more information, log on to www.thestar.com.my/starbizicrm/