Engineering: issues, challenges and opportunities for development ...

ENGINEERING AND HUMAN DEVELOPMENTket forces. This view is often associated with the economistMilton Friedman in his influential article, The social responsibilityof business is to increase its profits. 44 The problem withthis perspective is that it overlooks the social contract thatexists between the corporation and the state. The primaryresponsibility of business is the production and distribution ofthe goods and services that society needs. The right to makea profit from this social function is granted to corporationsby the state and demands justification. CSR is an attempt tojustify this right by responding to society’s changing expectationsof business.The objections to CSR from campaigning and market economyperspectives both have important lessons. Robust regulationis necessary to curb unrestrained corporate behaviour andensure compliance with minimum standards. This is particularlyimportant in the developing world where workers andpoorer communities are especially vulnerable. But unlockingthe full potential of the private sector also requires incentivesthat encourage companies to go beyond compliance withminimum standards and innovate in delivering high standardsof social and environmental performance. Getting this combinationof regulation and incentives is of critical importance indeveloping the second generation of CSR.CSR and the engineering industryThe engineering industry and its clients have been at the forefrontof the development of CSR in recent years. There are twoimportant reasons for this. First, the markets for its goods andservices are increasingly shifting towards the developing world.A number of factors have combined to boost governmentexpenditure and increase demand for infrastructure and services.These include several years of record economic growthin many low and middle-income countries prior to the currenteconomic crisis, sustained increases in natural resource commodityprices over the long term and higher levels of developmentassistance. The OECD estimates that through to 2030,telecommunications, road, rail, water, electricity and otherenergy related infrastructure will require investment equalto 3.5 per cent of global GDP. 45 This means we should expectapproximately US$2.6 trillion dollars to be needed annuallyfor constructing new and maintaining and replacing existinginfrastructure by 2030. Developing countries will be majorgrowth centres for the engineering industry in the next twentyto thirty years.in close proximity to them. Companies must manage theirrelationships with the disadvantaged who are either directlyor indirectly affected by their operations, as well as a range ofother stakeholders who tend to prioritize poverty reductionincluding governments, NGOs and international agencies. CSRoffers companies a way of managing these complex relationshipsand building a ‘social license to operate’.Of course there are a range of additional factors that are alsodriving the need for a second generation of CSR that applyacross industrial sectors. These include pressure from campaigners,shareholders and ethical investors, the demand fornew technologies, compliance with global frameworks suchas the UN Global Compact 46 and the growing recognition thatresponsible companies tend to attract and retain the bestemployees.Identifying opportunitiesWhen fully integrated into corporate strategy, CSR canbecome a source of opportunity and competitive advantage,and a driver of innovation. Jane Nelson has proposed aframework of four strategies for individual firms to strengthentheir contribution to local development and poverty reduction(Figure 1). Three of these strategies, compliance withregulation, charitable contributions and managing costs, risksand negative impacts, represent the conventional corporateresponses to managing social issues. The more innovativefourth strategy ‘creating new value’ combines improved socialoutcomes with competitive advantage and is a critical principlethat underpins the second generation of CSR. Porter andKramer refer to outcomes based on this principle as ‘sharedvalue’. They argue that the most valuable corporate societalcontributions, ‘ …occur when a company adds a social dimensionto its value proposition, making social impact integral tothe overall strategy.’ 4746 See http://www.unglobalcompact.org/47 Harvard Business Review, December 2006, Harvard University, Cambridge MA. pp. 10.Second, the core activities of the engineering industry, suchas building, maintaining and operating infrastructure, exploitingnatural resources and large-scale manufacturing, impactdirectly on the lives of poor people and are often conducted44 Friedman, M. The Social Responsibility of Business is to Increase its Profits, The New YorkTimes Magazine, September 13, 1970.45 Organisation for Economic Cooperation and Development (2008) Infrastructure to2030, OECD, Paris.© Arup Evinos Dam, Greece.51