The View from the Boardroom - UNDP Trinidad and Tobago

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The View from the Boardroom - CEO Study on Corporate Social Responsibility in Trinidad and TobagoCHAPTER 1CSR in Trinidad and Tobago – Strategic Evolution or Preserving the Status Quo?“CSR affects yourcorporate image. To theextent that your corporateimage that is out there ispositive then one wouldexpect there to be sometype of benefit fromthe sales perspectivethrough support fromthe communities. It istherefore a good businessdecision as it creates apositive corporate imageand that should lead tomore people supportingyour company.”Errol Le Blanc, CEOUnicomerSecondly, in overseeing theirrespective CSR programmes andbudgets, 60% of all CEOs mentionedthe criteria of Employee Motivationand Team-Building in defining thebusiness case for sustainability action.This result reflects positively on theprogress seemingly made in the area ofinternal CSR and in raising awarenessabout the business benefits of differentforms of employee engagement suchas corporate volunteerism. Ratherthan seeing investment in employeerecognition, fair labour practices andWhat are the most important considerations forhow you define the Business case for CSR?11.4%25.7%60.0%71.4%Brand, Trustworthiness and ReputationEmployee Motivation and Team-BuildingIncreased competitivenessLicense to operate in communitiesvoluntary participation of staff incommunity development activities asa financial burden on the company,an increasing number of managershave come to appreciate CSR as away to strengthen competitiveness,reduce operational costs andincrease productivity as a result ofimprovements in staff motivation andsolidified team structures. Thirdlyanother important filter throughwhich CEOs assess the value thatCSR can add to the commercialsuccess and market of the criterionof obtaining a License to Operate inCommunities. Such emphasis on theimportance of securing social accessto local communities highlightsthe ‘environment gatekeeper’ and‘peacemaker’ function that corporateinvolvement in the developmentof fenceline communities has formany industries and business types.Recognising the license to operate as amain element of the CSR business casecan be seen as an acknowledgementby local businesses of the crucialimportance of communal buy-in asit relates to approving and acceptingtheir presence and operations on theground. As one executive has put it:“It is this concern about the operatingenvironment, and a firm’s license tooperate which provides much of theimpetus for many corporations […]to undertake a broader role in societalaffairs.” 14Securing community support forcommercial operations has thepotential to help boardrooms,particularly those of multinationalcompanies and their local subsidiariesto reduce the costs associated withpossible delays in production andextraction caused by social activism,various forms of civil unrest andcommunity resistance againstcorporate investment and timeconsuminglegal battles. As such,it increasingly seen as a tool for riskmitigation. And finally, 11.4% of allCEOs interviewed for this reportmentioned Increased Competitivenessas an important feature of theCSR business case. Such firm-levelcompetitiveness gains through CSRmay be achieved in the realms ofcosts savings as well as throughvalue creation in the fields of humanresources, customer relations,innovation and risk and reputationmanagement. 15 The relatively lownumber of CEOs whose thinkingabout the commercial relevance ofCSR is guided by considerations ofgaining a competitive advantage14 Dr. Gary Dirks, ‘CSR – A View from BP’, Speech delivered at the CSR Forum, held at the School of Economics and Management, Tsinghua University, China, April 2004.15 See European Competitiveness Report 2008, pp. 107-116.22
The View from the Boardroom - CEO Study on Corporate Social Responsibility in Trinidad and TobagoCHAPTER 1CSR in Trinidad and Tobago – Strategic Evolution or Preserving the Status Quo?“If, instead, corporations were to analyse their prospects for socialresponsibility using the same frameworks that guide their corebusiness choices, they would discover that CSR can be much morethan a cost, a constraint, or a charitable deed – it can be a source ofopportunity, innovation and competitive advantage.”Michael Porter and Mark Kramerthrough the integration of social andenvironmental principles into theiroperational frameworks seems to pointat a persistent belief that sustainablepractices are not providing a hardtool for succeeding in the marketplacebut merely a soft instrument witha positive effect only on corporatereputation and community relations.Among those CEOs in Trinidad andTobago that recognise the connectionbetween CSR and competitiveness,some associated such convictionwith a fundamental shift in howstakeholders treated with the conceptof corporate responsibility. Ali Khan,Managing Director of the HiltonTrinidad, explained: “I have seenmajor changes over the past sevenyears. CSR almost became somethingof a fashion. Sustainability becameyour competitive advantage, how youDoes your company hav a CSR strategy?48.6%51.4%YesNowere responsibly behaving towardsthe environment, towards the workers,your vendors, your suppliers and howyou were able to show that you havewhat it takes to be responsible towardsgood causes.”While philanthropic approaches inthe practice of CSR in Trinidad andTobago continue to play a dominantrole, more than half of all CEOs in thissurvey said that their company utiliseda CSR strategy in its operations(51.4%). Among the elements thatstrategic planning frameworks forCSR would traditionally entail arenonprofit partnerships, sponsorshipsand financial donations, reportingrequirements, corporate governance,community investment and employeeengagement. This result does notsuggest much improvement over thepast few years in terms of a strongeralignment of core business processeswith CSR activities (‘Strategic CSR’)when read against the 2008 CSRMapping Report which found that30% of all companies had not focusedon such an alignment while 70% werein fact operating within some sort ofstrategic sustainability framework.Furthermore, having a CSR strategydoes not necessarily mean alignmentof business and sustainability portfolioas these strategies may and oftendo exist in isolation without beinginterconnected. One of the reasonsfor the problem of misalignmentof CSR and business and for thepersistently strong emphasis on cashgrants, material donations and theirpublic relations effects can be foundin the phenomenon of ‘distributiveoverstretch’ which means that acompany seeks to support a myriad ofsocial causes with an only limited CSRbudget. This approach of ‘handingout to all and sundry’ is often basedon an eclectic choice of causes andbeneficiaries without paying sufficientattention to the company’s competitivecompetencies when seeking to satisfyexpectations of a maximum numberof aid recipients. In such a scenario,no strategic choices for corporatesocial investment are being madeand no prioritisation of allocatedresources is taking place. The abilityto document, highlight and ultimatelymeasure the economic impact of CSRand thereby illustrate the relevance ofsocial engagement for the bottom linedetermines the conceptual solidity ofthe business case. Arguably one of themost challenging aspects of CSR thatvery few companies in Trinidad andTobago have tried to investigate is toestablish a causal nexus between theirsocial investment and their financialperformance. According to the survey,the overwhelming majority of CEOs– 94.3% - have never undertakencompany-internal analyses of the oftenclaimed link between CSR and thecompany’s competitive performancein the market.23
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The View from the Boardroom - UNDP Trinidad and Tobago

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