CSR is becoming more integral for companies in Asia

While triple bottom-line reporting, social audits, and ethical investing are increasingly de rigueur for US and European multinationals , two realities are emerging in the area of corporate social responsibility (CSR) in Asia.

While triple bottom-line reporting, social audits, and ethical investing are increasingly de rigueur for US and European multinationals , two realities are emerging in the area of corporate social responsibility (CSR) in Asia.

First, the CSR agendas for most Western-based multinationals operating in the region are driven by demands from corporate headquarters to ensure US- or European-based reporting meets expectations of stakeholders at home (e.g., NGOs and investors). Secondly, the CSR activities of both Western and Asian multinationals are more aligned with corporate philanthropy (e.g., giving programs) versus CSR (i.e., meeting the expectations of stakeholders for a company operating in a particular industry in a particular market or set of markets).

The result from both of these is that CSR in Asia is focused on ensuring minimum compliance as opposed to embedding CSR as a practice that enhances business outcomes. For communicators operating in the region, this translates into a continued focus on routine, ad hoc business, and product-driven communication at the expense of using communication as an enabler of business outcomes by emphasizing information-rich, highly relevant, open, and interactive relationships with key stakeholders.

In year one of a three-year study of stakeholder groups in Asia, Edelman and its research partner, Wirthlin Worldwide, started with a premise that relationships with stakeholders are critical to driving business outcomes and to driving perceptions of corporates as "responsible." The study examined the current communications environment for corporations, the drivers of stakeholder opinions of corporations, and how social factors play into relationships.

The study covered 330 government officials, senior business executives, NGOs, upscale consumers, and media across Korea, China, Hong Kong, Taipei, India, Malaysia, and Singapore.

After six years of economic chaos, our stakeholder groups are finding reason for optimism. Nearly 75% said they felt that the region's economies and corporations are on the right track.

The key reasons cited: corporate profitability (18%), improved economy/higher GDP/ better lifestyles (16%), and solid corporate management/good corporate strategic planning (15%). We feel that corporations are communicating in an environment that finds stakeholders predisposed to support them.

However, we also found that nearly 25% of those surveyed believe the direction of corporations is off-track. Thirty-two percent feel corporations are either overemphasizing profit making or taking short-term views of the markets. These views are driven by NGOs and governments.

While it would be easy to conclude NGOs and governments are looking for corporations to have a greater focus on social factors, we feel this is a hangover from the region's prolonged economic downturn (with the notable exception of China).

Getting to the heart of creating and managing mutually beneficial and enduring relation- ships between corporations and stakeholders, we asked study respondents - in an open-ended question - to name the factors critical to them when considering the amount of effort they were willing to invest in managing corporate relationships.

The top two factors, by a considerable margin, were knowing and respecting the company's leadership, and the quality and relevance of the products/services/brands offered by the company in a particular market.

This, we believe, points to an imperative for corporates to get executives visibly and substantively engaged in dialogues that match stakeholder needs to corporate core competencies. This is a big shift from the more common practice of using executives as spokespeople around product and/or service initiatives.

It is also worth noting that the third most important factor to stakeholders was the profitability of the company in question. In contrast to many stakeholders in North America and Western Europe, generally speaking, larger and more profitable companies are held in higher regard than their smaller, less profitable counterparts. This is particularly true when stakeholders are considering how and where to invest their time and resources in managing long-term relationships.

In developing opinions about what makes corporations "responsible," stakeholder views focused on areas directly related to core business attributes and/ or core competencies.

Examining attributes that more than half of the respondents ranked as important for a "good, responsible" corporation (a ranking of seven or higher on a 10-point scale, with 10 being absolutely essential), characteristics related to products and services, management, business performance, and staff development were dominant. On the other hand, half or fewer of the respondents believed more socially-driven factors, such as communicating openly with employees, were very important.

The key point for corporates is to understand the difference between CSR and corporate philanthropy. CSR efforts must focus on business tangibles and core competencies that form the basis of a company's social contract with stakeholders. The top two factors for "good, responsible" were "provides top-quality products/services/ brands" and "acts immediately" to address issues related to products/services/brands. Corporates in this region too often rely on generic corporate giving to cement social contracts instead of using management strength and product/service competencies to drive relationships and CSR.

Three imperatives emerge from this study for multinationals operating in Asia. First, start with a focus on relationship outcomes and their impact on CSR activities, not on driving a communications message. Second, building relationships with key stakeholders means understanding their priorities and what factors they use when forming opinions about corporations. Finally, expectations of responsible behavior start with factors driven by a corporation's core competencies.

  • Alan VanderMolen is president of Edelman in Asia Pacific, based in Hong Kong.

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