No Child's Play: Tackling Child Labour in Pakistan

The serious issue of child labour is as multifaceted as it is serious. It follows then that resolving this issue requires concerted, often collaborative and always non-sequential effort from several stakeholders across the public, private and civil society sectors. These efforts have a new entrant: the Federal and Provincial Ombudsmen in Pakistan. In partnership with a wonderful team at UNICEF Pakistan, I was privileged to have led the initiative of establishing a Children's Complaint Office as part of the institution of the Federal Ombudsman of Pakistan and later in the offices of the Sindh Ombudsman and Punjab Ombudsman. These Child Ombudsmen offices will help protect and promote child rights and fill a massive void in the justice system by providing access to children to have their grievances redressed. Hitherto, the only recourse was to approach the courts, which are largely inaccesible to children, costly and time consuming. The Ombudsmen, by their very nature, resolve disputes and redress rights through mediation and are therefore quicker and their services are free to the public. The Federal Ombudsman has already started offering an online complaint service and others will follow this model soon. Moreover, the Child Ombudsmen will address systemic issues and hold public agencies accountable for their acts of omission or commission in relation to child rights.

The Punjab Ombudsman recently held an official launch of its services in Lahore. The occasion served to remind everyone of some grim facts: there are over 3m child labourers in Pakistan; the enforcement of existing laws and compliance with the UN Convention on Child Rights is poor; and agencies dealing with child rights tend to under-resourced and on the fringes of priority of policy makers. Although not discussed at the event, one also has to realise that the Child Ombudsmen's jurisdiction does not extend to private sector organisations. In that respect, its work on child labour will be focused on holding public agencies accountable for their actions to prevent and reduce child labour, including in the private sector.

Ofcourse, child labour continues to be tackled by other stakeholders. Ever since Life Magazine broke the story in 1996 about Nike using child labour to produce its footballs in Pakistan, Pakistan has come under scrutiny. Nike owned up to its mistake and has since launched a rehabilitation program and now requires its supply chain vendors to not employ any child labour and if they do, to take him/her out of the factory, provide education and re-hire them only when they were legally employable. The story scarred both Nike and Pakistan.

Subsequently, the ILO in Pakistan has implemented several industry specific and broad based projects, aimed at reducing child labour. These projects have had strong allies in the respective industries and have helped clean up the country's image a tad, if not remove the scourge of child labour.

Two issues arise from this overview: one, to address child labour issues in private sector organisations, what should be done? Establish private sector Ombudsmen or extend the jurisdiction of the public sector ones? Get the SECP involved through its Code of Corporate Governance? And what about using SMEDA to tackle this issue as a priority?; and two, what steps can or should companies take to prevent use of child labour not only in their own factories, but also down their supply chains? Export-driven industries have to meet certification requirements from buyers, but what about companies catering to domestic markets? The new National Child Protection Policy is under finalisation, but it too does not offer any answers to either of these issues. The UN Global Compact's Pakistan network also has little to show for its efforts on this front, although it counts the Employers Federation of Pakistan as a member.

The search for solutions to this issue, it seems, shall continue.

Bringing Better Corporate Governance on Board

Absence of adequate professional capacity is a persistent bane for efforts aimed at developing a strong corporate sector anywhere and Pakistan is no exception. Along with cross-representation of family members on Boards which tends to lead to conflicts of interest and to a hazy corporate culture, the fact that members on Boards of Directors are not always up to speed on the cutting edge of knowledge, international best practice and even the country's own laws and regulations, weakens corporate governance. The promulgation and enforcement by the SECP of the Code of Corporate Governance in 2002 has helped raise standards but has a supply-side bias and does not stress capacity building of Board members enough. Now it seems the regulators may finally be taking steps to correct this.

According to a report in the daily News, the Karachi Stock Exchange has been directed by the Securities and Exchange Commission of Pakistan to amend its listing regulations to include a provision that members of the Board must possess a certification under a Board Development Series, an internationally accredited Director Education Program developed by the Pakistan Institute of Corporate Governance. This regulation would be implemented in phases, with at least one member of the Board to have this certification before 30 June 2011 and thereafter, every following year minimum one director on the board "shall acquire the said certification under this programme".

The Pakistan Institute of Corporate Governance was established a few years back as a not-for-profit company and hopes that this Business Development Series, which is accredited by RiskMetrics Group of USA, and allows for due recognition by rating companies when evaluating the participant’s organization, will strengthen corporate governance in Pakistan.

Time will be the judge of whether this aim is met.

CSR in the Textile Industry

Saw this very interesting article in the China Daily, which highlights steps taken by the top Chinese textile firms to improve their CSR practices and reporting. From this report, it does appear that it's not just window-dressing, as sometimes these things tend to be, because the steps indicated--improvement in working conditions, fairer wages, more efficient use of energy--all are substantive initiatives that clearly show the integration of CSR within operations.

Interesting to note that not a single Pakistani textile firm has signed up to the UN Global Compact (UNGC) network. While membership in the UNGC is not the ultimate test of commitment to CSR, it is a telling indicator.

Will Pakistan's textile industry take note of what their Chinese counterparts are doing?

Souring the Deal? CCP Claims Existence of a Sugar Cartel

Fresh from the traumatic ups and down suffered at the hands of the government as mentioned in a previous post, and smack in the middle of a perennial sugar crisis, the Competition Commission of Pakistan (CCP) appears to be back in full swing, claiming in a report submitted to the Supreme Court of Pakistan, that the preliminary results of its investigations into the sugar crisis pointed to 'collusive behaviour and prima facie cartelisation'. Snippets of the report can be read in this news story in the daily Dawn.

Interestingly, the CCP website also carries a Policy Note on the alleged Price Fixing Agreement between the government and the Pakistan Sugar Mills Association (PSMA), allowing the fixing of prices at certain rates. In this Note, the CCP advises the government to scrap the Agreement since it amounts to 'legitimization of practices prohibited under law' and urges it to 'not provide any patronage to anticompetitive practices and measures that in effect promote and encourage collusive behaviour'.

All this brings three questions to the fore:

1. How responsibly are the Boards of the sugar companies, almost all of whom are listed companies on the country's bourses, acting?

2. What role has the Securities & Exchange Commission of Pakistan (SECP) played so far in reviewing corporate practices that another regulator is tagging so publicly as inappropriate and illegal?

3. With all and sundry apparently wanting to sweeten the deal for the sugar barons, will anyone in government pay heed to the CCP's advice?

Paying the Price of Confronting Pakistan's Cement Cartels?

I am thankful to Salman Naveed Khan, CEO of One Tree Hill, an integrated solutions firm based in Lahore, for pointing out to the news about the recent judgment of the Competition Commission of Pakistan (CCP), which concluded that 20 cement companies had formed a cartel; a heavy $77m financial penalty was also imposed by the Commission on the guilty companies.

Almost immediately--and somewhat predictably--after the judgment was announced on 27 August 2009, the Chairman of the CCP, Khalid Mirza, was sacked. The Prime Minister himself has denied that the judgment itself was the reason for the ouster and in a fairly bizarre move, overturned the order of termination of Mr. Mirza's contract and restored him for one month. This is the second time that Mr. Mirza, an ex-World Bank senior manager, has been shown the door because of what appears to be a principled and professional stand; his stint as Chairman of the Securities & Exchange Commission of Pakistan was also cut short, despite improvements he brought about in the institution.

Without going into details of this flip-flop decision making, the incident does send a poor signal to the regulators and also reflects on the immense political influence that the business community wields. As indicated in the judgment (click here to download it or go to www.mca.gov.pk--makes very interesting reading on how the business operates to the detriment of consumers) the cement industry has been notorious for its tendency towards cartelisation and has been found guilt twice before: in 1992 when the CCP's predecessor, the Monopoly Control Authority (MCA) found that cement companies had formed a cartel in the wake of the post-floods reconstruction; and in 1998, when the MCA determined that a cartel was formed to hike the price of cement by nearly 100%. This history aside, the fact that the regulator was willing to confront the business community for engaging in uncompetitive practices was an act that needed to be backed by the government. I am willing to believe that by appointing a professional like Mr. Mirza, the intentions of the government were nobler than they might appear to be in the wake of the recent charade, but commitment requires appropriate action to give it credibility; when put to the test, the government seems to have balked. The government would also be bucking the global trend, which has witnessed regulators eschew liberal, unregulated-economy models for a more balanced, stronger regulatory regime.

If the government does indeed back down and the judgment is not enforced or a compromise arrived at with the cement industry, aside from Mr. Mirza, it is the consumer who will be paying the price of confrontation. Wonder if the government ever considers that when taking such politically motivated decisions?

Participant's Death in Unilever's Reality TV Show: Who's Responsible?

The sad and tragic death of Saad Khan, a 32 year old contestant in a branded Reality TV Show that was intended as a promotional tie in for Unilever's Clear Shampoo, raises questions of where corporate responsibility begins and ends. The TV show, managed by media agency Mindshare and apparently produced by Mumbai-based production house Working Hands Production, was being filmed in Bangkok, when Saad drowned in a pond while performing a diving stunt, on August 19th.

The news of the death was first broken by Aarpix, an online ezine. In the aftermath of the anger, sadness and outrage that poured across the internet against Unilever Pakistan, the company's response was slow and predictable. Claiming that they had no role in the production of the show (which is true) and thus distancing themselves from any liability as regards the participant's death, Unilever did state that they were is in discussions to provide for Khan’s wife and four children ‘out of rightness.’ My old friend Fareshteh Aslam is the External Communication Manager at Unilevers and I'm confident that she will see this expressed commitment through. However, I do wish that her official response had been couched in more sensitivity than it appeared to be. I'm also disappointed that there was nothing on their website about this event. Ditto with the Pakistan Advertising Association and Mindshare.

Since all facts relating to the incident (for e.g. what legal documentation and safety precautions were in place) are not yet known, it would be unwise to speculate over what happened. What is clear though, is that the unfortunate event brings to the fore issues of responsible advertising, with the argument of sponsors--in this case Unilevers--being equally responsible for what their agencies and production partners do. To draw an analogy with the manufacturing industry, if Nike can be held responsible for ensuring good and decent work practices down their supply chain, why shouldn't sponsors of ads or branded TV shows be held similarly accountable?

Will follow this story as it unfolds and report here, but there is a need to build up public pressure for ensuring disclosure on the event. I've created this online petition which you can sign. Spread the word.

Meanwhile, spare a thought for the family of the departed and if you want to, visit this online condolence book set up by Aarpix.

Central Bank Moves to Scale Up Microfinancing

The State Bank of Pakistan amended the Prudential Regulations for Microfinance Banks (MFBs) to facilitate lending to the lower income groups. As announced by the central bank, the new Regulations allow MFBs to lend up to Rs150,000 for general purpose and Rs500,000 for housing purpose. It is widely believed that these changes have been made to scale up microfinance initiatives in the country by enabling greater lending to lower income segments, particularly for meeting low-cost housing needs. Pakistan faces a huge backlog of residential units, with independent estimates placing the number at over 6 million and the National Housing Policy at 4.3 million; microloans for low-cost housing are seen as instruments for bridging this gap and social entreprenurial ventures such as the Acumen Fund and Saaiban have been doing exactly this, with considerable success in Karachi and Lahore.

In another welcome move, the State Bank issued a circular calling on commercial banks to make SME loan application forms and other documentation available in Urdu, in addition to English. Given the low levels of literacy, this is a sensible step to facilitate SMEs and entrepreneurs and one wonders why this wasn't done earlier.

GRI Claims Sustainability Reporting Up

The Global Reporting Initiative (GRI) has published its latest database on companies reporting on sustainability issues. In terms of the numbers of reports, the top ten countries are:

1. Spain 128
2. USA 100
3. Brazil 64
4. Australia 56
4. UK 56
6. Japan 49
7. Germany 41
7. South Africa 41
9. Italy 38
10. Canada 36

Sadly, Pakistani companies do not feature in the top reporter's list, although several companies do report using the GRI tools. Read the news items about the latest database here.

ARL Wins UN GC Award

The Attock Refinery Limited (ARL) won the "Living the United Nations Global Compact Responsible Business Award 2009" in the Large National Category. The award recognises Pakistani enterprises that best integrates the 10 principles of the United Nations Global Compact into their business philosophy and acknowledges organisations demonstrating adherence to these principles in action.

I have long been an advocate of the need to incentivise CSR in Pakistan and awards like this one and the ACCA-WWF Sustainability Awards of which I have been a part for long, help to promote the concepts related to corporate responsibility and the adoption and integration of the 10 UN Global Compact principles into the mainstream business planning and activities. So kudos to the organisers for providing another incentive to the corporate sector in Pakistan for CSR promotion and to ARL for winning the award.

Click here to read the related press release by ARL.

Government's Role In CSR?

Speakers at a recent event in Lahore debated the virtues and need for State support for CSR initiatives. Speakers from FritoLay, P&G, EBM and the Pakistan Centre for Philanthropy spoke about the different ways in which government support could help promote CSR in Pakistan.

This continues the debate on exactly what role the government has in promoting CSR. As I had mentioned in an earlier post, there is clearly an oversight function that governments can play, but it can also help incentivise CSR through fiscal instruments. In countries like Indonesia, CSR is legislated but that may be going too far and prove counterproductive in the end. What is important however, is for government to work with the corporate sector to facilitate CSR activities.

Getting to the Root Cause: Pakistan Sets Tree Plantation Record

Pakistan chalked up another entry in the Guinness Book of World Records, when 300 volunteers planted 541,176 mangrove saplings on 15 July in the wetlands of the Indus River Delta in Thatta District. This brilliant effort comfortably beat the previous record of 447,874 in a single day held by India. Pakistan has committed to plant 120m trees as part of the UNEP's Billion Tree Campaign and to increase its forest coverage by 1m hectares by 2015. Read the UNEP press release here.

The Continuing Struggle of Pollution Control in Tanneries

Despite earnest efforts by the Pakistan Tanners Association (PTA), the battle against pollution caused by discharge of untreated effluents continues. With over 1200 tanneries employing nearly 200,000 people and contributing 7% of total exports, the leather industry is an important sector of the economy. However, outdated equipment and production techniques, lack of access to solid waste disposal sites, low investments in affluent treatment plants and poor coordination between the private sector and the city, provincial and federal governments have resulted in continued pollution.

The PTA has made several suggestions, including waiver of Export Development Surcharge on treatment plants, provision of landfill sites and support in access to technical and financial resources, but progress has been slow. However, there is a silver lining to the cloud, with functional treatment plants in Karachi's Industrial Trading Estate (KITE), Kasur and Sialkot and the adoption of cleaner production technologies with help from UNIDO and the Netherlands government, helping reduce environmental pollution. Furthermore, as reported today, the development of a special zone in Sialkot on a public private partnership basis, will bring all tanneries into a spatially contiguous area and allow for common services for treatment and disposal of effluents.

eWaste, anyone?

Technological innovations and planned obsolescence in the electronic industry in general and the computing industry in particular have an unwanted outcome: accumulation of old, discarded and outdated equipment, otherwise known as e-Waste. Developing countries are often used as dumping grounds for this e-waste and Pakistan is no different. According to the IUCN, import of second hand computers adds to the 50,000 tonnes of solid waste generated in the country every day. These concerns echoed again at a recent discussion organised in Islamabad on 'Cost effective or technology defective’ where speakers from both public and private sectors emphasised the need to dig deeper in to the dumping carried on in the garb of bridging the digital divide.

Some 500,000 old computers are imported into the country, mainly from the US, EU and Singapore. Although Pakistan is a signatory to the Basel Convention on eWaste--initiated in response to numerous international scandals regarding hazardous waste trafficking that began to occur in the late 1980s--the import of these old computers as well as phones, TVs etc. continues, adding to the environmental hazards faced by the country.

Greenpeace did an interesting photo-essay on eWaste in Pakistan, where they tracked what happens to eWaste in Lyari in Karachi. You can view the photo-essay here. There are several other sites such as Lyari across Pakistan, particularly in Lahore, where such hazardous activities are going unabated and unchecked. The Federal and Provincial Environmental Agencies appear to be woefully incapable of addressing this issue. On the flipside, the livelihoods of thousands of people are linked to this work and one is not sure of the impact any regulatory move would have on these jobs.

My own view on this is that while eWaste is definitely an issue and the Pakistani government as well as the companies in the developed countries themselves need to assume greater responsibility, an argument could be made to avoid a complete crackdown on this flourishing informal sector activity. The Pakistani government could develop and enforce minimum safety standards, and help sustain jobs in this recycling industry, while the governments in the developed world should ensure that companies in their respective countries follow the Basel Convention!

And lastly, here's an updated status on which companies are acting responsibly as regards eWaste.

Banking on Better Corporate Governance

Amidst all the hoopla generated by the global financial and economic crisis, the need for a stronger and more robust regulatory regime has emerged as a common theme echoed by pundits of all ilk. However, in this drive for assigning a greater role for the state, the role of self-regulation should not be consigned to the bin of history. It was therefore good to read about Saleem Raza, the Governor of the Pakistan central bank, calling upon the banking sector to improve their corporate governance practices and enhance transparency through greater disclosure.

Click here to read what the Governor said.

Corporate Sector Rallies in a Time of Need

The ongoing army operations against militants holed up in the North West Frontier of Pakistan has led to what the UN terms as one of the largest mass migrations in recent history, with more than 3m people having to flee to safer zones. As can be imagined, massive relief efforts were required to cater for the immediate needs of the Internally Displaced Persons (IDPs), including shelter, food and medicines. The corporate sector in Pakistan has played an active role in contributing to these efforts, with the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) donating Rs. 150m in the form of relief goods, the Jang Group (Pakistan's largest media house) raising millions of rupees thru telethons and offline campaigns, local airline AirBlue teaming up with an NGO HelpCounts for airlifting of relief goods, the Pakistan Telecommunication Corporation setting up free Public Call Offices at the IDP camps and the telecom companies donating Rs.100m to the Prime Minister's fund for IDPs. Employees of a very large number of other firms have donated a day's salary to the fund and even Emirates airlines has pitched in, shipping 120 tonnes of supplies for the IDPs.

Despite all these efforts, the scale of the challenge is enormous and the government is seeking more donations in cash or kind. If you want to help, visit http://helpidp.org/, http://www.geo.tv/swat/ or see details of the Prime Minister's Fund to which you can send your donations. If you're in Pakistan, you can donate Rs.10 per SMS by typing FUND and sending it to 1199 for donating to the Prime Minister's Fund. And remember, every bit helps.

Green Accounting for Staying Out of the Red

With the UNDP estimating that environmental degradation costing Pakistan over Rs. 350b every year, the need for following green agendas is self-evident. At a recent workshop, experts suggested the introduction of 'green accounting' frameworks to calculate the costs of environmental depletion. The WWF agrees with earlier assessments that the costs of environmental degradation are as high as 6% of the GDP and needs a concerted mix of fiscal, monetary and managerial steps to reduce these costs. Businesses often tend to ignore or underestimate such costs but as was clearly indicated by speakers at the event, it's time their books stay in the green in the more ways than one.

Promoting Environment Protection

Two good pieces of news have emerged from the government side. First, there is a commitment to introduce environment as part of curriculum in public schools. The Ministry of Environment announced recently that it would collaborate with the Ministry of Education to include environment as a subject, helping raise awareness in youth. This is indeed a welcome initiative. The government agencies would be well advised however, to include civil society organisations, most notably the Book Group, which have established expertise in alternative textbooks and teaching resources, mainly with funding from corporate entities as part of their CSR initiatives.

The second encouraging news relates to plans to introduce Euro-II emission standards for petrol driven vehicles from July this year and for diesel driven automobiles from July 2012. As reported in the press, the Ministry of Petroleum and Natural Resources will have to ensure availability of Euro-II compliant diesel with low sulphur, by January 2012. This move also ties in with the government's plans to reduce air pollution and promoting the use of CNG-run vehicles, including the introduction of 8,000 CNG buses in major cities of the country.

Deaths in a Karachi Effluent Treatment Plant: Occupational Hazard?

Four workers in an effluent treatment plant in Karachi's Korangi Industrial Trading Estate, have allegedly died due to a methane gas leak in one of the plant's desludging pipes. This incident, reported widely in the daily newspapers, is the latest in a long list of events that amount to gross negligence on part of the employers and to a failure of the regulatory system.

Provisions related to Occupational Safety & Heath are spread across a number of legislation, including the Factories Act, 1934; Provincial Factories Rules; Hazardous Occupations Rules, 1963; Mines Act, 1923; West Pakistan Shops and Establishments Ordinance, 1969; Provincial Employees Social Security Ordinance, 1965; Workmen’s Compensation Act, 1923 and Dock Laborers Act, 1934. While there may be a case--oft pleaded by experts--for consolidating and updating these provisions, there appears to be neither a work safety culture nor any momentum for change. In 2001, the Government of Pakistan promised to set up a National Occupational Safety and Health Council but that initiative has yet to see the light of the day. Similarly, a National Labour Protection Policy was published in 2006 which called for improving work safety and working environment for labour. No report on whether this policy is being implemented or not, has been published by the Government.

The existing laws are overlapping in scope and tend to be soft on reporting requirements, making data collection on the actual number of casualties, injuries and health concerns due to poor work environment a very difficult task. The existence of a large number of informal businesses compounds this problem because they are unregulated and hence no official data can be compiled on them. Curiously enough, the Labour Force Survey 2005-06 claims that at 41%, the majority of OSH related casualties/injuries took place in the agriculture sector, with manufacturing (15%), construction (14.5%) and mining (.3%) lagging far behind. Conventional wisdom would suggest the exact opposite in terms of results and this clearly points to under-reporting in the non-agriculture sectors.

Moreover, there is little confidence in the regulator's willingness and ability to ensure compliance with these standards. But as I have often argued on this blog, the employers must deliver on their responsibilities as well and develop work safety standards that meet international benchmarks, not just the outdated ones found in the current Pakistani legislation. While this is already happening in export-oriented sectors who have to meet exacting international standards set by the buyers, there is a need for the rest of the sectors to catch up.

New Petroleum Policy Promotes Better CSR Practices

The newly announced Petroleum Policy calls for better CSR practices in the form of raising the social welfare obligation in exploration phases by $5,000 in every zone i.e. from $25,000 to $30,000 a year; calling for more direct benefits to the locals in terms of offering at least 50% of the non-skilled jobs to them; and fostering more inclusive management of the exploration areas through local participation.

While these are welcome measures, the track record of compliance by the oil and gas exploration companies doesn't exactly muster much confidence. Despite the the concession agreements signed between the government and the MNCs working in the sector clearly including CSR-based action points, the MNCs have often left the locals holding the shorter end of the straw. Worse still, the regulators have demonstrated neither any clear willingness nor the ability to enforce the agreements, further exacerbating the plight of the locals.

One NGO, Participatory Development Initiatives, has been actively advocating for better enforcement of the agreements in Sindh province. With support from Oxfam GB, their 'Community Mobilization and Networking on CSR of Oil and Gas Exploration and Production Companies in Sindh' project has done good work in raising awareness about the manner in which the local population is being denied their right to benefit from the investments in the sector.

The new policy is a step in the right direction. But it can only come up trumps for the locals if the Government is serious about ensuring compliance and better still, if the private sector companies are sincere the promoting CSR.

Survey Reveals Low Awareness About CSR

A survey administered in Islamabad and Lahore, by the NGO Consumer Watch, shows that 80% of the respondents did not know the meaning of CSR. The survey was conducted on the eve of World Consumer Rights Day, which this year revolved around the theme "Stop the Marketing of Unhealthy Food to Children". In addition to the questions about CSR, the survey asked different questions regarding the harmful effects of junk food and eating habits of children. While the low level of awareness about CSR comes as no surprise, the fact that 75 percent of parents were unaware that junk food contained high level of sugar, salt and oil, certainly did. CWP is advocating for the regulators to make health warnings mandatory on junk food packing as as well as issuing guidelines for food marketing companies. I couldn't agree more. Not only is there a need to have more responsible advertising for food items, especially those targeting children, but there is also a need for greater disclosure on the packaging itself. Question is, are the regulators listening?

Nominate Someone for the GRC MVP Award

The Governance, Risk and Compliance Institute is inviting nominations for the GRC MVP Award 2008. The awards recognize individual achievement and professional contributions in governance, risk management, and compliance in several disciplines, including:

Finance and/or Accounting
Information Technology
General Management
Legal and Ethics
Internal Audit

So if you if have any one in mind, do take the time to nominate someone for the award. You can learn more about the awards and file your nominations here.

CSR at Work: Two Sides of the Coin

Two news items relating to Pakistani companies have given cause for both celebration and despair. The decision by Standard Chartered Pakistan to hire 14 blind persons as part of their telemarketing team is indeed something to celebrate as it signals both a willingness by companies to use socially responsible employment practices but will hopefully also open doors for disabled people in other companies. The move to hire blind persons was part of Standard Chartered's 'Seeing is Believing' project and follows a pilot run. You can read more about it here.

On the other side of the spectrum is the protest lodged by workers and the IUF about Unilever Pakistan using what the IUF terms as 'disposable' jobs at its Khanewal tea factory in Punjab . IUF claims that by employing 733 workers on temporary contracts as against 22 permanent workers covered by a collective agreement, Unilever is denying workers the right to better employment prospects and fair remuneration. You can read more about this here.

The debate of contractual vs, permanent workers has many sides to it and perhaps requires a more detailed review, but suffice it to say that there is great room for enhancing transparency, equity and merit in employment practices, in MNCs and local firms alike.

Alleged Industrial Toxic Waste Claims Another Victim

An 8 year old boy apparently fell prey to the devastating effects of industrial toxic waste dumped in an open area, in the Sindh Industrial Trading Estate in Karachi, Pakistan's business and financial hub. As reported in the daily Dawn, the boy was playing cricket with friends and suffered severe burns due to exposure to the toxic waste. The newspaper further reports that the local police are reluctant to lodge a First Information Report (FIR) which is the first step towards further legal action in the matter. Ironically, this case echoes a similar incident about 2 years ago, in the same area, resulting in the death of a boy and injuries to 20 others.

Meanwhile, residents of Hyderabad city, Pakistan's sixth largest city, have been protesting about the contamination in their drinking water, including pollution from untreated industrial effluents dumped in the drinking water source by various factories.

Clearly, these events point to both gross and blatant disregard for environmental sustainability as well as to the apathy of the regulators to a situation that needs to be dealt with urgency and resolve in equal measure. To be fair to the business community, strict international environmental standards as well as embracing of CSR principles have led some export-oriented industrial sectors to adopt more efficient and cleaner production mechanisms, but these efforts have been sporadic and with government support tending to be inadequate in its scope and slow in its execution, the problem of industrial pollution is largely unresolved.

Just recently, the Pakistan Tanners Association, reiterated its demand for solid waste disposal sites. The tanneries, as you may recall, have been amongst the worst offenders vis a vis industrial pollution and have been under severe community and buyer-led pressure to clean up their act. Some success has been achieved in this respect, notably under the Kasur Tannery Pollution Control Project, but clearly a lot still needs to be done.

Will the Sindh Environmental Protection Agency exercise its powers in this latest instance of industrial pollution impacting local communities, or will inaction again overwhelm responsibility?

Is Mandatory CSR Reporting the Way Forward?

I had mentioned in an earlier post that the Indonesian Government had made CSR reporting mandatory and argued that such a move is unlikely to produce desired outcomes due to the weak enforcement capacity in developing countries. I was therefore interested to read this report in the Jakarta Globe which highlights the opposition of the leading business and trade associations in Indonesia, against the mandatory reporting. Their reasons for the opposition however, are different, as the associations and representative bodies claim that Foreign Direct Investment (FDI) is shying away from Indonesia due to the CSR-related legal regimes. This assertion begs research but poses an interesting issue.

Denmark also recently launched its own version of mandatory CSR reporting. Here, the initiative is targeted at big business including listed firms, state owned enterprises and institutional investors and requires firms to report on their CSR initiatives (or lack thereof) as part of their annual financial reports. The law was passed with a vast majority in the Danish parliament and requires 1100 of the country's largest firms to disclose CSR policies, the status of their implementation and results achieved. Given the quality of governance in Denmark and the stage of development of their markets, corporate governance structures and the effectiveness of their regulatory regime, there is every likelihood that the law will be complied with by majority of the target firms.

I do hope that such reporting is not made mandatory in Pakistan. I serve as a member on the panel of judges for the ACCA-WWF Sustainability Reporting Awards and over the years, we have seen an increase in the number of firms developing and submitting their reports, as well as a gradual improvement in their quality. I believe that is the path to continue on, at least for Pakistan: encouraging and incentivising quality sustainability reporting.

IPR Protection in Pakistan: Stoking the Debate

In the wake of the recent announcement by Glaxo Smith Kline (GSK) that it would slash prices of its patented drugs in 50 of the poorest countries, interest in Intellectual Property Rights (IPR) has again been stoked. Should MNCs, or for that matter local companies, be allowed to use IPR as a shield against sale of generic drugs which could cure millions of disease? When I was advising the UNDP on CSR issues in Pakistan, I had recommended--following Oxfam's position on the issue--that pharmaceuticals in Pakistan be goaded to adopt a tiered pricing structure, of the kind that GSK has now announced; initial discussions with the Pharma Bureau in Pakistan were very encouraging but this line of advocacy could not be pursued.

IPR are a thorny issue in developing countries, viewed often as a tool for either entrepreneurial asphyxiation, a source of unbridled profits, a reason for continuing disease and poverty or all of the above. The other side of the coin of course is that in the absence of IPR, there would be little incentive for companies to invest in R&D and thus for innovation and the pursuit of better solutions to perennial problems. The growing interest in Open Source and Creative Common licensing, has given the debate a new twist to deal with.

Given that IPR is now a key aspect of the multilateral trade regime under the TRIPS and TRIMS, Pakistan too has been paying due attention to promote IPR enforcement and compliance. But with a chequered past on IPR, to say that IPR enforcement in Pakistan is a challenge would be a gross understatement. My friend and classmate, Ameed Riaz, experienced this first hand when his enthusiasm for reviving the music industry in Pakistan when he took over EMI Pakistan, was ground to dust because of the well entrenched and thriving music piracy in the country (click here to read about it). A similar predicament was faced by another dear friend Akbar Yezdani, CEO of Fire Records--the music label of the Geo Network--although Fire Records has played it smarter and used Geo's corporate muscle to successfully deal with mass piracy of its releases. Akbar assures me however, that it's a huge battle he has to fight every day at work.

Small wonder then that the office of the United States Trade Representative (USTR) recently 'elevated' it to the 'priority watch list' as mentioned in their 2008 Special 301 Report--an annual review of the global state of IPR protection, although Pakistan has rather aggressively challenged this position and questioned the whole ranking system ab initio. Other stakeholders such as the International Federation of the Phonographic Industry (IFPI) have off and on been praising Pakistan's efforts, as the country strives to up the ante on this front, mobilizing the Intellectual Property Organisation of Pakistan, headed by a private sector professional and engaging with MNC's such as Microsoft, which recently conducted a special training program for officials of the Federal Investigation Agency, to help raise awareness of copyright infringement, different forms of copyright infringement, detection of counterfeit software, and investigation of software evidence leading to prosecution of the culprits.

That said, as with all developing countries, Pakistan will continue to be stretched on both sides of the divide, as it strives to walk the line on IPR.

Consumer Rights in Pakistan: Waking from their Slumber?

Although consumer protection legislation has been in existence for quite some time in Pakistan, both in the Islamabad Capital Territory and the province of Punjab, the establishment of Consumer Courts and their mobilization have been slow on the uptake. More recently though, there has been a spate of news relating to decisions of Consumer Courts given in favour of consumers, ranging from cases against sale of defective goods, against a mobile phone vendor for misrepresenting to the client about the make of the mobile phone and issuing notices to a foreign airline and local travel agent for apparently providing misleading information to a client.

The regulatory authorities are also stepping up their game, with the Pakistan Telecommunication Authority (PTA) announcing today that they intend to set up a consumer protection cell which will resolve customer complaints against overcharging by service providers and similar complaints against hidden charges. I suspect this move is due in part to the finding of the Federal Ombudsman of Pakistan--my former employer--who determined that the advertising of the Pakistan Telecommunication Corporation (now managed by Etisalat) was misleading and failed to reveal hidden costs. The Government of Punjab is also in the process of setting up a Consumer Affairs Department, which will have a broad mandate covering quality of goods and price control to consumer education on their rights.

While this upsurge of activity on consumer rights is welcome, Pakistan still has a long way to go in adequately protecting its citizens from breaches of contractual obligations, irresponsible and questionable corporate practices related to retailing and poor customer service. For one thing, there is a fairly convoluted legal landscape replete with overlapping jurisdictions; second, the consumer rights related legislation is currently restricted only to Islamabad (the capital city territory) and to province of Punjab (and here too there are only 11 courts); third, even where consumer courts do exists, enforcement has always typically been a challenge; and lastly, the level of public awareness about their rights and responsibilities as a consumer, is low bordering on the negligible. Still, these recent events are a step in the right direction and perhaps a pointer to the civil society and consumer rights advocacy organisations such as the Consumer Rights Commission of Pakistan, the Consumer Association of Pakistan, the Helpline Trust and the Network for Consumer Protection in Pakistan to up the ante in terms of building consumer voice.

Promoting Social Entrepreneurship in Pakistan

As I had noted in an earlier post, social entrepreneurship offers exciting prospects for harnessing the talents of Pakistanis. While there are several challenges, including access to finance and capacity constraints of the entrepreneurs themselves, it is heartening to note that promotion of entrepreneurship is beginning to attract attention in several quarters. As reported in the Business Recorder, the Institute of Business Administration Karachi, which is now headed by my former boss Dr. Ishrat Husain and is the best and oldest business school in Pakistan, is setting up a Centre for Entrepreneurship Development, which is great news not only because it would provide an institutional arrangement for filling in immediate capacity gaps, but also because it would help prepare a cadre of entrepreneurial managers who can take this agenda forward. Under Dr. Husain's leadership, I have no doubt that this initiative will help lay a sound basis for promotion of entrepreneurship.

On a related note, while there are already several social entrepreneurship initiatives operating in the country, but I was very happy to read Bina Shah's article in Dawn about the work being done Thardeep and my old friend Sonu Khangrani, for promoting drip irrigation in the poverty-stricken Thar region of Sindh province. This initiative demonstrates how social entrepreneurship can help find new solutions to perennial problems.

The Threat of Climate Change to Pakistan's Economy

Although its carbon footprint is amongst the lowest in the world, the threat of climate change looms large for the country, with the potential to derail its economy. Coming as it does in the wake of several battles that the government is facing on the political-economy front, this news comes as a grim reminder to planners that serious, concerted and consistent effort is required to ensure that mitigation strategies are in place for the risks at hand.

The fact that this warning came from no one less than Dr. Pachauri, the Nobel laureate Chair of the IPCC, testifies to the credibility of the claims. Speaking at a recent conference on Climate Change organised in Islamabad by the Government of Pakistan, IUCN and DFID, Dr. Pachauri outlined the link between environmental sustainability and economic growth, pointing out the stress on public resources that changes in climate change can put, especially in areas such as public health. The Prime Minister was the chief guest at the conference and expressed governmental commitment to the cause, but I've always been wary of the ability of the planners to both accord due seriousness to environmental sustainability and to grasp the link between it, economic growth and public health issues. The UNDP Pakistan estimates that environmental degradation and neglect cost Pakistan Rs. 365 billion, although there are some encouraging signs, including the fact that Pakistan has been an advocate of looking to CNG as an alternative fuel to petrol and is in fact the largest consumer of CNG in Asia (see my earlier post related to this) and the UNDP believes that it is likely to meet the MDG targets for environment. But one is forced to think that when the problem is of the magnitude and depth that it is, much more than simply declaring 2009 as the 'National Year of the Environment' is required by the Government.

And importantly, the role of the private sector needs to be defined in addressing issues of sustainability, not only in their immediate spheres as business and corporate entities by employing more environment-friendly, efficient and cleaner technologies that meet regional and international standards, but also in terms of working with the government and communities, because the environment is everyone's business.

Pakistan's Hashoo Foundation Wins the World Challenge 2008

Back after a long hiatus, and with interesting news too: The Hashoo Foundation's Plan Bee project has won the 2008 World Challenge. The World Challenge competition, which is organised by the BBC, Newsweek and Shell, aims to recognise social entrepreneurship initiatives and the 7-member judges panel, which includes Richard O'Brien of Outsights and Dr. Camilla Toulmin of the IIED, selected Plan Bee over the the Agricultural School (Paraguay) and Shanti Sewa Griha (Nepal)projects.

Plan Bee helps female beekeepers in the northern areas of Pakistan boost their income by selling high quality honey. The project hopes to train and link around 215 women with the market by the end of 2009, helping with organic certification, participation in trade fairs and global recognition of the brand. Commendable effort indeed. You can watch the BBC clip on the project here.

Mind you, the Hashoo Group, which is the main sponsor for the Hashoo Foundation, has drawn considerable flak from the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) which had been campaigning against the Hashoo Group over what it termed as 'Pakistan's longest-running labour dispute' relating to alleged 'sackings, harassment, violence and hardship' of members of the Pearl Continental Karachi Hotel Workers Union. The IUF stepped up its campaigning against the Hashoo Group in the wake of Plan Bee's shortlisting as a finalist, calling upon members and stakeholders to lobby against the hotel chain. Subsequent to Plan Bee's victory, the IUF also posted its regrets that the BBC Panel of Judges ignored what it claimed was the parent group's 'record of vicious union-busting' and chastising the judges for using a 'dubious Corporate Social Responsibility logic'.

This episode reveals two things: one, that there are always two sides to a coin; and secondly, that CSR begins at home. Without being privy to the details of the dispute between the Hashoo Group and the Pearl Continental Karachi Hotel Workers Union and without meaning to belittle Plan Bee's achievement, as a general comment it would be fair to say that CSR practices, principles and policies need to be internalised within the company itself before any entity can lay claims to following a CSR agenda. Anything otherwise would be a sham.