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.