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Corporate Social Responsibility:

Trends and Types in Pakistan


By Shadab Fariduddin
orporate Social Responsibility (CSR) is a recent
development in Pakistan. Although individuals and
businesses have been indulging in philanthropy and
voluntary giving since long, the concept of CSR and its
allied practices are relatively new to the socio-economic
development scene. Already, there are certain pronounced
trends and types we can find emerging with respect to
Corporate Social Responsibility in Pakistan.

Three trends in CSR are most visible:


1. Competition to Cooperation
Instead of stand-alone departments undertaking end-toend project, partnership with NGOs and development
agencies is on the rise. This is also an acknowledgement of
the contributions made by the development sector in recent
years. The corporations recognize that delivering social
services is a specialized field with its own dynamics. While
they retain the right of monitoring and oversight, they are
letting partner NGOs deliver the services. In effect, the
businesses then become "funding agencies."
2. Command to Demand Orientation
Instead of corporations determining what is best for the
community or society and then supplying that service, there

is marked awareness to be responsive to the need of the


people whom CSR is supposed to serve. This trend is also
evident from the way project selection is done. Far from the
target population, the Board of Directors decides the social
service to be provided. In certain cases the company consults the local politician or power lord to determine the
"beneficiaries' needs". We can roughly compare this
approach to Soviet-style command economy, where the
Kremlin would decide what Tajikistan needed 5000-milesaway.The ideas of participatory planning, stakeholders'
analysis, community involvement, volunteerism were alien
to the corporate CSR strategy and implementation. It must
be acknowledged that with the passage of time the corporate thinking is coming of age: CSR is now more demanddriven. Not only there is recognition of proper demand
analysis but also there is greater community involvement,
lesser reliance on "politicians' advice," and greater confidence in NGOs and local CBOs to carry out much of the
planning and implementation on behalf of the corporate
sponsors.
3. Outsourced versus In-sourced Fund Management
Economic liberalization, since the mid 80's, has led to very
good growth in fortunes of businesses and the industry. At
the same time, confidence in government's ability to deliver
social services most needed by the public has been waning.
Corruption in the higher echelons of political governments
during the last two decades was one major factor that
prompted businesses to rethink their own contribution to
the society. The phenomenon of setting up an in-house
foundation or a welfare trust is not new. Business houses
and empires have been using this provision of law for genuinely paying back to the society sometimes, but mostly for
unscrupulous tax evasion and mere eyewash, not only in
Pakistan but all over the world. Recent trend of setting up
own foundations and trusts seems to be quite different
from the practices of the past. There is genuineness about
the purpose and as a result serious efforts are being made to
address most pressing social issues that have come about
due to failure of governmental ability to deliver public
good. A famous fast food chain Cupola Foundation, has set
up its own foundation to take care of its employees after
some of its workers were burned to death in religious frenzy. Pakistan's largest newsgroup, Jang Group of
Publications, has the Mir Khalilur Rehman (MKR)
Foundation that played a most commendable role in earthquake relief. PICIC Bank has set up PICIC Foundation for
employee welfare and promotion of higher education.
In addition to genuine philanthropic reasons, in-source
fund management is also driven by sound business logic.
Governments' taxation regime allows tax relief to business-

NGORC Journal, June 2007

es if they spend on social development. The tax burden of


large business empires runs into millions of rupees. Tax
relief when calculated on such huge tax liability is found
enough to justify creation of a family foundation or trust,
which in turn might partner with larger NGO network
working for the socio-economic development.
These trends are influencing CSR practices in Pakistan. If
we analyze the motivations and the CSR practices in
Pakistan, distinct patterns can be observed, based on which
we can identify four separate types of CSR strategies:
1. Politically Motivated CSR Strategy
Under this type, a company's CSR strategy is aligned with
current political slogan which seldom, if ever, captures a
real grass-root need. Social spending by most public sector
organizations falls in this category. CSR funds are neither
allocated based on any analysis of people's needs nor are
they aligned with any espoused social value as part of longterm corporate strategy. Instead, the CSR allocations can be
likened to a "slush fund", discretionary money available to
top management and the CEO, who can spend it as they
please. The shrewd CEO senses which way the political
wind is blowing or going to blow and then moulds the CSR
money accordingly to the ongoing political thrust. The

manufacturing and services sector of our economy.


Invariably all MNCs operate under the policies of their
head offices in Europe and US. It must be mentioned here
that many MNCs are now larger than most developing
countries if we compare their earnings with the latter's
national income. Like a government, an MNC has certain
central policies decided by the head office; Corporate Social
Responsibility is one of them. Parent company is aligned
with a value or social development theme, which all offices
follow worldwide. A central CSR makes good economic
sense for the MNCs. It lowers the cost of implementation
and it maximizes benefits. By promoting a defined social
cause or services implementation becomes easy in terms of
choosing partners, lower administrative costs, and designing
a common promotion strategy. Maximum benefits accrue to
the MNC as it is recognized supporting a cause across all
cultures, which results in global branding.
Historically, local MNCs have been following the strategy of
parent organization. A pharmaceutical company, Johnson &
Johnson, under its global CSR commitment, is very wellknown for its generous and genuine support for the cure of
breast cancer among women. No doubt, the company has
done a marvelous job by highlighting and fighting the problem of breast cancer through its "Pink Ribbon" campaigns

Historically, local MNCs have


been following the strategy of
parent organization

result is more support for the CEO or the company from


the power corridors of politicians, generals and bureaucrats.
In the decade of 90's, few notable nationalized banks sponsored, with great fanfare and media coverage, IT training
centers in interior of Sindh. The then-Prime Minister inaugurated these centers in Nawabshah and Larkana and
praised the sponsors' sense of social obligation. Today, as
one would expect, the centers are no more there! One of
the sponsoring institutions has gone bankrupt and the other
is partially privatized.
This is not to say that politically motivated CSR is specific
to our national companies alone. It happens even in
advanced countries like UK, Sweden, Denmark to name a
few. The reigning monarchs, who are now more of a figurehead in their countries, have set up welfare foundations for
their subjects. The businesses generously donate funds to
such non-profits in order to build relationship with the
powerful, draw public goodwill and extract political mileage.
2. Globally Aligned CSR Strategy
Many multinational corporations, MNCs, operate in
Pakistan. They are in pharmaceutical, consumer goods,
NGORC Journal, June 2007

in the US and Europe, where this scourge of women's


health is more common and hence its CSR more relevant.
The local office of the company cannot deviate from the
central commitment. So, only very recently has its CSR
strategy become relevant in Pakistan as compared to its significance, dating back to the 50's, for the US and European
womenfolk. Another example is of Hewlett Packard, which,
through the Packard Foundation, is globally supporting
reproductive health under its CSR strategy.
Following the central CSR strategy, therefore, carries the
risk of miss-or-match with genuine local needs. The resulting CSR commitment is likely to be inflexible and, therefore, less responsive to the host society.
Some MNCs are realizing the need of, and benefit in, being
responsive to local needs. As a result, they are opting for a
broad policy for social development at the head office level
and giving more autonomy to their local country offices to
decide to spend CSR funds under the broad central policy.
For example, a software giant has chosen education and
health as its global social development responsibilities. It
allows local offices to support such programmes that are
5

most needed by the society. This variation could be called


"glocal CSR", a broad thematic central support that results
in need-specific response at the local level in a hot country.
3. Externally Imposed CSR
This CSR-type takes two forms: legally-imposed and tradeimposed CSR.
Regulatory environment of business in Pakistan consists of
many newly formed bodies such as the Securities and
Exchange Commission of Pakistan, Oil and Gas Regulatory
Authority, Pakistan Telecommunication Authority etc. In
addition to these many existing watchdogs such as Labour
Courts, National Industrial Relations Commission and
Environment Protection Agency etc also operate. These
regulators serve as custodian of public good and are mandated to ensure that public safety and rights of people are
not trampled upon by businesses and industries. The regulators have the force of law behind them and corporations
have to comply with the provisions of law. The compliance
is an unavoidable cost of doing business in our economy.
Some businesses just do bare minimum to meet the legal
requirements and some try to beat the law. Still there is an
ethical minority, which goes beyond the bare-minimum of

law and willingly do more than just complying with regulations.


Federal government requires big businesses to divert a portion of their earning towards social development of the area
in which they are located. Oil and gas exploration licenses
are particularly tied with mandatory conditions which
require energy companies to spend a fixed percentage of
their investments on socio-economic uplift of the concession areas granted to them for explorations. Invariably the
companies have a dedicated department to comply with regulatory CSR requirements. Such departments vary from
being very effective source to simple window-dressing
mechanisms for community development. The departmental effectiveness solely depends upon the value-system and
commitment of the top management towards socially
responsible behavior.
The Pakistan government and business sector also have
comprehensive policies on the elimination of child labour.
The Constitution of Islamic Republic of Pakistan states:
"No child below the age of fourteen shall be engaged in any
factory or mine or in any other hazardous employment." In

addition, it states that "All forms of forced labour and traffic in human beings is prohibited." However, the enforcement of these provisions is a different story as is the state
of willing compliance to these laws by businesses.
A number of laws contain provisions prohibiting child
labour and regulating the working conditions of child and
adolescent workers. The most important laws are:






The Factories Act 1934


The West Pakistan Shops and Establishments
Ordinance 1969
The Employment of Children Act 1991
The Bonded Labour System Abolition Act 1992
The Punjab Compulsory Education Act 1994

Pakistan has ratified ILO Convention 182 and has accepted


the obligation to increase the age limit to 18 years to control
the worst forms of child labour. The labour policy of 2002
reflects this obligation. In turn, the business sector has also
adopted the policy and the written statement "anyone below
the age of 18 years is not employed in this factory/business" can be seen close to the entrance gate of most business entities.
Another variant of Imposed CSR is when corporate behaviour is amended because of pure business compulsions
imposed by the buyers or customers. For example, Pakistani
exporters seek SA8000 certification to gain and retain market access to European countries. Social Audit 8000 certification, if implemented in earnest, ensures that the business
is being conducted in a socially responsible manner; its
operations are transparent and free from labour malpractices. Increasingly, importers from the USA and Europe
have been becoming stringent in imposing good responsible behavoiur on companies in Pakistan. How cosmetic or
real the behaviour change is, again, really depends on the
intentions of the top management. Trade-imposed CSR has
proven good for Pakistan at least in one case. Andre
Gorgemans has documented a case study of multi-stakeholder initiative to eliminate child labour in sports goods
industry around Sialkot.
World Federation of the Sporting Goods Industry
(WFSGI) is an independent association formed in 1978 by
sports industry suppliers, national manufacturers' associations, and well-known brands such as Nike, Adidas, Reebok,
New Balance, Puma, and others. Under one of its committees, the Committee on Ethics and Fair Trade (CEFT), the
members cooperate in promoting free and fair trade and
ethics, and work to improve the well-being of mankind
through sports. Around 1995, FIFA, UNICEF, ILO, local
NGOs and Chambers of Commerce and Industry joined
hands to address some of the more complex issues coming
to light around ethical business practices and to establish a
venue for the industry to understand, analyze, and act upon
a wide range of issues of corporate social responsibility.
Writing in eJournal USA: Economic Perspectives, Andre
Gorgemans comments on the results and impact of the
programme "The Pakistan programme has a wonderful
record of tangible accomplishment. Some 90 manufacturers

NGORC Journal, June 2007

from Sialkot, Pakistan, are now enrolled in the programme,


and more than 95 percent of export production is regularly
monitored and certified child-free. More than 6,000 working children have been phased out of production and put
back on the education track. The programme's Universal
Primary Education component focuses on all children aged
five to seven to prevent the entry of new children into the
labour market.
Leaders of the India Sports Manufacturer and Exporters
Association and the Sports Goods Foundation of India
have adopted the Pakistan model to fit their unique circumstances." He finally concludes most aptly, "International
bodies like WFSGI can facilitate collaboration, but we have
no illusions that industry's national leaders are the backbone of any successful programme (of responsible corporate behaviour)".

cle (parentheses added):




4. Philanthropic and Responsive CSR


Some times CSR does not seem to follow a well-defined
objective; rather it is based upon a broad "Do Good" principle. A sum of money is reserved for "doing good" and
funding takes place on as-requested basis. Corporate donations to the Shaukat Khanum Cancer Hospital, the Kidney
Centre, Aga Khan University, Sindh Institute of Urology
and Transplant and various other outfits especially health
and education institutions fall in this category. Highly successful business families have spent millions of rupees on
philanthropy. Recently in Karachi, the Tabba Institute of
Cardio Care has been set up at a cost of Rs 200 million by
the Tabba Family. Dewan Mushtaq Centre of Nephrology
and Transplant has been fully funded by the Dewan group
to the tune of Rs 350 million. Similarly generous corporate
donations to The Citizens Foundation are illustrative of
philanthropic CSR.
The general principle of "doing good" attains a particular
focus to become responsive CSR. The CSR funds are aimed
at addressing a particular and defined social service need of
the community or people. The need is genuinely felt for by
the business and becomes a value for the company. Lyton
Rahmatullah Benevolent Trust (LRBT) focuses exclusively
on free cutting-edge eye care for the poor. A car manufacturer in Bin Qasim found people in the area suffering from
eye diseases caused by poor drinking water, so its CSR is
focused community health and hygiene. It provides for
drinking water, waste management and free eye care to people in the surrounding villages. The largest private power
generation company in Pakistan, Hubco, operating in nearby industrial city of Balochistan is responding to the community need of clean drinking water and basic education for
the people of the area. Karachi Chamber of Commerce and
Industry joined hands with the City District Government's
health department to spray and fumigate various localities
against the Dengue fever. A local chemical company provided disinfectants for the treatment at very low costs.
Jas Ahmed of Middlesex University Business School published, in May 2006, findings of a comprehensive survey on
CSR practices in Pakistan. Jas's research captures the trends
and types of CSR discussed here. With due acknowledgement, his findings are reproduced as summarizing this artiNGORC Journal, June 2007







Western-style corporate social responsibility is clearly a


nascent concept in Pakistan
The motivation for CSR, the types of CSR emphasised, and the relative importance of different CSR
activities are influenced by cultural values, religious
belief, and (personal interests)
There are external pressures driving the adoption of
CSR values and practices in the country
There is evidence of financially substantial CSR activity in Pakistan both in the corporate sector and by high
net worth businessmen
A considerable proportion of activity is directed
towards socio-political causes such as health, education and social welfare (indicating government's failure
in providing social services)
Social responsibility appears to be limited to concepts
of corporate and personal philanthropy (limited to
giving money for good causes such as health and education)
Some industries are setting standards of ethical and
socially responsible behaviour
Inconsistencies prevail and there are considerable gaps
between best practice and common practice - including examples of socially irresponsible behaviour

Corporate Social Responsibility has the potential of becoming a major source for socio-economic uplift of the people
in our country. The development sector has grown to an
extent where NGOs are seen as providing specialized services and are respected for their contribution. Traditional
mistrust between corporate, government and non-profit
sectors is receding and is being replaced with cooperation
and mutual understanding. Need for home-grown, culturally valid and widely replicable CSR models, however, remains
unmet. Only public awareness and consumer pressure can
make the industry behave in more socially responsible manner. CSR concept, principles and practices will come of age
then: all CSR-types other than the truly responsive CSR
strategy would cease to exist because they become socially
unacceptable.
Shadab Fariduddin works for Frontline Consultants, which provides
management training and consulting services to development and
corporate sectors.