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Press Releases

2

September 2002

GOOD WORKS


Corporate Philippines seems to be taking its social responsibility seriously.

While more and more companies are taking up the cudgels to address various social issues, some companies are bringing corporate philanthropy a step further by making corporate social responsibility an integral part of their business strategy.

Today, business leaders themselves express their companies’ commitment to social development in their core business principles and practices. These leaders set the strategic direction of their companies’ corporate social responsibility, often by creating foundations or a special division dedicated to improving their relationship with key stakeholders.

Recently, chief executive officers and senior corporate executives from several countries indicated their support of good corporate citizenship by holding dialogues at the first Asian Forum on Corporate Social Responsibility. Leaders of organizations such as the Makati Business Club, Philippine Business for Social Progress, and the League of Corporate Foundations celebrated Corporate Social Responsibility Week last July by getting their members to launch various social projects.

This renewed interest in corporate social responsibility has led companies to look for creative and innovative ways to do good not only in their areas of expertise. Projects like Habitat for Humanity, Tabang Mindanaw and Children’s Hour have involved different, sometimes competing, companies for a common cause even if their businesses are not directly related to these issues.

Poverty reduction
Moreover, companies choose to support or develop projects that bring sustainable development. Pilipinas Shell provides skills training and financial grants to enhance entrepreneurship in local communities. Its Malampaya Project aims to reduce the dependence of the country on imported fuels by tapping energy from deep-sea gases. Meanwhile, Metrobank Foundation offers scholarships and grants for college students training to become teachers, engineers, and nurses. The foundation also has programs in other key areas such as health services, visual arts, and environment.

The active involvement of the private sector in social development has led the government to open opportunities for businesses to extend their projects nationwide. The government recently invited members of the business community to help develop urban and rural communities through its poverty alleviation program, Kapit-Bisig Laban sa Kahirapan or KALAHI.

Beyond providing one-time donations of funds and services, KALAHI allows businesses to come together to create greater impact on the community. In one case, several Ayala-owned companies recently adopted an urban poor community in Mandaluyong City which KALAHI identified as a critical area. By pooling their resources and expertise, these companies increased their capability to address the various needs of the residents.

For instance, Ayala Land and Globe Telecom, each with community development projects of their own, have pledged to conduct yearlong medical and dental missions in the barangay. Ayala’s utilities arm, Manila Water Company, is providing legal water connection and constructing a small sewerage treatment plant. The Bank of the Philippine Islands and Ayala Foundation, Inc. (AFI) brought their experience in micro-financing and entrepreneurship training and contributed to a revolving livelihood fund for families. The group also donated a computer laboratory to a local high school, with Globe providing free Internet access and AFI a training program for teachers.

Explained AFI president Victoria P. Garchitorena: “Social responsibility projects are part of the Ayala business. We recognize the role of the private sector to work hand in hand with government to help uplift the lives of Filipinos. We realize that business is there not only to increase its value for its stakeholders but also to give back to its community.”

Improving brand equity
But do businesses gain anything for being good corporate citizens? Yes, and no. Various studies show that corporate social responsibility will only affect the bottom-line if it is part of a clear business strategy. After all, the first contribution of businesses to national development is by being good, responsible businesses.

At the World Economic Forum early this year, an Arthur D. Little study showed that companies that take corporate citizenship seriously not only improve brand equity and operational efficiency. They are also more likely to be seen as a good investment and company of choice by investors, employees, customers, regulators and joint venture partners. Another study by two Harvard professors revealed that “stakeholder-balanced” companies enjoy better financial returns through good corporate reputation.

“Corporate citizenship fosters public good,” added Pedro Roxas, president of Central Azucarera de Don Pedro and a member of the board of trustees of Philippine Business for Social Progress, at the Asian Forum on Corporate Social Responsibility. He also cited ways that corporate citizenship can directly benefit businesses such as good corporate reputation, reduced risks, access to human and intellectual capital, and a favorable business environment.

Also speaking at the Asian Forum, Garchitorena said that good investments in society will redound to the good of the company albeit in an indirect manner. For instance, investments in education mean a better pool of future employees and investments in micro-credit mean greater consumer base to sell one’s products to. In the long-term, investments in housing or health can bring about less discontent and therefore more peace and order, which brings about economic and political stability so that businesses can better flourish.

 As emphasis on business accountability and transparency grows, firms that meet society’s expectations are favored over those that fail in corporate citizenship. By working closely with government, host communities, civil society, and other businesses in addressing social issues, local companies acknowledge that business success is intertwined with their commitment to bring economic, social and environmental value to society.