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How sustainable and responsible are your investments in South Asia and MENA?

Fler och fler skandinaviska företag investerar i att etablera eller expandera sin verksamhet i Sydostasien och Mellanöstern & Afrika (“MENA”), där hållbarhet och CSR fortsatt likställs med filantropi och välgörenhet. Frågor som rör korruption, mänskliga rättigheter och arbetsrätt hamnar oftast i skymundan. I den här artikeln bidrar Yawar Mian med insikter om hur hållbarhet och CSR uppfattas och vad det innebär i praktiken, och vilka utmaningar som svenska och skandinaviska företag möter, när de investerar eller planerar att investera i de två regionerna.

The absence of clear guidelines and regulations from regional governments, lack of understanding among the workers about their rights and the responsibilities of multinational and national companies, have seen only a handful of businesses designing and implementing sustainability and CSR programmes in South Asia and MENA. The economic realities in the two regions are different from those in Europe and Scandinavia, where businesses are struggling to sustain their operations by cutting costs, jobs and revising growth forecasts.

In South Asia and MENA many manufacturers and marketers of basic amenities, services and consumer items ranging from foodstuff, financial products, telecommunications, energy and pharmaceuticals are realising double-digit growth in sales and profits. This growth is driven by rising demand for goods and services in expanding markets full of young populations that identify better standards of living with the acquisition and possession of goods and gadgets in glittery packaging that promise a sense of affluence and prosperity.

The South Asian Scenario
In South Asia, the wide gap between the haves and have-nots overshadows the implementation of international human, labour and child rights conventions and covenants. The desire to get-rich-quick is common among businesses and the large populations that remain deprived of regular supplies of electricity, clean drinking water, basic education and healthcare. And this creates room for businesses to get away with doing very little to fulfill their responsibilities. By donating funds and equipment to social and community outreach programmes, which are good deeds indeed but often devoid of planning, that focus on showing the world how benevolent and conscientious they are to provide plastic chairs and Pentium II or III computers to a primary school in a village, most regional businesses expect to get much publicity and media coverage for their good deeds. A recent addition is the institution of several awards and prizes that could easily be bought by paying a few thousand dollars.

A closer look at the available data shows that only a handful of successful and consistently profitable businesses in the three largest countries in South Asia – Bangladesh, India and Pakistan – are signatories to the UN Global Compact or comply with its 10 guiding principles for conducting business as responsible corporate citizens. Businesses continue to view CSR and sustainability as a liability instead of responsibility and spend little or no resources on acquiring the knowledge and expertise for compliance and the implementation of CSR programmes.

The unequal distribution of wealth and the lack of employment opportunities in rural areas are taking their toll and choking South Asian cities. This is increasing pressure on the healthcare, education and sanitation facilities in big cities, creating pollution and seriously challenging sustainability of resources. South Asia accounts for almost 25 per cent of the world’s population and more than 70 per cent of its people live in rural areas.

Development of infrastructure and community improvement programmes in small towns and villages could reduce migration to big cities, as well as bridge the widening gap between standards of living of the urban and rural population. There are several development projects, backed by international and regional financial institutions such as the World Bank and the Asian Development Bank (ADB), for urbanisation and rural development in South Asia and MENA. And they also present lucrative investment and contract opportunities to Scandinavian investors and companies.

Development in rural areas could certainly lead to growth in the market share and sales of corporations, but the poor infrastructure and lack of basic amenities are challenges that are often exacerbated by natural and man-made environmental disasters such as floods and pollution created by factories. Nevertheless, opportunities for doing responsible business outnumber the odds in key sectors including energy, alternate energy, packaging, fast moving consumer goods (FMCG), pharmaceuticals, textiles, livestock and dairy development, banking, telecommunications, mining and industrial manufacturing.

The MENA Mindset
The MENA region boasts of some of the fastest growing economies in the world. The presence of more than 60 per cent of the global oil reserves and over 40 per cent of the known natural gas reservoirs makes it a magnet for global corporations and workforce. It is, however, ironic that many of the larger countries in the region remain stuck in the socio-economic chaos with majority of their populations living in communities without basic infrastructure and any sense of economic security.

A major challenge to human development in MENA is the mindset of governments and business leaders who are used to paying little or no attention to the rights of common people. The social and political upheavals in the region over the last two years have created some awareness among the masses about their human and social rights, but the pace of change remains painfully slow. Large-scale multinationals and national companies in MENA, like in South Asia, tend to focus more on charitable initiatives rather than implementing comprehensive sustainability CSR programmes that could make a tangible difference at the grassroots level.

The Scandinavian Dilemma
A strong public opinion and concern for the lack of or limited practice of international human rights and anti-corruption laws in South Asia and the Middle East place Scandinavian companies and businesses in a precarious position when investing in or doing business with the two regions. Some human rights and anti-corruption experts contend that Scandinavian companies should not do business with countries that do not adhere to human rights and anti-corruption laws and regulations and fail to provide proper working conditions and environment for their employees. The economic realities, however, are thrust upon large-scale Scandinavian companies selling or buying goods from countries whose exports thrive on cheap labour and goods – especially textiles, garments, leather shoes and products. These economic realities make South Asia and MENA attractive suppliers of cheap and economical products. Scandinavian companies proactively communicate with their stakeholders that they do not tolerate human rights violations and corruption. But they are unable to ensure that there are no such incidents in their supply chains.

Recent incidents and accidents – including fires at two garment factories in Pakistan and the collapse of a garment factory in Bangladesh – have highlighted the need for raising awareness about responsibilities of businesses in South Asia and MENA. Scandinavian companies could make a positive contribution, as well as ensure that their supply chains are not built on the blood and sweat of labourers who have no other option but to toil for long hours in unsafe working conditions for a few dollars. They could provide help to transfer expertise and knowledge.

Scandinavian companies could promote child protection, development research, vocational education and skills training, as well as education of CSR and sustainable development in South Asia and MENA. By engaging local social networks and platforms in the two regions to highlight development challenges and how they could be overcome, they could add much value to societies that are going through an evolutionary process by encouraging and inciting positive action.

Some Scandinavian companies have already begun to exert genuine efforts and provide guidelines to their suppliers in South Asia and MENA. They realise that aside from investing in enhancing their stakes in profitable dairy and packaging businesses, stock markets and setting up new joint ventures they must also invest in ensuring the sustainability of their investments in markets that will continue to grow in the coming years. But the pace of progress is painfully slow, and businesses often tend to forget and ingnore the ground realities when the going is good.

There is room to do more to minimise and eradicate malpractices and not become complacent and content with getting good press. In a recent encounter with the chief executive of a joint venture between a large-scale Scandinavian multinational that has made a substantial investment in Pakistan, I was shocked to hear the chief executive saying: “We do not want the media in Finland finding out that there is child labour in our supply chain, we are a listed company and this could have a negative impact on our share price, we have to do something about it!”

 

Yawar Mian is a Stockholm-based CSR and Sustainability practitioner and energy journalist. He is the founder of CSR PAKISTAN and lived in the Mideast Gulf region for more than a decade and is involved in various development projects in the South Asia and the Middle East and frequently travels to the two regions. He could be contacted at: yawarmian@gmail.com


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