Over the years, I have seen significant changes in the way companies in developing countries approach Corporate Social Responsibility issues. However, most businesses still struggle with materiality--information that is of material interest and value--in their sustainability agenda. From pinpointing high impacts areas for strategy-setting to ascertaining significant issues for reporting, businesses in developing countries endlessly grapple with the challenge of determining which issues are material and which are not.
In 2010, I worked with a client on developing a CSR strategy. I still remember the morning when we sat down for chat with the CEO and he gave us his three-point agenda. As much as I feel that management input and vision have a place in a strategy, the issues that he raised were neither significant nor relevant; he only wanted them included because he had recently returned from a conference in Europe that emphasized them.
This approach to setting materiality on CSR issues is not uncommon in countries where CSR is still confused with Customer Sales Representative (true story!). Since the concept is new, management often tries to model CSR efforts on the best practices from developed countries. While it is helpful to strive for international best practices, it is imperative that CSR issues are prioritized based on your own ground reality.
Below are four things companies in developing countries should consider while setting materiality on CSR issues:
Here USP stands for Unique Social Problems--issues like street children, gender disparity, and access to clean water that are common in large parts of the world. Overlooking these issues for their lack of glamor may seem like a good move from a brand differentiation perspective but will never result in long-term benefit for either the company or the community.
For example, while many developing countries give economic progress the highest priority, there are basic issues such as safe drinking water and food that demand attention from the public as well as the private sector. In some countries, including Bangladesh, China, and India, negative health impacts are growing over large areas due to fluorine and arsenic pollution in air and drinking water. To know your USP, one of the best places to start is the list of Millennium Development Goals for your country.
Typically public consultation in developing countries is limited to aid agencies and development workers, and companies do not normally conduct regular Stakeholder engagement sessions beyond the annual general meetings (open only to the shareholders). Consequently, the engagement process is not well defined and the stakeholders are not familiar with what it entails.
That said, feedback from stakeholder engagement is one of the most valuable inputs to a company’s materiality setting exercise. As I learned the hard way, stakeholder engagement is not just a one sided drill; rather it is a problem-finding exercise which benefits both the company and the beneficiaries by prioritizing the issues of highest need and by developing solutions that result in long-term benefit. It is also a great way to build rapport with them--something that take years to build through conventional branding and advertising.
There are unique cultural, religious, social, and historical elements in every country. In developing countries in particular, the socio-cultural context may limit or impede certain well-meaning activities. This could be because the society is still not that open or because the governments have a certain mandate. Whatever the case may be, companies operating in these countries would do best to respect limitations and set their materiality based on what is realistically achievable. The issue of contraceptives in Saudi Arabia is as controversial and inherently impossible to deal with as the issue of Internet Freedom in Iran.
I normally recommend that clients use a screening mechanism I affectionately call SAF (in my mother tongue, the acronym means "clear"). The purpose of this screening test, which stands for Suitability, Adaptability and Feasibility, is to weed out those activities which are not suitable from a cultural context, not feasible for the company from a cost or logistics point of view, or are not adaptable with a change in circumstances.
Finally, companies should use their own business realities and industry situation as the litmus test for setting materiality. For a textile manufacturer, the key priorities may be working conditions, child labor, or residues of pesticides and chemicals left behind on the fabric. For the ICT industry, issues like the digital divide, energy efficiency, and a recycling infrastructure may be the most material.
As Wayne Visser writes in his excellent book The A to Z of Corporate Social Responsibility, “Developing countries provide a socio-economic and cultural context for CSR which is, in many ways, different from developed countries." For long term CSR success, it is vital that companies choose to recognize these key differences and look at social issues through the lens of their own ground realities.