CSR Survey 2010
on
Corporate Social Responsibility
Practitioners in Lao, PDR
December 2010
Table of contents
Executive Summary ....................................................................................................................................... 1
Abbreviations ................................................................................................................................................ 2
1. Survey Background ................................................................................................................................ 3
2. CSR background and development ........................................................................................................... 4
2.1 Defining CSR ........................................................................................................................................ 4
2.2 CSR development ................................................................................................................................ 5
2.3 CSR Dimensions ................................................................................................................................... 7
3. CSR in Asia and Laos .................................................................................................................................. 7
3.1. Philanthrophy and the Art of Giving................................................................................................... 8
3.2. Asia is Waking Up ............................................................................................................................... 9
3.3. An Asian CSR Tour .............................................................................................................................. 9
3.6. The Case of Laos ............................................................................................................................... 15
4. Study findings .......................................................................................................................................... 17
4.1 CSR Awareness .............................................................................................................................. 17
4.2. Current practice ............................................................................................................................ 19
4.3 Spending and budgeting ................................................................................................................ 29
4.4 Plan and support needed .............................................................................................................. 33
5. Case studies of CSR program beneficies ................................................................................................. 34
MMG Training Center .......................................................................................................................... 34
Creating opportunities for disabled people ........................................................................................ 37
We can do it better.............................................................................................................................. 37
6. Conclusion and recommendations .......................................................................................................... 38
Annex 1: Questionnaire ....................................................................................................................... 41
Annex 2: Respondents‘ Directory ........................................................................................................ 51
1
Executive Summary
The German Development Service (DED) has requested the Enterprise & Development
Consultants Co., Ltd (hereafter called EDC) to conduct a survey on Corporate Social
Responsibility practice in 17 LMEs in Vientiane Capital and Savannakhet province from
December 2010 to February 2011. This survey is the first of its kind in Laos. It aimed to find out
if there are sufficient CSR practitioners (particularly among the large and medium enterprises -
LMEs) and if so, how is the practice spreading. Three case studies were selected and included
herein as best practices among the companies surveyed. A questionnaire was used with a focus
on qualitative rather than quantitative information.
Globally, there is no unified definition of CSR. Generally, it is referred to as corporate
conscience, corporate citizenship, social performance, or sustainable responsible business.
Wikipedia suggests that it is a form of self-regulation integrated into a business model. The goal
is to embrace the responsibility for the company's actions and encourage a positive impact
through its activities on the environment, consumers, employees, communities, stakeholders and
all other members of the public sphere.
CSR in Laos is alive but on a very early stage of development and embeddedness in the
companies. Applications have been sparse and limited in scope. Practitioners see this as an
important trend that they must respond, follow and comply to. CSR has not reached the stage
where they will be performed continuously by the practitioners. Interestingly, all companies
interviewed in the survey said they were aware about CSR and found it useful and important for
the company. The most common programs are to address health and safety issues of the
company staff, education and training for staff and communities and environment protection.
The main drivers of CSR in the companies are the top management. The bigger the companies,
the more CSR needs to be understood and promoted. The current biggest challenges for CSR that
the companies are facing are limited budget, no support policy and lack of awareness. They
needed more awareness, educating their staff and their stakehoders and other relevant ―publics.‖
A number of recommendations mainly focusing on awareness raising, education on the topic and
networking of CSR practitioners are made for DED‘s consideration in order to move forward
with CSR promotion in Laos.
2
Abbreviations
ASEAN Association of South East Asia Nations
CLICK Coalition for Lao Information Communication and Knowledge COP Community of Practice
CSR Corporate Social Responsibility
CSO Civil Society Organizations DED German Development Service (merged and renames in 2011 as GIZ)
DDD Digital Data Divide EDC Enterprise & Development Consultants Co., Ltd
EMS Environmental Management System
EU European Union
GPN Green Purchasing Network
HQ Headquarters
IGES Institute for Global Environmental Strategies
ISO International Standard Organization
LCA Life-Cycle Assessment
LNCCI Lao National Chamber of Commerce and Industry
LME Large and Medium Enterprises MDG Millennium Development Goals
MNCs Multinational Corporations
NGO Non-Government Organization
NTPC Namthern Power Corporation
SMEs Small and Medium Enterprises
SRI Socially Responsible Investments
TBL Triple Bottom Lines
TQM Total Quality Management
3
1. Survey Background
The German Development Service (DED) has requested the Enterprise & Development
Consultants Co., Ltd (hereafter called EDC) – a private human resource development company in
Laos to conduct a survey on Corporate Social Responsibility (hereinafter, called CSR) practice in
Laos. The survey is the first of its kind in Laos, with the aim to find out if there are sufficient
CSR practitioners (particularly among the large and medium enterprises (LMEs) in the country
and if so, how is the practice spreading. The survey covers a sampling size of 17 LMEs (2 extra
compared to 15 companies in the original plan) in Vientiane Capital and Savannakhet province
and has been carried out from December 2010 to February 2011. Three case studies were selected
and included herein as best practices among the companies surveyed.
The EDC survey team consisted of Ms. Buakhai Phimmavong, Mr. Anousack Chaysavang, Mr.
Ki Latmany and Mr. Intha Phanouvong and was assisted by Ms. Julia Dreeßen – a MBA student,
who specialized in CSR and provided valuable technical inputs during the survey
implementation. Dr. Eduardo Canela, a social enteprise consultant provided technical
supervision and read the draft reports.
The survey started later than planned. December turned out to be one of the busiest months for
some of the repondents. The team did not get the appointment with Phubia Mining and Namthern
Power Corporation (NTPC) till about mid-January 2011. Due to the relatively few practitioners in
the sample, the team could generate only three good case studies (Laos Soft drink, Digital Divide
Data DDD and Minerals and Metals Group MMG) instead of five as originally planned. Most of
the other practitioners‘s CSR are still on their infancy stage.
The Sample Firms. Much unlike the earlier CSR surveys of South Africa and Malaysia, this
survey used a very samll sample of 17 enterprises. This is largely due to the small size of Lao
PDR‘s industrial base. Moreover, the questionnaire (See Annex 1) focused on qualitative rather
than quantitative information as the former surveys did.
The survey covers a wide range of sub-sectors such as manufacturing including agricultural
plantation and mining (7), trading (2), professional business service (2), tourism and hotel (2),
transportation (1), telecom (1), education (1) and telecommunication (1). The detailed
respondents‘ list is in Annex 2.
4
2. CSR background and development
2.1 Defining CSR
There is no unified definition of CSR. In the Anglo-American language and in the German
literature, it is referred to as corporate conscience, corporate citizenship, social performance, or
sustainable responsible business.
Wikipedia suggests that it is a form of self-regulation integrated into a business model. CSR
policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures
its active compliance with the spirit of the law, ethical standards, and international norms. The
goal is to embrace the responsibility for the company's actions and encourage a positive impact
through its activities on the environment, consumers, employees, communities, stakeholders and
all other members of the public sphere. Practitioners would proactively promote the public
interest by encouraging community growth and development, and voluntarily eliminating
practices that harm the public, regardless of legality. Consequently, CSR is the deliberate
inclusion of public interest into corporate decision-making, and the honouring of a triple bottom
line (or TBL): people, planet, profit1.
The European Commission‘s Green Book defines it as2:
"Concept where companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders." It refers to responsible corporate
action beyond legal requirements. It manifests itself throughout the value chain, in a company‘s
treatment of its employees and in its dealings with the relevant stakeholders. This definition also
hints on the TBL:
Good economic performance
Good social practices
Good environmental performance.
1 Source: http://en.wikipedia.org/wiki/Corporate_social_responsibility
2 Green book / European Commision:
http://www.jussemper.org/Resources/Corporate%20Activity/greenbookeu.html
Fig.1: The Triple Bottom Line of CSR
5
CSR thus refers to an integrated business plan so that all "social, environmental and economic
contributions of a company voluntarily assume social responsibility that goes beyond regulatory
compliance." 3.
2.2 CSR development
The Beginning
The structure of the industrialized economies fundamentally changed at the end of the 19th
century. Larger enterprises representing significant concentration of power began to emerge,
while smaller companies became less important. It was the visibility, power and reach of these
new companies in that society that initially placed CSR on the public agenda. Some philanthropic
entrepreneurs behind the new companies responded positively and began to improve the situation
of their employees by building accommodation and enhancing working conditions. The classical
laissez-faire economic model remained dominant until the 1930s, then it was replaced by a new
system where the state assumed a more active and critical role in the economy. This prompted
companies to improve working and living conditions for employees, for example, or facilitate
social progress. [CARROLL 2003].4
The term CSR became popular in the 70s following the movements of many multinational
corporations (then called, MNCs) in the then emerging markets. The term ―shareholders‖ (MNC
owners) was expanded to ―stakeholders‖ to include those that the MNC activities have an
impact5. Proponents argue that corporations make more long term profits by operating with a
CSR perspective, while critics argue that it distracts them from their main economic roles. Others
opined that CSR is merely an attempt to pre-empt the role of governments as MNC regulators.
Over the years, CSR image changed. It is now seen to aid a company‘s mission and guide it to
what it stands for and will uphold to its consumers. It is now used to examine ethical and moral
principles to ethical problems that can arise in business environments. ISO 26000 is the
recognized international standard for CSR (currently a Draft International Standard). Public
sector organizations (the United Nations for example) adhere to the TBL. It is widely accepted
that CSR adheres to similar principles but with no formal act of legislation. The UN has
developed the Principles for Responsible Investment as guidelines for investing entities. Today,
3 Green book / European Commision:
http://www.jussemper.org/Resources/Corporate%20Activity/greenbookeu.html 4 Thomas Loew, Kathrin Ankele, Sabine Braun, Jens Clausen: Significance of the CSR debate for sustainability and the
requirements for companies.Munster, Berlin 2004. 5
See R. Edward Freeman, Strategic Management: A Stakeholder Approach (Pitman Series in Business and Public Policy), 1984.
6
CSR practitioners integrate social and environmental concerns in their business operations and in
their interaction with their stakeholders voluntarily.
CSR Debates in the USA
The CSR debates in the USA began in the Fifties. The first major work appeared in Bowen‘s
Social Responsibilities of the Businessman in 1953. It noted that the economy influences the life
of citizens in many areas. Bowen showed that a company's social responsibilities must reflect on
the society‘s expectations and values. Initially, it was a company's owners who were expected to
discharge these responsibilities, but over time the emphasis shifted to the social consequences of
companies‘ actions. In 1967, Davis minimized the importance to the individual interests of people
or companies and instead expanded the concept to include the total benefit to society resulting
from the use of the means of production as the most important factor.6
The European CSR process
The UK was for a long time the only European country to use the CSR approach. The European
Union (EU) started looking for its own CSR concept via the strategies adopted in Lisbon in 2000.
The strategy called for the EU, ―to become the most competitive and dynamic knowledge based
economy in the world, capable of sustainable economic growth with more and better jobs and
greater social cohesion‖ by 2010 [EUROPEAN COMMISSION 2001C:2]. This was followed by
the EU‘s strategy for sustainability that pinned CSR as an important contribution by businesses to
sustainable economy. This is EU‘s political drive to promote CSR [EUROPEAN COMMISSION
2001C].7
In 2001, the EU published the Green paper as its CSR framework. Five years later, Malaysia
developed its own version (called the Silver Book) which leaned towards the Swedish‘ CSR
concept (called, White paper). All these frameworks belong to a catalogue of international
standardizations initiative.
Since 2004, CSR became a subject of an international standardization process [ISO 2004] by the
ISO. The United Nations Global Compact‘s strategic policy initiative is committed to aligning
business operations and strategies with the ten universally accepted principles in the areas of
human rights, labor, environment and anti-corruption. There are other international standards
which belong to the international labor right and the millennium development goals (MDGs).
6 Thomas Loew, Kathrin Ankele, Sabine Braun, Jens Clausen: Significance of the CSR debate for sustainability and the
requirements for companies.Munster, Berlin 2004. 7 Thomas Loew, Kathrin Ankele, Sabine Braun, Jens Clausen: Significance of the CSR debate for sustainability and the
requirements for companies.Munster, Berlin 2004.
7
It is difficult to use the broad characterization of the CSR activities in Europe and the US as a
framework for examining the Asian context. Currently, the European-US framework has: (a)
greater emphasis on the importance of environmental stewardship and strengthening of
environmental management practices; (b) strong and active civil society involvement; (c)
management of the supply chain in response to well-articulated consumer concerns is a major
driver; (d) strong traditions of community outreach including corporate community investment
that extends beyond charity; and (e) companies are increasingly engaged in strategic partnerships
with stakeholders within communities in which they operate. Asia is far from these features.
In Europe the new CSR concepts are grafted on a tripartite system institutionalizing relationships
among social partners, i.e., the public authorities, companies and trade unions. On the one hand,
CSR concepts are perceived positively as tools to help to the revitalization of the welfare state
and adapt it to globalization. Business cannot substitute to the state but its input is considered as
essential to solve specific issues such as unemployment, regional development and education.
Business is also expected to participate to a co-regulation process with the other stakeholders.
2.3 CSR Dimensions
CSR has internal and external dimensions. Inside a company, socially responsible practices
include employees and other initiatives such as investing in human capital, health and safety, and
managing change, while environmentally responsible practices relate with the management of
natural resources as factors of production. Integrating CSR opens a transformative change process
and reconciles social development with improved competitiveness.
CSR spreads beyond the doors of the company into the local community and widens the concept
of stake holding in addition to employees and shareholders (e.g., business partners, suppliers,
customers, public authorities, NGOs representing local communities and the environment). Rapid
globalization has placed the CSR into the global agenda on governance.
3. CSR in Asia and Laos
Looking from country to country, the CSR Asia8 confirmed that there are numerous businesseses
who practice CSR. The origins and conceptualization of CSR in many Asian countries are rooted
in the diversity of tradition, culture and religious ecosystems that are deeply influenced by ethical
concepts spawned by religious practices. This diversity makes the Asian CSR scene very
complex, strange and different from the ways they are practiced in the US and Europe.
8 LRQA: CSR in Asia The real picture. 2010. http://www.csr-asia.com
8
3.1. Philanthrophy and the Art of Giving The CSR concept as we understand it today has already been practiced in many Asian countries
in their own humble and unique ways as shaped and tempered by their tradition, culture and
religious beliefs. The origin, introduction, spread, applications and depth of use of the CSR in
Asia vary from country to country‘s rich and diverse religious landscapes. In the old days, the
terms closest to CSR were charity and philanthrophy.
Box 1: Religion and Philanthrophy
Look back at your business and life, at their end, and honestly say that the years of doing business
have had some meaning. We should be able to look back and see that we have conducted ourselves and
our business in a way that had some lasting meaning and which left some good mark on the world. -
Buddha
If one’s actions are motivated only by profit, one will have many enemies. - Confucius
A good name is to be chosen rather than great riches, and favor is better than silver or gold. The rich
and the poor have this in common, the Lord is the maker of them all. - Bible Book of Proverbs
[9:60] Charities(Sadaqaat) shall go to the poor, the needy, the workers who collect them, the new
converts, to free the slaves, to those burdened by sudden expenses, in the cause of Allah, and to the
traveling alien. Such is GOD's commandment. GOD is Omniscient, Most Wise. Quoranic Verses
You came into this world with fists closed and you go away with open palms. So even while living
stretch your hand open and give liberally. (mutti bandhe aye jagat me hat phasare jaoge bhai). Kabir
(c1398-1470)
The Sarvodaya movement in India (developed by Archarya Vinoba Bhave, 1895-1982) is a program of
land gift (Bhudan), village gift (gramadan), wealth gift (sampattida n), and life time commitment
(Jivandan) for bringing about non-violent economic and social change.
Take old Japan for example. Businesspersons were expected to follow the samourai code to be resepcted.
This unleashed a business culture where companies were (and still are!) expected to bear benevolent
responsibility towards those with whom they had direct relations: employees, subsidiaries, business
partners and customers, and the community surrounding the workplace, shopkeepers and service
providers, i. e., the stakeholders in today‘s CSR language. This was observed in old China as well.
Businesspersons emphasized honesty, integrity and respect of ethical values. The core of values in
Japanese and Chinese societies were faith and trust that have deep roots from Buddhism and
Confucianism.9
9Ho, B. Confucian Businessmen, CSR Asia Weekly, Volume 2, Week 43, October 25, 2006.
9
The same sense of righteousness and respect for ethical values cut across many societies whose main
relious inclination sways from Islam to Christianity. Believers thought that success of a businesshighly
depend on the favours gained from people and society. Businesspersons are expected to reciprocate or
return back a certain amount even beyond any contractual agreements. Doing something good for society
enhances social reputation and deserving respect different from the contempt reserved for the mere profit-
seekers (Lebroux). Indeed Asia‘s companies and businesspersons were concerned about their social
responsibilities, long before the term CSR was invented.
3.2. Asia is Waking Up
Compared with their counterparts in the US and Europe, Asia may still be considered as barely becoming
aware of the CSR imperatives. CSR is gradually metamorphosing from its historical focus on business
philanthropy to a more strategic integration of the practices into the core values of larger organizations.
Many large MNCs and local companies in more advanced Asian countries (e.g., Japan, South Korea,
ASEAN 6) never shied away from their social responsibilities. But before CSR, however these
responsibilities were fulfilled as implicit obligations embedded in their business practices. For example in
areas where social commodities were less developed as in health, pensions and education in many Asian
countries, companies have taken over the responsibility over these issues. Such reponsibilities usually fell
into the hands of the corporate owners rather than a specific organizational unit.
3.3. An Asian CSR Tour
A brief overview of the CSR practices in Indonesia, Malaysia, Philippines, Singapore, Thailand, and
Vietnam follow.
Indonesia
State of CSR is still in early stages but recent developments indicate encouraging signs. In addition to its
Islamic roots, the concept is embedded in the Indonesian gotong royong culture. Current promotion
measures are led by an informal alliance in both government and private sectors. Most CSR users are in
compliance stage. Companies comply with relevant policies and regulations as part of doing business.
Some have reached the managerial stage where societal issues are embed in their core management
process. Still, a few others are in strategic stage where companies integrate social issues in their core
business strategies.
While it is fair to say that CSR makes a positive contribution to the human rights of those working in
MNCs, it is also fair to say that it only makes a difference to those few large companies targeted by
consumers or who are convinced of the necessity of thinking ethically and responsibly. Other companies
can avoid such pressure by staying under the radar screen. The on-going CSR debate centres on instrusive
CSR policies and regulations, rather than CSR‘s usefulness. Numerous companies10 resisted the inclusion
10
Edward Manik, “CSR: The Indonesian Context”, Frontier, June 2008.
10
of CSR under Law No. 40 of 2007 on Limited Liability Companies, Article 74, paragraph 1 that states:
Companies doing business in and/or in relation to natural resources must put into practice social and
environmental responsibility. Still, cynics argue that Indonesia may benefit from CSR, but it cannot rely
on CSR to solve issues of exploitation, environmental devastation and poor labor standards, particularly
when Western finance corporations are impervious to environmental or labor rights lobbying and
community outrage.11
Malaysia
This country has taken CSR seriously. Among its many continuing achievements in CSR promotion, it has
recently developed a Framework Agenda that was composed by Bursa Malaysia for public listed
companies in 2006. Bursa Malaysia is an exchange holding company under Section 15 of the Capital
Markets and Services Act of 2007. The Agenda is set of guidelines for public listed companies who want
to use CSR. The internal and external dimension of CSR in the Bursa Malaysia Agenda consists of:
Environment, Community, Workplace and Marketplace. See the framework areas12
in Box 2.
Box 2: Bursa Malaysia Agenda
Environment Community Workplace Marketplace
- Climate Change
projects
- ISO 14000
- Renewable Energy
- Energy Efficiency
- Waste management
- Recycling, Reuse,
Reduce
-Biodiversity
protection
Develop Carbon
Funds:
-CDM / Carbon
Markets
- Employee
Volunteerism
- Education: digital
divide / Schools
adoption scheme
- Youth development
- Underprivileged
homes
-Employee
Involvement
- Workplace
Diversity
- Gender issues
- Health & Safety
-Human& Labor
Rights
- Human Capital
development
-Green Products
- Stakeholder
engagement
- Ethical
Procurement
- Supplier
management
- Vendor
management
- Social Branding
- Corporate
Governance
11
CSR Report in Indonesia, UN Research Institute for Social Development (Dec 2001). 12
Bursa Framework
11
Philippines
The CSR concept and its initial practice can be traced as far back to 1950s. Market forces have been the
major CSR driver due the the presence and push by NGOs and civil societies. Persistent social problems
are the main challenge to sustaining commitment to and making resources available for CSR.
Most CSR efforts are philanthropic in nature with education and health being the main recipients. There is
growing internal expressions of CSR linked to operations of companies promoting employee involvement.
Leaders who play significant role in CSR are the principal agents for the CSR promotion strategy. One
non-profit, Philippine Business for Social Progress has obtained mandatory contributions (based on gross
profit percentage) from its usually large company members. Emerging new CSR areas including fair trade,
microfinance and solidarity movement have already immigrated out of the corporate corridors in response
to the MDGs, persistent poverty and the expanding needs of the Bottom of the Pyramid.
Singapore
Development of CSR is influenced by the country‘s unique city-state character that has achieved
economic success where government remains a key architect of the economy and has considerable
influence over corporate behavior. Government-centric approach influences CSR strategies with much
emphasis on compliance with legislative requirements as a means of achieving and regulating socially
responsible behavior. Corporate residents follow the state rules rather than their headquarters when
dealing with CSR appropriateness.
Thailand
Practice of CSR is at its early stages of development substantially influenced by religious beliefs and
traditional norms of ethical practice. Full integration of CSR into business management at the strategic
level is not widely evident yet reflecting insufficient commitment by top management and the general
perception that CSR is primarily business philanthropy. Engagement with NGOs deal with sound
environmental practices and social development while engagement with government emphasizes
compliance with environmental, health, labor and safety standards. The CSR challenges include narrow
perception of CSR by many leaders, threat of economic downturn, and negative perceptions that of CSR
standards as a form of trade barrier. The development of local standards is fairly well developed in
Thailand.
Vietnam
CSR activities are regulated and supervised by the government and corporate social policies observe state
regulations as outlined in the companies‘ annual plans. CSR thrust includes meeting requirements of
import partners, avoiding conflicts with local labor and to some extent philanthropy. Enterprises and
government are the main players for promoting CSR where enterprises determine the success of CSR and
government promulgates policies and supervises implementation. The main challenge is to raise the level
of awareness of CSR since consumers have limited appreciation of CSR and do not relate it with social
concerns.
12
This brief CSR Asian tour shows us that while there are positive signs of progress, much still needs to be
done. Most CSR practices vary between the CSR concept in the West and philanthropy in the East. Many
companies are taking the best of both worlds and continue to take in what works well in their respective
context. A few prefer to have their own CSR versions. Indeed, the question is no longer why CSR, but
how CSR. CSR is particularly important in Cambodia, Laos, Myanmar and Vietnam. They have to
confront the painful trade-offs between economic growth, preservation of the environment and creation of
good jobs in their rush to catch-up with their ASEAN neighbours and the rest of Asia.
3.5. The CSR Drivers
As the Millenium began, CSR dialogues and conversations in Asia have increased. They have
been happening and practiced in China, Japan, South Korea, Singapore, Malaysia and Vietnam.
Such dialogues point to many CSR drivers that may be used to anchor future CSR promotion
initiatives. The following are driving CSR in Asia: MNCs, good governance, environment, social
movements, global SRI funds, the state, and economic sense.
MNCs
Over the years, CSR surreptitiously landed in Asia via the MNCs invasion and technology transfers before
the mid-seventies. MNCs brought in new human resource development programmes where some CSR
practices have been embedded. They proved to be powerful magnets in attracting talents and loyal
employees in what was then an Asia with limited talents and competencies. Some practices survived while
others began to fuse with existing philanthropic practices that previaled in those times. Both the sides liked
the idea of MNCs adapting themselves to their new business environments. At that time, most of the small
and generally owner-managed companies in Asia began learning the ―western‖ ways. Some are now giants
in their own rights, Toyota, Tata, Samsung, HuaWei, to name a few. All started CSR as corporate charities
and have now become integrated in their business operations.
GOOD GOVERNANCE
Since the 1980s, demand for accountability and transparency (considered as hallmarks of good
governance) spurred a shareholder activism in the United States and later in Europe. This was unknown
and even strange in Asian countries until very recently. Whilst having the objective of defending
shareholders interest it has also become a tool to foster social and human rights-related causes. This
behaviour has affected corporate governance in Asia. The unexpected decision of the California Public
Employees Retirement System, one of the biggest pension funds in the world, not to invest in China a few
years ago and to withdraw from countries such as Thailand and Indonesia is a case in point13
. The pressure
exerted by Free Tibet on British Petroleum to get out of a pipeline project to Tibet in collaboration with
PetroChina is another14
. Consequently, efforts for improving measurement and reporting grew rapidly in
the belief that the outcomes will enhance CSR credibility. For other highly visible companies, CSR has
13
Association for Social and Responsible Investment in Asia, 2002. 14
Dodd, M., BP in Vietnam: social involvement, an evolution, Doshisha Business School, 2004.
13
become a response to meeting regulatory obligations and responding to public opinions that demand
higher standards of good governance and accountability.
ENVIRONMENT
Many CSR adopters see becoming better Earth citizens as an easy door to the CSR. Such environment
related CSR measures respond directly to the market demand. Western giants like HSBC, Mark &
Spencer, Tesco and Wal-Mart have all pledged to become carbon neutral or substantially reduce their
carbon emissions. This is bound to have a strong impact on their Asian suppliers.15
But there is also a
strong inside pressure. A few Asian governments instituted policies to encourage the purchase of
environmentally-friendly products. Japan has a Green Purchasing Law since 2000 while South-Korea has
Green Purchase Act. But still, consumer awareness lagged behind and seemed to have stagnated. Japan
established the Green Purchasing Network (GPN) in 1996 and is now being localized. South-Korea
formed a GPN in 1999, Malaysia in 2003, and Taiwan and Thailand in 200516
. Elsehwere in Asia, more
GPNs are underway. One major initiative is EU‘s Switch Asia which encourgaes the promotion of
sustainable production and consumption practices among the producers and the consumers.
The applications and use of environmental management system (EMS) such as life-cycle assessment
(LCA), environmental reporting, environmental accounting, and the application of ISO 14001 has
increased steadily. National standards certification organizations have been established in Malaysia,
Singapore and Thailand. Japan leads in ISO 14001 certificates issued, followed by China
and South-Korea; which are among the world‘s top ten issuers. Certification bodies also srang up and
grew in Taiwan, India and Thailand.17
Asian companies disclose more detailed non-financial information than before related to social and
environmental issues. In adopting the triple bottom concept, they recognize the necessity to protect the
intangible assets considered as key competitive advantages. They are also aware that evidence of the
emergence of shared workplace values is appearing in the corporate codes of conduct arena where multi-
stakeholder efforts such as the Ethical Trading Initiative and SA 8000 are gathering ground.18
SOCIAL MOVEMENTS
Even they wanted to, many Asian companies are inadequately equipped in tools and access to handle
many social issues. Child labor, unsustainable work hardship, human trafficking and prostitution are better
handled at levels much lower in the production chain by public authorities, NGOs and civil societies. If at
all, CSR interventions will have to be meticulously designed, very expensive and may well go beyond the
corporate missions. Then as IGES noted, the high level of indebtedness of countries like Indonesia, Laos,
Myanmar and Vietnam, makes it difficult to divert significantly higher financial resources to
15 Crow, L. Global Sustainability Targets: Will They have an Impact in Asia?, CSR Asia Weekly, Volume 3, Week 28, July 11, 2007.
16 Institute for Global Environmental Strategies (IGES),Sustainable Asia 2005 and Beyond - In, the Pursuit of innovative Policies, 2005.
17 ISO World Inc. 2007, World-Wide Number of ISO 14001, 2007.
18 Roche, J., Corporate Governance in Asia, Routledge: London, 2005
14
environmental facilities and infrastructure, and to assure the monitoring of the laws that would solve the
social issues.19
Social labeling is almost completely unknown and Fair Trade has not penetrated the Asian markets as it
has in Europe. The recent sneakers in Indonesia and cell phone manufacturing in China are two cases in
point. While consumers are concerned about child labor and dangerous work conditions, they are
indifferent to the issues of unionization and living conditions. Japan,South-Korea, and Thailand have
developed their own eco-labeling schemes for various products, including organic food.
GLOBAL SRI FUNDs
Socially responsible investments (SRI) funds in socially responsible companies. Common areas SRI
include avoiding investments in those that produce or sell addictive substances (like alcohol, gambling and
tobacco) and seeking out companies engaged in environmental sustainability. They seek those that offer
alternative energy and clean technology. SRIs can be made in individual companies or through a socially
conscious mutual fund or exchange-traded fund. Globally, it is growing into a widely-followed practice, as
there are dozens of new funds and pooled investment vehicles available for retail investors. Exchange-
traded funds provide an added advantage as investors can gain exposure in multiple companies across
many sectors with a single investment. Investors should read carefully through fund prospectuses to
determine the exact philosophies being employed by fund managers.
Anpha Capital Company is the first Vietnamese company to adopt the United Nations Principles of
Responsible Investment. It integrated environmental, social and corporate governance issues into
investment analysis, decision-making and ownership policies. It also plans to introduce the SRI Index of
Viet Nam to help create a more transparent and equitable environment for investment and management
activities. Anpha Capital manages Viet Nam Equity Holdings and Viet Nam Property Holdings, which are
both listed in the Frankfurt Stock Exchange.
THE STATE
CSR policies are likely to continue being State driven in China, Singapore and Vietnam. At first glance
their approach shares similarities with the European willingness to codify CSR rules or laws. But even
here, there are differences, specially in social partnerships and organized labor. Vietnam and China have
no independent unions as communist States. The recent involvement in CSR of the All China Federation
of Trade Unions remains 100% under control of the Communist Party. In Singapore the tripartite system
is also controlled by the State although unions representatives are members of the board of the Singapore
Compact, the public organization in charge of CSR.20
Japan is the only Asian country to have developed a
balanced tripartite structures although the collaboration between management and unions are not as close
as in Europe.
19
Ibid, IGES, 2005. 20
See Singapore Compact, Annual Report, 2006.
15
In Malaysia and Indonesia freedom of association has long been curtailed in the export-oriented
industries.21
Active labor unions have emerged in Indonesia, the Philippines and Taiwan the last 15 years.
But those countries are characterized by anti-union behavior from the political and business environment.
Therefore, in those countries the development of a tripartite system with trade unions playing an important
role is unlikely. Most Asian large companies are close to the US firms on this point. At best, trade unions
are just one stakeholder among the others. Partnership with them on CSR does not fit with their business
strategy. Like their Western counterparts, they want flexibility to deal with a diverse workforce
responding to their constantly evolving needs in term of human resource management22
.
THE ECONOMIC SENSE
One important driver of CSR is the idea that there is a business case for responsibility, i. e., responsible
behavior in business activities can be financially sound. Companies with good social and environmental
records show that CSR activities can result in better performance and can generate more profits and
growth. For some, CSR is a new activity and longer term evaluation remains to be done. The economic
impact of CSR can either be: direct and indirect. Positive direct results may, for example, derive from a
better working environment, which leads to a more committed and productive workforce or from efficient
use of natural resources. Indirect effects can result from the growing attention of consumers and investors,
which can expand market opportunities. Inversely, there can sometimes be negative impact on a
company‘s reputation due to an image of improper business practices which eventually affect company‘s
brand and reputation.
3.6. The Case of Laos
As this study would show, Laos is admittedly just in the very beginning stage in crafting a CSR culture.
Current initiatives in ground focus on social and environmental concerns and are still imperceptible at the
national level. More visible and meaningful involvement by the Government, NGOs, private sector, civil
society and donor communities are still urgently needed.
Lessons from the brief CSR tour above requires assessing three main preconditions for CSR in Laos: (a)
practices must blend well with it‘s significant spiritual and philosophical underpinnings, (b) practices must
eventually lead to improved profit, competitiveness and wealth accumulation; and (c) a legal framework
that promotes openness, partnerships and participation. Looking at these three lenses shows that Laos is
ready to confront the CSR challenge.
Laos has a very rich Buddhist culture which would confirm the presence of CSR as defined within its
context rather than Western ways. Western observers even suspect that it is even applied by the smallest
enterprise units in the most remote areas where the demarcation between ―family‖ and ―business‖ blur. In
21 Caspersz, D., The Talk versus the Walk: High Performance Work Systems, Labour Market, Flexibility and Lessons from Asian
Workers, Asia Pacific Business Review, Volume 12, No. 2, April, 2006.
22 CSR and Sustainable Development in Asia: a Growing Awareness Philippe Debroux, 2008.
16
the rural areas, money from the sales of goods in small retail shops are placed in a box accessible to
everyone including the customers. This indicates a high level of trust between sellers and buyers. This is
likewise the same box where the family members draw their funds for personal use.
Since it adopted the New Economic Mechanism and the open-door policy in 1986, business investments in
Laos has steadily grew. Key social and economic indicators have steadily improved. In fact, despite the
Asian financial crisis throughout the Nineties, economic growth rates have steadily increased.23 The
Government is very careful not to impose unnecessary rules and conditions that can stifle the flow of
investments in various high growth areas including mining and exploration, agroforestry processing, real
estate, industry hubs, and the service sectors. Companies are free to volunteer and adapt their own CSR
practices and define the boundaries where these practices can apply.
The legal framework has yet to be developed. In Laos, building the legal frameworks takes time. This has
been exhibited by its experiences with the Enterprise and Non-Profit Association Laws. The experiences
however show that Laos is trying hard to adjust itself with the realities of a more globalized world. To
sustain its future growth, the Lao government encourages all companies to voluntarily become socially
repsonsible while it continues to strenghten existing Lao Laws to insure everyone‘s participation that
businesses participate in development. Some companies are obliged to practice social responsibilities
specially those that have strong ties with communities and environment. Nevertheless, much is still
desired for all the businesses to comply with those laws. Laos will soon open its own stock exchange that
like in Malaysia could paly a vital role in promoting the CSR. The Lao Poverty Eradication Programme
mentioned that the strategies and laws aimed to cover sustainable development including social and
environment responsibilities.
Host to highly visible projects (hydros, MRC, etc.), Laos stands to benefit from the best practices on
safety, climate change, multi-country river management, marine eco-system, air pollution, and dealing
with problems from both international and local dimensions. This calls for a close and high level
collaboration between Asian states at sub-regional and regional levels to provide the necessary
institutional framework. Simultaneously, grass-root activities are also necessary because long- term
solutions require the involvement and acceptance of the actions by local people.
To the casual observer, Laos faces the following CSR challenges: (a) identification and addressing the
gaps in CSR practices, and this study is in the right direction; (b) development of common standards of
good practice throughout the supply chain; (c) emphasis on the role of MNCs in importing good CSR
practices, which are emulated by local corporate community; (d) raising further awareness of CSR; (e)
building capacities within existing institutions to drive adoption of CSR; (f) making the case to the local
business community to adopt CSR. The State will play a crucial role in the confronting these challenges.
However, Laos can rely on her neigbours, particularly Vietnam, Singapore and Thailand in crafting its
future CSR strategy.
23
National Poverty Eradication Programme (NPEP)
17
4. Study findings
4.1 CSR Awareness
Have you heard of the concept of Corporate Social Responsibility (CSR) before?
When asked if they heard about CSR, the respondents reported that CSR is not new to them.
They all have heard the term before and most have their own ideas about it. They also expressed
that CSR is done voluntarily and it is becoming more and more important for businesses in the
country. One respondent even reported that it has CSR in its portfolio of products and services for
LME clients. Still another respondent is interested in incentives for CSR initiatives. Finally, the
respondents expressed their desires to consider CSR in their business strategy and are willing to
learn more about the concept. See Figure 2.
Figure 2: Have you heard about CSR?
Understanding CSR
What do you understand by CSR?
The majority of those interviewed reported that CSR is doing good for the environment, society
and the company staff. It is the way the companies return something back to the environment,
society and the well-being of their staff, voluntarily. Compared to 4 areas in the framework
Agenda of Bursa Malaysia, the marketplace was not mentioned or least been aware of. Many
agreed that it should be built in as one of the company‘s core values. Two interviewees raised
their concern that CSR concept came to Laos via their mother companies and feels like being
forced by their international customers. So far, there has been no related local laws nor
regulations on this area. See Figure 3.
18
Figure 3: Understanding CSR
Usefulness
Do you see CSR as a useful concept for companies? Why so?
All companies interviewed agreed that CSR is useful and important for business. They claimed
varying reasons including: creating and maintaining good reputation, making the socio-economic
development process faster and more sustainable, bringing long-term returns to the business and
establishing good relation with the local authorities. CSR activities enhances the company‘s
image, build trust on their products/services and therefore, could bring in more customers in the
future. They also believe that together with the Government‘s efforts, their CSR program makes
an important contribution to the economic and social development of the surrounding
communities in particular and the country in general. It is also worth noting that the respondents
consider CSR as a long-term investment through people who get trained and would eventually
come back to work with the company. See Figure 4.
19
Figure 4: CSR Usefulness
4.2. Current practice
Does your company have any CSR initiatives in the sense of the definition stated above? Please
specify
All respondents are aware of the social concerns in Laos. They try to fulfill the social needs for
their own employees and the local communities. The most common CSR activities are: health and
safety programs for the workers. Employee rights are given the utmost importance by the
companies. Some examples are: self-help fund, from which employees can borrow money for
personal purposes and a special health care scheme such as eye and teeth treatment that other
companies would normally not provide. The respondents also support education by encouraging
their own employees or workers for self-education for better job performance. Furthermore,
companies give scholarship to students, who could potentially join their workforce. Sector wide,
20
the manufacturing companies claimed to have staff wellfare more than companies from other sub-
sectors.
Going beyond what the laws stipulate, the companies also practice social responsibility in other
areas such as supporting community school construction and repairs, providing learning facilities,
providing support to ASEAN Youth and Annual Cultural Exchange Programmes, and helping the
disabled.
In environment aspects, the manufacturing companies are more active than the companies in
other sub-sectors. Some companies turned their business to a sustainable resource management
operation such as water cleaning, recycling, power saving and renewable energy. Others began
because they have perceived a wide impact to water and air in nearby communities. Also, they
offer sponsorships for tree planting or clean up campaigns. They try to reduce their environment
impacts and costs. Those engaged in these activities felt that they have built a better image on
environment and relations with local communities and authorities. One respondent reported
having Public-Private Partnership projects on rural electrification, income generation, clean
drinking water and waste water treatment. See Figure 5.
Helping out the youth and schools, doing cleaning work or staff training are spread out in almost
all sub-sectors.
Figure 5: Current
CSR initiatives
21
Intensive CSR practice
In your opinion, where is CSR extensively practiced in Laos?
Seven companies reported that CSR is practiced intensively in multinational LMEs, particularly
in the mining and hydro power sector because they have bigger budgets. Three other companies
claimed that even local LMEs have CSR initiatives. Finally, three other companies reported that
even non-profit organizations use CSR. The larger LMEs focus their CSR initiatives on
environment and community concerns. See Figure 6.
Figure 6: Intensive CSR practice
Information sources
Which of the following do you use to obtain information about CSR?
The primary external sources of CSR information are: government documents and internet.
Internally, the companies rely on materials from their HeadQuarters, competitors, and other
media. It is noteworthy that three companies learn CSR from their competitors. See Figure 7.
22
Figure 7: Information sources about CSR
CSR structure and drivers
Does your organization have a CSR department or a CSR team? Who are the internal CSR
drivers in your organization and how many people are involved?
None of the respondent companies has a separate CSR department. In smaller enterprises, CSR is
ran by the managers (the HR managers are popular choices) and is discussed from time to time in
management meetings. Only a few companies like Green Discovery, Sunlabob and DDD make
their CSR initiatives known to all staff and appear to be holistically integrated in their business
structure. Top management (CEO, Top Executives, etc.) is still the main drivers of CSR
initiatives.
In the larger enterprises, CSR ran under the Community Relation Department. CSR activities are
quite well planned and organized in these companies because they clearly assign who are
responsible for certain plans and activities. Without the CSR departments, those interviewed feel
that it is hard for them to carry out because of their daily work routines. This fact shows that
compared to the concept of CSR in Malaysia as mentioned in Page 9, paragragh 1, the CSR in
Laos is just in the early stage of development and mainly operated as extra activities instead of
being strategized like in the large companies. See Figure 8.
Figure 8: CSR structure and drivers in companies
23
CSR Initiatives: When started and why
What was the year when you started to apply CSR in your company? Why?
Six companies started their CSR activities in the early 2000 while another six companies have
CSR since they were established. The four other companies started theirs less than five years
ago. This implies that CSR in Laos also started at the same time when CSR came to Asia. CSR
initiative began for different purposes. Five companies followed their mission as a social
enterprise, a non-profit organization and to fulfill their HeadQuarter‘s requirement. The majority
are from the manufacturing companies, which are mainly joint-venture or foreign invested. Other
reasons are: (1) the team expanded and had more ideas, (2) the establishment of the mass
organization units in the company, and (3) more pressure to support society. See Figure 9.
Figure 9: Start-up time and reasons
Selection of activities
How do you go about selecting CSR projects?
Most companies selected their CSR projects via internal discussions on their business nature and
mission, the owner‘s preference, staff‘s ideas rather than demand-based (9 versus 2 replies). They
seek advice from their international HeadQuarters on specific projects. The policies from the
international business partner also influence the selection. For example, after Carlsberg joined the
Laos Softdrink Company, CSR has been introduced and selected to apply as part of the company
policy. See Figure 10.
24
Figure 10: CSR project selection
Start-up barriers/constraints
Are there any barriers/ constraints when you start the CSR initiatives?
In the sample, all respondents felt some barriers in starting their CSR activities, except for two.
The most common barriers mentioned are: (1) limited time and budget, particularly no specific
budget set for the CSR activity, (2) people and staff are suspicious about the company‘s real
intensions, as well as (3) limited understanding by the company staff and workers. The
respondents reported that it would even be more difficult to sustain the activities at their
workplace because their co-employees do not understand the real purpose. It is also interesting to
see that few companies find it difficult to achieve a balance between maximizing profit and
spending ―extra‖ money for CSR. Two companies pointed to lack of supporting legal framework
and policies as main barriers to CSR start-up. See Figure 11.
25
Figure 11: Start-up barriers/contraints
Frequency
How often do you practice CSR in your company?
Eleven companies regularly carry out CSR activities frequently, e.g., cleaning, painting,
campaigns to give back to society. A few companies organize it based on needs or on special
occasions such as tree planting. One company also mentioned that they have new CSR plans
every year. See Figure 12.
Figure 12: Frequency of CSR activities
26
Venue for applications
In what areas of your company is CSR applied*?
Most companies are active in three CSR areas: environment, community and workplace (7
replies), among which the majority is in the manufacturing sector. This confirms the respondents‘
earlier remarks about the current initiatives on staff training and benefit schemes, education,
resource saving, and so on. Five companies reported that they were working in all four areas. The
larger enterprises‘ CSR activities are focused on the environment and the marketplace. See Figure
13.
Figure 13: Venue for CSR applications
External CSR target and intention
Which external stakeholders does your
organization/company want to address
through its CSR initiatives? What are the
objectives of the CSR activities with respect
to the stakeholders referred to in your
response?
Figure 14: External targets of CSR program
For the external targets, interviews revealed
that the companies target mostly local
27
communities (16 replies), customers and Government (7 each). To a less extent, they are also
aiming at: competitors, NGOs, suppliers and industry associations. For these stakeholders, most
companies aim to bring in societal and environmental impact (13 replies) and internal business
performance improvement (9 replies). Other intention such as attracting or retaining talented
people, benchmarking, supporting Government are considered but to a lesser degree. See Figure
14.
CSR general aims
What will be the company objectives for you organization to apply CSR?
The findings above on the external targets and intentions confirm that the companies in Laos still
have the general notion that CSR is philanthropy (10 replies), followed by making contributions
to environment and society (8 replies each). Other purposes such as attracting new investors or
customers, being demanded by stakeholders, competition are not considered the key aims.
Interestingly, a company claimed that its aim is to show the public how to do and achieve success
in CSR initiatives. See Figure 15.
Figure 15: CSR aims
28
Successful projects and results
What are the main CSR projects that your company has undertaken? Which one is successful and
why?
Five companies considered the staff development and education-related projects as successful.
Likewise, interviews revealed that some concrete results of CSR include: (1) motivated and
healthier staff, (2) employees having more time to interact with each other and hence building a
better relationship (social capital), and (3) staff earning more money after on-the-job-training.
All the respondents understood that staff development and education-related projects have longer
time yields. Two more companies mentioned that successful projects like tree planting should
immediately yield visible results.
Beneficiaries
Who are the beneficiaries of your CSR initiative?
Figure 16: CSR Beneficiaries
The respondent firms claimed that the
nearby communities (15 replies),
employees and staff (13) and local
government (10) are the main CSR
beneficiaries. These 3 groups of
beneficiaries are widely chosen by
companies cross the sub-sectors.
Customers and NGOs are considered less
important target groups. See Figure 16.
Compliance to other standards
Does your organization/ company formally adhere any initiatives/ standards/ indexes in the fields
of environment, social and human right or is planning on doing so?
29
In addition to CSR, the companies follow or comply with various standards, including: ISO
standards on quality management system (ISO 9001), UN Global Compact, fair trade, total
quality management (TQM), and company code of conduct. However, four companies do not
follow any of the above standards. See Figure 17.
Figure 17: Company‘s compliance to other standards
4.3 Spending and budgeting
How much does your organization/company spend on CSR initiatives annually? How do you set
the budget for CSR?
Six companies had a fixed CSR budget. It varies from 3,000 up to 370,000 USD per company per
year. Other five companies follow variable budget, which is calculated as a proportion profit or
operation costs and based on the needs percieved. Two other companies did not know how much
is atually spent for CSR activities. See Figure 18.
Figure 18: Annual spending
30
When asked about budgeting, however, there were more companies that set their CSR budgets
based on the needs rather than as a proportion of profit, costs, or sales. The percentage vary from
company to company, e.g. 3-5% of sales, 5% of profit of the year before or 1% of the annual
profit. See Figure 19.
Figure 19: Budgeting methods for CSR activities
Internal and external influence
What are your experiences with CSR? Has CSR changed your business? Do you notice the
influence of CSR internal or external of your business?
Most companies admit that CSR creates internal and/or external influence. Some internal
influences are: motivated staff, improved performance, better understanding about CSR, and
increased sales. The most common external impact is good reputation (7 replies). Four
companies disagreed. They found no clear impacts within the company, only externally in the
society. See Figure 20.
31
Figure 20: Internal and external influences of CSR to business
Challenges
What challenges, if any, have you had in applying CSR?
According to the companies, the biggest challenges for CSR are: limited budget, no support
policy and lack of awareness. The companies‘ particular concerns regarding budget is that the
company with CSR program has high expenses than other businesses without the program, hence,
the company profit is not maximized. In addition, the business income may not always be
sufficient to allow a budget for CSR. This constraint is mentioned by almost all companies,
except those in the education and banking sub-sectors. Regarding the limited awareness, the
companies claim that people and local authorities are sometimes suspicious about the company‘s
intention, which is misunderstood as equivalent to the advertising function. Moreover, the staff
themselves also does not understand and hence, do not support the program. Being unsure about
how the company‘s donation is spent or villages not available during the planting season were
also mentioned as challenges. The issue related to awareness is mentioned most by the
manufactoring companies. See Figure 21.
32
Figure 21: Challenges in CSR
applications
Impact assessment
Has your company measured the impact of its CSR? If yes, which of the following do you use to
check the impact?
Generally, companies (11 replies) did not pay particular attention to assessing the impact of their
CSR programs, although they mention the activities in their annual reports to stakeholders. Other
five companies did assess their impacts through different means such as statistics, periodic
monitoring, social impact assessment. Interestingly, 12 out of 15 respondents said that impact
assessment results were not immediately available. Others claimed that the results are published
on their website and in their mid- and annual project reports. One company reported that they
were required to assess their impacts before additional new CSR projects are considered. See
Figure 22.
Figure 22: CSR Impact measurement and availability of results
33
4.4 Plan and support needed
Future plans
What are your organization’s plans for CSR projects in the future?
When asked about their CSR plans, more companies wanted to expand their existing activities
and introduce new activities. More favoured new activities than ―continuing with their existing
activities.‖ They plan to have more activities on: (1) environment and support to nearby
community, (2) build a relaxation facilities, (3) Green Care Foundation and University for better
staff performance, and (d) further study, to update the company‘s formal document on CSR and
to expand the program to other communities.
Involving the local communities and government in the program is another idea raised by the
companies. Some planned to implement activities with the nearby communities concerning
environment and other social topics. They realize that a good understanding from local people
and authorities is necessary. In addition, companies realize that they do not have enough human
resources to manage the CSR activities. Some are seriously thinking about collaborating with
other organizations in this area.
Support for CSR implementation
Do you think your organization/company needs more support in CSR?
The most common support needed by the companies is on raising the awareness within and
outside the company. They suggested events like specific in-house training or workshop and
internal consultations and through internet and publications. Assistance in formulating
company‘s strategy is also mentioned. They also recommend to have a better connection and
network among the companies that are interested in CSR. Most of them want more support or
encouragement from the Government. See Figure 23.
Figure 23: Support needed for CSR implementation
34
CSR promotion
What needs to be done to encourage more CSR practice in Laos?
To promote CSR in Laos, the majority (11) of companies suggested to raise awareness in both
public and private organizations, at the Government and all other levels through publication,
media, and news. To advocate for the Government to have respective policies has also been
mentioned, e.g. ― Government should have policies to promote CSR‖, ―The Ministry of
Commerce and Industry should be the leading body in the CSR initiatives together with LNCCI‖,
―to provide tax incentives for companies doing CSR, to enforce the CSR when issuing
investment license, to monitor the program regularly. Integrating the topic into the education and
building network of companies having CSR are also recommended. Figure 24.
Figure 24: CSR promotion
5. Case studies of CSR program beneficies
MMG Training Center
Minerals and Metals Group (MMG) is the biggest mining company in the country. It is located in
Vilaboury district, Savannakhet Province . The district is the most rural area of the province.
Before the MMG started, there were only a few households in this district. After the company
came, more people and families from different districts nearby migrated to settle in the area. The
local economy improved rapidly by the affect from the mining industry. One can say that the
economy of the district depends on this industry. Since thousands of workers work for the
industry, the rate of the consumption of the local products and services increases. On the other
35
hand, the industry also addresses the social and environment concerns from the local
communities and government. Therefore, MMG has different departments to be responsible for
these works.
Providing job opportunities to the local people is one of the company‘s strategies to reduce
poverty and improve people well-being. Since most of the local people lack of knowledge and
skills, MMG cannot employ them. Furthermore, the services of the local service providers were
not qualified according to the company‘s requirements. For that reason, MMG has built a job
training center to provide training to communities.
MMG started the Job Training Center in Vilaboury district with the aims to improve employment
skills of the local people. It provides a relative wide range of skills, which people can choose to
learn such as agricultural production (frog rising, pig rising, goat rising, poultry rising, fish
culturing, and growing vegetables) or handicraft making (weaving and mulberry planting, bloom
Training Center and Sericulture Training
36
making, and tailoring). People who have chosen to attend the agriculture training actually
produce and supply their products such as fish, chicken, pork, different kinds of vegetables to
MMG. Those who obtained better techniques and skills in mulberry planting and weaving from
training could improve their ways of production.
Those who have learned tailoring can choose to open their own shops or work in MMG‘s
clothing factory, which produces uniforms and cloths for company‘s workers and staff.
At the beginning, the project has satisfied the communities‘ needs. The local people have gained
skills and knowledge from the trainings and use them to earn money. However, there were some
complains from the communities about the sustainability. The complaints were from the farmers
who supplied agricultural products to MMG. What happened was that their products were not
qualified to sell to MMG. The vegetable was too small in size due to the improper plantation.
When MMG did not accept those products, the farmers claimed that the company did not want to
support the community anymore.
To deal with the problem, MMG has to organize extra trainings for the villages on improving
agricultural production. After that, farmers are more satisfied because they can improve their
productions and sell to MMG again. From this experience, MMG has included additional
essential topics to the course such as animal diseases, vegetable diseases, and good farming
practice.
Vegetable and Mushroom Training
37
Creating opportunities for disabled people
Mr. Sakda Vilahong has joined DDD since 2009 after his Business Administration Course
graduation from Sikert Vocational School – a vocational school for disable people in Vientiane
capital.
By the low income of his mother and younger sister, his family has to feed two old grandmothers
and support two sons to study. Somsak is one of the sons, who came to study in the Capital City
for two years with the family support hoping that he can earn and take care of himself after he
graduates.
After his graduation from the vocational school, it was not easy to find the job because of his
disability. Then he applied for a job with DDD and was trained to be a full time staff after one
month as a data entry officer. There he works for six hours a day and spends the rest for extra
trainings of the company such as English and computer skills. Working with DDD has changed
his life completely. Before, he had a plan to work and make a saving for his further studies.
However, it was be too difficult for him to do so from the little income. Now he has a chance to
develop his English competence by attending the advance English course in the company.
Somsak said that there is a big chance for him to
develop himself at this company. For more than
one year, he has attended different trainings. Up
to now, he becomes a typing trainer for the young
trainees and still works as a data entry officer. His
earning can cover all his expenses such as room
rental, gas, electricity, water supply, etc.
According to the policy of the company, he plans
to continue his study on Information Technology,
for which he has to pay 40 percent of the tuition
and the rest will be covered by the company.
With the vision as a social enterprise, DDD creats
opprotunities for the disadvantaged people like
Somsack, yet gives him the freedom to find
another job that he likes so that he can start his
new working life. What much more important
than money is the knowledge and experience that
he gains with the company, which has made a
great change and brought bight hopes into his life.
We can do it better
The Lao Soft Drink Company is the biggest soft drink producer in the country. It was a state-
owned enterprise before the Carlsberg Brewery A/S joined the business in 2007. The company
38
has made a significant contribution to the country‘s income. It is reported that the company paid
tax of more than 34.9 billion Kip in 2007. Since 1971, the company has improved its soft drink
production under many kinds and brands of quality products to serve the domestic market.
Besides taking efforts on product improvement, the Lao Soft Drink Company has still been
involved in social responsibilities in many ways. From the past, the company applied CSR mostly
in the social dimension. Similarly to other big companies in Laos, the company gave sponsorship
to schools activities such as sport and art. It also sponsored different traditional events such as
festivals, Lao New Year, Children‘s day, Lao National Day, etc under the Corporate Social
Responsibility program and the company advertisement campaign. The social activities were
implemented by the administration under the management‘s decisions. There was no person in
charge of this specific area.
Since 2007, the CSR practice in the company has changed. After Carlsberg Brewery A/S became
the shareholder, many new management policies and initiatives were introduced to the company.
The managers‘ committee can choose the suitable policies and strategies to improve the business.
CSR initiative is one of the chosen ideas to be practiced in the company and is actively supported
by its partner. CSR is more seriously planed and implemented by being more structured in the
company. Even so far, there is no separate CSR department but at least a person is assigned to be
in charge of CSR. The company has ensured that managers and officers understand the concept.
Among not so many CSR activities, waste management and cleaning activities are the key ones
within the company before the ideas are brought to the nearby community.
6. Conclusion and recommendations
The findings revealed that CSR in Laos is alive but on a very early stage of development and
embeddedness in the companies. Applications have been sparse and limited in scope.
Practitioners see this as an important trend that they must respond, follow and comply to. CSR
has not reached the stage where they will be performed continuously by the practitioners. They
needed more awareness, educating their staff and their stakehoders and other relevant ―publics.‖
Each company needed to set in motion processes that lead to better planning, implementing,
bugeting, and managing CSR initiatives for impacts.
The bigger the companies, the more CSR needs to be understood and promoted. The lack of
understanding of CSR leads to the question how much is real CSR and how much it is ‗‘Green
washing‘‘ and ‗‘Window dressing.‘‘ The CSR in Laos is still in philanthropic stage and needs to
move a notch higher, e.g., embedding the the CSR principles and values within the business
strategy and corporate plans.
39
While companies increasingly recognize their social responsibility, many of them have yet to
adopt management practices that actually reflect them. These CSR practices have to be integrated
in their day-to-day management involving their whole supply chain, companies‘ employees and
managers need numbers of training in order to acquire the necessary skills and competence.
Pioneering companies can mainstream CSR practices by disseminating best practice. While CSR
can only be taken on by the companies themselves, stakeholders, particularly employees,
consumers and investors, can play decisive roles — in their own interest or on behalf of other
stakeholders in areas such as working conditions, the environment or human rights — in
prompting companies to adopt socially responsible practices. They require effective transparency
about companies‘ social and environmental performance.
The Team would like to recognize the CSR achievements of the following LMEs: Green
Discovery, Sunlabob, MMG, Lao Softdrink company, DDD and Birla Lao. DDD and the Lao-
American College‘s program about the voluntary students teaching and environment awareness in
a primary school could be recommended for a PPP program with DED.
RECOMMENDATIONS
As a way forward for promoting CSR in Laos, DED can:
1. Start a series of awareness raising campaigns in public, private companies and in educational
institutions especially where the business management courses are available. It will be important
that the Government goes hand-in-hand with DED in these activities as part of advocacy
measures. In addition, DED can cooperate with NGOs, CSOs and other social institutions for
these initiatives. This can be done via a series of well-selected and placed events (roundtable
discussions that can be implemented via radio or TV spots, exhibitions, internet-based events, and
others) designed to upgrade the level of awareness via good practices and model CSR initiatives.
2. Corollary to the above, DED can support a CSR Community of Practice (COP) starting with
the actual managers and professionals of the companies in the sample. The COP will enable the
group to exchange notes and best practices and communicate with one another. Then, in the mid-
term, DED may consider pooling all the COPs in a network of CSR practitioners that can sustain
the awareness program and other promotional activities.
3. Share more CSR resource materials, tools and best practices. Many new investments are
currently flowing in to highly environment-sensitive areas like mining and hydropower. More
than ever, this is the right time to introduce CSR ideas and tools for the LMEs and the smaller
40
enterprises as well. Tools like TBL accounting, social audits and impact assessments can be
introduced.
4. Link with the universities in Vientiane and elsewhere. Future CSR events must be linked with
the universities to touch the lives of the next generations (and sustain its legacy). Long term
awareness can be embedded in environment related courses in various fields of business,
engineering, social sciences and economics. Another advantage is the multiplier effect that can be
expected out of the partnerships.
5. Work with the Coalition for Lao Information Communication and Knowledge (CLICK) and
EDC regarding the establishment of a small internet portal for CSR that will be in both English
and Lao language. The portal should initiate discussions, chat, podcast, etc. on CSR materials.
The content of this report should be one of the major entries to the site.
6. Introduce and develop the concept of CSR Champions as change agents in the LMEs sector.
Initiate a 5-day course on Leading CSR Initiatives in Laos plus a sustained mentoring support can
facilitate the adaptation of many CSR practices.
7. In line with the stock market opening in Laos, DED can also introduce the concept of CSR
Index that will enable the future stockholders and investors to gain insights into the environment
and social friendliness of the companies in Laos.
41
Annex 1: Questionnaire
EDC-DED CSR Survey 2010
A Survey of
Corporate Social Responsibility
Practitioners in Lao, PDR
ORGANISATION’S PARTICULARS Name of department head: ___________________________________________________________ ___________________________________________________________ Designation (CEO, MD, SM): ________________________________________ Organization Name: ___________________________________________________________ ___________________________________________________________ Organization Address: ___________________________________________________________ ___________________________________________________________ INTERVIEWEE DETAILS
42
Name: ___________________________________________________________ ___________________________________________________________ Designation (CEO, MD, SM): _______________________________________ Hand phone No.: ___________________________________________________________ Tel No.: Fax No.: __________________________________________________________ Email Address: __________________________________________________________
ORGANIZATION DETAILS:
Organization sector / sub sector classification*:_______________________________________________ Type of organization (MNC, LLO, SME, GLC)*:_______________________________________________ Ownership of your organization:
o Lao: ___
o Foreign : ___, please specify_________________________________
o Foreign Subsidiary:_________________________________________
o Joint Venture___
o Other, please specify________________________________________ Year established: _______ Permanent number of employees: _______ Number of females: ______ Number of subcontractors: ______ Sales (last year) according to the report*: ___________________ (US Dollar)
GENERAL UNDERSTANDING of CSR
1. Have you heard of the concept of Corporate Social Responsibility (CSR) before? Yes__, No__.
2. What do you understand by CSR? (Essay)
43
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3. Do you see CSR as a useful concept for companies*? Yes__, No__ and why?
______________________________________________________________________________
______________________________________________________________________________
CSR DEFINITION
CSR is a “concept whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis”24
. It refers to responsible
corporate action beyond legal requirements; CSR manifests itself throughout the value chain, in a
company’s treatment of its employees and in its dealings with the relevant stakeholders.
The economic, social and environmental are the key issues
for CSR and the three dimensions of sustainability. CSR
thus refers to an integrated business plan so that all "social,
environmental and economic contributions of a company
voluntary assumption of social responsibility that goes
beyond regulatory compliance. “, involves.
Fig.1: The Triple Bottom Line of CSR
The four areas, in which CSR is practiced, are: Environment, Community, Workplace and Marketplace.
The following scheme gives an idea on possible CSR initiatives in each area25
:
Environment Community Workplace Marketplace
24 Green Book- European Commission 25
Bursa Framework
44
- Climate Change projects - ISO 14000 - Renewable Energy - Energy Efficiency - Waste management - Recycling, Reuse, Reduce -Biodiversity protection Develop Carbon Funds: -CDM / Carbon Markets
- Employee Volunteerism - Education: digital divide / Schools adoption scheme - Youth development - Underprivileged homes
-Employee Involvement - Workplace Diversity - Gender issues - Health & Safety -Human& Labor Rights - Human Capital development
-Green Products - Stakeholder engagement - Ethical Procurement - Supplier management - Vendor management - Social Branding - Corporate Governance
Not all criteria apply to all companies.
ORGANIZATION / COMPANY UNDERSTANDING of CSR
4. Does your company have any CSR initiatives in the sense of the definition stated above?
Please specify:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
5. In your opinion, where is CSR extensively practiced in Laos?
don't know,
large local,
medium local,
large multinational,
medium multinational,
small enterprise,
non-profit association,
SOE,
others, please specify: ______________________.
6. Which of the following do you use to obtain information about CSR?
government documents,
competitors,
company headquarter,
internet,
local government,
none of the above,
Others, please specify: ___________________
45
ORGANIZATION / COMPANY CSR STRUCTURE
7. Does your organization have a CSR department or a CSR team? Who are the internal CSR
drivers in your organization and how many people are involved?
executive leader,
board members (or partners),
managers,
local government.
8. What was the year when you started to apply CSR in your company? ____ Why then (Essay)?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
9. How do you go about selecting CSR projects?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
10. Are there any barriers/ constraints when you start the CSR initiatives? ______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
11. How often do you practice CSR in your company?
sometimes,
periodic (during specific occassions)
regularly scheduled,
during Lao holidays (specify______),
routine,
others please specify: _________________________.
12. In what areas of your company is CSR applied*?
(Is based on: amount spent, people involved, beneficiaries, all of the above.)
Environment (E.g. renewable energy, energy efficiency, waste management, recycling / reuse / reduce, carbon markets, environmental cause, etc)
Community
46
(E.g. employee volunteerism, education: digital divide / schools adoption scheme, youth development, underprivileged homes, etc)
Marketplace (E.g. green products, stakeholder engagement, ethical procurement, vendor management, social branding, etc)
Workplace (E.g. employee involvement, workplace diversity, gender issues, health & safety, human capital development, etc) o others, please specify: ________________________.
13. Which external stakeholders do your organization / company want to address through its CSR initiatives?
Local communities
Non-Governmental Organizations (NGOs)
Employees
Competitors
Suppliers
Customers
Industry Associations
Regulatory bodies / Government
Others
14. What will be the objectives of the CSR activities with respect to the stakeholders referred to in
your response to question 13?
Internal business performance improvement
Societal and environmental impact
Attracting / retaining talented personnel
Social care for workers
Analysis of stakeholder assessment needs and expectations
Provision of a holistic reporting effort
Benchmarking
Provision of a forward-looking business perspective
Provision of information
Others
15. What will be the company objectives for you organization to apply CSR?
Improve business performance
Differentiation opportunities
Philanthropy
Attraction of new investors or customers
Legal or regulatory obligations
Environmental concerns relating to products or services
Social concerns relating to products or services
Community pressure
Information demand by stakeholders
Competitive pressure
47
Others
16. What are the main CSR projects that your company has undertaken? (Name at least five punctuating: time started, how much staff was involved, how many benefitted, and for our how long.
CSR Projects/Activities
When undertaken and duration (in days, months, etc.)
How many of your company’s staff members/workers were involved
How many benefitted (excluding staff and workers)
Estimated expenditures
1)
2)
3)
4)
5)
17. Which of these CSR project were considered successful and why? ______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
18. Who are the beneficiaries of your CSR initiative?
Own employees
Own customers
Nearby communities
Advocacy groups including NGO and CSOs
Local government
Others, please specify: _______________.
19. Does your organization/ company formally adhere any initiatives/ standards/ indexes in the fields
of environment, social and human right or is planning on doing so?
Standards
Year of establishing
Implementation planned
48
20. How much do your organization / company spend on CSR initiatives annually?
______________________________________________________________________________
______________________________________________________________________________
21. What are your experiences with CSR? Has CSR changed your business?
Do you notice the influence of CSR internal or external of your business? ______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
ISO 9001
ISO 14001
ISO 31000
SA 8000
OSHAS 18001
Global Reporting Initiative (GRI)
UN Global Compact
Dow Jones Sustainability Index
FTSE4Good
Amnesty International Business Principles
OECD Guidelines
Sigma Guidelines
International Labor Organization (ILO) – Declaration on fundamental principles and rights at Work
Universal Declaration of human rights
Fair-trade certificate
Code of Conduct
PPP-Projects
49
22. What challenges, if any, have you had in applying CSR with respect to:
Business environment:________________________________________
Regulatory policies:_________________________________________________________
Beneficiaries: _________________________________________________________
Support from within the company:_________________________________________
Sustainability: _________________________________________________________
Annual budget: _________________________________________________________
Increasing demands: ____________________________________________________
Others: ___________________________________________________________
23. Has your company measured the impact of its CSR? Yes __, No __ . If yes, which of the following do you use to check the impact:
o __user studies, o __periodic monitoring, o __mid and annual evaluation, o __ex post evaluation, o __others: ______________________________
24. Do you have a summary of impact results? Yes __, No __ . If yes, could you please share a copy with us?
25. How do you set the budget for CSR?
__% of profit the year before,
__% of sales,
__% fixed amount,
__% of tax paid,
__% of gross profit,
__%of raw materials used,
__ %of value added,
whatever is needed,
others, please specify: _____________________.
CSR IN THE FUTURE
26. What are your organization’s plans for CSR projects in the future?
______________________________________________________________________________
______________________________________________________________________________
27. Do you think your organization / company needs more support in CSR?
Specific training
Briefings
Publications
Workshops/ Conferences
50
Consultation
Strategy formulation
Internet plattforms
Others, please specify:______________________
28. What needs to be done to encourage more CSR practice in Laos?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
51
Annex 2: Respondents‘ Directory
1.
Organization Name: Digital Divided Data
Organization Address: Unit 21. Dongpalab Village, Chanthabuly district, Vientiane
Capital
Website: www.digitaldividedata.org
Name: Mrs. Mai Siriphongphanh
Designation (CEO, MD, SM): Chief Operating Officer (Oversee three offices in three
locations; one in Laos and two in Cambodia)
Email Address: [email protected]
2.
Organization Name: Lao Cement Industry
Organization Address: 014 Kaisone Phomvihan Ave., Sivilay Village, Xaisettha
District, Vientiane capital, Laos
Name: Mr. Namseng Sisomphou
Designation (CEO, MD, SM): Financial Controller
Email Address: [email protected]
3.
Organization Name: The Lao-American College
Organization Address: Phonekeng Village, Xaysettha district, Vientiane capital, Laos
Name: Ms. Virginia Van Ostran
Designation (CEO, MD, SM): Director
Email Address: [email protected]
4.
Organization Name: Magic Lao Carpets Handicrafts(Fair trade)
Organization Address: Ban Nongdouang Tai, Sikhottabong District, Vientiane capital,
Laos
Name: Ms. Souvita Pasert
Designation (CEO, MD, SM): Director
Email Address: [email protected]
5.
Organization Name: MILICOM LAO CO.LTD Organization Address: 14 LanXang AV. PO. Box 4693, Vientiane, Laos
Name: Ms. Thipphaphone Tattanavong
Designation (CEO, MD, SM): HR Executive
Email Address: [email protected]
52
6.
Organization Name: Vientiane Steel Industry
Organization Address: Km11 Thadeua rd, Hatxaifong district, Vientiane capital, Laos
Name: Mr. Sonesavanh Soukdala
Designation (CEO, MD, SM): Deputy Director
Email Address: [email protected]
7.
Organization Name: Lao Ford City Organization Address: Unit 6, LouangPhabang Road, Ban Khunta Thong, Vientiane
Capital, Laos
Name: Mr. Chittakone Rajphangthong
Designation (CEO, MD, SM): Marketing Manager
Email Address: [email protected]
8.
Organization Name: Green Discovery Organization Address: GDL Head Office: Hang Boun Road, Ban Haysok,
Vientiane,Laos
Name: Mr. Vianney CATTEAU
Designation (CEO, MD, SM): Managing Director
Email Address: [email protected]
9.
Organization Name: KPMG Lao Co; Ltd
Organization Address: 3rd
& 4th Floor K.P Tower, 23 Sinha Road, Phonxay Village,
Saysettha District, Vientiane, Laos
Website: www.kpmg.com
Name: Mr. Ganesan Kolandevelu
Designation (CEO, MD, SM): Country Director
Email Address: [email protected]
10.
Organization Name: Lao Cotton State Enterprise (SOE) Organization Address: Suphanouvong Rd, Khounta Thong Village, Sikhottabong
District, Vientiane, Laos
Website: www.laocotton.com
Name: Mr. Bounchanh BULYAPHOL
Designation (CEO, MD, SM): Deputy Director, Textile Engineer
Email Address: [email protected]
11.
Organization Name: Lao Airlines Organization Address: 2 Pangkham Road, Box: 6441, Vientiane, Laos
Website: www.laoairlines.com
53
Name: Mr. Noudeng CHANTHAPHASOUK
Designation (CEO, MD, SM): MD (Country Director)
Email Address: [email protected]
12.
Organization Name: Novotel Vientiane Organization Address: Unit 10, Samsenthai Road, P.O. Box 585, Vientiane Capital,
Laos
Name: Mr. Khamsouk Dejvongphan
Designation (CEO, MD, SM): HR Manager
Email Address: [email protected]
13.
Organization Name: ST Bank
Organization Address: 144 Samsenthai Rd, Anou Thong Village, Chanthaouly
District, Vientiane, Laos
Website: www.stbanklaos.com
Name: Mr. Hansan HOMSOMBATH
Designation (CEO, MD, SM): Manager of Admin Financial and HR Department
Email Address: [email protected]
14.
Organization Name: Sunlabob- Renewable Energy
Organization Address: Thai-Lao Road, Watnak Village, Sisattanak District,
Vientiane, Laos
Website: www.sunlabob.com
Name: Andy Schroeter
Designation (CEO, MD, SM): CEO
Email Address: [email protected]
15.
Organization Name: Lao Soft drink company Organization Address: Thadeau Road, Vientiane, Laos
Website: www.pepsilao.com
Name: Vilayvanh Phimmachanh
Designation (CEO, MD, SM): Training and Development Officer
Email Address: [email protected]
16.
Organization Name: Birla Lao Pulp and Plantations Company
Organization Address: Savannakhet Province, Laos
Website: www.birlalao.com
Name: Mr. Srey Designation (CEO, MD, SM): Manager of Community Relation Department
54
Email Address:
17.
Organization Name: Lanxang Minerals Limited (MMG) Organization Address: Savannakhet Province, Laos
Website: www.mmgroupltd.com
Name: Mr. Warren Mayes Designation (CEO, MD, SM): Manager of Community Relation Department
Email Address: [email protected]
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