In the wake of Egypt's revolution, government officials and business leaders alike have become acutely aware of the need to include social justice in Egypt's economic development story. Unfortunately, the image of the private sector has been tarnished by allegations of greed and corruption by maximizing corporate gains at the expense of ordinary citizens. However, the evidence indicates a picture to the contrary - the private sector has long been involved in community engagement, particularly through corporate social responsibility (CSR).
A diverse cross section of 104 companies responded to a post-revolution CSR survey conducted by the AmCham Foundation, AmCham Egypt's community arm. Nearly 90 percent of respondents identified themselves as being engaged in CSR activities. Among the companies that are not, all but one expressed a desire to initiate social engagement within two years.
Education was the most popular CSR activity, with 71 companies active in this area. Poverty alleviation initiatives, such as housing programs and addressing hunger issues, were the second most popular, with 59 companies working toward related goals. Environmental sustainability work ranked third, with 45 active companies; only 19 companies work on gender equality issues.
Engineering Consultants Group (ECG) is one survey respondent heavily engaged in various CSR activities. The company is working on an illiteracy eradication campaign in 30 schools, targeting 30,000 students over a three-year program in Beni Suef. Nevine Abdelkhaled, vice president of human resources and organization development at ECG, says that 6,000 students have been helped as the program enters its second year. "Students are given pre- and post-testing for literacy and numeracy," she says.
In the area of health services, ECG provides eye operations, nurse training and machinery to Qasr Al Aini Hospital in Garden City and runs blood-donation campaigns. On February 25, ECG partnered with Rotary, an international network of community-based service clubs, for a four-in-one family day event that included a blood drive, polio fundraising campaign, charity bazaar and fundraising "swimarathon."
Besides trying to identify companies' CSR activities, the AmCham Foundation survey also asked how they do them. Direct funding of projects is a popular CSR strategy, with about 70 percent of those involved in education and poverty initiatives donating money. In-kind donations of goods and services also are common: Of the companies engaged in poverty alleviation, 72.9 percent offer services pro bono, making it more popular than giving cash in this area of CSR. Volunteerism is also a strong means by which companies engage the community, especially in environmental work, where 71.1 percent of companies give their time to such activities as planting trees.
A January Harvard Business Review (HBR) article suggests that employee engagement through volunteer work is on the rise and in time will outpace (and perhaps replace) simply writing checks, especially in a tighter global economic climate.
Offense or defense?
Companies frequently engage in CSR for reasons other than pure altruism expecting to benefit from increased leverage and influence; market and product expansion; improved access to financing; attracting and retaining top quality employees; and enhancing reputation and brand protection.
CSR can be either defensive or offensive, says Helene Gayle, president and CEO of CARE USA. Defensive CSR relates to protecting a company's reputation, whereas offensive CSR is about building up a world-class reputation, she explains. CARE is a leading international humanitarian organization that has increasingly been exploring partnerships between the corporate world and civil society.
After the revolution, corporate reputations suffered, and some experts argue that companies in Egypt are going through a defensive CSR phase. Jennifer Bremer, chair of the public policy department at the AUC School of Global Affairs and Public Policy, believes that CSR has evolved from a public relations activity to an essential activity, often combining funding with team- and brand-building initiatives.
Others believe that offensive CSR is dominant. Abdelkhaled notes that the two founders of ECG are Rotarians, and they led the company in the Rotarian motto of "service above self." Abdelkhaled is a past president of the Rotary Club of Cairo. She is also the treasurer of Hope Village Society, an organization with which ECG partners to help street children.
Despite the benefits of CSR programs, economic realities have forced some businesses to reassess their impact in supporting positive social change and their ability to continue. Budgets for social programs vary significantly, with HSBC reporting the highest annual allocation of LE 25 million. Other companies earmark a percentage of profits for CSR, which means funding could dry up along with profits.
"There are companies that want to do more but don't know how and there are those who do know how, but are unable to expand," says Abdelkhaled. Due to limited funding this year, ECG may have to scale back its goal of educating 30,000 students in the Beni Suef program. Abdelkhaled says that while the company will still work with 30 schools, they will likely be smaller.
Matchmaking
Many companies lend legitimacy to CSR initiatives by partnering with civil society organizations with expertise in a specific area, says Susan McPherson, who wrote the HBR article. "Such programs can enhance a firm's reputation in the eyes of stakeholders, leading to public good, the viral sharing of information and potentially increased revenues." She reports that 97 percent of marketing executives believe this to be a valid business strategy.
The 2010 Egyptian Corporate Responsibility Index, a joint project of the Egyptian Corporate Responsibility Center and the Egyptian Institute of Directors, ranked Mobinil in the top spot, replacing Commercial International Bank's (CIB) top ranking the previous year. Aware of the mismatch between jobs and skills, Mobinil launched an initiative in August to provide 100,000 Egyptians with skills training for the workforce under the motto "helping hands that want to learn" through partnerships with multiple civil society organizations. Mobinil press releases highlight partnerships as a core part of the company's social engagement strategy. CIB has actively partnered with hospitals, schools, charities, food banks and other organizations to achieve its CSR goals.
Abdelkhaled agrees there is a need for matchmaking between funding and available CSR activities. She supports the need to move beyond traditional partnerships and start planning an integrated approach in which civil society is involved from the start.
Indeed, most corporations engaged in CSR do not operate alone. The AmCham Foundation survey found that two-thirds partner with other organizations, ranging from universities to civil society groups (mainly non-governmental organizations) to hospitals and media outlets.
Recipients of CSR also do their due diligence, says CARE's Gayle, explaining that NGOs are selective about accepting money to ensure that donors' business activities are in line with organizations' ethical values. CARE had previously rejected funding from Vodafone Egypt when it discovered that the communications service company provided adult content online in their Dutch operations. While this was legal in the Netherlands, consequences were felt in Egypt. Such examples force multinationals to consider the potential effects on business practices globally, says Gayle.
Souheir Elmasry, president and CEO of Culture & Education for the Child & Family Foundation (CECF), has been involved in both sides of the CSR coin, as a donor and recipient. "Years back, I used to be on the donating end of CSR when I served on the board of directors of the Illinois Humanities Council, and when I served on the Child, Youth and Family Advisory Committee of the Chicago Community Trust. I have witnessed firsthand the importance of pooling the CSR funds of the businesses in a community to help educate its youth, so that ultimately the businesses are presented with a better-educated workforce."
Elmasry returned to Egypt after more than 30 years in the United States and was surprised by the state of society. "I founded CECF, registered it with the Ministry of Social Solidarity and started working on lectures and educational material to address Egypt's problems," she says, moving to the recipient side of CSR funds.
CECF's flagship initiative, Ana wa Nahnoo, is a two-year, four-part educational program that has been applied to more than 9,000 children aged 11 to 14 in public schools and youth centers in 10 governorates. The program aims to develop emotional intelligence, promote environmental values and teach the value of diversity. "They are strongly impacted by the program; results indicated that more than 80 percent of the children have learned to set goals and organize better," she says.
Companies need to change their approach to allocating funds, says Elmasry: "Don't just give money, come and see the results."
AmCham's Corporate Social Responsibility Committee has been working to change the mindset since the revolution. Egypt has remained trapped in a philanthropic approach to CSR, where the question was how to use a corporation's resources for charitable activities, rather than whether these profits were made in a responsible way. Corporations can seize the present opportunity to use CSR to play an integral part in shaping the nation's future.
According to the AmCham Foundation survey, there often is no single person responsible for CSR decisions. Elmasry encourages companies to hire specialized consultants who can assess an organization's impact through a rigorous methodology, so that companies can make better choices.
The geographic destination of support is another issue. It may come as no surprise that Cairo is the top recipient of CSR programming in all work areas, with two-thirds of companies reporting that they conduct their social engagement programs in the capital, according to the survey. Such centralization begs the question of whether companies are targeting resources based on need or convenience and visibility.
In an effort to address this, the Social Contract Center was established in 2007 as a joint project of the Information and Decision Support Center and the United Nations Development Programme to "provide technical support for human development efforts in Egypt using a rights-based approach and the principles of good governance and citizenship." Private sector engagement is a key part of the center's work. Noting a gap in how the private sector engaged and realities on the ground, the center set out to create a "social responsibility map" to identify areas of need. The map was launched in December 2010 and focused on the government's initiative to develop the country's 1,000 poorest villages. Since the launch occurred shortly before the revolution, the map has yet to be utilized to its full potential.
Starts from within
HBR's McPherson cites a Green Research study that finds 80 percent of major corporations will invest significantly in employee engagement this year. In other words, CSR impacts not only beneficiaries, but employees themselves; those engaged in volunteering are far more likely to feel job satisfaction that those who are not, according to a Gallup poll.
While community outreach is an important component of CSR, companies in Egypt have not forgotten the workplace. AmCham Foundation's survey discovered that companies are well aware of the importance of internal CSR initiatives, and almost all respondents were working with their staff. Training topped the list, with 81.7 percent of companies providing human resource development initiatives for employees. Health and safety (67.7 percent), employee communication and representation (63.4 percent), and diversity promotion (55.9 percent) were popular.
About 80 percent of ECG's employees participate in a voluntary program to deduct a quarter day's salary for a fund for families after the deaths of colleagues. The company matches these funds.
The evidence clearly shows that CSR is well developed in Egypt, both external and internal, across types and activities; this is not simply a new fad. Many companies have been engaged in the community for more than 20 years, says Abdelkhaled, "before the term CSR existed."
© Business Monthly 2012
