09 December 2005
The business spotlight was on social responsibility last week, as a high-profile event brought together the elite of Morocco's economy. The aim was to discuss socially responsible investment, a topic that is fairly new to the region, but that is generating a growing buzz in more advanced markets.
Socially responsible investment (SRI) is an application of the corporate social responsibility (CSR) trend, whereby on a voluntary basis, companies integrate social and environmental concerns into their business operations and interaction with stakeholders - as opposed to just stockholders.
While CSR does not have a universal definition, many see it as the private sector's way of integrating the economic, social and environmental imperatives of its activities. As such, CSR closely resembles the business pursuit of sustainable development and the triple bottom line, with a view to reconciling concerns that have long seemed to be clashing - namely economic efficiency on the one hand, and social progress and environmental protection on the other.
In addition to integration into corporate structures and processes, CSR also frequently involves creating innovative and proactive solutions to social and environmental challenges, as well as collaborating with both internal and external stakeholders to improve CSR performance.
Organised by the Ministry of Finance and Privatisation's Department of Investment, in partnership with the Caisse de Dpt et de Gestion (CDG) and a wide array of sponsors, on December 1-2 the third edition of the Fundamentals of Investment mustered some 800 national and foreign participants to ponder concrete strategies for Morocco to position itself on the global SRI market. Indeed, while socially responsible funds are just a blip on the mutual fund radar, they are growing briskly. Some 200 funds boast assets of $37.4bn, up 21% from a year ago, according to Lipper, a leading fund information company.
Morocco is currently focused on firmly putting King Mohamed VI's National Initiative for Human Development (INDH) on the launching pad. This ambitious and well-intentioned mobilisation was announced by the King last May in a speech to the nation, and an action plan was unveiled in August.
This lead Anis Barrou, junior minister in charge of literacy and education, to tell Morocco's economic daily L'Economiste that the theme of socially responsible investment matched the country's preoccupations in its efforts to emerge economically in the context of globalisation, as well as its internal needs and the policies the authorities have adopted to address these needs.
The initiative initially targets 5m people, the majority in rural areas, and has a budget of $1.1bn up to 2010, 20% of which is to be contributed from abroad. It is dedicated to strengthening Morocco's infrastructure - potable water, electricity and road - while creating employment, income-generating activities and providing social services for people in most need, especially at-risk youth, women, the homeless and the elderly.
There are already commitments of financial support from Belgium, France, Germany, Kuwait, Saudi Arabia, the UAE, the US - through the Millennium Challenge Account - and from international organisations.
Drawing on this new sustainable development impetus, a number of onlookers pointed out that the conference on SRI could not have come at a better time. Indeed, in the royal opening speech read out by Prime Minister Driss Jettou, Mohamed VI underlined that in his view, Investment is first and foremost a means [to achieving] progress and social justice... We have decided to lift, one by one, all obstacles to investment promotion.
Yet an equal number of players underlined that SRI should not be seen as a panacea for the challenges Morocco is facing.
However, a number of analysts were quick to point out that Morocco should first focus on attracting more mainstream foreign direct investment (FDI), a priority that would be best addressed by further improving the overall investment climate, but also by better marketing Morocco as an FDI destination. As an example of this, Younes Benjelloun, partner at Morocco's first merchant bank CFG Group, recently told OBG that The fact Morocco's privatisation programme has attracted more FDI than any other in Africa is one of the global investment scene's best kept secrets.
Meanwhile, in respect to portfolio investments, Benjelloun underlined that with only 55 companies listed, the Moroccan stock market still lacked depth to attract portfolio SRIs in particular, although most of the listed companies were likely to qualify as socially responsible.
Nevertheless, while nobody seems to expect SRI to start flowing massively into the kingdom as soon as next year, a number of Moroccan businesses are eager to take a position in this niche market. These include CDG and BMCE Bank, which have contracted European CSR rating agency Vigeo to assess their CSR performance.
>From the same point of view, the head of the Department of Investment, Hassan Bernoussi, has emphasised in the press that since Morocco is currently undertaking a thorough upgrading process, businesses should integrate social responsibility criteria into their upgrade programme.
In addition, with CSR concerns poised to spread and SRI funds already booming, countries that fail to match rising ethical standards might find themselves cut out of the globalisation loop. Indeed, socially responsible businesses will progressively stop dealing with unethical suppliers - a trend that was reinforced when Nike's brand reputation was ruined after it was criticised for outsourcing its production to companies whose business model was basically based on child labour.
Some analysts have voiced the view that this might well turn out to be international trade's next non-tariff barrier. In this case, Moroccan businesses would indeed be well advised to take advantage of the King's human development initiative to make an early start in the race to attract SRI.
However, with the authorities already taking pains to enforce existing regulations and ensuring judicial security, some are rightly emphasising that responsibility should not be viewed only as a business concern. Morocco will indeed need to mobilise all its stakeholders if it is to meet its ambitious development agenda.
The business spotlight was on social responsibility last week, as a high-profile event brought together the elite of Morocco's economy. The aim was to discuss socially responsible investment, a topic that is fairly new to the region, but that is generating a growing buzz in more advanced markets.
Socially responsible investment (SRI) is an application of the corporate social responsibility (CSR) trend, whereby on a voluntary basis, companies integrate social and environmental concerns into their business operations and interaction with stakeholders - as opposed to just stockholders.
While CSR does not have a universal definition, many see it as the private sector's way of integrating the economic, social and environmental imperatives of its activities. As such, CSR closely resembles the business pursuit of sustainable development and the triple bottom line, with a view to reconciling concerns that have long seemed to be clashing - namely economic efficiency on the one hand, and social progress and environmental protection on the other.
In addition to integration into corporate structures and processes, CSR also frequently involves creating innovative and proactive solutions to social and environmental challenges, as well as collaborating with both internal and external stakeholders to improve CSR performance.
Organised by the Ministry of Finance and Privatisation's Department of Investment, in partnership with the Caisse de Dpt et de Gestion (CDG) and a wide array of sponsors, on December 1-2 the third edition of the Fundamentals of Investment mustered some 800 national and foreign participants to ponder concrete strategies for Morocco to position itself on the global SRI market. Indeed, while socially responsible funds are just a blip on the mutual fund radar, they are growing briskly. Some 200 funds boast assets of $37.4bn, up 21% from a year ago, according to Lipper, a leading fund information company.
Morocco is currently focused on firmly putting King Mohamed VI's National Initiative for Human Development (INDH) on the launching pad. This ambitious and well-intentioned mobilisation was announced by the King last May in a speech to the nation, and an action plan was unveiled in August.
This lead Anis Barrou, junior minister in charge of literacy and education, to tell Morocco's economic daily L'Economiste that the theme of socially responsible investment matched the country's preoccupations in its efforts to emerge economically in the context of globalisation, as well as its internal needs and the policies the authorities have adopted to address these needs.
The initiative initially targets 5m people, the majority in rural areas, and has a budget of $1.1bn up to 2010, 20% of which is to be contributed from abroad. It is dedicated to strengthening Morocco's infrastructure - potable water, electricity and road - while creating employment, income-generating activities and providing social services for people in most need, especially at-risk youth, women, the homeless and the elderly.
There are already commitments of financial support from Belgium, France, Germany, Kuwait, Saudi Arabia, the UAE, the US - through the Millennium Challenge Account - and from international organisations.
Drawing on this new sustainable development impetus, a number of onlookers pointed out that the conference on SRI could not have come at a better time. Indeed, in the royal opening speech read out by Prime Minister Driss Jettou, Mohamed VI underlined that in his view, Investment is first and foremost a means [to achieving] progress and social justice... We have decided to lift, one by one, all obstacles to investment promotion.
Yet an equal number of players underlined that SRI should not be seen as a panacea for the challenges Morocco is facing.
However, a number of analysts were quick to point out that Morocco should first focus on attracting more mainstream foreign direct investment (FDI), a priority that would be best addressed by further improving the overall investment climate, but also by better marketing Morocco as an FDI destination. As an example of this, Younes Benjelloun, partner at Morocco's first merchant bank CFG Group, recently told OBG that The fact Morocco's privatisation programme has attracted more FDI than any other in Africa is one of the global investment scene's best kept secrets.
Meanwhile, in respect to portfolio investments, Benjelloun underlined that with only 55 companies listed, the Moroccan stock market still lacked depth to attract portfolio SRIs in particular, although most of the listed companies were likely to qualify as socially responsible.
Nevertheless, while nobody seems to expect SRI to start flowing massively into the kingdom as soon as next year, a number of Moroccan businesses are eager to take a position in this niche market. These include CDG and BMCE Bank, which have contracted European CSR rating agency Vigeo to assess their CSR performance.
>From the same point of view, the head of the Department of Investment, Hassan Bernoussi, has emphasised in the press that since Morocco is currently undertaking a thorough upgrading process, businesses should integrate social responsibility criteria into their upgrade programme.
In addition, with CSR concerns poised to spread and SRI funds already booming, countries that fail to match rising ethical standards might find themselves cut out of the globalisation loop. Indeed, socially responsible businesses will progressively stop dealing with unethical suppliers - a trend that was reinforced when Nike's brand reputation was ruined after it was criticised for outsourcing its production to companies whose business model was basically based on child labour.
Some analysts have voiced the view that this might well turn out to be international trade's next non-tariff barrier. In this case, Moroccan businesses would indeed be well advised to take advantage of the King's human development initiative to make an early start in the race to attract SRI.
However, with the authorities already taking pains to enforce existing regulations and ensuring judicial security, some are rightly emphasising that responsibility should not be viewed only as a business concern. Morocco will indeed need to mobilise all its stakeholders if it is to meet its ambitious development agenda.
© Oxford Business Group 2005
