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: mai@digitaldividedata.org

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: sriphoom@gmai.com

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: thelaoamericancollege@yahoo.com

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: lanicoltd@gmail.com

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: thipphaphone.rattanavong@tigolao.com

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: sonesavanh@vsi-group.net

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: chittakone.r@rmagroup.net

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: vianney@greendiscoverylaos.com

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: gkolandevelu1@kpmg.com

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: info@laocotton.com

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: noudeng@laoairlines.com

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: hr-novotelvte@etllao.com

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: hansana@stblaos.com

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: andy.schroeter@sunlabob.com

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: vilayvanh.pmc@pepsilao.com

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: warren.mayes@mmg.com