AHSAN RAZA

MUHAMMAD SAQIB NASIM

MUHAMMAD TALHA EKRAM

ZUHAIR AZIZ QIDWAI

SUBMITTED TO

MR. SAMIR S. AMIR

CONTENTS

Acknowledgement.................................................................................................4

Introduction............................................................................................................6

Definitions of social responsibility.......................................................................6

Corporate social responsibility means................................................................6

Is CSR the same as business ethics?................................................................6

The debate on social responsibility.......................................................................8

Free market view - a summary...........................................................................8

The free market case against corporate social responsibility.............................9

The corporate responsibility view.......................................................................9

Stakeholder theory.............................................................................................9

Arguments for socially-responsible behavior....................................................10

Enlightened self interest...................................................................................10

From Philanthropy To Stake Holder Participation............................................11

The New Innovations In Implementing Corporate Social Responsibility..........12

Engaging employees in CSR............................................................................13

Diversified programs........................................................................................14

Importance of involvement...............................................................................15

Participatory forum...........................................................................................15

The larger picture.............................................................................................16

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About the company.............................................................................................16

Vision................................................................................................................18

Mission.............................................................................................................18

Core values......................................................................................................18

UBL Structure...................................................................................................18

Organizational Culture......................................................................................19

Major CSR activities.........................................................................................19

Charities and Donations...............................................................................22

Competitors activities..........................................................................................22

Faysal Bank CSR activities..............................................................................23

Competitive Analysis Grid................................................................................25

Problems with Corporate Social Responsiblity....................................................26

Future Prospects.................................................................................................30

Possible Areas for Improvement.........................................................................30

Appendix.............................................................................................................31

UBL CSR Interveiew........................................................................................31

References.......................................................................................................34

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ACKNOWLEDGEMENT

We would like to acknowledge our beloved instructor for assigning the task to enhance our potential in the corporate social responsibility. He gave us wonderful opportunity to understand and implement the CSR in our day to day processes. This assignment proved to be very informative and innovative. We have tried our best to accomplish this task by taking all the necessary procedures.

We would like to thanks Mr. Ejaz Wasey (Head Marketing Services) for giving us some valuable time and support to help us in every possible way. Secondly thanks to Ms. Rubab Abedi for providing us the essentials information regarding CSR activities in UBL.

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Corporations should be and could be a major force for resolving environmental and social concerns in the 21st century.

William Ford, Jr., 2004.

Corporate social responsibility is a dangerous distortion of business principles. If you find an executive who wants to take on social responsibilities, fire him. Fast.

Peter Drucker, 2004.

There is a happy convergence between what shareholders want and what is best for millions of people the world over’

Kofi Annan (2001)

In recent years corporations have been asked to play a key role in addressing issues that appear to go beyond their primary economic function, for instance corporations are increasingly being urged to tackle issues like global poverty, human rights, and climate change. Whether corporations are equipped to play such a role is in some doubt: while there is a long history of corporate engagement with the broader society through philanthropy and community development, the primary function of a corporation remains firmly focused on profit generation, which limits the extent of a corporation’s involvement with broader social issues.

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INTRODUCTION

DEFINITIONS OF SOCIAL RESPONSIBILITY

Corporate social responsibility (CSR) is an obligation, beyond that required by the law and economics, for a firm to pursue long term goals that are good for society.

The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as that of the local community and society at large.

It is about how a company manages its business process to produce an overall positive impact on society.

CORPORATE SOCIAL RESPONSIBILITY MEANS

Conducting business in an ethical way and in the interests of the wider community

Responding positively to emerging societal priorities and expectations

A willingness to act ahead of regulatory confrontation

Balancing shareholder interests against the interests of the wider community

Being a good citizen in the community

IS CSR THE SAME AS BUSINESS ETHICS?

There is clearly an overlap between CSR and business ethics. Both concepts concern values, objectives and decision based on something than the pursuit of profits and socially responsible firms must act ethically

The difference is that ethics concern individual actions which can be assessed as right or wrong by reference to moral principles.

CSR is about the organization’s obligations to all stakeholders – and not just shareholders.

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There are four dimensions of corporate responsibility:

Economic - responsibility to earn profit for owners

Legal - responsibility to comply with the law (society’s codification of right and wrong)

Ethical - not acting just for profit but doing what is right, just and fair

Voluntary and philanthropic - promoting human welfare and goodwill, being a good corporate citizen contributing to the community and the quality of life

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THE DEBATE ON SOCIAL RESPONSIBILITY

Not all business organizations behave in a socially responsible manner

And there are people who would argue that it is not the job of business organizations to be concerned about social issues and problems

There are two schools of thought on this issue:

1. In the free market view, the job of business is to create wealth with the interests of the shareholders as the guiding principle.

2. The corporate social responsibility view is that business organization should be concerned with social issues.

FREE MARKET VIEW - A SUMMARY

The role of business is to create wealth by providing goods and services

“There is one and only one social responsibility of business- to use its resources and engage in activities designed to increase its profit so long as it stays will the rules of the game, which is to say, engages in open and free competition, without deception or fraud.”  [Milton Friedman, American economist]

Giving money away is like a self imposed tax

Managers who have been put in charge of a business have no right to give away the money of the owners

Managers are employed to generate wealth for the shareholders - not give it away

Free markets and capitalism have been at the centre of economic and social development

Improvements in health and longevity have been made possible by economies driven by the free market.

To attract quality workers it is necessary to offer better pay and conditions and this leads to a rise in standards of living and wealth creation.

Free markets contribute to the effective management of scarce resources.

It is true that at times the market fails and therefore some regulation is necessary to redress the balance. But the correcting of market failures is a matter for government - not business

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Regulation should be kept to a minimum since regulation stifles initiative and creates barrier to market entry

THE FREE MARKET CASE AGAINST CORPORATE SOCIAL RESPONSIBILITY

The only social responsibility of business is to create shareholder wealth

The efficient use of resources will be reduced if businesses are restricted in how they can produce

The pursuit of social goals dilutes businesses’ primary purpose

Corporate management cannot decide what is in the social interest

Costs will be passed on to consumers

It reduces economic efficiency and profit

Directors have a legal obligation to manage the company in the interest of shareholders – and not for other stakeholders

CSR behavior imposes additional costs which reduce competitiveness

CSR places unwelcome responsibilities on businesses rather than on government or individuals

THE CORPORATE RESPONSIBILITY VIEW

Businesses do not have an unquestioned right to operate in society

Those managing business should recognize that they depend on society

Business relies on inputs from society and on socially created institutions

There is a social contract between business and society involving mutual obligations that society and business recognize that they have to each other

STAKEHOLDER THEORY

The basic premise is that business organizations have responsibility to various groups in society (the internal and external stakeholders) and not just the owners/ shareholders. The responsibility includes a responsibility for the natural environment. Decisions should be taken in the wider interest and not just the narrow shareholder interest.

ARGUMENTS FOR SOCIALLY-RESPONSIBLE BEHAVIOR

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It is the ethical thing to do

It improves the firm’ public image

It is necessary in order to avoid excessive regulation

Socially responsible actions can be profitable

Improved social environment will be beneficial to the firm

It will be attractive to some investors

It can increase employee motivation

It helps to corrects social problems caused by business

ENLIGHTENED SELF INTEREST

This is the practice of acting in a way that is costly and/or inconvenient at present but which is believed to be in one’s best long term interests

CSR behavior can benefit the firm in several ways

It aids the attraction and retention of staff

It attracts green and ethical investment

It attracts ethically conscious customers

It can lead to a reduction in costs through re-cycling

It differentiates the firm from its competitor and can be a source of competitive advantage

It can lead to increased profitability in the long run

Corporate Social Responsibility (CSR), can be described as, the continuous commitment by corporations towards the economic and social development of communities in which they operate.

FROM PHILANTHROPY TO STAKE HOLDER PARTICIPATION

This is the new paradigm of Corporate Social Responsibility. The conceptualization of corporate social responsibility up till the 1990’s was purely in terms of philanthropy or charity. Welfare programs or initiatives were introduced

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not as a duty or a responsibility but as a form of charity that was supposed to indicate the virtues of the company or the organization.

The problem with the this philanthropy –based model has several problems

The corporation does not commit its resources fully behind such a project and often confines itself to one-time or periodical financial grants.

Since it’s an act of charity, the corporation does not feel the need for community participation in the designing or management of such initiatives and people participation, if any, is restricted to limited implementation aspects reducing the efficiency and effectiveness of corporate social responsibility measures at the ground level.

The lack of involvement from the primary resource provider i.e. the corporation leads to low levels of accountability and transparency at the implementation level.

In the stakeholder model the community in which the corporation is present in is seen as a stakeholder in the company and therefore, the company has certain obligation and duties towards it like it has towards its other stakeholders (customers, employees, shareholders). It is a recognition of the fact that companies perform in non-financial arenas such as human rights, business ethics, environmental policies, corporate contributions, community development, corporate governance, and workplace issues and company should be held accountable for its ‘triple bottom-line’ that includes social, environmental, and financial performance and not just the financial aspect.

The question that arises at this juncture is what the reasons for this shift are in the basic paradigm in corporate social responsibility.

This transformation has been the result of three reasons:

1. Recognition of the importance of 'reputation capital' for capturing and sustaining markets. Therefore corporate social responsibility is basically a new business strategy to reduce investment risks and maximize profits by taking all the key stakeholders into confidence.

2. The growing importance attached to the ‘eco-social’ stability i.e. social and environmental stability and sustainability is necessary for the survival of a free-market economy in the long run.

3. The importance being attached to accountability, transparency and social and environmental investment as the key aspects of corporate governance in the era of globalization.

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This implies that the stakeholder model has been adapted as it makes CSR programs more effective and efficient, the need for which is recognized by corporation who see multiple benefits like increased sales and customer loyalty, enhanced brand value and reputation, increased ability to attract and retain quality employees, investors & business partners, better productivity of workforce, cooperation with local communities, efficient operations resulting in improved financial performance, increased stock value, reduced litigation & environmental costs, better and faster governmental approvals, rewards, tax benefits that come from good CSR practices.

THE NEW INNOVATIONS IN IMPLEMENTING CORPORATE SOCIAL RESPONSIBILITY

This is the revolution at the grass roots levels. With the shifting of the corporate social responsibility paradigm to a stakeholder centric approach, practices at the ground level have also undergone a radical transformation. In every aspect of corporate social responsibility measures the last decade has seen corporations innovating to increase efficiency, effectiveness and accountability. The focus has been on initiatives that are people-centric with active community participation at all levels. Further, the corporations themselves have moved away from the charitable initiatives like giving financial grants or sponsorships to providing products and services in a manner that would make a real difference in the target communities.

The first perceptible change has been the introduction of a host of innovative programs and schemes in several areas like education, healthcare, rural development, environment protection, protection of artistic and cultural heritage and disaster management that are customized to meet the specific needs of the target group and corporations devote not only financial resources but expertise, manpower, products and services.

Along with innovation, corporations have worked hard at integrating corporate social responsibility into their core practices. There is now greater evaluation and stricter accountability and transparency norms for social initiatives along the lines of norm set for mainstream projects and ventures.

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ENGAGING EMPLOYEES IN CSR

"CSR should start from within an organization; you don't have to look far, much like going into the woods to plant trees or giving money to charity. You can simply begin by treating your staff in a fair manner" said Alex Mavro, the founder and managing partner of Social Impact Ventures Asia (Siva).

Companies have started focusing on society and its needs under the umbrella of CSR.

‘Serving society’ seems to be one of the newfound mantras of corporate. Being a part of people at the grass root levels, uplifting the destitute, shouldering the elderly, educating the illiterate or connecting with rural areas; these form a slew of Corporate Social Responsibility (CSR) ventures and are a necessary part of the branding exercise. The focus here is not restricted on people alone; it can be on creating awareness of the growing environmental hazards, protecting the depleting wildlife or even saving animals against ill-treatment.

Needless to mention, in an age of rising recognition and the imperative need for increasing employee engagement, CSR initiatives are not any different. The company may chart out a policy, draw up a plan, and invest funds, but it needs complete endorsement and active participation by employees to carry it forward and implement it as perceived.

DIVERSIFIED PROGRAMS

The aim of CSR activities is to give back a portion to society. The means to reaching out to the needy are manifold. While some companies have readily

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joined the CSR bandwagon, others are still involved on an ad hoc basis, showing active participant as and when the situation demands. Companies can either partner an institution or an NGO to support a specific cause or they themselves can set up a committee of volunteers to oversee the operations. Some of the programs companies can volunteer for are:

Help during natural calamities like earthquakes, floods, etc.

Women empowerment and upliftment, fighting for their rights and against domestic violence

Services to an orphanage or an elderly home

Providing medical care

Educational support

Fighting against child abuse or bonded labor

An attempt to save environmental degradation

Fighting the declining wildlife

Blood donation camps, rebuilding lives during disasters like earthquake or floods, periodically collecting books, toys, clothes or utensils for distribution, green drive initiatives like planting saplings, visiting an orphanage or an old-age home, promoting art and literature, imparting knowledge about small jobs, etc., are some of the widespread areas where a number of companies show a keen interest. CSR, in some cases, also empowers individuals by showcasing the camouflaged talent, and promoting the skill lying beneath each individual. Waste management, reduction in fuel consumption, adoption of energy efficient methodologies, green drive initiatives, are some of the emerging projects taken up by companies.

CSR initiatives, particularly environmentally-oriented workplace initiatives, can reduce costs dramatically by cutting down on waste and inefficiencies and improving productivity, and thus contributing to the organization growth. An organization considered socially responsible can benefit both from its enhanced reputation with the public, as well as its reputation within the business community, increasing a company’s ability to attract capital and trading partners.

IMPORTANCE OF INVOLVEMENT

Engaging in a social cause is more on a personal level, touching one’s emotional chords. It is not an obligation to get involved, but the feeling of wanting to

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contribute and make a difference. CSR essentially is giving back a portion of your resources (time, energy, finance, etc.) to society and people who are deprived of life’s basic necessities. It is also sharing a common responsibility and working towards a common cause, spreading awareness in society and making it a better place to live in for the have-nots.

In many organizations, more often than not, employees are let on their own to decide the programs that need to be taken up, and to chart out the course of action for proceeding with the same. Such levels of participation, right from the foundation stage, give employees an immense sense of satisfaction and pride, as they form an intrinsic part of the forum, rather than just meting out the service. Sensing it from another level, workforce engagement helps break the monotony of an employee’s routine and gives them an outlet to showcase their spirit and talent in a different world and to a different set of people altogether.

Firms also have an arrangement where employees forego a part of their salary for a specific period of time. The sum of all money accumulated from every employee at the end of the assigned period goes to a specific pre-decided endeavor. In some instances, companies themselves equal employee contribution and raise money.

PARTICIPATORY FORUM

To be a part of a worthy cause and do something meaningful is a feel-good factor for every person. The role of employees is not merely limited to entering in the execution stage. Their inputs and insights can be right from the brainstorming session that determines areas that need to be prioritized to the roadmap that needs to be followed.

Voting for opinions on projects and settling on the chosen one/few, collecting funds and disseminating it amongst the projects voted for, forming a committee which will spearhead the campaign, and then prudently giving each elected project proportional weight age, active employee participation can be garnered at every step of the ladder.

For dreams to assimilate into reality, employee endorsement is inevitable.

CSR activities help spread positive vibes and goodness amongst employees, and also assist in helping enhance the work environment. It makes employees more sensitive and empathetic towards customers and fellow co-workers. It gives them a broader perspective on life and shows them an alternate means to deal with daily constraints.

It makes them more matured and responsible human beings and instills a sense of satisfaction and pride within them. CSR activities helped organizations build a

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holistic institution around multi-threaded relationships that remain strong and unblemished despite the demands or ravages of pressure and time.

THE LARGER PICTURE

CSR—for the company it is a beneficial business advantage with tax exemptions, while for the employees it acts as a moral boost for working with an organization that values ethics and cares for culture. In the long-term, CSR can positively impact business and society. If managed well, it can aid the wealth creation process and create inclusive socio-economic growth and sustainability.

CSR can be a source of competitive advantage as it aligns the company’s mission and values with initiatives that delve into civic engagement. It no longer gets labeled as a do-good but more as a core business opportunity. In short, the goal post for businesses has moved due to society’s expectation from them and it is now generic concern for the “good of all” rather than risk mitigation.

CSR has increasing relevance for brand and corporate reputation management as well as for risk management. It is emerging as being very closely aligned with strategic corporate communications in many companies. This serves the dual purpose of building relationships of trust with internal and external stakeholders, but also setting the foundation for achieving sustained profitable growth through efforts that contribute to the sustainable development of society

ABOUT THE COMPANY

UBL has assets of over Rs. 620 billion and a solid track record of fifty years - in addition to the convenience of over 1121 branches serving you throughout the country and also at several overseas locations. UBL is growing with immense potential and prospects for employment in the offering. It is on the path rerouted for attaining excellence; to achieve organizational goals for more prosperity and to enhance internal and external equity.

UBL believes in setting the right goals for the right jobs and strives to identify the right resources. UBL is known for redefining the career paths and growth prospects of all its employees, and has pride ourselves in that. In order to ensure employee success, UBL provide an affluent work environment, conducive and beneficial to the enrichment of their personal grooming and one that proves instrumental for the success of the Bank.

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Date Established: November 7, 1959

Chairman: His Highness Shaikh Nahayan Mabarak Al Nahayan

President & CEO: Mr. Atif R. Bokhari

Branches: 1121 Domestic, 17 Overseas Branches

Representative Offices in Foreign countries:

Iran

Kazakhstan

China

Subsidiary

United Bank AG Zurich, Switzerland

United National Bank Limited, UK (Joint venture with NBP)

UBL Fund Managers Limited

United Executors and Trustees Company Limited

Associated Company

Oman United Exchange Company, Muscat

UBL Insurers Limited

Offshore Banking Unit

Export Processing Zone, EPZ Branch, Karachi, Pakistan

VISION

“To be the premier organizations operating locally & internationally that provides the complete range of financial services to all segments under one roof”

MISSION

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“To develop and deliver the most innovative product, manage customer experience, deliver quality service that contributes to brand strength, establish a comparative advantage and enhance profitability, providing value to the stakeholders of bank”

CORE VALUES

Trust and Integrity Respect for people Responsible corporate citizens Passion for business excellence Commitment to total customer’s satisfaction

UBL STRUCTURE

ORGANIZATIONAL CULTURE

United Bank Limited culture is the personality of the organization. Culture is comprised of the assumptions, values, norms and tangible signs (artifacts) of organization members and their behaviors. The organizational culture of UBL is that it always provides profit to its stakeholder and never misrepresents its

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financial reports and will never do any unethical act which harms its client and competitor. The employees of UBL will always be helping and friendly with its customers. The norms of UBL are it always follows the Laws of country and maintain its goodwill.

MAJOR CSR ACTIVITIES

Karachi Education Initiative - Invested Rs 100 million in Karachi School of Business and Leadership

The Karachi Education Initiative (KEI) is a not-for-profit entity registered under Section 42 of the Companies Ordinance. The KEI is the sponsoring and fund raising entity of the Karachi School for Business & Leadership. Sponsor Directors, representing some of the leading industrial and financial groups in Pakistan, have pledged a contribution of at least Rs.100 million (USD 1.2 million) on behalf of their respective organizations to provide the core funding for the KSBL. They have also committed to raising a permanent endowment to facilitate the education of meritorious students at KSBL, as well as for the provision of resources, facilities and buildings required to create a world-class institution.

UBL has agreed to pay Rs100 million along with The Dawood Foundation,Engro Chemical Pakistan Limited, Mahvash & Jahangir Siddiqui Foundation, Lucky Cement Limited, Arif Habib Securities Limited, AKD Group.

The KEI project will bring both social and economic benefits. The social benefit is that quality education will be provided to masses. The economic benefit is that a trained and qualified work force will be available to run the organization. Secondly, the students will market the UBL support for education and standards and this will also stimulate the demand of the UBL. Today, people want to invest in the organizations that work for social benefits along with the economic benefits.

Intitute of Business Administration- 3.5 lacs per annum

Every year UBL gives Rs 3.5 lakhs for three complete scholarship and some cash awards for high flyers in IBA. UBL has been consistently working for well trained human resource. This is not specifically for the bank itself but for the entire market. Therefore in this regard, scholarships and rewards program has two fold benefits. One well trained and educated human resource will be available for the organizations and socially the awarded students will be playing a critical role in improving the education and living standards. Second, the graduates in their respective fields will support UBL and this support will stimulate the demand of UBL services.

The program could be improved if mentoring from the practitioners of the field is

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added to the program. This will allow the students to align and update their abilities with the market demands.

Lahore University of Management Sciences - 3.5 lacs per annum

Every year UBL granted to one to two students per year under national outreach program (NOP). Preference is given to students from rural areas. Under this collaboration, successful students will receive the full amount of scholarship for the complete program.

Most of the organizations major focus is improving the educational standards because improvement in this sector will not only benefit the society but the company will itself be benefited.

Granting scholarships for the students will strengthen the student body and will raise the education standards. As the scholarship is granted on the basis of merit therefore the healthy competition will be beneficial in both economic and social perspective. A skilled human resource will be available for the organization and thus the organization will not be spending hefty amounts for the trainings.

The Citizens Foundation - owned 2 schools 2.5 lacs per annum

Ubl funded for the development of two schools and their support for 3 years. Cost of development is 11 lacs per school. For Banks the most important aspect of any market is the growth of the economy. The higher the growth will be the greater will be the opportunities for the banks. Thus the major focus of banks is usually education sector.

UBL allocates a large portion of its CSR expenditure on the education sector. TCF funding is a part of the strategy of developing and strengthening the economy on long term basis. The funding will bring social benefit in terms of high literacy rate and from economic perspective the overall economy will grow and with growth of economy bank’s growth is associated.

IDP - 3.5 lacs cards x Rs116 [card production fee]

UBL gave Lifetime membership of IDP for free, ATM VISA prepaid cards were used to disburst 7.6 billion without any involvement of corruption.

The IDP project has brought great results from both economic and social aspect. With the availability of remote ATM machines and trained individuals a massive

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problem of distribution of money has been resolved. The electronic system ensures the security and clarity of the money distribution, which was near to impossible when cash was handed directly to the sufferers. Outreaching to SWAT has built a bonding of trust between organization and the customers. The project has boosted the sales of the organization.

IBP certification award

UBL pays the award cash prizes for the employees who clear IBP papers each year. UBL supports its employers to gain knowledge and grow with the bank. An example of this is that UBL reimburses the expenses of a student for IBP certifications. This reimbursement motivates the employees to develop sound understanding of the system and its operations. Secondly, with a trained and skilled staff the bank is able to take part in the healthy competition among the banks.

Community Welfare: SOS Villages

UBL donated for the establishment of SOS villages in Karachi and Jamshoro. When the Village was first opened the children were sent to outside schools but, it soon became apparent that, if they were to be provided a good education, we would have to do these ourselves. It was decided, therefore, that community schools would be established in conjunction with every SOS Village. This has several advantages as, not only do our children and those from outside receive a sound education, but it ensures that our children do not grow up in isolation.

SUN development foundation – 1.5 lacs per annum

UBL gives swing machine and training to girl who then starts their career in tailoring. UBL plays an active role to improve the basic life standard of a commoner. In this regard the bank invested .15 million rupees for the sewing machines training of girls. This training will allow the trained ladies to work in a skilled labor industry. Therefore the two results of this project are evident, one social benefit of the masses and second growth of the economy.

UBL sport complex

UBL is an active supporter of healthy activities, for this reason it has provided a state of art sport complex for its employees. Sports have long term benefits in both social and economic aspect. From regular sports the employees remain in a

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sound health and thus they are able to perform better and drive better results. Another major benefit is that various competitions are held at the complex and thus this markets UBL concern policy for its customers and employees and therefore such competition also stimulates the sales of the organization.

Taaleem for All Trust and SAHARA for Life Trust

Education has the highest priority among all other CSR activities. A major portion of CSR expenditure is spent on the education sector. Every year a handsome amount is granted to various trusts that are working for the education and development of commoner.

CHARITIES AND DONATIONS

1. Earthquake victim fund

2. Al Mazmar Community Center for Elder Citizen [Dubai]

3. Raft Race [Bahrain]

4. Ramzan Iftar & Azan -e - Magrib Airtime [Bahrain]

5. Royal Charity Organization [Bahrain]

6. Ceremony for Swat Displaced people [Yemen]

7. Ida Rieu School of Blind --> some students inducted as call center rep.

8. Layton Rahmatulla Benevolent Trust

9. Pakistan Association for Mental Health

10.Patient`s Welfare Association

11.Sindh Institute of Urology & Transplantation

12.SKMCH and RC Donations

13.SKMCH and RC Zakat

PORTER ANALYSIS

S.No Activity Factor Conditions

Demand Conditions

Strategy And

Related Industrie

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Rivalry s1.

Karachi Education Initiative

√ √ X X2.

IBA scholarship and cash rewards

√ √ X X3.

LUMS scholarship

√ √ X X4.

TCF funding

√ X X X5.

IDP program

√ √ √ X6.

IBP certifications

√ X √ X7.

SUN development

Foundation √ X X X8.

UBL sports complex

√ √ X √9.

Pakistan Association for Mental Health

√ √ X X10.

SAHARA for Life Trust

√ X X X11.

Taaleem for All Trust

√ X X X12.

BISP √ √ √ X

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VIRTUE MATRIX

Strategic

KEI - KSBL

IBA scholarship

LUMS scholarship (NOP)

Immediate Displaced People(IDP)

Structural

TCF funding

Sun Development Foundation

Taleem For All Trust

Mental Health For Life Trust

SOS village

SIUT

AKUH Emergency Care Center

EDHI Foundation

Choice

UBL sports complex

IBP certifications

Earthquake victim fund

Compliance

Labor laws – wages and pensions

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COMPETITORS ACTIVITIES

FAYSAL BANK CSR ACTIVITIES

An endowment towards establishing a teaching chair at the IBA, University of Karachi for its Executive MBA - Banking and Financial Services programme.

Tuition expenses of financially underprivileged children at TAC school in Lahore.

Tuition expenses of financially underprivileged children at Sargodhian Spirit Trust school in Sargodha.

Sponsorships of declamation and debate contests for school children in Karachi.

Sponsorship of government school children under the Duke of Edinburgh Award programme.

Donation of computers to TCF schools countrywide

Donation of computers to Behbud Vocational Training Centre in Karachi

Donation of computers to TAC school in Lahore

Donation of computers to Mashal Trust hostel for orphans in Karachi

The bank’s philanthropic efforts are often combined with its CSR efforts to support other causes falling in the health and welfare sectors.

Some recent examples:

The Bank and staff joint fund raising and provision of support to IDPs in Swat

The Bank and Rotary Metropolitan Club joint efforts for support of IDPs

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Visit to Cancer Ward of the National Institute of Child Health, JPMC, Karachi

Donation of computer accessories to The Child Aid Association, NICH, JPMC, Karachi

Sponsorship of Special Olympics

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COMPETITIVE ANALYSIS GRID

UBL FBL HBL

Public perception about company’s involvement in CSR

High Low Medium

Percent contribution of NI on CSR

2.66% Less than 1 %

React to national level problems/ helping government in problem solving

High Low High

Checked people, society and nature before profit

No N/A N/A

Seek to reduce unemployment

Medium High High

Work only for the shareholder interest

Yes N/A Yes

Size of CSR team Small Small Large

CSR policy recognition

No No Yes

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PROBLEMS WITH CORPORATE SOCIAL RESPONSIBLITY

There are many definitions of CSR, which remains an emerging area of research as theoretical development in the field is still in its early stages. While some scholars claim that CSR ‘lacks a dominant paradigm’ (Lockett et al., 2006; McWilliams et al., 2006) others argue that the dominant approach of CSR is instrumental and focuses on the economic function of the firm (Banerjee, 2007; Roberts, 2003). Carroll’s (1979) categories of CSR as consisting of economic, legal, ethical and discretionary responsibilities have been influential in understanding the nature and type of obligations that business has to society. According to Carroll (1979, p. 500) the fundamental social responsibility for any business firm in this framework is its economic responsibility – ‘to produce and services that society wants and to sell them for a profit’. Other responsibilities and roles are framed from this fundamental assumption – corporations are expected to follow all necessary laws while seeking to make profits and they are expected to behave ethically in areas that are not codified by law. While economic and legal responsibilities are clear cut, ethical and discretionary responsibilities are not well defined and opinions on the scope of the latter two responsibilities are divided. To what extent a corporation can become a ‘citizen’ and the kind of citizenship behaviors it displays is also open to debate (Matten and Crane, 2005). More recent scholarship in CSR (see for example the July 2007 special issue of the Academy of Management Review titled ‘Corporations as Social Change Agents’) has identified ‘relational motives’ and ‘morality-based motives’ in addition to instrumental motives for CSR and examined their interactions at multiple levels of analysis including individual, organizational, national and transnational (Aguilera, Rupp, Williams and Ganapathi, 2007). These authors argue that non-instrumental motives interacting at national and transnational levels can enhance social welfare while providing secondary economic benefits to the firm.

Underpinning the vast literature on CSR is a core normative assumption: that a corporation should behave ethically and responsibly not only to their employees, shareholders and customers but also to the broader community. CSR advocates argue that ethical and responsible corporate behavior is related to good financial performance (despite the dubious nature of empirical evidence of this relationship, see Orlitzky et al., 2003; Vogel, 2005). There is also an assumption that if a corporation is a bad citizen then its license to operate will be revoked by ‘society’. High profile cases of corporate misbehavior in recent times have led to the demise of large corporations like Enron and Arthur Anderson. Public concern and activism by nongovernmental and environmental organizations have also forced some corporations to change their environmental strategies – in the much publicized case of Shell and Brent Spar for example, the company changed its decision to dispose their oil storage facility in the Atlantic and followed an on-shore disposal mode due to public opposition and a powerful environmental

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campaign by Greenpeace. Consumer and community pressures were strong enough to force a major transnational corporation like Shell to reverse their decision even though the company continued to insist that the social and environmental damage arising from disposal at sea was significantly lesser than for on-shore disposal (Lofstedt and Renn, 1997).

However, in other cases large transnational corporations accused for causing major environmental disasters and social dislocation (Union Carbide, Nike, Exxon, Shell, Nestle to name a few) rather than lose their license to operate have actually become stronger and more powerful through mergers, acquisitions, corporate restructuring and relentless public relations campaigns. Even during extensive negative media coverage of Nike’s alleged use of sweatshop labor and wide ranging anti-Nike protests the company continued to stay profitable – as Zadek (2004, p.130) points out ‘institutional investors have shown a startling disinterest in Nike’s handling of labor standards’. Thus, there is some doubt about the effectiveness of consumer boycotts – one motivating force that CSR advocates claim can compel companies to become more socially responsible. One study of consumer boycotts in the U.S. found that targeted firms did not suffer any decline in shareholder value as a result of boycotts (Koku et al., 1997). However, while Nike’s profitability did not suffer from their negative image in the market the company did alter its subcontracting policies and developed codes of conduct after pressure from external stakeholders. Pressure from the investing community may also have some influence over firm-level CSR practices. Several surveys in the US and Europe have shown that socially responsible investing (SRI) has grown in recent years. In the U.S. for instance $2.14 trillion dollars was invested in socially screened portfolios in 2003 and the European SRI retail market was worth 12.2 billion euros (Vogel, 2005). The assumption is that addressing social and environmental risks positively impacts a firm’s market value in the long term. Both institutional and individual investors can use shareholder resolution processes to force corporations to address environmental impacts, develop better workplace policies and address human rights issues. Pension funds in the UK for example are now required to declare how they integrate social and environmental issues into their investment decisions (Vogel, 2005). However, the actual social and environmental performance of corporations that constitute screened portfolios is reported in fairly basic terms – many firms receive ‘good’ ratings simply because they do not manufacture harmful products like tobacco or alcohol or weapons. While there are a few cases where shareholder activism has influenced corporate behavior these have focused on specific corporate abuses and not on promoting corporate social initiatives per se. It is unlikely that shareholder resolutions will compel corporations to address social issues like poverty, health and education unless this is part of a broader political movement with the backing of governments, international organizations and other agencies (Welsh, 1988).

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As Margolis and Walsh (2003) have pointed out the ‘practical necessities’ of stakeholder theory have meant that normative justifications beyond that of providing shareholder value have not gained significant ground in theory or practice. Even in ‘stakeholder firms’ the focus is on the interests of primary stakeholders that can influence the firm’s economic bottom line as shown by some recent court rulings have attempted to include some level of stakeholder recognition. These so-called ‘stakeholder laws’ allow company directors to consider ‘the effects of any action upon any or all groups affected by such action, including shareholders, employees, suppliers….’ (Cunningham, 1994, p. 1294). However, this simply allows company directors to consider ‘public interests’ (provided these interests do not harm shareholder value); it is not legally binding in any way, thus limiting the extent of any social initiative pursued by corporations. It is also important to understand that in several US states that have passed these ‘stakeholder laws’, the driving force behind the legislation was to protect employees, customers and suppliers, a firm’s primary stakeholders, from hostile takeover bids (Clarke, 1998). These laws certainly do not prescribe how a corporation might address its impacts on ‘the general public’, the ‘community’, or ‘society’. As the American Bar Association states: ‘While allowing directors to give consideration to the interests of others, the law compels them to find some reasonable relationship to the long-term interests of shareholders when so doing’ (American Bar Association, 1990).

Thus, virtually all of the research on CSR and stakeholder theory serves to reinforce the shareholder value maximization theory of the firm because in attempting to broaden the criteria of firm performance the fundamental assumptions of the shareholder view remain unchallenged – the approach is to broaden a firm’s responsibilities provided they do not harm shareholder value (Margolis and Walsh, 2003). The focus is almost entirely on win-win situations where a particular ‘social’ initiative is evaluated by its economic benefit to the firm. Commenting on the results of a meta-analysis of more than 25 years of empirical studies on the link between corporate economic and social performance, Orlitzky et al. (2003) claimed that the literature was ‘over inclusive’ in defining organizational stakeholders and called for a more ‘restrictive’ concept of stakeholders in order to establish a stronger link. This implies a focus on stakeholders who can influence the financial or competitive position of the firm, leaving little or no resources directed to serve the interests of marginalized stakeholder groups.

There is very little empirical research that describes what corporate social initiatives actually achieve for society in the long run because the primary focus in the literature is on the financial impact of these initiatives on the company

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(Margolis and Walsh, 2003). One survey of ‘socially innovative’ businesses found that in every case companies reverted to their conventional practice after a period of implementing socially innovative practices citing ‘structural problems’, ‘rising costs’, ‘market forces’, as reasons (Quarter, 2000). A more recent survey of CSR practices in Canada and the United States found that in most cases the ‘supply’ of CSR (the range of CSR activities) depended on the ‘demand’ for CSR (from consumers or regulatory agencies) or as a respondent put it ‘when the customer wouldn’t pay more or wait longer and the government wouldn’t bring in regulation, the effort was not sustainable’ (Berger, Cunningham and Drumwright, 2007, p. 140). Despite some attempts to broaden the role of the firm using more inclusive normative criteria the dominant approach in stakeholder theory and practice focuses on a narrow list of stakeholders whose interests and influence directly relate to a firm’s economic interest (Walsh, Weber and Margolis, 2003). As Roberts (2003, p. 251) points out at best these ‘win-win’ CSR policies can produce ‘moments of calculated cooperation when reciprocal self-interests coincide and ethical justification can take the form only of an argument that ethics pays’.

If corporations are expected to contribute to solving the social ills facing the world it is unlikely that contemporary CSR practices will produce meaningful outcomes. Several multinational corporations in resource extraction industries operating in the poorer regions of the world have come under attack for their negative environmental and social impacts. Communities from whose lands vast amounts of wealth are extracted find themselves impoverished despite millions of dollars of royalty and compensation payments. Where does the responsibility of the corporation to the local community begin and end when governments are unable or unwilling to deliver basic services like sanitation, health and education? Are energy and resource corporations not only responsible for paying royalties and reasonable compensation from their resource extraction activities but also responsible for how government agencies spend that money? Can a corporate entity acquire these government-like features that can be reflected in its mission, purpose and identity? What is the role of NGOs and other non-state actors in ensuring that communities that bear the brunt of development also participate in its benefits?

Corporations do not exist in isolation but are actors in a much larger and more complex political economy. Focusing our analysis at the level of the individual corporation can only produce limited outcomes restricted to win-win situations. The dynamics of power between corporations, governments, international institutions, NGOs, and other societal interests produce a particular form of political economy as well as the conditions and norms for participating in that economy. If the normative basis of stakeholder theory is its fundamental justification then we need to broaden our unit of analysis from the individual firm

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and focus instead on the networks of relations between different market, state and non-state actors that constitute the political economy because it is in this space that economic and social norms are created and managed.

FUTURE PROSPECTS

There is no escaping the inherently normative basis of any theory of corporate social responsibility. Such a normative theory would require corporate decision-making to be organized around delivering key social outcomes that the shareholder primacy model is not equipped to deliver. Thus, if corporations are to play the role of social change agents a new ontology of the corporation is required that can open the way to more ‘polyphonic’ forms of organization (Hazen, 1993) requiring a plurality of voices and actors from economic, social, cultural, political, juridical and pedagogical spheres. The real challenge as Boggs (1986, p. 16) points out is to imagine possibilities that can ‘transform the state apparatus, revitalize the public sphere, and create new forms of authority so that fundamental change can be initiated consistent with the radical potential of new social movements. This requires a counter hegemonic logic and a holistic framework: the hierarchy of issues, themes, and priorities will be social, cultural, and political as well as economic’. Such a framework will allow new parameters of organizational performance, new forms of accountability and public institutions, perhaps even new forms of corporations to emerge. The current formulation of corporations as artificial persons with guaranteed rights but non-enforceable responsibilities or as a nexus of contracts between wealth maximizing actors places severe limits on the social role of corporations. CSR governed at the global level by market, state and civil society actors can address the blurring of responsibilities between governments and corporations, allow alternate forms of organization to emerge and enable participation of civil society actors in the governance process.

POSSIBLE AREAS FOR IMPROVEMENT

The UBL has although done much to carry out CSR activities at various levels, but still we think that there exist some areas of improvement.

Create competitive advantage through CSR

There are approximately 44 banks working in Pakistan and there exist tough competition gain market share and enhance profitability. By incorporating CSR in their business processes UBL will become more socially responsible in the eyes of customers.

Assess risks and opportunities before making business decisions

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All the decisions must be taken in view of the societal and enviornment aspects. This will foster the company in attaining long term sustainable growth. Normally companies discard the CSR aspect in lure to maximize profitablity.

Present the business case for CSR initiatives

As part of corporate activities company should present CSR business cases which will create deeper understanding of the CSR. Business case will enhance the importance of CSR and its effect on brand image of the organization.

Implement CSR at all levels of the company

The CSR values must be align with the organizational values. From the top management to the operational level management everyone must understand CSR. This will make them more motivated and responsible to society. UBL should align CSR strategies with organizational goals and capabilities.

APPENDIX

UBL CSR INTERVEIEW

Mr. Ejaz Wasey

Head Marketing Services and Corporate Communications, UBL

1. Does your organization have an official corporate social responsibility (CSR) policy? Please give details.

Answer: UBL has a Donations Policy on the basis of which participative relationships are established with and contributions are made to various organizations, institutions and accredited NGOs. The focus of the organization is to make some meaningful contribution to the betterment of people at the fringes of society, who are often deprived of their right to education, healthcare and productive existence.

2. Is your policy focused on CSR through corporate philanthropy or looking at the broader principles of 'responsible business' being promoted at the UN/G8 level?

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Answer: At UBL we believe in delivering tangible results with our CSR program. That is why we not only work with reputable organizations, we are regularly in touch with them and monitor through periodic reports or visits whether the funds are being properly utilized. Even if it is at times difficult to quantify all our achievements, our close interface with the recipients ensures greater diligence and commitment from all sides.

3. What does your organization hope to achieve through its CSR program? Please provide a list of aims and objectives against any specified timelines.

Answer: Broadly speaking our CSR objectives comprise the following:

1. Supporting Education mainly at Primary level:

We work with reputable organizations towards improving educational standards in Government-owned schools or and establishing schools in low-income / less-developed areas;

2. Providing Opportunities for Post-Graduate level education:

We provide opportunities for Post-graduate level education to outstanding students from low-income households, in collaboration with top business schools in the country;

3. Filling the gap in “Specialized” / Free Healthcare:

We endeavor to fill the gap in specialized health-care and assist major hospitals provide free treatment to the poorer segments of society;

4. Funding ‘capacity-building’ activities:

We work in collaboration with registered and reputable NGOs to enable the less-privileged persons in communities become more productive and self-sufficient through skill-training / vocational-training projects.

Several of our programs run over 2-3 years. However, we take on new projects with more pressing need for funds, to replace existing ones where we feel the need for our support has diminished.

4. What is the size of your CSR program? Please specify both in nominal currency terms and as a percentage of pre-tax profits.

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Answer: Our Donations vary from year to year based on need. We have donated anywhere between Rs.15 million and Rs.40 million over the last 4 years.

5. Which social sectors does your CSR program address?

Answer: Our primary focus is on SEC classes B and C, where our contribution is more likely to deliver optimal results as there is sufficient infrastructure support in place. These include low-income areas in metro towns as well as smaller towns in the less developed parts of the country.

6. What are your most successful projects in each social sector?

Answer:

1. Education: TCF Schools in Karachi and Gujju in Interior Sindh and SMB Fatima Jinnah Girls School in Karachi, managed by Bookgroup;

2. Health: SIUT and AKUH Emergency Care in Karachi;

3. Community Welfare: SOS Villages in Karachi & Jamshoro, Sindh.

7. Who takes decisions on CSR in your organization?

Answer: The office of the President approves all Donations as per Policy.

8. Who implements CSR projects on behalf of your organization? Please identify partners, e.g. development agencies, Govt of Pakistan, foundation/NGOs

Answer:

Institutions such as those mentioned above that receive our contributions serve as conduits and connect us with the target population; and

Selected organizations / NGOs who we collaborate with, pass on the benefit of our contributions to the ultimate beneficiaries.

10. What monitoring and evaluation mechanism do you have in place for CSR?

Answer:

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Periodic reports;

Visits.

11. How do you foresee the role of CSR in Pakistan's development in coming years?

Answer:

CSR can play a vital part in bringing about socio-economic change across the country, but the demand for support would continue to outweigh supply from the corporate sector and other private Donors. Focus therefore should remain on optimizing projects and deriving the maximum benefit from programs.

At a national level public-private sector collaboration seems to be the only viable approach, where the role of the private sector should be oriented towards carrying out projects and that of the government towards providing infrastructural support and funding.

International donors, in our opinion, will also have to be tapped to make long-term, large-scale programs successful in Pakistan.

REFERENCES

UBL Dialogues (Newsletters)

United Bank Limited Annual Report 2009

Harvard Business Review Article relating to CSR

http://www.iba.edu.pk/News/List_Major_Donors_Rev_April_21_2010.xls

http://www.ksbl.org/donate/donor-recognition/

http://www.ubl.com.pk

http://www.thecitizensfoundation.org/

http://www.faysalbank.com/csr.html

http://www.csrwire.com/press/press_release/15533-The-Latest-Corporate-Social-Responsibility-

News-Banking-on-Sustainability

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http://www.responsiblepractice.com/english/worldwide/worldbank/

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