By Ali Tauqeer Sheikh and Mohammad Shehzad

The corporate social responsibility [CSR] is about how companies manage the business processes to produce an overall positive impact on the society. Companies need to answer to two aspects of their operations: a) the quality of their management both in terms of people and processes; and b) the nature and quantity of their impact on society in the various areas.

The World Business Council for Sustainable Development in its publication, 'Making Good Business Sense' by Lord Holme and Richard Watts, used the following definition:

'CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the work-force and their families as well as of the local community and society at large.' The same report has given different perceptions of CSR from different societies across the world.

Definitions as different as 'CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees.

In the US, CSR is known as a philanthropic model. Companies make profits, unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving.

But one thing is for sure- the pressure on business to play a role in social issues will continue to grow. Over the last ten years, the institutions that have grown in power and influence have been those that can operate effectively within a global sphere of operations. These are effectively the corporates and the NGOs.

Poverty is a serious threat to sustainable development. It is wrong to assume that poverty-alleviation is the job of the government. It is a collective responsibility, particularly of those who come from the rich class that owns the corporate sector.

The corporate sector is probably the largest employer in this country. Poverty is not in the interest of the corporate sector since it decreases people's buying power. So, alleviating poverty serves the interests of the corporate sector. In this respect, prosperity has a relationship with sustainable development. This relationship is more evident in our country.

When people are poor, they are so desperate to meet their basic needs-water, food. etc-that they have no time left to look after their local environment. They unwittingly damage it because they are so much under pressure from their basic needs.

And that's true-you have to meet your requirements before environment is protected properly. Within the lifetime of people who are still alive, a great deal of environmental deterioration has taken place. Somehow, we will have to try and reverse it. That means, helping those who are very severely disadvantaged by poverty-helping them regain control of their lives.

CSR should be used for poverty alleviation. The corporate sector is in an ideal position to carry out this job. The successive governments have failed to alleviate poverty. The donors have more faith in citizen organizations, community organizations and the corporate sector which has the capacity and skills to address some of the most fundamental issues of the communities.

Why have so many mega project of poverty alleviation have failed in this country? The reason is simple. The will of the people is not taken into consideration by the policymakers. I believe people pose more trust in the corporate sector and non-profit organizations compared to the government. Communities are the clients of the corporate people.

Therefore, it is easier for the corporate sector to work with them. There are so many examples where the corporate sector and citizen organizations jointly worked with the communities as part of their CSR mission and a tangible improvement in the people's plight was achieved.

Lately, we spent a few days with the co-founder of Groundwork, John Davidson. We learnt how the corporate sector could work with the communities addressing their environmental concerns, alleviating poverty and still making its products green while creating awareness about the environment.

The 'Groundwork' is a UK based non-profit organization. It specializes in community work. It undertook projects where it encouraged children to interact with the managing directors of local companies to understand what the business expected from the communities.

In return, the children measured the impact of the business on the local environment and apprised the managing directors about it chalking out a plan about improving the environment. This provided a new way of thinking to the managing directors.

They had to listen to the children of their employees seriously. They had to address their concerns. They engaged children for creating awareness about the environment. They empowered the communities, alleviated poverty, and ensured itself a good skilled labour.

Similarly, the Groundwork created links between schools and local communities. It encouraged children to conduct an energy audit at the school-regarding consumption of electricity, etc.

Once they understood how much energy the school was using and wasting-at that time there were no energy conservation measures in place-the next stop was to conduct the similar audit at their homes and ask their parents what did they think about the conservation issues. So a dialogue took place and it became a very good way of creating awareness about energy conservation.

The Groundwork from its experience proved that business is part of the solution to creating a more stable, healthy and prosperous world. Business must build on that recognition and examine its own contribution with a sharp and self-critical eye. Business is not separate from the rest of the society. Business and society are interdependent and we must ensure, through mutual understanding and responsible behaviour, that the role of business in building a better future is recognized and encouraged.

Ensuring that CSR supports, and does not undermine SMEs [small and medium enterprises] development is crucial to meeting its goal of improving the impact of business on society. SMEs are essential to the 'path out of poverty' for many developing countries. SMEs are the backbone of Pakistan's economy. They are the second largest sector of manufacturing in Pakistan where they produce a wide range of consumer goods and provide employment to a large numbers of skilled and semi-skilled workers in both urban and rural areas.

SMEs account for about 30 per cent of the country's GDP with 15 per cent share of investment and 80 per cent of employment and also make a substantial contribution to the country's balance of payments. A strong SME presence provides the resilience to the economy from global economic fluctuations that the large business enterprises are unable to respond to quickly.

If our target becomes zero waste economy, then almost all of the waste of the larger industrial sector can become the raw material for SMEs. So anything that we did not touch previously, has the opportunities for livelihood, and employment, and income generation for hundreds of thousands of people.

Waste is simply one example. Waste water industry exists and has to be streamlined and recognized as a sector. Likewise, take anything-waste in sugar, cement, manures, flour, ghee, etc-that's where SMEs are coming.

The question is, can we steadily restructure our economy in such a way that waste among one's structure or zone of activity of economy can be raw material for others? How could we facilitate it? How the best practices could be established and propagated?

The biggest challenge before us is the enhancement of the 'capacity' of the SMEs. A person, who would start a small business with a capital of a few million rupees and with a strength that ranges between 20-40 people, would be afraid of interacting with the government authorities because of the fear of taxation and police harassment. These are some of the factors that don't allow the SMEs to carry on business openly. That is the reason SME business is not documented and streamlined.