Manuel V. Pangilinan
Inquirer

STRATEGIC Corporate Social Responsibility (CSR) and how it can obtain a competitive advantage is a difficult subject to address, because both the literature about, and the experience of, strategic CSR have been, so far, few and new.

A number of companies here and abroad have attempted to make their giving more strategic. But what currently passes for strategic philanthropy has neither been really strategic, nor particularly effective. At present, most corporations are trying to find a truly strategic way to use their charitable efforts to improve the competitive context.

To begin with, integrating business and social needs into a strategic CSR perspective requires fundamental changes in the way companies approach their philanthropic programs.

More discipline
For one, it is likely to demand more discipline and more thought, as well as adjustments to organization, processes, even reporting relationships.

Further, it will require greater cooperation amongst companies in their charitable programs so that their combined capabilities, and their intended socially-beneficial effects, are optimized even more. Corporations in fact are now beginning to leverage their assets, including product donations, volunteers, professional services, technology, and distribution channels.

That said, it must be imperative for Philippine business to craft a strategic CSR program which is unique and relevant to our country’s requirements. Whilst we can certainly learn from the experience of others, my sense is that it is best to do our own cooking.

Governments alone cannot put an end to poverty. Sufficient economic development can’t be achieved solely through official development assistance. And where government seeks to acquire wealth by entering into business, the iron laws of bureaucracy take over, and the efforts rarely are profitable.

Government redistribution of wealth from rich to poor would subsidize the poor, yes, but would not create the necessary motors for self-perpetuating economic growth. The poor would still be with us.

The only way
We must believe that the private sector has the best means to remedy our most pressing problems. But creating wealth requires investment of resources in order to expand market opportunities. There is no other way.

The money to fund the necessary private sector investment in developing countries is readily in private hands.

Private investment crossing national borders runs on average of $250 to 300 billion a year–five to six times as much as official transfers to poor countries, which run to about $50 billion annually.

In the year 2000, $865 billion of foreign direct investments moved between countries of the world. Seventy percent of this landed in the United States and the European Union. All of the other countries, which hold 90 percent of the world’s population, received the other 30 percent, or $250 billion. Africa got practically nothing.

Only the global private investment community controlling most of humankind’s liquid wealth–estimated to be $80 trillion in all the financial markets– has the means to correct the dysfunction and inequity of global poverty.

The most daunting task must be our ability to attract even a modest amount of these funds into business and social investments in our country.

PLDT-Smart experience
What has been our own experience with strategic CSR at PLDT?

Over the years, different companies in our group have contributed significant amounts of time and resources to CSR programs.

To date, these efforts have been separate and independent of each other. We’ve determined that it is best to coordinate and integrate our CSR efforts into one foundation, and imbue it with a strategic view.

The PLDT-Smart Foundation was recently formed precisely to be the conductor of the entire group’s CSR efforts, to enable us to undertake more effective initiatives, delivered in a more time-and cost-efficient manner.

How do our current programs reflect a strategic bias?

Education
Let me start with education where we have a considerable commitment. The Smart Wireless Engineering Education Program (Sweep) is an innovative partnership between industry and academe.

Sweep seeks to improve the level of technology and engineering education in this country, particularly in the field of electronics and communications engineering or E/C/E. Designed to complement the schools’ existing E/C/E programs, its first element is to build and populate schools nationwide with computer labs. In turn, these labs will require access to the Internet by way of a wireline or wireless access gateway, which PLDT and Smart can provide.

Its second component is a continuing education program together with PBSP, under which Smart and PBSP periodically deploy staff to provide training in wireless technologies and the Internet.

Launched in 2003, the program has installed wireless laboratories in 8 universities and one training center in the national capital region, 10 universities in Northern Luzon, 4 universities in Southern Luzon, 10 schools in the Visayas, and 8 schools in Mindanao. This makes a total so far of 41 computer labs installed throughout the country–not yet sufficient, but a good start.

In support of these corporate labs, Smart has launched the Smart Bro Computer Station project. This involves Smart installing one or two computer stations in a sari-sari store or in the home of a microentrepreneur.

Effectively, this station serves as the Internet center for a particular community. The cost of the computer station is amortized by its revenue. Smart takes care of providing wireless broadband access.

And as an adjunct to this effort, the managers of PLDT have organized themselves into an NGO called the Managers’ Club. Their principal effort is also focused on education, in conjunction with the Gabay Guro project, to train educators and teachers, and raise their teaching abilities.

Our emphasis on education simply reflect our conviction that investment in human capital is critical to our social and economic development. Our thrust specifically in computer education and training is to stimulate the usage of broadband Internet in this country. This development in turn will require more broadband access, which feeds more business into PLDT. This is strategic CSR in action–producing symbiotic benefits to both giver and recipient, and a competitive advantage as well.

Microfinance
On another front, we’re considering how to participate actively in the microfinance industry. We’d like to invest in a microfinance institution that could breed micro-entrepreneurs and reach both the unserved or “most in need” sectors.

Let me simply emphasize here our desire to support poor micro-entrepreneurs–the bottom-of-the-pyramid, so to speak–the enlargement of which will create more livelihood and raise the incomes of target communities. Like a rising tide that lifts all boats, an increase in disposable income–even from the poorest parts of our society–will help us add subscribers because more can afford our services. And if they already are our customers, usage would rise with higher incomes.

Disaster management
We are now in support of a disaster reduction and management program. So far, our initiatives in this area count the victims of last year’s super typhoon Reming in Bicol and the communities around the Guimaras oil spill in Iloilo–together with PBSP. In the aftermath of a disaster, we’d like to re-establish communications quickly, re-build our business in the affected areas, and restore the lost incomes of the devastated communities.

Further, the immediate aftermath of a tragedy–where relief goods and medical care are needed quickly–is actually not our main focus. Ours is a longer-term –and less glamorous–effort at restoring overall community life: creating jobs and livelihood programs, building schools, houses, water supply, electricity, and roads. And in extreme cases, relocating entire communities away from disaster-prone areas because a calamity can recur. We have done this with the help of PBSP in the case of Guinsaugon in Southern Leyte.

Finally, we’re working with the Manila Observatory to design and install an early warning system for impending disasters. For example, the amount of rainfall in a given locality can indicate a potentially significant flooding or a disastrous mudslide. The goal is to have indicia of a potential disaster measured, and warning signals sent to potentially affected sites.

Social value
In order to give substance to the strategic incarnation of corporate social responsibility, we’ve had to ensure that our initiatives are built on the bedrock of people, products, and services that bring social value.

When we integrated PLDT, Piltel, and Smart in the year 2000, we had at our disposal a great tool for providing the mass market with affordable and extensive access to communication products and facilities.

E-load, an original innovation from Smart, introduced the sachet concept of loading value onto prepaid GSM accounts, thereby enabling us to mine deeper into the lower income strata of our society. As well, for e-load to be effective, an extremely extensive distribution network had to be built. This was critical.

Now, there are more than one million retail outlets nationwide. Not only is e-load convenient and affordable, it produced a desirable social side-effect by supplying incomes to more than a million micro-entrepreneurs.

E-load was soon followed by another innovative product called pasaload, enabling load transfers amongst subscribers and further enhancing our ability to enlarge our mass market subscriber base.

From a CSR perspective, the mass market, bottom-of-the-pyramid approach argue that a business model attuned to the needs and contingencies of emerging markets does not only provide disenfranchised people access to products taken for granted in the developed world. More importantly, it allows them a much greater stake in the process of wealth creation.

Ways to build CSR
Before I close, may I offer a few thoughts on how to craft an effective strategic CSR program:

First, follow your passion. The most effective patrons begin the process of giving by asking what they care about passionately. Get personally involved. There is more to giving than writing a check; roll up your sleeves and work to make a difference.

Second, be strategic about your giving. Focus on specific programs with measurable goals. Articulate them well so as to mobilize the energy, ideas, and strengths of your people.

Third, foster teamwork. Turn your competitor NGOs and foundations into collaborators to maximize the CSR effort. Partner with nonprofits that demonstrate success.

Finally, provide long-term commitment. Most programs are not successful overnight; they require an investment in time, money, and resources.

Conclusion
Corporations–because of their size, nature, and scope–have a profound and positive influence on society.

By investing capital, providing jobs, purchasing goods, selling services–simply by being open for business every day–business has the ability to offer not only new jobs, new products and services, but also new needs, new hopes, and new dreams.

When a well-managed business applies its focus, resources, and skills to problems which it understands, and in which it has a stake, it can have a greater impact on social good than either government or any other institution.

The challenge for strategic CSR must be to get a company to identify a specific set of societal problems that it believes in, and is best equipped to help resolve, and from which it can gain a competitive benefit.

(The article is actually a speech delivered by the author at the Joint MAP-MBC-LCF general membership meeting on July 16, 2007. Feedback at mapsec@globenet.com.ph)