Amidst searching for sustainable profitability, Egyptian businesses are now taking upon corporate social responsibility (CSR) as an income-generating method that works far beyond a philanthropic concept in efforts to attract investors and maintain a strong brand image.
Economic expert and associate professor of marketing at the American University in Cairo (AUC) Department of Management Hamed Shamma mentions that CSR’s conventional definition has changed in today’s marketing world where it strictly focuses on carrying out campaigns that serve communities, the environment and a firm’s profit. Simply put, a triple bottom line approach has been emerging.
“CSR no longer works as a philanthropic approach where a firm donates an annual budget to different organizations. On the contrary, the fresh intake on CSR now requires a corporate to address its basic crucial inner responsibilities such as economic and legal status,” he clarifies.
Over the past years, Egypt began to move away from the traditional concept of CSR, embracing a more diversified approach: planet, people and profit.
The traditional way: Donations
CSR in Egypt used to be strictly influenced by the country’s religious beliefs; therefore, for decades, its culture of corporate responsibility was targeted at donating money to the Islamic Zakat or the Christian Ushur.
According to some reports, Egypt has taken on a new approach to CSR following the uprising of 2011, focusing on new targets to achieve financial sustainability within and beyond a corporation. This approach involves different targets, such as eyeing an improved access to financing, attracting top quality employees, expanding in the market and protecting a brand’s reputation.
Rise of a new era of CSR
A report by the United Nations Development Programme (UNDP) entitled “Expanding horizons in development: The rising role of the private sector” defines how firms could adapt to a new generation of CSR through balancing between sustainable development and commercial profitability. The report documents 50 case studies of companies that have been impacted from investing in bottom-of-the-pyramid (BOP) markets. Those companies and their CSR projects – such as Mansour Group’s Kheir Zaman supermarket chain, Siwa’s eco-lodge and Orascom Construction’s low-income housing – have achieved profits and left a positive social impact.
Egypt’s private sector remains the greatest available resource for achieving reasonable growth
Since the traditional CSR approach is neither sufficient nor sustainable, the report suggests that the true “win-win” situation for businesses are found at BOP markets, with opportunities in the health, water, education, textiles and waste management sectors.
According to the report, Egypt’s private sector remains the greatest available resource for achieving reasonable growth. The global financial crisis and political discourse in Egypt following 2011 has hindered Egypt in achieving the post-2015 Millennium Development Goals (MDGs) – a United Nations (UN) initiative comprised of principles targeting employment, health, energy, population dynamics, governance and sustainability. Hence, the private sector is encouraged to work on those through its CSR programs.
How to make the shift
Shifting from traditional CSR to new CSR involves focusing more on inclusive business models through applying enterprise solutions that enable poor communities to access needed goods and services, creating livelihood opportunities for businesses.
A research paper entitled “Upholding competitive advantage through endorsing corporate social responsibility: Case study Pepsico Egypt” measures how endorsing CSR benefited businesses. The study concludes that Pepsico Egypt engaged employees in CSR community projects, which in return met the expectations of stakeholders and customers, added competitive advantage, spread brand awareness and sustained brand image.
“CSR has become a prerequisite to doing business and it is increasingly being integrated with national and regional agendas,” head of marketing and sustainability at Qalaa Holdings Ghada Hammouda explains.
The company was one of the early adopters of the UN’s Sustainable Development Goals (SDGs) which launched in 2016 in efforts to provide a global platform that companies can follow.
CSR has become a prerequisite to doing business and it is increasingly being integrated with national and regional agendas
What are Egyptian businesses doing today?
Despite many companies’ active role in diverse initiatives, these entities should be able to ensure sustainable economic improvement through CSR by looking for methods that would maximize profit, minimize costs and continuously seek opportunities to grow the business over time, according to Shamma.
Hammouda says that Qalaa Holdings focuses on developing an effective governance structure as part of its CSR which helped reduce risk, identify internal and external threats and capture profitable business opportunities. The strategies include quality education, affordable and clean energy, industrial economic growth, innovation, infrastructure and environmental policy. However, one of its most important focal points is the investment in human capital through providing scholarships to a range of different segments – and in that, Qalaa Holdings is not the sole player.
The American Chamber of Commerce in Egypt Foundation conducted a survey in 2012, unveiling that already back then, 81 percent of companies provided human resource development initiatives for their employees through regular staff training.
Another direction is taken by the Engineering Consultants Group (ECG), where employees participate in a voluntary program through which a portion of their salaries is used to financially support families of their deceased colleagues.
“Uber has a good CSR strategy [through which] they try to include more female workers, people from different backgrounds, ethnic origin, […] people with disabilities and […] from different age groups,” Shamma elaborates.
Could CSR pave way to foreign inflows?
Internal sustainable development in a firm is not the only incentive gained from CSR campaigns; a firm’s reputation among local and global stakeholders and investors can also strongly improve, according to an article by senior vice president at Fenton Susan McPherson in the Harvard Business Review (HBR). She adds that CSR leads to viral sharing of information and eventually increases revenues, while claiming that in 2012, 97 percent of marketing executives deemed CSR as a successful business strategy.
“When a company develops a strategy that highlights economic, legal, ethical and philanthropic responsibility and is serious about implementing it, then there are higher chances of attracting foreign direct investment (FDI),” Shamma explains.
Some investors are willing to invest in a company or country because its CSR creates a safe investment climate, according to a report by the Organisation for Economic Co-operation and Development (OECD), stating that anti-dumping regulations could be used to divert foreign flows by making an investor feel protected in a country with similar regulations.
“Qalaa was able to access investments from international investors such as development finance institutions (DFIs) and export credit agencies (ECAs) who financed some of our major investments such as the Egyptian Refining Company (ERC). Access to this type of funding requires compliance with international ESG standards,” Hammouda says.
Hence, today, the aim of CSR is no longer to merely throw money where it is most needed, but rather cultivate the triple bottom line: supporting people, protecting the planet and increase profits.