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Reality bites: Business first, CSR later

By Lala Rimando, abs-cbnNEWS.com/Newsbreak | 12/31/2008 10:56 AM

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Editor's note: This is the ninth in our series of year beginners.

It was sexy to be virtuous and unselfish in 2008.
 
Sustainability—also known by its many permutations: Corporate Social Responsibility (CSR), Enlightened Enterprise, Business for Society and Environment, and many more—expanded its reach. And on top of the academic definition of voluntary caring for resources now for users of tomorrow—which in Asian oligarchic business context could translate to making sure the next generations have a robust business or source of wealth to inherit—environmental groups have engaged wealthy Filipinos to add a green dimension to their good works.

Glossy magazines run several cover stories of Philippine elite involved in various environmental causes.  

But that was then.

In 2009, harsher economic realities will bite. Sustainability will take on a different significance in boardrooms. The focus will be staying in business.

Profits over good works
 
Companies already feeling or anticipating the impact of a drastic economic slowdown are like cars running on fifth gear then suddenly shifting to second gear. Coping with the jolt most probably means slashing costs and cutting jobs.
 
Budgets for sustainability champions—whether the family-owner’s daughter leading the non-profit arm, or the ardent public relations head—will likely be trimmed, if not altogether cut. It will be difficult to defend to the board funds meant for philanthropic, non-core business-related causes, when the company is laying off or closing factories.
 
The threat of job cuts and even closing shop will serve as a powerful reminder of the basic reality that—despite the lure of packaging profit-making companies as a God-sent to a society in need—companies should stay financially healthy to provide employment, goods and services that consumers want come good times and bad.
 
Diminished elite wealth
 
And in a typical Asian oligarch-led economy, the few families that control the biggest chunk of wealth in the country are facing one of their worst times. The demise of giant financial firms, like Lehman Brothers, greatly diminished their personal wealth—most of which were parked abroad.
 
The wealth of most Filipino oligarchs—when combined, dwarfs the national budget and even the billion-dollar-worth investments in key infrastructure needs of the country—is handled by private and investment bankers in Singapore, Hongkong, and other financial hubs that invested in exotic financial products linked to US sub-prime loans, the trigger of the global shakedown.
 
In other words, the Filipino elite are in no mood to be generous.
 
Focus on value for money
 
After the festive Christmas holiday is over, Filipino consumers are likely to hold on to spare cash—if there is any after the job cuts here and abroad that threaten their dollar-sending relatives. They will then be less likely to pay extra for socially or environmentally friendly products, like organic or fair trade food, or even click on the option to offset their carbon emissions when booking a flight in a local budget airline’s Web site.
 
While some companies have packaged their green initiatives as both a way to cut operating costs and save the planet, lower global oil prices will make companies boast about these less. At best, companies could claim that rewards will be in the form of being able to discipline their employees to be more conscious of something as plain as turning off their computers or the faucet when not in use.
 
In a way, the sustainability advocates who claim that their CSR efforts are part of their corporate DNA—even if these are mere patchworks or pet projects that are vaguely related to the core business—will be dampened by the global economic shake-out. The head of Banyan Tree, an Asian chain that claims to practice responsible tourism, told abs-cbnnews.com/Newsbreak in November that the coming difficult months will push philanthropic advocates to be more discerning in their giving.
 
The difficult economic times will force most companies to tone down on their social and green initiatives, including exploiting these for public relations purposes. Instead, companies will be emphasizing value for money for their products and services.
 
Positioning for the upturn
 
Yet, companies who are well-positioned to ride out the downturn in the economic and business cycle instinctively know that it will be a mistake to forget about trying to be good.
 
The forces that pushed Philippine-based companies to fret about sustainability—media-savvy environmental groups, enlightened creditors or investors who have active shareholders to account for and whom local companies will need to tap to raise funds, and the continuing (although now more subdued) race to recruit from a limited pool of highly qualified high-flyers—will still be there.
 
A recent Nielsen Media online study showed that Filipino professionals consider work-life-balance as their top priority, more than the fledging economy, which was just the third priority.
 
When the economy starts to recover, companies that sustained their values and have shown they are not mere fair-weather advocates of sustainability will reap the rewards.