Assessing corporate responsibility and environmental management

Published:

This paper is a reflection on the speech given by the Chairman of the Securities Commission, Dato Zarinah Anwar at the StarBiz-ICR Malaysia Corporate Responsibility Awards presentation ceremony on 22nd 2008. The StarBiz-ICR Malaysia Corporate Responsibility Awards presentation was introduced to recognise and honour companies that have demonstrated outstanding Corporate Responsibility (CR) practices that go beyond community and philanthropic activities. The aim is to encourage responsible business practices focusing on how business can be made responsible in the ways they make money compared to what they do with the money once they have made it.

The details are as follows:

Speech by:

Date of speech:

Event:

Organisers:

YBhg Dato'Zarinah Anwar, Chairman, Securities Commission

22 August 2008

StarBiz-ICR Malaysia Corporate Responsibility Awardspresentation ceremony at Nikko Hotel Kuala Lumpur

Star Publications (M) Bhd and the Institute of Corporate Responsibility Malaysia (ICRM)

Her speech highlights the need to promote Corporate Responsibility and highlights the achievements of Malaysian companies pertinent to Corporate Responsibility. The Chairman noted that a company can be philanthropic but at the same time have poor governance, damages the environment and creates other externalities for which it does not pay. Besides focusing on responsible, ethical practices and their efforts at giving back to the community, the panel of judges also looked at the underlying intent of the business and the extent to which responsible business practices are embedded throughout the business which signals the quality of the company's enterprise governance. The companies' policies will also be investigated including the value chain impact on the environment in terms of climate change, pollution, waste and water management.

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In terms of performance, the Chairman noted that many companies did not understand how their operations or geographical location can affect biodiversity and had poor awareness of the importance of environmental impact assessments and energy conservation. On community, she noted that while most companies had some form of community initiatives, these were in the form of ad-hoc activities which were in the form of donations, disaster relief and scholarships.

Seven companies in total were honoured for their exemplary corporate responsibility (CR) initiatives in the event. Nestlé Malaysia bagged two awards at the inaugural StarBiz-ICR Malaysia Corporate Responsibility Awards 2008 in the marketplace and community categories for companies with market capitalisation of RM1bil and above. The other winners announced were Telekom Malaysia Bhd, Chemical Company of Malaysia Bhd, KPJ Healthcare Bhd, Opus Group Bhd, Faber Group Bhd and Tex Cycle Technology (M) Bhd and none of them was from the plantation industry.

MY REVIEW

I choose this speech as my source for this reflective paper because it reminded me how I got motivated and pursued my research and publication in the area of corporate social responsibility and environmental reporting. I still remember the day when I was complaining about the weather which seemed to be rather hotter than usual. It was a Sunday morning and after filling up petrol for my car in a nearby petrol station, I grabbed a newspaper for my leisure reading. It started off when I read about the award presentation ceremony in a local newspaper. I sincerely belief that it is important for Malaysian companies to be more socially responsible especially realizing how their operation have actually impacted the environment. I personally feel that this global warming that we currently facing has been induced by irresponsible companies not to mention, irresponsible individuals. These have triggered me to get into the StarBiz-ICR website and read the speech of the Chairman at the awards presentation ceremony. The speech gave me some ideas but also left me with some unanswered questions for which I were to pursue painstaking research and managed to publish my findings in social responsibility and environmental management journal.

The speech, I think, signified the honourable intention of the organisers in tackling the problem of lack of awareness among Malaysian companies on Corporate Responsibility. ICRM chairman Datuk Johan Raslan said,

"A responsible CR approach in a company's business strategies can help reduce cost, mitigate risks, improve reputation, motivate employees, drive innovation and boost performance," (The Star online, 2010)

The issues on environment destruction for the sake of trading and making profits have long been discussed, researched and debated in the West. There, it was the shareholder pressure, environment legislation and lobbying groups that initiated such awareness (Kolk, 1999 ; Holland and Foo, 2003 ; Doh and Guay, 2006 ; Phillips, 2008 ;Thompson, 2008). Thus, an initiative like StarBiz-ICR Malaysia Corporate Responsibility Awards is crucial in promoting more responsible and ethical business practices among Malaysian companies of which majority have the attitudes of pretending to be ignorant, practising the culture of 'wait and see' or stealing the limelight on ad hoc basis.

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Often, we witnessed in the media how conglomerates proudly announce their contributions in terms of donation and supports for charitable organisations as a part of their CSR initiatives. This is especially true during the festive seasons where the orphanage and the unfortunate were treated with luxury dinner and were given angpow - money packets. I remembered on one particular day during the fasting month of Ramadan, when I visited an orphanage in Klang, which I seldom visit, asking the Principal when I could have dinner with the children. The principal, without hesitation, said that they were fully booked by the corporate companies that month. Well, what happen after this month passed? They were left behind and people like me, can then have the time to spend with the children. This issue was highlighted by the Chairman in the speech where she noted that most companies had community initiatives in the form of ad-hoc activities such as donations and disaster relief. She stressed the need to align community development efforts towards goals to ensure sustainable development by identifying community issues, allocating resources for implementation and measuring the impact to ensure sustainable benefits to the beneficiaries.

Another issue that attracted my attention was when the Chairman reported that none of the winners were from the plantation industry. This might be the reason why later she highlighted that many companies still did not understand the impact of their operations on biodiversity and the importance of environmental impact assessments and energy conservation. This left a big question mark in my head about how oil palm companies have actually performed in relation to fulfilling their social obligations to disclose the impact of their operations on earth, water and air in Malaysia. This is critical as palm oil has received criticism from various NGOs worldwide, mainly on extinction of orang utans, deforestation and particularly, the food versus the fuel dispute (Othman & Ameer, 2009). For example, the Asian Food Channel (AFC) has launched a special programme on palm oil "Good Fat, Bad Fat?" which seeks to provide the "Facts behind the Fat" and uncover the issues pertaining to the palm oil industry describing its destructive nature on the environment and the communities dependent upon forest resources.

As a Malaysian, we know how this country is depending on the income generated by the Palm oil. Not only, the economy but the industry provides income to thousands, may be millions of people in Malaysia. I had the urge to explore the current state of environmental reporting in Malaysia with special focus on how the Plantation companies disclosed the impact of their operation in the annual report. Together with my co-researcher, we found out that some palm oil plantation companies provided only general statements, and were quite defensive in discussing their interactions with the environment. Only a few provides a lengthy section on the environment including operational best practice, emissions reductions, carbon sequestration and conservation initiatives. Thus, we concluded that this situation cannot satisfy stakeholders' appetites for more specific disclosures on environmental impacts (Othman & Ameer, 2010).

The speech by the Chairman reported that the companies' policies would also be investigated including the value chain impact on the environment in terms of climate change, pollution, waste and water management. This is a very interesting point considering that this statement which was made two years ago has unfortunately unfolded few weeks ago when the Greenpeace launched its Greenpeace Kit-Kat campaign accusing Nestle of endangering orang-utans through deforestation caused by its irresponsible palm oil supply chain in Indonesia(Greenpeace International, 2010). Also, another important fact was that Nestle bagged two awards at the inaugural StarBiz-ICR Malaysia Corporate Responsibility Awards 2008]. As a result, Nestle was forced to cease its palm oil supply from Sinar Mas Group followed by Switzerland's Nestle following their investigations into the palm oil supply chain. Though the campaign was specifically aimed at the Nestle supplier in Indonesia, Malaysia will soon be at the limelight and after considering the commitment of the plantation companies in reporting the impact of their operations in the annual report, it will not be long before Malaysian plantation companies to be under attack from the NGOs.

The Government, regulators, academicians and plantation companies must work hand in hand in improving the current practices and hopefully this could prevent the spread of the issues into the industry from which the country takes its pride from. At the moment, the government through its agencies has introduced CR and Prime Minister's CSR award, the creation of a new ministry - Ministry of Energy, Green Technology and Water and the implementation of a Green Buildings Index. There has been proposals to reform company law and incentives for plantation companies to implement zero burning during planting or replanting, disposing the trunks of the old stand in a proper way, at the same time, making sure minimum disruption to the surrounding ecology for the preservation of the flora and fauna.  The aim of this year's Awards is to encourage companies and the public to consider Corporate Responsibility (CR) as an investment and a business strategy, not a liability. In similar vein, the recent StarBiz-ICR Malaysia Corporate Responsibility Awards highlight the significance of responsible business practices by recognising and honouring companies which demonstrate outstanding CR practices that go beyond community and philanthropic activities.

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CONCLUSION & RECOMMENDATION

As I reflect the moment how the Chairman's speech triggered my concerns and initiated my research focus, followed by various developments and emerging issues caused and faced by the Plantation companies, I feel a sense of satisfaction surging in my heart. It was a right decision and quite timely too. I love my country and firmly believe that all plantation companies, especially the oil palm companies, have the social obligations to disclose the impact of their operation on ecosystem. These impacts have major consequences to the surrounding biodiversity and Orang Asli that live very closely to these oil palm plantations. The experience faced by the suppliers in Indonesia should not be taken lightly before it spreads to our mother land. All stakeholders must focus on strategies to assist oil palm companies in resolving the issues. Rigorous and immediate measures must be proposed, implemented, and evaluated, beyond the introduction of awards. The significance of this whole experience and analysis is overwhelming considering the huge impact it would have on the national economy if not well taken care of.

On a personal note, the exposures to these issues have alerted me on my own responsibilities to the environment. I had the chance to meet in person Mr Matthias Gelber, the Greenest person in planet, and it really changed the way I consume electricity at home and at work. I am more careful in things that I bought in the supermarket and start to use recycled bags instead of plastic bags for shopping. As a lecturer, I have always prompted discussions with my students on their roles towards the environment, being responsible students and citizens. I am always excited to know what they would propose to their employers to become more responsible corporate citizens, once they are employed as accountants in their organisations. I am proud of their ideas and proposed initiatives.

As an UiTM researcher, I feel that I have not done enough. My research findings show that there is much more to done. With the escalating pressures from the public and the NGOs, the issue of accountability of oil palm companies is becoming crucial. This makes me thinking deeper on how to trigger the companies to be more accountable for their actions. Introduction of awards is a good initiative but so what if they don't win any! This concern on accountability of the oil palm companies has forced me to be more open minded and more receptive to other people from different backgrounds who share the same concerns I am having. My co-researchers and I have met researchers specialising on environmental engineering focusing on oil palm waste management. The outcome of the discussion has prompted us to propose regulations for companies to discharge their social obligation to stakeholders. This can be done by comparing the percentage of the land bank areas that these companies occupy in Malaysia with the level of disclosures that they should ideal report in their annual reports. I believe there should be no 'one size fit all approach'. This scanning and reporting tool called Pulpwire can also help individual companies to scan their oil palm footprint and devise carefully strategies to enhance their social obligation in substance and disclosed through the annual reports to reduce the gap between the stakeholders' expectations. The next step is to test this tool and gain acceptance for its use by the oil palm companies.

This innovation has won Gold Medal at Innovation, Invention and Design (IID) Competition in UiTM, Silver Medal at the Pertandingan RekaCipta IPTA (PECIPTA), and Silver Medal at the Seoul International Invention Fair (SIIF) in 2009.