The Middle East is waking up to the benefits of CSR
Responsibility, accountability and sustainability are the new buzzwords in the business language of the Middle East. Everyone’s thinking about it, many are talking about it, and a few are taking action. Some companies are now choosing to acknowledge their success by implementing sound CSR. Companies realize they need to establish themselves as legitimate parts of society, and business leaders in the Middle East are beginning to understand the importance of the stakeholder.
One chief executive in Jordan says there’s no time for complacency and that CSR is a necessity in the region. Fadi Ghandour is founding CEO of Aramex, the global logistics and express delivery group listed on the Dubai International Financial Exchange. The company has just released its Middle Eastern first sustainability report, and Ghandour says it’s now ‘time to show the community we are ready to be measured’. He says Aramex has always been a good corporate citizen, but feels the region needs to have leaders in this area. This was also part of his motivation to be seen ‘to be graded and measured, to demonstrate best practice and be the benchmark for excellence.’
Saudi Arabia-based CSRMiddleEast.org wants to encourage such excellence and promote best practice. The consensus is that corporations must be involved, but the reality is not always so encouraging. ‘Today we see few companies taking CSR seriously, but I believe the numbers will increase in the near future,’ says Dr Fatih Mehmet Gul, network and communication manager for CSRMiddleEast.org.
Think global
Netherlands-based stakeholder network group the Global Reporting Initiative (GRI) wants to promote its global standard in the Gulf. Many companies are using the GRI guidelines, but Ralph Thurm, associate director of business engagement and development, would like to see more. He says those who adopt ‘transparency through sustainability disclosures’ can ‘instill trust and confidence in an organization from all stakeholders.’ Gul says part of the reason for the slow uptake is a lack of education about CSR: ‘There are too few CSR education providers in the region, and the implementation of CSR is the new way of management.’
This is where Hawkamah, the Gulf region’s governance institute, can help. ‘Corporate governance is the overriding concern,’ explains Dr Nasser Saidi, executive director of Hawkamah and chief economist of the Dubai International Financial Center. ‘CSR does not have a life of its own; it all begins when corporations adopt good corporate governance practices and abide by regulations.’
With the recent IPO interest in the region and serious players like DP World going public, the need for corporate governance will be magnified. Saidi is optimistic the situation will improve. ‘With more investment coming into the region and more people involved in the financial markets, we’ll see more scrutiny,’ he says. ‘This can only improve standards.’
As Dubai-based Jumeirah plans the development of 20 new properties, the executive chairman of this international hotel and hospitality management company, Gerald Lawless, says CSR in his business ‘is a win-win for everyone. Travel and tourism is good business in any economy, and CSR is an integral part of that.’
Ghandour agrees with Lawless and sees the cost of any CSR efforts as ‘a sound investment’. Both men run successful and expanding global businesses with CSR at the forefront.
Leading the way
The Middle East’s governments and policy makers must lead by example, and Saidi feels encouraged that many are beginning to show initiative. The real impetus will come from the private sector, however. As the region’s stock markets recover from recent declines, the weak players have been weeded out; this has been a ‘welcome correction’, according to Saidi. ‘More mandatory guidelines need to be in place, especially from the central bank and the stock market authorities,’ he says.
The Middle East, particularly the Gulf Cooperation Council (GCC) area, is rapidly becoming a cosmopolitan region, attracting investors from around the world as Middle Eastern companies expand abroad. Thurm says this is a positive consequence of globalization, but it means ‘no company can afford to ignore a sustainable approach to business, and sustainability reporting is central to this. It’s a question of survival in a globalized world.’
Business survival in the region has been fast-paced and rewarding, and the future is looking even brighter, according to global investment bank Lehman Brothers. In the bank’s May report, ‘Beyond petrodollars: globalization and sustainable development in the Middle East’, chief economist Edward Morse is encouraged by the region’s GDP growth in recent years and says the six GCC countries are on the verge of overcoming oil dependency. ‘If the investment off the back of this is sustained, we should expect to see a new Middle East that is a critical engine of global growth,’ he writes.
This is encouraging news for business leaders in the region. Ghandour says the practice of CSR will help sustain this growth, explaining that CSR is not a choice. ‘It’s a welcome necessity and the only obvious choice to make,’ adds Lawless.
The region is now clearly on the map in terms of big business and international development. As Ghandour concludes: ‘If we don’t step up now and do the right thing, we’ll be left behind.’