regulars

6 global briefs
people - planet - profits

42 report: corporate governance

corporate governance and corporate social responsibility

48 csr talk
“the desire to not stagnate”

52 csr toolkit
my choice: a model for a sustainable future

54 survey: corporate diversity practices Editor-in-Chief

examining the cracks in the ceiling Zohare Ali Shariff

57 crossword Editorial Director

Khadeeja Balkhi

60 musings Managing Editor

yours humbly Rutaba Ahmed

Research, Distribution & Development

Mehfooz Aleem
features Zahra Baray
Alizeh Shariq
5 notes from our founder sponsors Raza Tahir

Creatives
12 the crisis and causes Kamran Rauf
the failure of good governance: how it led to the financial crisis Umair Anwar

Reprint
16 rules vs. relations In line with our mission, we encourage
pak-governance: parallel tracks reproduction of material, provided tbl and
content partners are given credit
18 futuralysis: the financial crisis and csr Publisher
corporate responsibility in the age of irresponsibility Asiatic Public Relations Network
(Private) Limited
20 csr in turbulent times
csr now needed more than ever before Printed at
Nikmat Printers, Karachi
24 strategic csr casuality Disclaimer
victims and winners: csr and the financial crisis The views expressed in tbl are the
authors’ and not necessarily shared by
tbl and/or APR
28 governance via internet
the internet: true government of the people Declaration
From the office of
District Coordination Officer,
30 opinion City District Government Karachi
csr in a recession: 10 reasons to keep doing it... NO.DCO/DDO/LAW/CDGK/109/2007,
Karachi
34 adult literacy Dated May 22, 2007
pursuing a lost generation or common sense csr? Subscription, advertising and
feedback at:
39 entrepreneurship
entrepreneur, anyone? tbl: triple bottom-line

46 global energy outlook Address: A-7, Street 1,

weo calls for global energy revolution despite economic crisis Bath Island, Clifton,
Karachi, Pakistan.
50 in hindsight Tel:
Fax:
(92-21)-5837674, 5823334
(92-21)-5867103
bull’s-eye? revisiting ‘07’s forecast for ‘08 E-mail: feedforward@tbl.com.pk
Web: www.tbl.com.pk
58 model for urban development
Subscribe to a full year of tbl (6 issues) at the special rate of Rs.1,000 and save the cost of an issue.
If you wish to subscribe to tbl, or unsubscribe, please write to us at feedforward@tbl.com.pk

tbl nov-dec 08 1
 editor’s note

making a difference

W
e at tbl have devel-
oped a new respect
for the management
of daily newspapers. Here we
are, bringing out the sixth and
last issue of our publication for
this year and we know what
trials and tribulations we had
to go through for each issue,
making it all happen. And this,
mind you, for a bi-monthly publication. So newspapers
who manage to churn out 24 or more page editions
every single day have our admiration. Quite a
challenge even if we take into consideration the huge
number of people who may be involved in the process.
companies with no CSR programme or strategy for the
moment, so that the benefits of true CSR continue to
spread to an ever-widening audience.
Behind the success of tbl is a team of dedicated young
people, from researchers to designers, to sub-editors
and still others. But I would like to take the opportu-
nity of this last editor's note of the year to acknowledge
the total commitment and ardour of two ladies who are
truly the moving spirit behind this publication. Rutaba
Ahmed, our managing editor, who is ultimately
responsible for putting it all together and Khadeeja
Balkhi, our editorial director and a co-founder of tbl,
who is to tbl what the nervous system is to the human
body.

tbl has proved to be a unique publication in many
ways. To start with, it is the first, and to our knowledge
the only specialized journal in Pakistan on the subject
of CSR. Then, all writing in tbl is original content,
especially written for tbl. From time to time we have
also re-printed previously published content from other
sources, but every time permission has been sought
from the source and their support acknowledged.
Third, tbl is sent complimentary to a thoughtfully
compiled list of recipients and the approximately five
thousand people who read it are people who can make
a real difference, be they from the corporate sector,
government, NGOs, academia, international institu-
tions active in Pakistan or other groups involved in any
facet of CSR. At the risk of sounding self-congra-
tulatory, I believe tbl is, by the end of its first year in
print, well on its way to furthering the cause of CSR
tangibly.
The six issues this year have examined a range of CSR-
related issues and the writings have been both food for
thought and a call for action. Practical tool-kits have
espoused how companies can structure and leverage
their CSR initiatives and case studies have illustrated
corporate success stories that others can customize and
replicate. Starting next year, with the January-February
2009 issue, we hope to build on the platform that has
been established and provide guidance especially for
I cannot end this note without thanking our two
founder sponsors - EBM and National Foods Ltd,
whose contribution meets a fair percentage of the cost
of bringing out tbl. When the tbl team first finalized
the concept for this publication, it approached various
companies for founder sponsor support. While several
showed interest, they linked potential support to
editorial coverage or laid down other pre-conditions,
which we politely declined, as we were quiet clear in
our vision that tbl will be a fully independent and
transparent publication. Only EBM and National Foods
came forward with unconditional support and we
believe this reflects their own conviction that CSR
knowledge needs to be spread as widely as possible.
This is indeed a positive approach and if more
companies extend support to tbl, or for that matter to
any other awareness building initiative, then we can
look forward to CSR becoming an integral part of cor-
porate life in our country across the board.
Sincerely,
Zohare Ali Shariff
Editor-in-Chief

This publication is sent complimentary to decision-makers and opinion-formers in the corporate sector, the government, NGO sector,
international institutions and academia, and has an estimated readership of 5,000 plus people. Recognising that your sphere of work
has the potential to compliment and reinforce the essence of our mission, we have taken the liberty to present tbl to you. It is also
available at selected outlets.

We would love to hear from you. Please do contact us at feedforward@tbl.com.pk with your thoughts, feedback and input from your
corporate or social practices.

tbl strongly believes in knowledge dissemination and sharing. Please feel free to share tbl contents with your peers and teams -
of course we know you’ll give tbl the credit when you share our work.

2 www.tbl.com.pk
letters to the editor Dear readers,

Thank you for sharing your

valuable feedback with us, as

Y
our publication is a wel-
come new source of valu-
able information and sub-
ject knowledge. I can say with
confidence that it is possibly the
only magazine in Pakistan that
comes up to an international
standard in terms of content and
presentation. One area of
improvement that I feel you
need to work on is more hands
on solutions for specific problem
areas in our society, specially
those relating to conservation of
the environment.
Toufiq Pasha Mooraj
ing is perhaps the best way for-
ward as that part of Pakistan
gets the most amount of rain
annually. I suggest that tbl
should include a contributions
section for those of us who wish
to offer monetary assistance to
our brothers in the north who
continue to suffer and are
deprived of even life's basic
necessities.
Saira Khan
Entrepreneur
Lahore
it is indeed what keeps us all
encouraged here at tbl.
Mr. Pasha, we appreciate
your compliments. In future
issues, we will publish
material on practical
solutions for the environment
as well as other CSR related
issues in our country.
Ms. Khan, thank you for
taking the time to write to us.
It is encouraging to read your
thoughtful feedback and we
have noted your valuable
suggestion.

T
Consultant and Conservation here wasn't much I knew
Activist about CSR before I started
Karachi reading tbl. The effort you
are putting in to create aware-
ness about corporate social
responsibility is truly exem-
Ms. Taimur, thank you for
your compliments on tbl.
Creating awareness about
CSR is indeed our main
objective. It is to give
corporations a platform

Y
our article on Rainwater
Harvesting was a very
interesting read. It is
indeed very sad how people in
the mountainous areas have
been affected by the 2005 earth-
quake and it is sadder still that
we have not yet managed to
provide them with safe drinking
water. I think rainwater harvest-
plary. Your last issue on
Hydroethics was a real eye
opener. It made me realize how
we take water - this scarce
resource, for granted. Keep up
the good work!
Sana Taimur
Student
Karachi
through which they can
benefit and gain knowledge
about what corporate
citizenship is all about.
We look forward to our read-
ers' feedback which will help
us make this platform a more
effective source of debate and
interaction.

tbl Special Report

As we find ourselves amidst a global meltdown, this year-end edition of tbl brings to you a special
report on Governance, CSR and the Financial Crisis, comprising a series of articles and reports written
by eminent CSR experts and organizations from diverse parts of the world.

Following our interactions with several people including writers, CSR advocates, scholars and organi-
zations in this field, we found that a consensus may be emerging on the link between CSR and the
Financial Crisis and the direction in which CSR is headed. The articles explore the global financial
meltdown in depth - what are the factors that led to the crisis, what is the role of CSR and
Governance, and what is the likely impact on CSR.

Will CSR become more of a buzzword, used by the myriad of self-serving organizations as a veil, or
will it serve as the much-needed reality check - amidst the Crisis that the world is engulfed in? In the
upcoming year, tbl will bring comprehensive coverage on Pakistan's journey towards the true light of
CSR - where we stand, how far we have come and where we are headed.

tbl nov-dec 08 3
 editorial advisory board
With this issue of tbl, we bring you the remaining profiles of our board members. We hope you are
enjoying getting to know them as much as we are.

Ayesha Tammy Haq Abrar Hasan

Member Founder Sponsor Member

With degrees in law (London School of Abrar Hasan is Chief Executive of

Economics, University of Kent and
Gray's Inn, UK), Tammy is a Barrister-at-
Law and, more recently, a media person-
ality. She has practiced law in the UK,
Pakistan, the Philippines and the USA
and has worked on several international projects. Her area of
expertise is project development and finance.
In addition, she hosts a current affairs talk show on satellite
television, writes opinion pieces for several newspapers and
publications and hosts a radio show on one of Pakistan's FM
radio stations. She currently also sits on numerous other
boards, committees, task forces and was a member of
Pakistan's 5 Year Plan working group in 2004. A civil rights
activist, she is involved with human rights and other rights
based organizations in Pakistan.
National Foods Limited, Pakistan’s
pioneering multi-category food
company. He joined NFL as Plant
Director in 1993 and served in that
position for four years. He was elected Deputy Managing
Director in 1997 and then Chief Executive shortly after. Prior
to joining NFL, he was Plant Director at Precision Rubber
Products (Pvt.) Ltd., a sister concern, from 1990 to 1993.
Abrar enjoys playing golf, squash and cricket, and is an avid
reader of books on management, leadership and technology.
He holds a bachelors degree in industrial management and
industrial engineering from the Purdue University in
Indiana. He is based in Karachi.

Habiba Hamid Vivian Lines

Member Member

Habiba Hamid currently works for the
Dubai Government. In 2007 she worked
in Baghdad's Redzone for a USAID-
OFDA and UN implementing partner
on emergency response and economic
development throughout much of Iraq.
She has worked in various capacities for local and national
government and several lobbying groups in the UK. She also
served in an elected capacity in organisations which con-
tribute to educational development in the UK.
Vivian Lines is President & Chief
Operating Officer of Hill & Knowlton's
Asia Pacific region. He joined Hill &
Knowlton in 1984 and has worked with
the company in the UK, Bahrain, Dubai,
Taiwan, Singapore and Hong Kong.
He has extensive experience in designing and implementing
strategic communications programmes for a broad range of
multinational and local clients across multiple markets.

Habiba holds an M.Sc in Globalization & Development Vivian is an experienced crisis counsellor and undertakes
(SAS/SOAS, University of London) and a B.A. (Hons) in regular crisis training and crisis assessment programmes in
Politics, Philosophy and History (Birkbeck, University of Asia for a range of clients. He is based in Singapore.
London).

Anwar Rammal Khadeeja Balkhi Khawar Masood Butt

Chairperson Executive Member Founder Sponsor Member

vision and Vision: To steadily facilitate the germination of sustainable visions for organisational growth,
sharing specific triple bottom-line knowledge and tools

mission Mission Statement: To disseminate triple bottom-line knowledge to a diversified group including
corporate, social development and general business groups primarily through a specialised journal,
expanding in accordance with organisational capacity and market readiness

4 www.tbl.com.pk
 notes from our founder sponsors
T N
here can be little doubt that in the global
socio-economic setup today, it is the firm
responsibility of ethical companies to play a
key role in enhancing and shaping the economic and
social progress of the countries they are operating
in. It must be understood that above all this makes
good business sense, as the sustainable development
of a company's business is today inextricably linked
to the sustainable growth of society itself. And this
can only be done by inculcating and practising core
values and best practices that contribute to the
prosperity of companies and hence positively
impact the growth of a country.
Just as globalization is today a reality, whether you
are a proponent or an opponent of it, so is the need
to incorporate sustainable business practices.
In times to come only the best will survive, whether
it is in the manufacturing or the services sector.
The best will be those who strategically pursue the
triple bottom line approach to business - that is a
business growth model based on the welfare and
growth of society at large (people), the preservation
of the environment and precious natural resources
(planet) and the pursuit of profitability (profits) in
an ethical way.
It is to be noted also that pursuing the triple bottom-
line by yourself in an isolated bubble is highly
undesirable. The message needs to be spread
widely, for knowledge shared results in benefits
spreading even more widely. In this regard we were
very pleased earlier this year to become one of the
founder sponsors of this publication, as tbl is indeed
the vehicle for knowledge dissemination that meets
our own vision and values. Now several issues later,
I am pleased to note that tbl is positively facilitating
a sustainability-entrenched culture in the country.
tbl is serving its Mission well and I believe that it is
a catalyst which will make a tangible difference in
the times to come.
The standard of tbl and its content is impressive
and at par with that of well reputed international
publications. It is a unique source of information
and guidance for decision-makers and opinion-
formers across different sectors and not just the
corporate sector. EBM is proud to be associated with
tbl and I take this opportunity to wish the entire tbl
team the very best in its future endeavours.
Khawar Masood Butt
Chairman and MD,
English Biscuit Manufacturers
ational Foods Limited (NFL) has been
associated with tbl as a Founder Sponsor
before its first issue was published in
January 2008. We have enjoyed witnessing its
growth since.
Regrettably, the scope of Corporate Social
Responsibility (CSR) which tbl strives to espouse is
still largely an alien concept for a lot of corpo-
rations in Pakistan. The capacity building concept
that CSR is essentially about is regularly missed
altogether and CSR is most often equated with
image-building, philanthropic activities and corpo-
rate tax write-offs. At the same time, it can be said
that the level of interest of the larger corporate sec-
tor in CSR is rapidly rising. From this perspective,
tbl is quite timely.
'Responsibility to society' is a misnomer. It is
essential that the corporate sector recognizes that
the responsibility element of a CSR strategy should
principally be related to the stakeholders in real
terms - by promoting sustainable enterprise
between the corporation and stakeholders, thus
completing the real meaning of the triple bottom-
line: people, planet and profits.
For awareness in the right sense to be created, it is
important to treat the achievement of tbl as a goal.
Its accomplishment should be targeted in phases
which can, for example, include:
a) Knowledge and awareness-building through
workshops and otherwise.
b) Correct concept definition, with real life
examples.
c) Creation of sustainable enterprise equations
and, again, real life examples of measurable
achievements by companies.
d) Enforcement of the triple bottom line approach
at the SECP and corporate governance levels.
e) Corporations to be held accountable for
exploitation of stakeholders through some
means of regulatory controls.
It is a pleasure for National Foods to support this
initiative and we shall continue to do so, enabling
the tbl team to use the tbl platform to undertake a
broader range of activities that support its
mission.
Abrar Hasan
Chief Executive,
National Foods Limited
tbl nov-dec 08 5
 global briefs
PEOPLE
Barometer Launched to
Measure CSR Disclosure
The recently launched 'CSR Asia
Business Barometer 2008' by CSR
Asia, compares the Corporate
Social Responsibility (CSR)
disclosure of the 20 largest listed
companies in Hong Kong,
Malaysia, Singapore and
Thailand. More companies are
seeing the value of making
commitments to responsible
business practices and disclosing
their practices.
Some of the findings include:
Company (codes and policies)
are the most reported CSR
issue (scoring 59 percent),
compared with workplace
and people scoring only 19
percent. This seems to imply a
continued lack of trans-
parency on Asia's thorniest
CSR issue, namely labour
conditions.
The companies' overall score
remains low (30 percent), but
there is some national varia-
tion, with Hong Kong scoring
best (42 percent), as compared
with Malaysia (29 percent),
Thailand (25 percent) and
Singapore (24 percent).
The top companies - China
Light and Power and HSBC,
both listed in Hong Kong -
scored 93 percent, as com-
pared with the poorest per-
former - Hong Kong Land -
scoring only 3 percent. The
top company in Malaysia was
BAT (British American
Tobacco) Malaysia; in
Thailand, it was Siam
Cement, and in Singapore,
City Developments.
6 www.tbl.com.pk
Publicly available reports based
on a robust data collection and
reporting framework can be an
excellent communication tool to
inform stakeholders of CSR
strategy, approach and
performance.
Shared by CSR International and CSR Asia
Annual Summit Highlights Key
CSR Issues in Asia
The annual CSR summit,
organized by CSR Asia, was held
in November, at the Asian
Institute of Technology, Thailand.
Amidst a growing call for
companies to engage with CSR
initiatives in Asia, the event was
poised to explore hot topics
unique to the Asian context,
which would bring new insights
for businesses, governments,
NGOs and other CSR
practitioners.
The rise of CSR up the agenda in
Asia was reflected in the
Summit's attendance. There were
over 300 participants this year.
CSR Asia itself reflected this
growing interest in CSR, with 25
staff in offices in Hong Kong,
Singapore, Shenzhen, Beijing,
Kuala Lumpur, Dhaka and Ho
Chi Minh City. The event
attracted a diverse group of
organizational representatives -
not only corporate CSR types, like
the head of water for Coca-Cola
and supply chain for Hewlett-
Packard - but also NGOs and
consultants focusing on
corruption, HIV/AIDS, climate
change and labour justice, to
mention a few.
Until fairly recently, CSR in Asia
was largely equated with philan-
thropy and supply chain issues,
specifically labour conditions.
Now, there is a marked shift to
environmental issues, specifically
water, but also deforestation and
climate change, as well as product
responsibility. The relationship
between the financial crisis and
CSR has already emerged as a hot
topic, with Mr. Kasit Piromya,
Director of International of the
Democratic Party in Thailand,
stating that governments will
have to tackle the systemic greed
of the financial markets and over-
paid CEOs if CSR is to be at all
effective in future.
Shared by CSR International, an online blog dedicated
to connecting and empowering corporate sustainability
Non-executive's Role in
Corporate Governance More
Crucial than Ever
Independent non-executive direc-
tors should help drive corporate
responsibility - but how?
Non-executive directors play a
vital role in shaping the strategy
and governance of UK companies.
Independence from management
should allow them to take a
broad, long-term view of strategy,
and gives legitimacy to their role
in scrutinising management plans.
Corporate responsibility has
become a board-level concern for
UK non-execs only recently, says
Craig Mackenzie, senior lecturer
in sustainable enterprise at the
University of Edinburgh. "In the
last five years it's become much
more formally significant for non-
execs of big companies," he says.
UK corporate governance guide-
lines require London-listed firms
to report on their performance
against business ethics and corpo-
rate responsibility standards - or
explain why they do not. Boards
are free to decide how they will
manage and oversee corporate
responsibility concerns, and what
role non-execs play in the process.
The breadth of experience non-
execs bring can be valuable in
pursuing ethical business agen-
das, particularly in cross-fertilis-
ing best practice between sectors
and bringing expertise and
insight from other walks of life,
head of corporate governance at
the UK's Institute of Directors
Roger Barker says. He adds that
the increasing involvement of bili-
non-execs in corporate responsity
is part of a general trend since the
government-commissioned report
by the late Sir Derek Higgs of
2003, which recommended
expanding the non-exec director
role to improve corporate gover-
nance.
Citing the complex financial prod-
ucts in the banking sector, Barker
suggests a lack of in-depth opera-
tional knowledge may inhibit a
non-exec's ability to ensure ethical
standards effectively. The ethical
scrutiny role can create moral
dilemmas for non-execs when
there is a conflict between short-
term profits and doing the right
thing.
Some may say grappling with
that moral dilemma is what being
a company director, executive or
non-exec, is all about. There
seems little doubt that in the cur-
rent economic climate, the judg-
ment calls are only likely to
become more frequent and diffi-
cult. Because it is non-exec direc-
tors who, more than any other
board members, are charged with
taking the longer-term view, their
role is arguably now more crucial
than ever.
Shared by Ethical Corporation, an independent media
firm
Organic Food and Farming
Conference
A Conference on "Managing
Competing Values in Organic
Food & Farming" was held in
November 2008 in Bristol. The
Conference focused on two key
subjects including: ‘How can
organic farming contribute
towards the development of ‘sus-
tainable communities’ in rural
areas' and ‘How do farmers and
other actors in the organic food
chain define and work towards
the protection of ‘non-market val-
ues’ - and what works against
them?’.
In this conference, eminent
researchers and professors high-
lighted issues such as
Organic farming and its
impact on the community
Local or global sourcing
Fairtrade
The role of supermarkets
UK and international
perspectives
This Conference was part of a
sequence of five interactive,
participatory one-day workshops
to be held over the next twelve
months. The workshops will focus
on the key areas of food produc-
tion, supply and retailing.
Attendees from all areas of food
production, distribution and
retailing as well as regulatory
bodies and research will
contribute and share their
experiences, views and beliefs.
New Architecture and Urban
Phenomena
'Balkanology, New Architecture
and Urban Phenomena in South
Eastern Europe', an ongoing exhi-
bition at the Swiss Architecture
Museum, in South Eastern
Europe, explores contemporary
architecture and urban design
from a trans-disciplinary perspec-
tive, not just at national level as
its title might suggest, it also puts
architecture into a global context.
Balkans generally refers to South
Eastern Europe, a region with
varying geographical definitions.
Going beyond clichés and the
pathos, the Balkanology exhibi-
tion focuses on the impact of
recent socio-political changes on
architecture and urban planning,
drawing a variegated picture of
urban development in the region
and the forces that determine it.
Curated by Kai Vöckler, the exhi-
bitions focuses on two main
themes:
The way inhabitants solved
the lack of housing and initi-
ated construction projects on
their own account.
A comparison between out-
standing yet hardly known
buildings of socialist mod-
ernism in Yugoslavia with
contemporary architecture.
Since the collapse of the socialist
economic system in ex-Yugoslavia
and Albania and the war that lead
to the split of Yugoslavia, a new
form of urbanization typified by
extensive informal building activi-
ty has appeared on the territory.
Inhabitants have taken the issue
of housing shortage in their own
hands, and they have started
building new dwellings from
scratch and adapting existing
edifice for their own purposes.
In this context, the term
Balkanization takes a radically
different meaning: it stands for
the improvisation and adaptation
skills of architecture. Some of the
many questions the exhibition
aims to raise include: how can a
combination of governmental and
social control offer the best possi-
ble basis for a successful retro-
active 'post-regulation?
These unregulated forms of urban
developments have often
bypassed the expertise of archi-
tects. This makeshift architecture
has nevertheless developed its
own style and culture character-
ized by a new intermeshing of
spaces through visual worlds
communicated by the media,
migratory movements and cash
flows.
Shared by Worldchanging, a nonprofit media
organization
tbl nov-dec 08 7

PLANET
Eco Redesigning for
Devastated Communities
Sustainability incorporates lessons
leaned from history in order to
improve on design to avoid fatal
flaws and in this case, to prolong
the lifespan of a structure as it
relates to its surroundings.
The brand new, modern, eco
homes being erected at a rapid
pace are redefining the 9th Ward
and are being built for the origi-
nal home owners who were dis-
placed by Hurricane Katrina. The
focus of this project is on the
impressive and innovative green
aspects of the project itself and
how it serves as a model for
building a new neighbourhood
from the ground up in a sustain-
able way. The new home designs
are by a combination of local,
national, and international archi-
tects.
Even though the new homes in
the 9th Ward include solar panels,
energy efficient everything, and
other elements that we think of
when we think of sustainability,
perhaps the single most important
feature of these homes are their
stilts. If the ocean should ever
intrude again, these new homes
could be high enough off the
ground to clear the floodwaters, a
simple solution to end the debate
about whether or not to rebuild
the 9th Ward at all.
To date, the 84th house, out of
150, has been paid for through
sponsorships and donations.
Shared by TreeHugger, an online media outlet dedicated
to driving sustainability mainstream
Guerrilla vs. Gorilla
Due to escalating violence,
Congolese rangers have been run
8 www.tbl.com.pk
out of the country's Virunga
National Park, threatening the
safety of some 200 mountain
gorillas that live there. "There are
documented cases of the gorillas
getting caught in the crossfire and
getting killed," says a park
spokesperson. "It's the chaos of
war and they are right in the mid-
dle of it." Only about 700 moun-
tain gorillas remain in the wild.
The three African nations that still
have mountain gorilla popula-
tions have agreed to cooperate on
a new plan to save the critically
endangered primates. Rwanda,
Uganda, and the Democratic
Republic of the Congo hatched a
10-year programme to enhance
security in the parks and forests
that the gorillas call home, as well
as other measures. The countries
have also agreed to programmes
aimed at mitigating the harsh
poverty in communities sur-
rounding gorilla habitat, which
often leads locals to poach
wildlife and clear more land. "For
the first time, the three countries
have decided to protect the great
apes which are threatened with
extinction and insecurity in the
region," said Moses Mapesa of the
Uganda Wildlife Authority. The
multination plan is largely seen as
an important step, but plenty of
challenges remain. Notably,
armed militants still control a
large part of the DRC's Virunga
National Park where over half of
the world's remaining 720 moun-
tain gorillas live.
Shared by Grist, an online environmental news
magazine
World's First International
Renewable Energy Agency
A consortium of European gov-
ernments is developing the
world's first International
Renewable Energy Agency.
The agency, known as IRENA,
will serve as a global cheerleader
for clean energy. It plans to offer
technical, financial, and policy
advice for governments world-
wide, according to a joint
announcement from Germany,
Spain, and Denmark - the pro-
ject's leaders.
Renewable energy is on the rise
worldwide as governments
attempt to reduce greenhouse gas
emissions and create domestic
energy sources. Despite a variety
of international organizations that
are helping with the clean energy
transition, IRENA's leaders said
that no single agency addresses
the local, national, and interna-
tional needs of both developed
and developing nations.
The international organizations
that currently focus on renewable
energy include the International
Energy Agency (IEA), World
Bank, Renewable Energy Policy
Network for the 21st Century
(REN21), Renewable Energy and
Energy Efficient Partnership
(REEEP), and several United
Nations agencies.
In the past year, global renewable
energy sources have increased
dramatically. More than 250
gigawatts of capacity, excluding
large hydropower, exists globally.
Clean energy investments
surpassed $148 billion in 2007, a
60 percent increase from 2006,
according to the U.N.
Environment Programme.
Several countries in charge of the
IRENA initiative, including
Germany and Denmark, are home
to some of the world's leading
producers of renewable energy
technologies.
At a conference in Madrid last
month, IRENA's 51 participating
nations agreed that the agency's
first projects would be presented
in January 2009. The involved
nations currently include nearly
all of Europe as well as Australia,
Argentina, Brazil, India,
Indonesia, and the United Arab
Emirates.
Shared by Worldchanging, a nonprofit media
organization
Rice Husks Generating
Electricity in India's Villages
There are 350 million people in
India without power living in
small villages; and those commu-
nities harvest 92 million tons of
rice harvested every year. In a
typical village, about 1500 tons of
rice is harvested every season,
yielding 500 tons of husk and
1000 tons of edible product, states
Robert S. Katz, a Knowledge &
Communications Associate at
Acumen Fund. The farmers either
burn the husk or allow it to rot in
the fields. Rice husk is the outside
of a rice kernel. Rice husk is cellu-
losic, which means it can be heat-
ed up and released for energy -
the gas released is similar to
methane. It also contains silica,
which is released as a waste prod-
uct when burned.
A rural electrification company,
Husk Power Systems (HPS) is
using husk to make electricity.
The gas that is made out of the
husk is filtered, and then run
through a diesel-like engine to
generate power. HPS is operating
in 5 villages, and currently pow-
ers 12,000 people's homes. HPS
utilizes a proprietary technology
to run 35-100 kilowatt mini power
plants, delivering pay-for-use
electricity to un-electrified vil-
lages in India's "Rice Belt."
The co-founder of HPS, Chip
Ransler says, "We're using an
older technology - gasification -
which has been around since
World War II. We retrofit
machines to work with multiple
types of raw material - not just
rice husk, but corn husk and
wheat husk, too. We work with
two Indian manufacturers to
build gasifiers with the right spec-
ifications."
According to Ransler, in the next
5 - 10 years: "We think we can
power 2500 villages - 750,000 peo-
ple." To date, five pilot projects
have become operationally prof-
itable within six months, deliver-
ing sustainable, environmentally-
friendly, low-cost energy that is
dramatically improving the lives
of over 12,000 rural Indians.
Innovative and Sustainable
Design Structure
The recently built Women's
Healthcare Centre in Burkina
Faso is truly an innovative struc-
ture, driven by the ideas of sus-
tainability and ethical awareness.
It has been built by FARE Studio,
a design production facility based
in Rome and also won the Health
Category Award at the World
Architecture Festival.
It mixes local materials, simple
technologies, careful siting and
control of sun and wind to build
an off-grid, solar powered facility.
The entire complex is built on a
raised platform to allow ventila-
tion under and to separate it from
the dust and mud. Then the
buildings are constructed from a
sun-dried brick cast on site. The
bricks don't do well in contact
with a lot of water, so they sit on
the raised plane for protection
from below, while above, a sun
and water screen protects the
buildings.
Breezes can flow below the floor
and below the roof, keeping the
buildings cooler without mechani-
cal ventilation. The roof also gath-
ers rainwater. The buildings are
plastered and painted, with slo-
gans in five languages as a graph-
ic element.
The Women's Health Care Centre
was built with local trades in fif-
teen months.
Shared by TreeHugger, an online media outlet dedicated
to driving sustainability mainstream
New Tsunami Warning System
Launched
Indonesia launched a sophisticat-
ed new tsunami warning system
designed to give coastal residents
enough time to flee or seek shelter
from an impending tidal wave.
The national system aims to pro-
tect the inhabitants of the archi-
pelago's vast coast and prevent a
deadly repeat of the 2004 Indian
Ocean tsunami that killed 168,000
people in Indonesia alone.
But even as President Susilo
Bambang Yudhoyono inaugurat-
ed the system in Jakarta, officials
conceded it would be several
years yet before it is fully com-
plete and the whole coastline pro-
tected.
According to Thomas Rachel,
Germany's parliamentary state
secretary, in Jakarta: "We are
starting the world's most
advanced tsunami early warning
system able to issue the quickest
possible warnings with a high
degree of reliability."
Indonesia, with its 17,000 islands,
remains especially vulnerable
because it sits on the meeting
point of three of the earth's tec-
tonic plates, leaving 60 percent of
the coastline at risk from
tsunamis.
The new high-speed warning sys-
tem connects a series of seabed
sensors that detect the earth-
quakes that may set of a tsunami,
information that is relayed to
buoys on the surface. Deep-sea
pressure gauges monitor any sud-
den variations indicating that a
tsunami is in motion, data that is
enhanced by the notion of the sur-
face buoys that carry global posi-
tioning systems.
All the information is relayed by
satellite to the tsunami early
warning centre in Jakarta, which
is connected to 11 regional hubs
across Indonesia.
Shared by Worldchanging, a nonprofit media
organization
tbl nov-dec 08 9
PROFITS
Sustainability can Enhance
Competitiveness: Report
In the current economic crisis, the
ability of companies and countries
to be competitive has never been
more important. Sustainability
can enhance that competitiveness,
according to a news briefing pub-
lished today by the Institute of
Chartered Accountants in
England and Wales (ICAEW).
'Competitiveness and
Sustainability: building the best
future for your business' has been
written by leading sustainable
development charity Forum for
the Future.
The report is the first publication
in a new series, which forms part
of the ICAEW's broader thought
leadership programme "Sustain-
able Business". The series aims to
offer a platform for corporate
responsibility and sustainability
experts to express their views on
issues which will be of interest to
the business community.
The paper outlines three deter-
mining factors which companies
will need to address:
Industries at the start of sup-
ply chains will have to pay
more to harvest, extract and
get access to many primary
products.
As ecosystem services
decline, the framework condi-
tions within which businesses
operate, will change.
New business opportunities
will emerge. Demand will
grow for more efficient ways
to use eco-system services for
meeting needs or mitigating
impacts.
10 www.tbl.com.pk
According to David Bent, Head of
Business Strategies at Forum for
the Future and Vice Chairman of
the ICAEW's Corporate
Responsibility Committee and
author of this report, "The reces-
sion is a perfect storm warning of
how sustainability issues are driv-
ing the context in which business-
es compete. High prices for ener-
gy, food and commodities plus
unsustainable levels of debt are
the long-term drivers of unsus-
tainable development. When we
look at future trends it is plain
that the questions of sustainability
are a fundamental part the com-
petitiveness of any company or
country."
Shared by CSR International, an online blog dedicated
to connecting and empowering corporate sustainability
Auction of Carbon Permits in
UK
The E.U.'s first carbon-permit auc-
tion was held in November 2008,
raising some $80 million, as bid-
ders fought for the right to emit
greenhouse gases. Previously, all
of the emissions permits allocated
to UK businesses under the
European Union's trading scheme
were given out free. According to
the Financial Times, "the govern-
ment has pledged to auction
another 80m permits in the next
four years, which is likely to bring
in revenues of more than £1bn."
The identities of bidders has not
been disclosed, but electricity pro-
ducers are expected to be the
main buyers as they had their free
allocation of permits cut by 30
percent.
The government considers the
auctions as a model which it
hopes would be followed by other
European countries. According to
Angela Eagle, exchequer secretary
to the Treasury, "This is the most
economic, efficient and effective
way of [making companies pay
for their emissions]."
"The free allocation of permits in
the first phase of the scheme,
from 2005 to 2008, enabled power
companies in the UK and other
countries to make windfall profits
by raising electricity prices to
cover the notional cost of having
to buy permits, despite receiving
them free," reports the Financial
Times. The government said that
the auctions should not result in
further electricity price increases,
as the cost of permits had already
been factored in.
The UK is pushing for power gen-
erators to have to pay for all of
their carbon permits in the third
phase of the EU scheme, from
2013, arguing that electricity pro-
ducers tend to be well-insulated
from international competition.
A late amendment to the climate
change bill is expected to receive
royal assent by the end of this
year. This initiative will make it
easier to obtain subsidies for
small-scale renewable energy
projects. Any project producing
up to 5MW of electricity - equiva-
lent to about three to four wind
turbines - will qualify for a "feed-
in tariff" rather than the current
subsidy system. Under such tar-
iffs, generators are guaranteed a
higher price than normal for their
electricity for several years.
Greening the Supply Chain in
Emerging Markets
A Report by the World
Environment Center, titled
"Greening the Supply Chain in
Emerging Markets: Some Lessons
from the Field." looks at success-
ful strategies for improving the
performance of supply chains
throughout the developing world.
The report is second in the new
GreenBiz Reports series by
thought leaders in the green busi-
ness arena. It examines the defini-
tion and scope of "Greening the
Supply Chain" initiatives, discuss-
es the value they contribute to
business, identifies selected key
factors to success, presents an
approach for managing successful
GSC projects and reviews what
remains to be done through busi-
ness management, government
policy making and financial man-
agement partnerships.
Greening the Supply Chain initia-
tives are part of a process for
implementing a sustainable
development plan for
corporate business strategy aimed
at achieving improved environ-
mental, health and safety per-
formance; increasing efficiencies
in the use of energy, water or
other natural resources or raw
materials; reducing the environ-
mental and societal impact of
business operations upon local
communities and the global
biosphere; and expanding eco-
nomic and quality of life enhanc-
ing opportunities that result from
the company's business activities.
One of the lesser understood fac-
tors in the governance of global
companies, especially with
respect to management of their
supply chains, is the limited
number of their own employees
that are located on-the-ground in
developing market nations.
Greening the Supply Chain (GSC)
initiatives have emerged as one
means to compensate for this
limitation; they also aim to assist
companies to achieve greater
economic efficiencies and align-
ment of sustainability objectives
across their operations while
working with hundreds and, at
times, thousands of independent
supplier firms with differing
objectives and capabilities.
Cleantech Investments and
Economic Stimulation
The short-term blowback from the
global financial panic has been
pretty logical: A flight to value
and safety and reallocation of
assets to deal with longer-term
risks of the new economy. So
what does this mean for cleantech
investing?
While it is true that the short-term
panic means an interim dry-up of
financing, the same can be said
for nearly all venture capital,
private equity, and even public
equity. But the fear that cleantech
projects may take a back seat to
economic recovery efforts ignores
the fact that cleantech is still being
embraced by many forward-
thinking U.S. companies and
investors - and may just be the
driving force behind economic
stimulation.
Bill Gates is one of the $100
million in investors for algae-
based fuel technology company
Sapphire Energy. T. Boone
Pickens has over one million sig-
natures on his Pickens Plan peti-
tion, and is investing $10 billion
to build the country's largest
wind farm. Even Warren Buffet is
seeing long-term value in General
Electric by investing $3 billion in
the world's leading manufacturer
of wind turbines, energy-efficient
hybrid locomotive engines and
other eco-friendly products. The
bottom line is that these investors
are not philanthropists; they rec-
ognize these as money-making
opportunities in the long term.
Clean energy is also an excellent
hedge against long-term down-
side risk. Despite extreme turbu-
lence in the short-term, carbon
emission limits, public sentiment
and climate change itself repre-
sent significant financial risk to
every company's bottom line. The
risk of increased regulation,
combined with volatile energy
prices for oil and other fossil
fuels, all favour clean energy in
the future - and in some cases,
already do.
According to Mark Fulton, global
chief of climate change invest-
ment research at Deutsche Asset
Management: "The current crisis
is making the necessity of tackling
climate change an opportunity to
stimulate growth through invest-
ment opportunities. Encouraging
investment in renewable energy is
a key focus. Energy efficiency
technologies are obviously highly
desirable in economies facing
recession. Infrastructure stimulus
can be tied directly to climate-
sensitive sectors such as power
grids, water, buildings and public
transport which present a vast
field for the creation of new
technologies and jobs."
How to Create Green Jobs and
a Low-Carbon Economy
A report "Green Recovery" by
economists at the University of
Massachusetts Political Economy
Research Institute was released in
October, by the Center for
American Progress (CAP).
The report shows that a $100
billion green economic investment
could create 2 million US jobs in
two years - not to mention the
wonders it would do for breaking
our dangerous fossil fuel addic-
tion and cleaning up the climate.
A groovy new map on the CAP
website illustrates how allocations
to 34 states from this "green
recovery programme" would
translate to net job creation and
the dent this would make on each
state's unemployment rate.
The CAP programme proposes to
boost public investment (and
leverage private capital through
loan guarantees) in six energy
efficiency and renewable energy
strategies: retrofitting buildings to
improve energy efficiency;
expanding mass transit and
freight rail; constructing "smart"
electrical grid transmission sys-
tems; wind power; solar power;
and next-generation biofuels.
Shared by Worldchanging, a nonprofit media
organization
Compiled by Rutaba Ahmed
tbl nov-dec 08 11
 the crisis and causes

the failure of good governance:

how it led to the
financial crisis
report by jia en teo
for tbl

The concept of good governance has typically been used in development

economics as a way to describe the system of aid-recipient countries - developing
economies. The recent economic crisis has brought this concept into light in
developed economies where governance, both public and private, has been
assumed to be sound. Euphemistically put, the unfolding of recent events has
proven that this is not always true.

12 www.tbl.com.pk

Governments create the conditions for the function-
ing of markets, operation of private firms, strength
of civil society, and welfare of communities and
individuals. (Or at least that's what they're supposed
to do.) Systems of governance affect the perform-
ance of the state in executing its core functions and
through this, the performance of countries in meet-
ing their major economic and social goals. In the pri-
vate sector, the same concept applies - firms' leader-
ship enables the functioning of various departments
and is responsible for the welfare of the firm's
employees. A firm's leadership also largely deter-
mines the firm's performance and its ability to meet
its goals.
In recent months, developed economies around the
world experienced an unprecedented shock - credit
markets froze up, equity markets tumbled to record
lows and major banks failed and whole countries
were on the brink of default. While the crisis cannot
be blamed on one single entity because it came
about as a result of greed and complacency of con-
sumers, investors and businesses alike, it is widely
argued that the lack of good governance at the pub-
lic and private levels led to this meltdown.
PUMA's Six Pillars of Governance
Good governance, in the private and public sphere,
is the ability to exercise power, and to make good
decisions over time, across a spectrum of economic,
social, environmental and other areas. There are
many ways to define good governance, however,
there seems to be a general consensus that key fac-
tors, as outlined by the OECD programme on Public
Management and Governance (PUMA) include:
1) Technical and managerial competence
2) Organizational capacity
3) Reliability
4) Accountability
5) Transparency and open information systems
6) Participation
Technical and Managerial Competence
Under Question in The Wake of Crisis
Technical and managerial competence of leadership
is an obvious factor of good governance. In this
financial crisis, it is hard not to question the compe-
tence of the regulatory bodies responsible for over-
seeing the financial institutions, and the competence
of the financial institutions themselves. It became
obvious that neither public sector leadership nor pri-
vate sector leadership really understood the complex
financial instruments that were structured, packaged
and sold during the boom years.
Rewind to April 2004. Only after the crisis had
begun unfolding did the New York Times publish
an account of the brief meeting between Security
special report
and Exchange Commission (SEC) officials and the
heads of the large investment banks. The investment
banks wanted the SEC to exempt their brokerage
units from an old regulation that limited the amount
of debt they could take on. The exemption would
free up billions of dollars held in reserve as a cush-
ion against losses on their investments. Those funds
could then flow up to the parent company, enabling
it to invest in the fast-growing but opaque world of
mortgage-backed securities, credit derivatives, and
other exotic instruments. This meeting was sparsely
attended and went unreported in the media. It last-
ed a total of 55 minutes, states The NY Times.
In loosening the capital rules, which are supposed to
provide a buffer in turbulent times, the SEC also
decided to rely on these investment banks' own risk
models, essentially allowing them to monitor and
regulate themselves. The 2004 decision was a chance
for the SEC to supervise the banks' increasingly
risky investments in mortgage-related securities, but
the agency never followed through on this and it
remained a low priority, until now.
Inadequate Organizational Capacity: Failure of
the Fed?
Another factor of good governance is organizational
capacity. Good governance has to be built on the
quality of organizations so that development is
based on this rather than simply relying only on the
political or personal will of a strong leader, which
may not be sustainable over the longer term.
Both government and private sectors firms proved
to be inadequate in this regard, and a case in point is
the failure of the Federal Reserve under Alan
Greenspan. The Federal Reserve under Greenspan
was operated by the will of one rather than by a sys-
tem of checks and balances. Stephen Roach, Chief
Economist at Morgan Stanley said in an interview
with the Financial Times that the Federal Reserve,
led by the "libertarian ideology" of Alan Greenspan
was "very reckless in condoning the excesses of com-
plex financial information and setting the price of
risk far too low." Roach's views are echoed by many
other economists who say that Greenspan encour-
aged the bubble in housing prices by keeping inter-
est rates too low for too long and that he failed to
rein in the explosive growth of risky and often
fraudulent mortgage lending.
The Fed chairman had been one of the nation's lead-
ing voices for deregulation, and there are past state-
ments in which Mr. Greenspan had argued that gov-
ernment regulators were no better than markets at
imposing discipline. The Fed slashed interest rates
from 2001 to mid-2004, which led to warnings of a
potential bust, but Greenspan brushed these worries
aside, according to the NY Times. Greenspan, along
tbl nov-dec 08 13
with most other banking regulators in Washington, markets. But perhaps this call for accountability is a
also resisted calls for tighter regulation of subprime case of too little, too late.
mortgages and other high-risk exotic mortgages that
allowed people to borrow far more than they could Financial Crises: Due to A Breakdown of
afford. Transparency
Transparency is another important aspect of good
The Freddie Mac and Fannie Mae Case: The governance. Governments have access to a vast
Case for Reliability Highlighted amount of important information. Dissemination of
Reliability is another factor of good governance. this information through transparency and open
Reliability requires governance that is free from information systems can provide specific informa-
distortionary incentives - through corruption, tion that firms and individuals need to have to be
nepotism, patronage or capture by narrow private able to make good decisions.
interest groups.
This financial crisis was a case study of the break-
The story of Freddie Mac and Fannie Mae is a classic down of transparency at many levels. Take for
case of policy capture that highlights the importance example, AIG and its 'small' derivatives unit, headed
of reliability in governance and the effects when it is by Joe Cassano. This unit was conveniently
absent. The Wall Street Journal and CBS have report- classified and located in London so to ensure
ed that Freddie Mac and Fannie Mae spent millions particularly lax oversight over the dubious accoun-
of dollars lobbying some influential members of ting and disclosure practices evidently abetted by its
congress, in exchange for, among others, lax capital chief. The insurance behemoth came to its downfall
reserve requirements. As a result of their lobbying because its leadership had made some very risky
prowess, these obsolete bets, hid them from regula-
institutions became virtually tory oversight, and moved
untouchable behemoths. Accountability is a convoluted the risky business abroad.
Congressman Ron Paul has concept with respect to this financial
said that "the special privi- crisis because of the global nature Capital markets depend on
leges granted to Fannie and of the financial system. Consumers information openness and
Freddie have distorted the transparency but the nature
housing market by allowing
are at fault for over-borrowing, of these complex derivative
them to attract capital they banks are at fault for over-lending, products made it difficult
could not attract under pure investment banks are to blame for for most people to under-
market conditions." over-securitizing, and regulatory stand, much less regulate.
institutions are at fault for allowing The collapse of the giant
Accountability: too little, investment banks and the
this excessive behaviour.
too late? financial system are due to
Accountability is a crucial the lack of transparency
way to ensure that the surrounding these products
power that is given to those in public office is used and the loss of confidence in the counterparties
appropriately and in accordance with public inter- involved. As a result, investors panicked, causing
est. Accountability requires clarity about who is the markets to tumble.
accountable to whom, for what, and that civil
servants, organizations and politicians are held Lack of The Right Kind of Participation Triggered
accountable for their decisions and performance. The Crisis
Another factor of good governance is participation.
Accountability is a convoluted concept with respect Participation involves consultation in the develop-
to this financial crisis because of the global nature of ment of policies and decision-making, elections and
the financial system. Consumers are at fault for other democratic processes. Participation gives
over-borrowing, banks are at fault for over-lending, governments access to important information about
investment banks are to blame for over-securitizing, the needs and priorities of individuals, communities
and regulatory institutions are at fault for allowing and private businesses. Governments that involve
this excessive behaviour. the public will be in a better position to make good
decisions, and decisions will enjoy more support
At some level, the leadership at the public and once taken.
private institutions that has been involved in this
crisis are being held accountable - top executives at Before the crisis happened, in boom times, partici-
these banks are being questioned and will be pation was everywhere. However, it was not the
missing out on some of their bonuses; Greenspan is right kind of participation - this was participation in
being called into question for his lax oversight of the a party of excess, complacency and greed, and the

14 www.tbl.com.pk

participants were not just greedy investors, but large
banks and even regulators. As Professor at
Columbia University, Joseph Stiglitz put it, "it was
all done in the name of innovation, and any regula-
tory initiative was fought away with claims that it
would suppress that innovation. They were innova-
ting, all right, but not in ways that made the econo-
my stronger. Some of America's best and brightest
were devoting their talents to getting around
standards and regulations designed to ensure the
efficiency of the economy and the safety of the
banking system."
The lack of the right kind of participation - participa-
tion in developing sound policy and regulation, has
contributed to the unraveling of financial systems
worldwide.
Due to poor governance, America's financial system
failed in its two crucial responsibilities: managing
risk and allocating capital. The industry as a whole
had not been doing what it should have been doing
and it must now face change in its regulatory struc-
tures. Regrettably, many of the worst elements of the
US financial system were exported to the rest of the
world, according to Joseph Stiglitz.
The global financial crisis, triggered by the mortgage
and financial derivatives debacle in the US, was not
just a failure of dogmatic ideology, or of know-how,
or of technical regulations. As illustrated at the
outset, powerful 'vested' interests, at the intersection
between politics and business, and corruption,
played a role in shaping the flawed oversight, the
absence of transparency, the regulations, and their
lax implementation.
The Effect on Pakistan
In Pakistan, people watched from afar as the capital
markets crashed in the US and Europe. According to
sources within the banking industry, the global
financial crisis has not affected Pakistan yet because
the country is not a large financial player in the
global economy. However, the SBP's First Quarterly
Report issued last month states, "the domestic
economy is now more open and prone to external
shocks than ever before".
Former president of the Overseas Chamber of
Commerce and Industry, Zubyr Soomro believes
that the primary impact for Pakistan would be tight-
ened terms for access to international debt markets.
Some analysts view this crisis in the West as a
chance for Pakistan to establish a stronger economic
foothold in the region. They believe that investment
will pour into the country as returns in developed
markets fall. According to the Head of retail banking
of the National Bank of Pakistan, Amir Siddiqui,
"We need to prepare ourselves on a war footing by
getting floating barrages from the Middle East to
special report
overcome the energy shortages and to receive a fat
chunk from the investment that would be diverted
to surging economies of Asia."
But Pakistan has a crisis of its own to take care of for
now. While Mr Musharraf's prime minister, Shaukat
Aziz, frequently likened Pakistan to a "tiger
economy", the former government left an economy
on the brink of ruin without any durable base.
No Bail
The Pakistan Rupee has lost more than 21 percent of
its value so far this year and inflation now runs at
25 percent - by conservative estimates. The rise in
world prices has driven up Pakistan's food and oil
bill by a third since 2007, according to Wilkinson in
the Telegraph. President Zardari told the Wall Street
Journal that Pakistan needed a bailout worth $100
billion from the international community.
President Zardari is expected to ask the international
community for a rescue package at a meeting in Abu
Dhabi next month. This gathering will determine
whether the West is willing to bailout Pakistan.
However, with developed nations vying for bailouts
of their own, it is unclear if they even have the
capacity to provide this rescue package.
Whatever the outcome, it is clear that good
governance is key to steering Pakistan, and the rest
of the world, out of a global recession. It will take
cooperation at an international level and for many
governments to not only make the decisions that are
right for their domestic situations, but also work
together with their counterparts abroad to find a
solution to mend this problem and reduce its trickle
down effect on real economies.
References
http://www.nytimes.com/2008/10/03/business/03sec.html?_r=1&oref
=slogin Edmund L. Andrews. The NY Times.
http://www.nytimes.com/2008/10/24/business/economy/24panel.html
(Joseph Stiglitz, The fruit of hypocrisy; Dishonesty in the finance
sector dragged us here, and Washington looks ill-equipped to guide
us out, The Guardian, September 16)
http://governanceblog.worldbank.org/capture-and-financial-crisis-ele-
phant-forcing-rethink-corruption
http://www.dawn.com/2008/02/04/ebr17.htm
Isambard Wilkinson. Pakistan Facing Bankruptcy. November 17,
2008 <http://www.telegraph.co.uk/finance/financetopics/
financialcrisis/3147266/Pakistanfacing-bankruptcy.html>
About the Writer
Jia En Teo is an online entrepreneur and writer who cur-
rently resides in New York City. Aside from her online ven-
tures, she has great interest in issues related to social
entrepreneurship, corporate social responsibility and the
environment. She graduated from the University of Michigan with a
Bachelors in Political Science and Economics.
tbl nov-dec 08 15
rules vs. relations

pak-governance: parallel tracks

by ahsan ali mangi
for tbl

The term "good governance"

has increasingly been used to
describe the regulatory inter-
ventionist regime necessary to
support free markets in order to
reduce, minimize and dampen
suboptimal market outcomes
due to constraints present in
the real world. The concept was
also adopted by development
literature whereby it was
argued that better institutions
(that is, better governance) is
one of the vital factors which
differentiates a country's rela-
tive progress in social and eco-
nomic development.
What is Governance?
Governance has been defined
differently depending on the
context, however for clarity, lets
first understand what governance
is not. Governance is not synony-
mous with government.
Therefore, there is always a dan-
ger that a governance issue
maybe dubbed a 'government'
issue, with the corollary that the
onus for fixing it necessarily rests
with the government.
Governance has been defined by
the UN ESCAP (United Nations
Economic and Social Commission
for Asia and the Pacific) as "the
process of decision-making and
the process by which decisions
are implemented or not imple-
mented". An analysis of gover-
nance processes reveals that it
involves a number of formal and
informal actors including govern-
ment, private sector, civil society,
religious leaders, NGOs, media
and others depending on specific
governance issues.
Better governance is the result of
meaningful and productive inter-
actions between the actors
involved in decision-making and
its implementation. Thus, the
more mature, responsible and
educated the actors, the better the
results. Good governance is
equally important in the interna-
tional, national, sub-national and
corporate governance scenarios,
as all of them affect the general
wellbeing and welfare of people.
Democratic Governance -
Serving Citizens
In terms of the state and citizens,
governance is about provision of
public goods to persons living
within certain parameters; it is the
quality of these public goods that
distinguishes strong states from
the weaker ones. A well-governed
nation provides the rule of law,
political and civil freedom, health-
care, education, arteries of com-
munication, a banking and money
system, a fiscal and institutional
context within which citizens can
prosper; support for civil society;
and a method of regulating the
sharing of the environmental
commons. Together, the manage-
ment, supply and delivery of
some or most of these goods con-
stitutes governance, states
Rotberg, Director of the
Programme on Intrastate Conflict
at Harvard University's John F.
Kennedy School of Government
Key Factors of Good
Governance
The distinguishing characteristics
of good governance which have
been commonly accepted and pio-
neered by UNDP (United Nations
Development Programme) are;
accountability, transparency, con-
sensus orientation, participation,
rule of law, efficiency and effec-
tiveness, equity and inclusivity.
The World Bank rates over 200
countries annually on its WGI
(Worldwide Governance
Indicators) to measure the level of
governance in these countries.
WGI includes six dimensions of
governance; voice and accounta-
bility (VA), regulatory quality
(RQ), political stability and
absence of violence/terrorism
(PV), government effectiveness
(GE), rule of law (RL), control of
corruption (CC).
Governance in Pakistan
Successive Pakistani Governments
have underscored 'good gover-
nance' as an essential step
towards a prosperous Pakistan.
Trade bodies and the private
sector and businesses have also
aspired towards and demanded
good governance which will insti-
gate efficiency, reduce cost of

16 www.tbl.com.pk

doing business and ensure the
implementation of contracts.
A look at Pakistan's performance
on WGI between 1996-2007
reveals that not much progress
has been achieved on any of the
six determinants of good gover-
nance. In fact, Pakistan's ranking
in the world has declined on all of
these indices during the last two
years.
There is a genuine concern at all
levels of elected representatives,
public functionaries, civil society
and among private businesses,
about suboptimal governance in
Pakistan, which results in ineffi-
ciencies in the economic sector,
implementation of basic rights
and security, and poor provision
and quality of public goods and
services.
Pakistan has gone through struc-
tural adjustment programmes
funded and endorsed by IFI's
(International Financial
Institutions) with the aim of
improving governance, institu-
tions and the economy. During
the last two decades, Pakistan has
significantly reduced subsidies on
food and fuels, liberalized its
financial markets and is now
implementing second generation
financial reforms. It has success-
fully privatized the public-run
banking sector, fertilizer plants,
its national telephone company,
public transportation and the
Electricity Supply Company of its
biggest city.
In spite of these efforts, gover-
nance in Pakistan has seen mar-
ginal improvement, if any. For
example, telephone services have
not shown any improvement
since the management of the
national monopoly has been
handed over to a private entity.
Amounts spent on the capacity
building of judicial officers, public
officials and public representa-
tives in three tiers of government
over this time period seem to
have not affected them in a sub-
stantial way.
Rule-based versus Relation-
based Governance
This scenario is better explained
in the framework of a rule-based
system of governance versus a
relation-based system. Rule-based
governance is based on explicit
and clear contracts with clear
monitoring mandates.
Maturity Indicator: Rule-
Governance
Rule-based governance consists of
a mature informational infrastruc-
ture such as auditing, accounting,
rating agencies, legal codes, cases,
and efficient regulatory regimes.
Until universal informational
sharing is possible; laws on paper
are mere ink. All these accumu-
late with time as accountability
processes take root in a continu-
ous and representative democratic
system.
Establishment of rule-based gov-
ernance in a country is a long evo-
lutionary process, since rules can
only be implemented if all deci-
sive players have mutually consis-
tent beliefs and they become com-
mon knowledge.
Dysfunctionality Indicator:
Relation-Governance
In the absence of rule-based gov-
ernance, countries function under
a 'relation-based governance' sys-
tem, whereby most transactions
are based on personal and implic-
it agreements.
Governments are usually not able
to enforce contracts and regulate
impartially. Players are more
interested in getting a larger share
in the pie rather than increasing
the size of the pie. All decisions
are made taking a short-term
view and taking into account
immediate gains. The incentive
matrix in this case resembles a
prisoner's dilemma whereby col-
laboration will result in value
maximization while deviation is
unilaterally beneficial and results
in inefficiencies. Ex-ante behav-
iour of players is based on their
expectations for their ex-post bar-
special report
gaining power which in turn is
dependent on ex-post institutional
arrangements and also the behav-
iour of the government (for exam-
ple, whether it is predatory,
benevolent, partisan or other-
wise).
The Effects of Relation-Based
Governance in Pakistan
Relation-based governance is
common in countries where there
is lack of circular monitoring.
There is no clear separation
between judiciary, legislature and
executive levels - or one arm is
overwhelmingly powerful. In
such scenarios, business is carried
out and contracts are made purely
on local and personal knowledge
and through personal 'rapport',
resulting in large individual gains
at the cost of a maximization of
gains.
The transaction cost is negligible
in these cases, unlike in the rule-
based governance system, which
involves large total fixed transac-
tion costs. The average transaction
cost however is high in the form
of suboptimal use of resources
and inefficient outputs.
Quite recently relation-based gov-
ernance in Pakistan has manifest-
ed in the hoarding of food essen-
tials, speculation on commodities
and currencies and a price bubble
in stock markets in the backdrop
of hapless state regulation: Thus,
yielding high inflation, devalua-
tion of the rupee, depleting for-
eign exchange reserves, a slow-
down in economy and rising
unemployment. The result? Few
winners - and the rest, all losers.
About the Writer
Ahsan Ali Mangi is Director
Planning (Education) at
Earthquake Reconstruction and
Rehabilitation Authority (ERRA)
and former Director Food,
Sindh. His research interests include causes of
inequality between and within nations and its
impact on human well-being and the political
economy of Food. He holds a Bachelors in
Electrical Engineering and a Masters in
International Development from the UK.
tbl nov-dec 08 17
futuralysis: the financial crisis and csr
corporate responsibility in the
age of irresponsibility:
a symbiotic
relationship
between csr
and the
financial
crisis?
by flavia thomé
for tbl
Trying to understand the future
impact of the financial turmoil of
the last few months on the many
institutions and actors on the
global stage, is a daunting yet fas-
cinating process. The analysis
forces us to take a step back and
view whatever it is that we may
be aiming to understand with
rather critical eyes - in my case it
was through the lens of Corporate
Responsibility. As an advocate of
CSR, I often spend my time fight-
ing the cause and countering its
many critics. However, as I
attempted to make sense of the
effects on CSR of the recent finan-
cial crisis and potentially extend-
ed recession, I was able to see
more clearly how close the CSR
industry may be to its demise if it
does not radically re-shape itself.
Financial Crisis: The Causes &
CSR's Role
The causes of this turmoil are
multifaceted. Although many
issues remain unclear, there are a
couple of conclusions to take from
the crisis. The first is that this was
a crisis of responsibility, or lack
thereof. The second is that it will
18 www.tbl.com.pk
“ This has been an age of global
prosperity. It has also been an era of
global turbulence, and where there has
been irresponsibility we must now
clearly say the age of irresponsibility
”
must be ended.
PM Gordon Brown, UN General Assembly (September 26, 2008)
only be repaired by the re-estab-
lishment of trust between compa-
nies (especially those in the finan-
cial sector) and their stakeholders.
Logically, this presents a perfect
entry-point for CSR to be finally
recognized by the business com-
munity as a force of necessary
good and long-term sustainabili-
ty. The emphasis placed by CSR
on the role of corporations in the
larger social and environmental
contract is key in preserving an
ideal equilibrium of confidence
and responsibility.
However, in its current shape
CSR has opened itself to yet more
criticism with strong anti-CSR
arguments being voiced by busi-
nesses, academia and the media.
Understandably, in a crisis
defined as one of corporate irre- What The Crisis Means for the
CSR Industry
sponsibility (and arguably also of
As we focus ahead, I can see three
individual) it is only logical that
possible paths for the CSR
the inability of CSR to ensure
industry:
deep-rooted accountability and
business governance is being
Path 1: CSR Fad Fades
highlighted and condemned. Is
The business community will dis-
this crisis not the antithesis of the
miss it entirely as a fad that
core principles of CSR?
served a role in creating a market
for ethical and environmental

products but does not have a
wider purpose in society. As a
potential recession looms, busi-
ness expenses will be reduced
only to essential and CSR will be
considered a 'nice-to-have' but
unnecessary outflow. Cost-cutting
will result in a number of corpo-
rate activities and sponsorships
being axed.
Philanthropic activities will be
confined to foundations rather
than to corporations, which is a
shame because those in need of
charity are particularly vulnerable
during times of crisis and weak
economic prospects. Nonetheless,
this kind of CSR was arguably
unsustainable anyway as it had
little to do with integrating
responsibility and governance
into the core business model.
Path 2: Active CSR Survives - not
Thrives
The second outlook for CSR is
that companies will come to real-
ize just this and understand that
CSR must play an active rather
than superfluous role which may
be relinquished during hard
times. Organizations may choose
to engage in actions where their
products or activities are linked
to a wider social or environmen-
tal good. For example, a comput-
er manufacturer joining hands
with local schools by supplying
classrooms with computers. On
the other hand, responsible
actions should be recognized as
not just necessary but a business
imperative. It is good business to
understand the role that your
organization plays in the broader
society and to leverage your
resources in order to manage and
satisfy your stakeholders.
Keeping CSR at the periphery of
the business model will go some
of the way towards improving
stakeholder relations and re-
establishing much needed trust.
However, this form of CSR will
do little to bring about long-term
business and market sustainabili-
ty, consequently also little to
avoid future crises like the one
we face today.
Path 3: Non-peripheral, Wide-
scale Sustainable Practices
The third model builds upon the
last two and benefits from my
eternally optimistic view of the
world. In light of the shocks the
world is experiencing and the crit-
ical need to re-establish trust with
stakeholders, companies will not
have a choice but to make CSR a
main concern.
Peripheral CSR, even if
strategic, will not be
sufficient to minimize
risk and promote the
long-term health of the
system.
In this model, I look beyond the
CSR which encourages employees
to plant trees in low-income hous-
ing areas or companies to donate
computers to schools. Evidently,
these are valuable actions in their
own right; both in terms of the
benefits to society and the posi-
tive corporate culture it fosters.
But peripheral CSR, even if strate-
gic, will not be sufficient to mini-
mize risk and promote the long-
term health of the system.
As we look ahead to perhaps the
largest crisis of business confi-
dence, it is time to shift the focus
away from short-term gains to
longer-term economic, environ-
mental and social successes. Even
in the catastrophically affected
financial sector, organizations
such as the Dutch Tridos Bank
and the UK's Co-operative Bank
have proved robust due to their
focus on transparency and
responsible investing. Tridos
Bank's CEO, Peter Bloom,
explained that "by lending to
businesses and projects that are
sustainable financially, as well as
socially and environmentally, we
balance a positive impact on soci-
ety with a healthy financial
return." Hence, "by sticking firm-
special report
ly to our own approach, the crisis
currently impacting the banking
industry is bypassing Triodos
Bank. This crisis is caused by los-
ing touch with the real economy."
Embedded CSR targets good gov-
ernance, accountable leadership
and ethical practices so as to
ensure that they create opportuni-
ties and contribute to increased
performance. This is the opening
for CSR to demonstrate its
strength and power to bring
about the changes needed in the
business and financial sectors pro-
moting the adoption of sustain-
able practices on a wide scale.
Sustainability, after all, is what
will determine whether a business
will outlive the actual and
inevitable crises of the future.
Symbiotic Relationship Forged
As I look at these three paths
ahead, I realize that this crisis
forces corporations and CSR into
the perfect symbiotic relationship.
Businesses cannot afford to allow
for the demise of CSR, as it pro-
vides the only way out.
Embedding responsible action
and ethical conduct into the core
business will go a long way to
re-establish trust and re-connect
stakeholders. At the same time,
CSR must re-shape itself and
instill confidence in its funda-
mental importance to corporate
and market sustainability. Only
by working together with the
same goals and priorities, will
business and CSR guarantee their
own survival - and, maybe even
their victory. The economy,
environment and society will be
much obliged.
About the Writer
Flavia Thomé has worked as a
consultant for Accenture and is
currently working as a
Programme Administrator at the
International Institute for
Sustainable Development (IISD), based in
Geneva. Born in Brazil, she has a BSc in
Economics and International Development and
an MA in Global Ethics from the University of
London.
tbl nov-dec 08 19
csr in turbulent times

csr now needed

more than ever before

by michael hopkins, julian roche and ivor hopkins

for tbl

Turbulent times: Financial storms in the US and UK will have implications for all
of us. Main Street and Wall Street cannot be separated. If the captains of those
financial companies, now in crisis or bankrupted, had acted more responsibly with
a proper Corporate Social Responsibility (CSR) strategy, then their vessels would
not have sunk nor would they be on the brink of foundering. Responsible business
will be the new mantra. Indeed, we go further, and suggest that the demise of
investment banks in their present form would be the best news possible for CSR!

What went wrong? continue to develop initiatives to CSR at award-winning Vodafone

Lehman Brothers stated in its
2007 letter to its shareholders
that:
"Strong corporate citizenship is a
key element of our culture. We
actively leverage our intellectual
capital, network of global rela-
tionships, and financial strength
to help address today's critical
social issues."
Regarding sustainability they
stated:
"As a global corporate citizen,
Lehman Brothers is committed to
addressing the challenges of cli-
mate change and other environ-
mental issues which affect our
employees, clients, and share-
holders alike. It is critical that we
focus on these challenges facing
our environment now and in the
future."
They had corporate responsibili-
ty too and noted in 2007 that:
"We are also looking inward. In
2007, Charlotte Grezo, an expert
in socially responsible business
practices, joined the Firm as glob-
al head of Sustainability and pres-
ident of the Council on Climate
Change. In addition to oversee-
ing the Council's activities, she
will further the development of
the Firm's own environmental
policy and strategy."
Charlotte, as many readers will
know, was the former head of
- but Lehman's announcement
showed that their focus was more
on environmental concerns than
strategic CSR which examines all
key stakeholders.
In fact we at MHC International
Ltd had suggested to Lehman
Brothers early in 2007 to carry out
a strategic CSR review and to
examine all stakeholders. Our
proposal was not accepted. A
careful stakeholder analysis could
well have discovered Lehman's
problems in the sub-prime market
and alerted top management.
Yet, as Mallen Baker noted, "Bear
Stearns produced no CSR report
of any sort. Lehman Brothers did
not produce a CSR report, but
they produced a philanthropy

20 www.tbl.com.pk

report. Even if they had gone
further, it seems unlikely that the
complex nature of how they
created wealth would have been a
feature."
Recap on what investment
banks do
They earn their money through a
mixture of means: trading and
broking stocks and shares -
including short selling and
derivatives - providing advice on
mergers and acquisitions, and
IPOs, investing in private equity
deals of one sort or another, and
structuring deals such a
securitization and public-private
partnerships. They have been
responsible, in large measure, for
the current financial crisis.
What have they been doing to
achieve this? Their private equity
investments have stripped
companies of jobs, merged them
with their competitors, and
stacked them up with risky debt
provided by eager bankers. The
debt has been securitized in
tranched revenue deals that
ended up with pension funds
holding toxic securities they do
not understand, and then creating
exotic securities with payment
profiles that defy even the most
complex modeling. When they
have not been 'rationalizing' com-
panies, they have been pushing
companies to accept external
equity, or creating market solu-
tions for problems that defy mar-
kets.
Carbon trading is an excellent
example. CSR would suggest
voluntary curbs by individual
firms, backed up with strong
regulatory control by responsible
Governments. What is the invest-
ment bank solution? Carbon
trading, of course: let the rich buy
the right to pollute, and let the
poor be obliged to pay transaction
fees to investment banks to let it
happen!
How could CSR help?
CSR is about companies sliding
into the role previously occupied
by Governments in taking respon-
sibility for making the world a
better place for all their stake-
holders. Ban Ki Moon, Secretary-
General of the United Nations,
recently used his opening
remarks at the General Assembly
to question the reliance on free
markets: "We need a new under-
standing on business ethics and
governance, with more compa-
ssion and less uncritical faith in
the 'magic' of markets." How right
he was. The investment banks
have been the wizards of market
magic. If investment banks are to
be truly socially responsible, they
need to change what they do fun-
damentally.
What could investment banks do
instead? Clearly, they need to be
properly regulated. But more
venture capital investment, infra-
structure investment with guaran-
teed maximum rates of return,
special report
The investment banks
have been the wizards
of market magic. If
investment banks are to
be truly socially
responsible, they need
to change what they do
fundamentally.
and more socially responsible
investment - and less, much less,
private equity, would be a start.
The plain fact is that investment
in socially responsible business is
highly unlikely to exhibit the sorts
of returns that the shareholders of
investment banks seek, so a
compact amongst the investment
banks and the analysts will be
needed. The new financial archi-
tecture, in which CSR could play
a major role, will render such
attitudes socially unacceptable to
stakeholders and even subject to
judicial review.
A code of practice amongst
investment banks limiting the
extent of their involvement in
traditional private equity deals
that slash jobs would be helpful
here - for instance, the UN
Principles for Responsible
Investment. Such a code could
also limit the amount of debt
injected into any one deal to
prevent undue risk creeping back
into the system as it did after the
failure of the junk-bond market -
never again, said the regulators at
the end of the eighties - yet look
what's happened now. A commit-
ment not to use certain types of
security altogether, such junk
bonds, could follow on.
More than that, such a code could
also be worked out in conjunction
with the rating agencies so that
there is far more disclosure of
risks than hitherto. The rating
agency models failed on
sub-prime. But if voluntary
disclosure by the investment
tbl nov-dec 08 21
banks were combined with
similar constraints on retail bank
lending, backed up by stronger
regulation, the raw material for
the structuring which has led the
global economy, at least in the
West, into such difficulties would
be in shorter supply.
Something also needs to be done
about securitisation, structured
finance and tranching in general.
For instance, a general guarantee
by investment banks over all their
structured products - effectively
forcing them to act as their own
insurers? They would charge for
these services, of course, but it
would prevent them from making
money out of securities over
which they have no future inter-
est once issued, which has created
a situation of moral hazard time
and again.
CSR companies should have no
truck with moral hazard so this
alone as a yardstick of future
investment bank behaviour
would be useful. Investment
bankers have long been able to
avoid the responsibility of actual
entrepreneurship, so tying their
rewards more closely to their
deals would be a step in the right
direction.
Sadly, however, all this is very
unlikely. With all the attention
being focused on the demise of
larger investment banks, what is
being forgotten is the quiet rise of
numerous boutique organizations
specializing in M&A advice or
one particular sector. Such small-
er companies don't even need to
cloak themselves in the veneer of
respectability that the larger ones
did, and will be able to continue
the relentless pursuit of share-
holder value for their often tiny
shareholder base without the
glare of public attention.
If Ban Ki Moon's vision is to be
realized, then governments need
to use corporate tax to deflect
investment away from financial
deals and towards socially
22 www.tbl.com.pk
responsible investments in such The Observer (Feb 3rd, 2002)
areas as alternative energy, food regarded this philanthropic form
technology and low-cost housing. of CSR as a 'figleaf' and 'of a piece
Of that, not a word from with Enron's overall strategy'. In
Congress, not a word from Wall fact, CSR is an overall strategy for
Street. At times like these, invest- systematic management of all of a
ment banks are not likely to turn company's stakeholders and is not
to CSR consultancies such as confined to philanthropy.
MHCInternational for advice. It's
a shame: if they had done when Third, CSR has not been given as
times were good, times would be much prominence on Wall Street
a lot less bad now. as it should simply because of the
legal framework under which
most corporations operate. Robert
What to do next? Hinkley argues , for the USA, that
There are a number of steps as we the law, in its current form,
noted in an article written by actually inhibits executives and
MHCi as far back as 2002! corporations from being socially
responsible because the law
First, CSR can help. A major baldly states that the purpose of
stakeholder of a firm is its the corporation is to make money
employees. CSR does not imply for its shareholders. Any devia-
that downsizing should be tion from that could leave the
prevented, that would be absurd. corporation open to a lawsuit. So
What it does imply is that Hinkley suggests simply adding a
companies must make an effort to phrase on CSR to corporate law
organise layoffs in a socially so as to enhance CSR. Law, he
responsible manner. This could advocates, would then read
include early warning, coun- something like: “Directors and
selling, re-training, temporary officers have a duty to make
financial assistance etc. The money for shareholders, but not
tendency of US companies to give at the expense of the environ-
immediate notice is both ment, human rights, the public
distressing and can be counter- safety, the communities in which
productive once re-hiring starts
again. There is no doubt that
there is an unequal power
between companies and
employees. A company can
recover, it has its own institutions
such as banks willing to keep it
going through hard times. A
redundant employee has none of
these advantages and is in a very
weak position once he or she
leaves the confines of an insti-
tution.
Second, CSR urges transparency
of operations through socially
responsible reporting of activities
such as informing shareholders
and staff about off-balance sheet
holding of debts. Enron, for
instance, may well have been in
much better shape today if it had
behaved in a socially responsible
manner. Even though Enron was
a lavish donor, Simon Caulkin of

Directors and officers have a duty to make money
for shareholders, but not at the expense of the
environment, human rights, the public safety, the
communities in which the corporation operates or
the dignity of its employees.
the corporation operates or the
dignity of its employees.”
Fourth, CSR has a positive impact
on the intangible assets of a com-
pany. A company's clear ideas on
its identity and long-term goal,
can help it to identify two sets of
variables: one a 'value creating
path' and the other a set of key
success factors (KSF) and indica-
tors that are appropriate as per-
formance measurements. Such a
process is very similar to develop-
ing CSR in a company which, in
turn, will have a powerful effect
on developing intellectual capital,
a significant part of a company's
intangible assets.
Fifth, CSR has a long-term affect
on improving a company's bot-
tom line. There is a positive link
between social and financial per-
formance especially when looking
at the increased relevance of
intangible assets such as reputa-
tion and knowledge networks.
These turn into a source of market
value and competitive advantage.
Sixth, social responsibility is not
confined to corporations.
Institutions that have a major
impact on the way we live are
also expected to behave in a
socially responsible manner.
How, therefore, can we explain
the continuing focus of the
International Monetary Fund
(IMF) on targeting inflation and
not on creating incomes and
employment? Nor has the IMF
been very active in these turbu-
lent times. As Joseph Stiglitz, the
2001 Nobel Prize winner for eco-
nomics noted, "...rather than pro-
viding needed liquidity to devel-
oping countries to enable them to
pursue full employment policies,
typically the IMF provides liquid-
ity to countries only on the condi-
tion that they pursue contrac-
tionary policies." Contraction in
the developing countries or in
countries in economic crisis, such
was the case at the time for
Argentina, leads to smaller mar-
kets for a corporation's goods and
services.
In times of crises, business history
can be a source of inspiration.
Consider Sony founded, 'among
the ruins of a defeated and devas-
tated 1945 Japan' in 'an aban-
doned telephone operator's room
in the hollow remnants of a
bombed and burned-out old
special report
department store…", by the entre-
preneurial Masaru Ibuka. He cer-
tainly concentrated on his day to
day business essentials, yet, he
also took the time to formulate his
core ideals for the company that
led the company for the next forty
years and which are today still
part of the Sony Pioneer Spirit.
His ideals were very much CSR as
they embodied a focus on the
individual within the company
together with a mission that
impacted positively and was
intended to continue to impact
positively - on the wider society
in which the company operated.
Crisis? Recession? CSR is a long
range strategic tool that if used
and accessed prudently, would
give a hard pressed captain the
guidelines and support that will
help avoid, or weather, the
sudden storms of crisis.
References
http://www.lehman.com/annual/2007/letter/i
ndex4.htm, accessed 24 Sept 2008
http://www.lehman.com/annual/2007/sus-
tainability/
Business Respect - CSR Dispatches
No#137 - 29 Sep 2008
MHCi article, 2002. <http://www.mhcinter-
national.com/corporate-social-responsibili-
ty/publications/csr-in-recessionary-
times.html>
'How Corporate Law Inhibits Social
Responsibility', Robert Hinkley, Business
Ethics, Jan. 2002
Joseph Stiglitz, "Employment, Social
Justice, and Societal Well-being", Keynote
speech to ILO Global Employment Forum,
1-3 Nov 2001 see www.ilo.org
Collins & Porras, Built to Last (Random
House, 2000), 'More than Profits..', p. 48
About the Writer
Michael Hopkins is Managing Director of MHC
International Ltd (MHCi) and is an economist
specializing in socio-economic issues. He has
broad range of experience and almost two
decades of action in CSR.
tbl nov-dec 08 23
strategic csr casuality

victims and winners:

csr and the financial crisis
report by wayne visser
for tbl

Is the crisis the result of

irresponsible banking, financial
markets, corporations,
executives or capitalism itself?
And how will the impact vary,
depending on whether CSR is
philanthropic, strategic,
embedded or revolutionary?
This article examines the scale
of the financial crisis, the links
to CSR and the likely impact on
CSR.

24 www.tbl.com.pk

The Scale of The Crisis
There is nothing small or trivial
about the global financial crisis.
According to the Bank of
England's recent Financial
Stability Report, governments
worldwide have already pledged
more than $7 trillion in loans,
guarantees, capital injections, and
other assistance in their coordi-
nated effort to prop up the global
financial system. (Ironic since the
financial industry is the oft-glam-
orous, jet-setting pinnacle of
many corporate circles). The ILO
estimates the crisis will cost 20
million jobs by next year.
This is not the first financial crisis
the world has seen over the past
century. The worst, of course,
resulted in the Great Depression
in the 1930s. But there have been
numerous others, all of which car-
ried painful economic and human
costs. For example, the crises in
Argentina (1981-1990), South
Korea (1997-1999) and Thailand
(1997-2000) all cost more than 30
percent of these countries' GDPs.
But even by historical standards,
the 2008 crisis is, big. In what's
been dubbed "Wall Street's Red
October", the S&P 500 plunged
16.9 percent, or 198 points, for the
month. That's the worst-ever
monthly point decline for the S&P
500. The Dow similarly dropped
14.1 percent, or 1,526 points. And
the ILO estimates that the crisis
will bring the total unemployed
figure to more than 210 million
for the first time in history.
The key difference is that, unlike
the Asian and Latin American
crises in the 1980s, this crisis is
truly global. Some countries, like
Iceland and Pakistan, are threat-
ened by bankruptcy. Others, like
Japan, have been hit by huge
volatility in the markets. And
even the cash-rich, high-flyers like
China are seeing their growth suf-
fering as a result.
But what does any of this have to
do with corporate social responsi-
bility (CSR)?
The Links to CSR
Irresponsible Banking
I'd like to suggest a multi-level
approach to this. At the first and
most obvious level, we can say
the financial crisis is a direct
result of irresponsible banking.
According to the Mortgage
Bankers Association, the number
of sub-prime loans offered to
risky borrowers increased more
than 15 times since 1998.
Essentially, the banks got greedy
and compromised good banking
practices of credit risk assessment.
Irresponsible Financial Markets
At another level, the crisis is the
predictable consequence of irre-
sponsible financial markets. Since
the deregulation of the 1980s, the
derivatives market has grown to
around $600 trillion dollars,
almost 10 times the value of our
global GDP. This speculative trad-
ing (which some call the "casino
economy") is meant to hedge risk,
but it also increases the volatility
and systemic risk of financial
markets.
We would do well to recall econo-
mist John Maynard Keynes' warn-
ing: "Speculators may do no harm
as bubbles on a steady stream of
enterprise. But the position is seri-
ous when enterprise becomes the
bubble on a whirlpool of specula-
tion. When the capital develop-
ment of a country becomes a by-
product of the activities of a casi-
no, the job is likely to be ill-done."
Irresponsible Corporations
Others argue that the crisis is the
inevitable consequence of irre-
sponsible corporations. This is
linked to the short-termism of
shareholder value driven public
companies. At the extreme,
authors like Joel Bakan suggest
that corporations have "a legally
defined mandate to relentlessly
pursue - without exception - its
own self-interest regardless of the
often harmful consequences it
might cause to others." This
behaviour in humans, he notes,
would be characterized as patho-
logical.
special report
Irresponsible Executives
The financial crisis has been fur-
ther inflamed, some claim, by
irresponsible executives, as evi-
denced by outrageous pay pack-
ages. In 2007, the CEO of a
Standard & Poor's 500 company
received, on average, $14.2 mil-
lion in total compensation,
according to The Corporate
Library. United for a Fair
Economy reports that, in 2006,
CEOs received more than 364
times the pay of the average U.S.
worker (up from 42 times in
1980).
More specifically, it seems the
leaders of Wall Street's top banks
are still in line to receive pay
deals in 2008 worth more than
$70bn, a substantial proportion of
which is expected to be paid in
discretionary bonuses.
"Many critics of investment
banks," reports The Guardian,
"have questioned why firms con-
tinue to siphon off billions of dol-
lars of bank earnings into bonus
pools rather than using the funds
to shore up the capital position of
the crisis-stricken institutions."
Irresponsible Capitalism
Some would even go so far as to
say that the current financial crisis
represents a systemic failure of
shareholder-driven, free market
capitalism. Among such critics is
European Central Bank President
Jean-Claude Trichet, who argues
that the current financial crisis is
partly a result of the demise of the
original Bretton Woods' agree-
ment, after deregulation since the
1970s.
Trichet's conclusion is unequivo-
cal: "It's absolutely clear that
financial markets need discipline:
macroeconomic discipline, mone-
tary discipline, market discipline."
British Prime Minister Gordon
Brown and French President
Nicolas Sarkozy agree, stating
that the turmoil has shown the
world's post-Second World War
financial architecture is not fit for
tbl nov-dec 08 25
the task of controlling today's
global financial system.
The Impacts on CSR
Irrespective of its causes, it is like-
ly that the financial crisis will
have a substantial impact on CSR.
The question is, how will this
impact play out? Who will win
and who will lose? According to a
poll run on the CSR International
blog during October, 44 percent of
CSR professionals believe that
CSR will increase as a result of
the crisis. A further 26 percent
believe it will change, while 22
percent think it will weaken. This
is a slightly surprising result and
perhaps masks a more complex
answer. In my opinion, the impact
on CSR will vary depending on
the type of CSR being practiced.
Philanthropic CSR: Worst Hit
I have little doubt that those who
have adopted an immature ver-
sion of CSR, in which CSR is pri-
marily about philanthropy (spon-
sorship, donations, charity and
employee volunteering), will suf-
fer substantial cut backs during
the coming recession. Irrespective
of the fact that those most in need
of charity will be worst hit by the
crisis, companies around the
world will be forced into cost-cut-
ting and philanthropy budgets
will be among the first to be
trimmed.
Strategic CSR: Less Affected
It is likely that Michael Porter and
Mark Kramer's concept of strate-
gic CSR will pay dividends for its
followers in the aftermath of the
financial crisis. They argue that
"the more closely tied a social
issue is to a company's business,
the greater the opportunity to
leverage the firm's resources-and
benefit society." Hence, compa-
nies that have aligned their phil-
anthropic and broader CSR efforts
with their core business are more
likely to protect these initiatives,
even during the recession.
For example, the commitment
Coca-Cola has made to become a
water neutral company is so
26 www.tbl.com.pk
closely tied to its core business
(which is, after all, mostly about
selling huge volumes of sugar
water), that they cannot afford to
abandon this as a superfluous
CSR programme. They know that
if they are not perceived to be
responsibly managing the scarce
water resources of the communi-
ties in which they operate, their
business will ultimately fail (as
they have already found to their
detriment in India).
Embedded CSR: Largely
Unaffected
CSR can only be resilient if it is
part of the DNA of an organisa-
tion. In other words, CSR will
only survive the vagaries of fickle
markets, fluctuating profits, finan-
cial crises and leadership whims
if it is totally embedded in the
corporate culture, strategy and
governance systems. The impend-
ing recession will be the ultimate
DNA-test for companies. A year
from now, we will have a much
better idea of who has driven CSR
deep into the heart of their busi-
ness and who has simply been
wearing it as a mask.
One example may be the UK's Co-
operative Bank. Although it will
not emerge from the financial cri-
sis completely unscathed, its
deeply ingrained ethical approach
to banking - introduced in 1992 -
is unlikely to change and may
even have contributed to its
robustness over the past 12
months. As Jonathan Porritt,
Chairman of the UK's Sustainable
Development Commission says,
"at the very least, the relative
resilience of this business model
should prompt both Treasury and
the sector's regulators to think
again about alternative ownership
and governance structures in the
financial services sector."
CSR 2.0 will continue to
strengthen
For those companies that are alive
to the opportunities of the CSR
2.0 revolution, even the recession
will present large opportunities
for business growth and financial
profits. This is because CSR 2.0 is
all about the creation of scalable
solutions to the world's most
urgent and intractable problems,
such as water stress and climate
change. Unlike the defensive,
incremental, risk-based CSR of
the past (CSR 1.0), CSR 2.0 rides
the wave of emerging responsible
and sustainable markets.
For example, the demand for
renewable energy and low-carbon
technologies now far exceeds the
supply. And given the escalating
costs of climate change, the high
oil price and ambitious political
targets (of up to an 80 percent
reduction in greenhouse gas emis-
sions by 2050), companies that
have strategically positioned
themselves as clean technology
solutions providers will continue
to benefit from this $284 billion
market, which is expected to
grow to over $1.3 trillion by 2017.
Conclusion
Hence, the answer to the question,
"What is the relationship between
the financial crisis and CSR?", is that
it depends. It depends on your
beliefs about how deeply the irre-
sponsibility behind the economic
meltdown runs - is it banks simply
overextending themselves, or a far
more systemic failure in the corpo-
rate, financial and capitalist models?
Similarly, the answer to "How will
CSR be affected by the financial cri-
sis?" depends on how deeply CSR
runs within the organisation - is it
superficial philanthropic CSR, some-
thing more strategic or embedded,
or even the more revolutionary CSR
2.0 version? Either way, the reces-
sion ahead will not only be an acid
test for companies' CSR commit-
ment, but for CSR itself. It may very
well be that the time has come for
CSR to adapt or die.
About the Writer
Wayne Visser is Founder and
CEO of CSR International. In
addition, he is Internal
Examiner at the University of
Cambridge Programme for
Industry, where he previously held positions as
Research Director and External Examiner.
governance via internet
the internet:
true government of the people
by ramla akhtar
for tbl
One day in June 2006
I had a sudden realization: I am
beyond borders and regulations
on the Internet. Certainly, the reg-
ulations and norms of the "real
world" no longer applied to the
virtual interactions of hundreds of
millions of people.
From chatting to creating social
networking communities like
Orkut and Facebook; from writing
emails to sussing out the real
from the fraudulent on MySpace,
and taking citizen action through
blogs, using our networked com-
puters as our media centers - we
are semi-consciously creating a
new space with its own rules and
codes of conducts.
It struck me that the Internet had
indeed become my de facto
government.
It was then that I proposed this at
the NEXT> blog:
June 2, 2006:
If "government" means the "act
of exercising authority," then I
must report that I believe my
official government may not be
my official government.
In its broadest sense, 'govern'
means the power to adminis-
trate, whether over an area of
land, a set group of people, or
an association."
If this is really what govern-
ment is - a body of influence,
whose rules and laws I form,
obey and own - my government
is The Internet.
The Internet is the government
of the commons, which has lev-
eled social, and class and racial
and other barriers.
28 www.tbl.com.pk
I think for the first time in histo-
ry, humans across the globe
have created a government that
is truly a government of the
people, by the people, for the
people.
A reader at the blog questioned:
"You're sure? Internet is only the
medium…it is neither the mes-
sage nor the messenger. What
thrives here is the open and acces-
sible communication between far-
flung human beings."
My response: Exactly. What is
government but a facilitator of the
activities of human [societies]… a
servant that administrates the
complex function? That is why we
say, "like people, like govern-
ment." By itself, the government is
nothing.
Governments do not represent the
people - rather they shape the
minds of the people.
The Internet does not exist to rule.
It does not exist to create absurd
laws. It is a collaborative space. It
is inclusive, responsive, self-
organizing, and evolving. It is a
powerful source towards which
the modern human is turning to
share and to listen.
In fact, in my opinion, never
before in the history of
humankind has the democratic,
human-centric definition of
government been seen in practice.
The Internet is not just any
people's government; it is the first
truly human government.
The Power of Conversations
Here is the reason why the details
of this exchange are shared. If we
step back and look at the content
of conversation and how it devel-
ops, we notice that:
1. One person, using their terri-
tory (the blog) declared alle-
giance to a new kind of gov-
ernment. This declaration
draws authority from another
virtual territory - Wikipedia -
which has a self-governing
system. That territory is able
to overcome differences of
race, class, geography, lan-
guage, sexual orientation,
faith, etc. to create a thriving
system;
2. This declaration is willful;
3. Another person challenges;
4. And the first responds -
demarcating their "law";
5. If the challenger agrees, this
law is established between at
least two people. There are
also silent readers to count.
Within this conversation, an evo-
lution of governance has taken
place that is hard to emulate in
the physical world in speed and
authority. The power of such con-
versations in creating change is
not to be underestimated, espe-
cially where the virtual communi-
ty is strong and led ably. Conver-
sations change people. People
change spaces.
The Formation of a Government
One of the most powerful consti-
tutions in the world is that of the
United States of America. It was
the result of the conversations
between the founding fathers of
that nation. The outcomes of their
thoughts were published in The
Federalist Papers - 85 essays out-
lining how the new government
would operate and why that type
of government was the best

choice for the USA. Back in the
days of print, the Federalist
Papers meant to persuade New
York voters to ratify the proposed
constitution.
Internet: How It's Changing the
Territory
The process of writing a constitu-
tion is germinated in conversa-
tions and willingness. Internet is
changing the way conversations
take place. Humans are in a free
space communicating with each
other. The once slow and costly
services have been replaced with
fast, agile, free, and universal
services.
Let's step back in history and
examine how countries came to
be marked. In the most primitive
times, it was oceans, rivers,
mountains, forests, walls, wild
animals, and other natural phe-
nomenon that marked distances
and differences. Soon enough,
humans began marking fields,
building walls, setting up
colonies, and creating tribes.
Over time, ideological boundaries
led to the birth of countries. What
separates the two sides of a no
man's land but the differences in
political constitutions and social
contracts? Passports, visas, restric-
tions, treaties are the products of
very recent times with respect to
the human history.
This development has run parallel
to an evolution in human knowl-
edge.
November 2008: Generation-O
has Chosen a Government
There are many people who still
believe that Internet has no reach,
it is a waste of time, and above all
- it's an elite medium. Media are
relevant. Let's make it simple:
which of the following seems the
most inclusive?
1. Print: Few write, many read.
2. Radio/TV: Literate and
groomed produce, many are
audience.
3. Internet: Many produce,
many engage.
As a Pakistani, which of these
special report
media can I use to send a message resistance movements in Pakistan,
to an official in Barack Obama's Burma, Thailand - are often the
transition team? To the world via signs of territories changing.
CNN (iReport)? Obama's victory is the first but
This chart shows how the systems of governance have been
changing in congruence with the enablers humans have put to use.
Human Knowledge: System of Source of Enabler
Evolutionary stages Governance Governance Power People
Prehistoric Era Right of Might. Survival Instincts Elements
Might. Agility.
Agricultural Era Feudal Contracts: Physical Strength. Land. Manpower
Slave & master relationship.
Industrial Era Economic Treaties. Natural resource ownership. Machines
Scientific supremacy.
Information Era Breakdowns of traditional Information manipulation Traditional Media
government. Systematic
anarchy.
Intent & Attention Era Reformation of new, Integrity: Character, Internet:
idea-based tribes. Driven responsibility, vision, the supreme
by personal leadership. action. communication
network
More than 2 years after I first pos- not the last time in human history
tulated the idea, a relatively when the networked structure of
unknown, young, multi-ethnic the Internet became a map for
black man has been elected the real-life organization - and change
President of the United States. of government. It is a benevolent
Barack Obama's campaign change - one that is brought about
machine made unprecedented use by acceptance, inclusion, and the
of the Internet by forming com- will of the peaceful citizens work-
munity organizations, linked ing together to create a more posi-
through their leaders who net- tive world. (That is the intent.)
worked online.
A Matter of Choice
Not everybody has to be online, Internet is not just a tool for pass-
only their community leaders. ing time. It is at once the product
The argument about the Internet of and the herald of a new era in
being elitist and non-effective has human consciousness, and there-
little merit. At any rate, Internet is fore systems of governance that
growing to become more inclu- are inclusive, self-reflective, trans-
sive, not less. Obama's victory is parent and swift.
an affirmation to all believers in
the power of Internet to create a The choice is up to humanity to
true people's government. accept the power of this enabler,
and use it now to create benevo-
lent governance from corpora-
Making Sense of the Global
tions to communities to nations.
Governance Breakdown
Or, as it happens at times of all
Governance, in its widest sense, is
evolutionary shifts, be left behind
not just a political-national insti-
and perish.
tution. From households to corpo-
rations, even down to the Self, the
rules of governance apply. About the Writer
Ramla runs a consultancy,
"NEXT>", which is geared to
What we are witnessing in this design fresh solutions for con-
world as "breakdowns" - from temporary opportunities and
challenges. She can be reached
financial meltdowns of USA, at ramla@nextbyramla.com
Europe and Asia to people's
tbl nov-dec 08 29
opinion

corporate social
responsibility in
a recession:

10 reasons
to keep
doing it...

by toby webb
for tbl

W
hile many corporate executives are wor-
ried, rightly, about their budgets for next
year, there are many good reasons for con-
tinuing efficient responsible business initiatives in
2009. Here's a few of them. While I wouldn't claim
to be an expert on pretty much anything, I have
been out and about talking to some big companies
about what may be going on next year in the world
of responsible business.
that well-thought-out programmes can be worth the
investment, given that, lets be honest, CSR is cheap
compared to advertising spend, or paying staff more
money.
While Matthew Bishop at the Economist calls CSR
often "a cynical exercise in public relations", compa-
nies do it because it can deliver, despite the chal-
lenges in measuring impacts or progress.

Clearly, all in the world of business ethics are con- Here are some reasons I have gleaned from talking
cerned about what they will be allowed to spend in to companies in the last month as to why the right
the next year or so. But smart companies will know CSR spend is still worthwhile:

30 www.tbl.com.pk

1. It can be cheap. CSR
that does not radically alter
business models does not
cost that much. And, as we all
know, can save money. As
anyone from Boots to Wal-
Mart will tell you, going green-
er often saves money. CFOs
will like that. Make the case to
them, convince them that
what you are proposing helps
the bottom line. They may
have forgotten and started
thinking its all-socialist plot
again. Some stats on their
desk might help.
2. Reputation and trans-
parency are still key. In fact,
they are now even more
important. If you let people
go, you need those you keep
to understand why you did it.
And how you did it in the best
way possible. You still need
talent, and talented people
want to know you are well
regarded.
3. Communities are feeling
vulnerable. They are looking
for local leadership on impor-
tant issues. Your company
may be able to help. Think
about what you can do that's
different, and that caters to
their current concerns, not to
your volunteering plan from
last year.
4. Customers are worried.
They are wondering who they
can trust. Some readers may
have seen the new Lloyd's
TSB ads, which talk about
how they are seen as solid
(implying others are not).
Help reassure customers with
communications about any-
thing from product safety to
reliability and good service
awards. These things matter.
And yes, this is part of CSR.
5. Regulators are up in
arms. Many are happy to use
the business world as a
scapegoat for their own poor
regulatory incentives.
Showing you are still focusing
on a bit more than just sales
and cost-cutting can help you
reassure them that you care,
and may help them stop over-
reacting.
6. Green advertising has
gone mainstream. People
care about green if it delivers
efficiency, particularly for
them. So communicating well
is still key, and a green/effi-
cient message may still res-
onate well.
7. Newspapers are even
hungrier for copy that sells.
And companies provide
excellent cannon fodder for
editors. Ethics related cut-
backs, poor customer service
and extended payment terms
will all start making the news.
Keeping an eye on over-
eager internal plans and how
they might go against your
values statements can help
keep things consistent. No
board wants to see panic, so
re-iterating values in tough
times may help keep things in
check.
8. There is opportunity to
gain trust. This is particularly
true if others are cutting back.
Showing you can treat your
customers, suppliers and
business partners fairly, even
when times are right, may
help you build that bank
account of goodwill, useful
when you really need it.
special report
9. Think about the short-
term future. Recessions
don't last long, usually.
Imagine the benefits of NOT
cutting back once all this is
over. You'll be able to crow in
your CSR report, that unlike
others, you kept X and Y ini-
tiative going when times were
tough.
10. Trim the fat. Become
more evidence-based in your
approach without upsetting
partners who may go to the
media in better times. This
time they may be more
understanding. Being more
rigorous will only help when
things pick up again.
Note
This article has been tailored for tbl and is
a copyright of Ethical Corporation 2008.
Half-price subscriptions for new
subscribers to Ethical Corporation
magazine are available for just €199 for
700 pages a year of articles such as this
one.
Go to: http://www.ethicalcorp.com/ to sign
up for half price or a free trial to the
monthly print edition.
About the Writer
Toby Webb is Founder and Managing Director
of Ethical Corporation, ClimateChangeCorp.com
and Ethical Corporation Institute, UK.
tbl nov-dec 08 31
adult literacy
pursuing a lost
generation or
common sense
csr?
report by zohare ali shariff
for tbl
I
f you are reading this publication, you are a liter-
ate person with probably a minimum of 16 years
of formal education, till at least an undergradu-
ate degree level. Your life is greatly facilitated
because of your advanced ability to read and write.
Now imagine what life would have been like if you
did not have this ability, even if you were born with
a silver spoon in your mouth in a well-to-do family.
You would probably have been heavily dependent
on others, for all but the simplest chores, almost like
a handicapped person. That is exactly how adults
who have now become literate felt, before the light
of literacy shone on them - disabled.
One factory worker who graduated from the Adult
Literacy Programme (ALP) run by National Foods
Limited (NFL) even went as far as saying that he
feels as if all his life he had been blind and now,
after the programme, he had got sight for the first
time. Another expressed his newly acquired literacy
capability as freedom from bondage. A third, a
female, described her ability to read post-pro-
gramme as an awakening; joyous but in one respect
also painful. Because now she realizes how much
she had been taken advantage of in everyday life
matters by others who exploited her inability to read
or write.
Adult literacy is not about advanced education at an
adult age. This is perhaps not even possible, given
the fact that acquiring advanced education would
require a lot of time, and the majority of illiterate
adults are from the lower income segments, who
cannot afford to stop work to pursue higher educa-
34 www.tbl.com.pk
tion. Of course the ALP enables them to continue
with part-time education to perhaps a secondary
school level, which itself would substantially
improve their livelihood further.
Some eight years ago, in 2000, Abdul Majeed, the
Chairman of National Foods Limited met with
Rayed Afzal, the founder of Literate Pakistan
Foundation, an organization imparting education to
illiterate adults. It was a decisive meeting, for at the
end of it Abdul Majeed had decided to initiate a
programme to provide basic education to the largely
illiterate and semi-skilled labour working in the
company's factories. To say that Majeed was
motivated by altruistic considerations would not be
incorrect. A self-made man himself, he strongly felt
it was his moral responsibility to educate the people
who worked for him and gave their best to the
business he and his friend Waqar Hasan had set up.
By this time National Foods had grown from
humble beginnings in 1970 as a single ingredient
spices company, into a multi-category food
company, producing over 110 products (over 250
today) and employing almost 1500 employees,
including 1000 contract workers.
Thus was launched the Adult Literacy Programme
that has grown over the years both in its scope and
its coverage.
A number of corporate sector organizations are
supporting education in Pakistan at various levels,
from adoption of government schools, to sponsor-
 Chairman’s
Thoughts
by khadeeja balkhi
M
r. Abdul
Majeed shared
his vision with
Ronald Inayat and Khadeeja Balkhi of the tbl
team.
"Since inception, we at NFL were aware of our
responsibility to the society we exist in,"
Mr. Majeed shared. "Adult illiteracy is the main
cause of our (the country's) problems: the females
especially are not literate - which means future
generations will be at a disadvantage also."
When asked about the positive changes he wit-
nessed in participants, he said, "Whenever they
complete the programme, they show and they tell
how much they have gained. Most of them say
that when they were illiterate, they were just like
the blind. Now their eyes have opened - and they
will bring their children up according to the mod-
ern environment."
"I think the basic gain is that the children take the
message to their mothers and sisters who are not
educated and ask them to enroll in our pro-
grammes in TCF schools," the Chairman said.
There are obvious benefits of education, which go
far beyond just the learning that an individual
gains.
"If your labour is educated, your efficiency will go
up, your productivity will go up," he emphasized.
“Cleanliness, handling, responsibility levels have
improved - if you give them instructions in writ-
ing, or put labeling on the machines, they can read
it,” Majeed added.
ship of schools operated by NGOs like The Citizens
Foundation (TCF) and CARE, to offering scholar-
ships for higher education at various institutions
and including top-rated ones like the Institute of
Business Administration (IBA) in Karachi and the
Lahore University of Management Sciences (LUMS)
in Lahore. All such initiatives are to be lauded
because these are helping to bridge the yawning gap
in our education system, caused by grossly insuffi-
cient government attention to this vitally important
sector. But the possible drawback with philanthropic
support is often that it is not sustainable after a few
years, as priorities for the philanthropic corporate
may and do change for various reasons and their
budget for such social action may well be diverted
in time to more 'newsworthy' causes.
“There is a lower rate of their forgetting because
they can read instructions posted,” he elaborated.
“We are creating awareness, and we are creating
literate people in Pakistan".
The team asked Majeed if he felt that such pro-
grammes can be leveraged to make a widespread
positive impact on the lives of illiterate people in
the country. His response:
"Definitely!"
The reasons?
"Our costs are very low," he shared. "The commu-
nities run the programmes".
"Corporate people should come forward, the gov-
ernment alone can't tackle this issue," Majeed
stressed. "For example, we can make any one per-
son literate for Rs. 400." Afterwards, the trainees
are requested to establish literacy centers in their
own homes, and charge nominal amounts - this
way these become community-owned pro-
grammes.
There is a need to create awareness and motivate
people to step forward and support this
cause."What is 400 Rupees?" Mr. Majeed ques-
tioned both rhetorically and emphatically. "You
don't have to go to the United Nations to get it!”
“We don’t need to look for big grants or anything
like that. You, me, we can sit together and do it,"
he said with deep conviction.
"All we need is awareness."
About the Writer
Khadeeja Balkhi is a Sustainability Consultant
who finds great joy in her work, whether it's
strategizing, hands-on implementation, field-based stakeholder
engagement or documentation and monitoring.
Thus a better model for the long term is a CSR
model whereby the support to education or for that
matter any other worthy cause, has a strong linkage
into the business of the corporate sponsor. This
ensures the continuity of the support as an ongoing
programme, as it in turn gives back to the compa-
ny's business also on an ongoing basis. The Adult
Literacy Programme scores high on this count. Let
us examine how.
A factory employing a largely illiterate labour force
still expects that its labour will follow rules and reg-
ulations and standard operating procedures put in
place to ensure consistent quality of product, meet-
ing a set of minimum requirements. These proce-
dures are communicated to the labour force through
tbl nov-dec 08 35
training, verbal and printed instructions and signage
placed at strategic locations to create high recall. The
procedures may be required by local or national
laws, by international standards like ISO, or by for-
eign buyers (like EU) regulations in the case of
exports. At a minimum a company may formulate
and institute its own standard operating procedures
that seek not only to maintain high product quality,
but also serve to control wastage, ensure higher out-
put or productivity and reduce or control other
undesirable human resource related issues, like
downtime due to any accidents at the workplace.
It should be quite obvious that even a semi-literate
worker will be able to understand and comply with
the regulations and procedures in place far better
than an illiterate worker. Even a simple task for
example, of inserting a product the right way up
into a package can be a challenge to the illiterate
worker, especially if both ends look the same and
the distinction has to be made on the basis of letter-
ing or text. Example: a bar of soap which must be
inserted into its wrapper with the engraved brand
name on the bar being the same way 'up' as the
brand name on the wrapper into which it is going.
As the illiterate worker cannot even distinguish even
between a single letter being 'up' or 'down', he or
she is more liable to make mistakes. Perhaps a sim-
plistic example, but nevertheless a valid one to illus-
trate the point.
Think also in terms of worker safety. Yes, a factory
management may train all labour on safety proce-
dures. But still, safety signage is placed all over the
premises as a constant reminder which studies have
shown is essential to create frequent recall. Some
signage may be simple graphics which presumably
even an illiterate person will understand. But of
necessity others need to be simple text based or at
least text included with graphics.
And this is not all. At National Foods are examples
of workers who have gone through the ALP and
have actually been able to rise within the organi-
zation to levels they could not have been dreamt of
before. Bashir Masih, an employee of NFL since 1988
and based in the SITE factory, is proud that he has
risen from a cleaner in the factory to being a
Janitorial Supervisor under the administration
department, after successfully going through the
Adult Literacy Programme and subsequently meet-
ing the promotion criteria.
An ALP is also good CSR at a holistic societal level.
A literate worker is more inclined to educate his or
her children, thus starting off education of the next
generation at an age when it should ideally start off.
A more literate society pays back into the company's
business in several ways. For example, in terms of a
36 www.tbl.com.pk
more capable future workforce becoming available -
and instances are common across industries where
sons have followed fathers into the same company
and often at a higher level than where their fathers
had started off. A more literate society can also
mean higher earnings and hence higher spending
power.
The ALP of National Foods is being operated effec-
tively with two strategic partners. The programme
consists of four books (three Urdu and one basic
arithmetic book) developed by the Literate Pakistan
Foundation - one of the partners. This course is
called Jugnoo Sabak and can be taught in a short
span of three months at two hours per day for six
days a week. On successful completion, a previously
illiterate person can read and write Urdu and do
simple arithmetic. This is possible via a special pho-
netic system of teaching.
The other partner, The Citizen's Foundation (TCF)
was brought onboard by NFL in 2005 to provide
much needed premises to expand the programme
beyond NFL's own labour force. Thus, TCF schools
(and teachers) came into the equation for holding
the ALP classes in poor communities. The tripartite
partnership is working with enviable results. TCF
provides the premises which are mostly free during
the evenings when the regular schoolchildren have
finished for the day and the teachers, who are
trained by LPF. NFL picks up the tab for the books
and for stipends to the teachers and other miscella-
neous expenses.
Thus starting off in National Foods factories, the
ALP has been running for the past three years: the
fourth phase has now started in Karachi. Normally
two programmes per year are feasible. Most centers
are for women and in the three phases so far, over a
thousand women have graduated.
Now the broad plan for this year is to activate a total
of 100 TCF Literary Centers (TLCs) and run 4 ses-
sions per year in each of these, with a target to edu-
cate 12,000 adult learners on an annual basis.
Once thought by some cynics as pursuing a lost
generation, the Adult Literacy Programme has
proved itself to be common sense CSR with
far-reaching and long-term sustainable benefits.
About the Writer
Zohare Ali Shariff is CEO of Asiatic Public Relations
Network Ltd. & Editor-in-Chief of tbl. A graduate of the
London School of Economics, he is a published author
and winner of National Book Foundation Awards. He is
based in Karachi.
 feedback

feedback please!
As our readers, your thoughts are what should keep moulding our magazine.

In upcoming issues, the tbl platform will starting conducting surveys.

For starters though, we'd like to test our understanding of the baselines of CSR in
Pakistan. Please respond to the quick questions below and email it to us at
feedforward@tbl.com.pk You can also fax or mail us this survey page at the
APR address.

1. Is there anyone in your organization directly involved with CSR who

should also be receiving tbl? Please give name and full contact info below.

2. How many articles in tbl have you read to-date?

(It's ok, you can be honest…)

3. Do you think tbl is playing a role in creating awareness about corporate

social responsibility in Pakistan effectively? Please rate on a scale of
1 - 10, with 1 being the lowest and 10 the highest score.

4. What do you think are the major knowledge gaps in CSR understanding in
Pakistan?

5. To what extent do you agree or disagree that social responsibility is vital to

the long-term profitability of a company?

6. Does your organization report on corporate social responsibility? How?

7. Does your organization monitor CSR using specific benchmarks and

quantifiable targets?

8. tbl plans to carry out a range of activities during 2009 focused around CSR.
Who is the one person in your organization who is principally responsibl
for CSR whom we should interact with?

9. Which companies are you aware of that practice CSR?

10. Would you be interested in participating in cross-company CSR

programmes?

38 www.tbl.com.pk
 entrepreneurship

entrepreneur,
anyone?
One can study facts and acquire
the expertise to even predict
events. But it is only when one
has control over certain factors,
that one can aspire to determine
one's destiny as a change agent
and choose which direction to
take. When you are in the
driver's seat, then only are you
able to choose this direction.
This seat exists in the realm of
entrepreneurship alone.

report by muhammad siddique sheikh

for tbl

History of Entrepreneurship
Economist Joseph Schumpeter
(1950) defined an entrepreneur as
a "person who is willing and able
to convert a new idea or inven-
tion into a successful innovation.
Entrepreneurship forces 'creative
destruction' across markets and
industries, simultaneously creat-
ing new products and business
models. In this way, creative
destruction is largely responsible
for the dynamism of industries
and long-run economic growth."
In the year 1900, only about 10
percent of the U.S. workforce was
employed by the government and
the industrial/commercial corpo-
rate sector. The others -about 90
percent - were entrepreneurs run-
ning their own businesses. After
100 years - in the year 2000 - the
scenario was just the reverse with
only 10 percent of the workforce
being self-employed and 90 per-
cent in state and/or corporate
employment as salaried profes-
sionals.
A Driving Force in Growing
Economies
Is the field of entrepreneurship
growing or becoming obsolete?
There are a growing number of
economies thriving on small and
medium enterprises (SMEs) - a
characteristic of flourishing
economies.
One of the main qualities expect-
ed in a professional is to be, enter-
prising. The ability to be creative,
original, proactive and bold, that
is, enterprising, shall always rank
high as an essential competence
for success in one's personal and
professional life. Corporations are
investing huge amounts and
effort into developing human cap-
ital and fostering a work environ-
ment that enables and promotes
individual excellence as well as
team spirit.
The Knowledge-based
Economy
Human capital coupled with
innovative, cutting-edge technolo-

tbl nov-dec 08 39
gies are fast undermining the
value of material input and
enhancing the weightage of
value-addition components in
final products or services. This is
a characteristic of a knowledge-
based economy.
Recently, some segments of spe-
cialization in the education sector
in Pakistan have been overem-
phasized, such as information
technology and business adminis-
tration.
Abundance qualifies for superior-
ity only within the perspective of
a genuine need. If all that we have
cannot be put to any lucrative
use, then having too much is not
superior to having just enough.
Thus, resources invested in pro-
ducing the unused surpluses are a
sheer waste.
An individual's educational career
choice is usually based either on
guidance from parents or on
peers' counseling. These are trig-
gered by the glory of professional
success attained by recent gradu-
ates and the available job oppor-
tunities with local and multina-
tional organisations. This trend
has led to a mushroom growth of
institutions, some of high -and
many of questionable- credibility.
Consequently, the education sec-
tor - both public as well as private
- is mainly producing employees.
This slow and costly process is
unable to arrest the widening and
deepening poverty, much less
alleviate it. The Institute of
Business Administration (IBA),
Karachi, for example, has only
produced about 5000 graduates to
date. Also, the large number of
incumbents coming from the
Urdu-medium system of school-
ing can simply not survive in the
English-medium education sys-
tem.
Economic Challenges Facing
Pakistan
In the current economic scenario
prevalent in Pakistan, this is not
40 www.tbl.com.pk
enough. The organized sector in
Pakistan is neither diverse nor
large enough to accommodate
current and potential job seekers.
Furthermore, Pakistan is confront-
ed with the challenges posed by
the growing number of people
living below the line of poverty -
57 million Pakistanis - according
to the Asian Development Bank
(ADB). This necessitates the need
for us to think differently, for a
solution to the economic chal-
lenges that our country is facing.
Many respectable segments of
global wisdom assign great
weightage to entrepreneurship as
a potential vehicle for alleviating
poverty. Acumen Fund's philoso-
phy is: "a belief in the power of
innovation, in the power of a
good idea … in entrepreneurial
solutions to global poverty."
Acumen Fund is currently work-
ing to promote entrepreneurship
in three major areas- water, health
and housing. This is being done
in five countries and eventually
aspires to help the four billion
people earning less than US$ 4 a
day to play a decisive role in the
alleviation of poverty.
Entrepreneurial Initiatives
The UNDP Report 2004
"Unleashing Entrepreneurship -
Making Business Work for the
Poor" has gone the extra mile: to
the extent of drawing an elaborate
action plan for stakeholders in the
developing world - including
governments, philanthropy and
the civil society organizations.
The purpose is to provide an
enabling environment and oppor-
tunities for skill development to
private sector entrepreneurs to
bring them out of their plight.
Contributors of this report -
Commission on the Private Sector
and Development - include per-
sonalities such as Paul Martin, the
ex Prime Minister of Canada and
A. Dello, ex- president of Mexico.
A large array of high profile glob-
al organizations like UNCTAD,
UNDP, WORLD BANK, SIDA
(Swedish International
Development Co operation
Agency), a host of companies and
researchers such as, McKinsey
and Co (Unleashing the Full
Potentials of Entrepreneurs to
Alleviate Poverty in Less
Developed Countries, 2003) C. K.
Prahad (The Fortune at the
Bottom of the Pyramid:
Eradicating Poverty Through
Profit) and Hammond Allen
(Serving the World's Poor
Profitably, 2002) have focused on
suggesting specific thematic,
structural, policy and legal
changes, effectively to promote
pro-poor entrepreneurship.
Physical conditions and human
potentials vary from country to
country, along with specific advo-
cacy about formula changes.
What the developing world today
urgently needs is change agents:
entrepreneurs of all types.
What was Conrad Hilton back in
the first quarter of the twentieth
century, when he carried a picture
of the Waldorf Astoria Hotel in
New York with him for years and
dreamt of owning it one day? A
day dreamer? An entrepreneur?
What is Mehmood Bhatti? An
artist? A world class designer? An
entrepreneur? What was he in
1977 when he left for Paris? A
graduate of Government College,
Lahore? An adventurer? An
entrepreneur?
What is Bill Gates? A researcher?
A scientist? An entrepreneur?
We need to prepare an army of
enlightened, courageous and
committed entrepreneurs,
equipped to revisit the enormous
challenges scattered around them
and to undertake projects. Not
just to enrich their current jobs or
seek new ones and get lost in the
same old glut. That very glut
which has miserably failed to
empathize with the under-
privleged of society.
Educational System Must
Focus on Developing
Entrepreneurial Competence
The systems of almost all the
educational institutions are
designed to produce first-class
professional managers, and they
are successfully churning them
out. But do these managers
essentially lack entrepreneurial
confidence?
Competence, personal experience
and readiness breeds confidence.
It seems that the education sector
needs to work closely with
organizations like SMEDA,
Chambers of Commerce &
Industry and professional trade
associations or Taameer (Shell), to
develop educational plans that
focus on inculcating entrepre-
neurial competence in addition to
strategic management skills.
True, well-groomed competent
professional managers get
promptly employed, thus success-
fully meeting their personal
economic objectives. But an
entrepreneur can achieve a lot
better and a lot more by adding
value to the existing businesses,
exploiting untapped resources
and generating additional wealth
through new businesses, products
and services.
To a large extent, the children of
businessmen tend to opt for
business and those coming from
families with a professional
service background, choose to go
professional. Whereas the family
environment does have an
influence on an individual's
career choice, the educational
system plays a vital role by
enhancing weightage on the
inculcation of entrepreneurial
competence and confidence.
Given Pakistan's current
economic challenges, institutions
must teach: the conceptualization
of projects of relevance; the
preparation of feasibility studies
from concept to launch.
Characteristics of an
Entrepreneur
1. Vision to conceive projects of
useful and lasting value
through synergy of tradition
with technology and global-
ization.
2. Inquisitiveness and the pur-
suit of knowledge.
3. Integrity to consistently deliv-
er good value for money and
to establish and promote their
own brands.
4. Courage to be creative, origi-
nal and bold.
5. Consideration of all factors,
especially the human factor
for effective team-building.
6. Commitment and determina-
tion to be a change agent, to
make a difference
7. Resilience to absorb the
shocks and persevere in the
face of challenges and losses.
Taking these traits into account,
educationists and practitioners, in
consultation with successful
entrepreneurs, must attempt to
state curricular objectives and
design a relevant syllabi focusing
on developing entrepreneurial
qualities and attitudes. The edu-
cational system needs to give
weightage to, and highlight the
immense opportunities present in
traditional products and art and
handicraft of Pakistan.
GIs: Entrepreneurial
Opportunities in Rural Pakistan
This calls for the embodiment of
an authentic National Register of
Geographical Indications (GIs)
(peculiar products and services of
different districts - such as the
carved wood work of Chiniot,
tiles of Hala, ajrak / ralli of
Larkana and blue pottery of
Multan, etc) traditional knowl-
edge (literature, treatments and
recipes, etc.) and folklore (leg-
endary stories of wisdom, chival-
ry, truth, beauty and romance).
Educationists and social scientists
need to take up this assignment
with the help of bodies such as
the FPCCI (Federation of Pakistan
Chambers of Commerce and
Industry).
The findings must be contextual-
ized and collated into the 4T
model of Tradition, Talent,
Technology and Trend, in order
to merge tradition with current
trends and demands of the mar-
ketplace.
The certified GIs, TK and FL shall
be registered under Intellectual
Property Rights and promoted in
national and international mar-
kets as authentic originals, for
which a premium price niche of
collectors and connoisseurs exist
worldwide. Folklore can fetch
respectable royalties from art
galleries, publishers and media
producers, especially documen-
taries, feature films and TV
serials.
This exercise will provide districts
a unique and genuinely well-
deserved opportunity to build
upon and add value to their
exclusive designs and skills
handed down through
generations.
Taking the unique opportunities
that exist in our country, the
intervention by the breed of neo
-professionals in Pakistan - the
educated entrepreneurs - should
hence focus on resource
mobilization, standardization of
materials, design, quality
assurance practices, national and
international marketing, among
others. Improved quality,
cost-effectiveness and intensified
marketing will certainly expand
the horizons of businesses - in
terms of size and scale - as well as
add to increasing profitability.
Which will in turn help alleviate
poverty through increased income
generation and economic growth.
About the Writer
Muhammad Siddique Sheikh is Chairman of
the Standing Committee on Education and
Standing Committee on CSR at the Federation of
Pakistan Chambers of Commerce & Industry. He
is a Member of the National Think Tank on
Education and the Federal Ministry of Education,
Islamabad.
tbl nov-dec 08 41
report: corporate governance

corporate
governance
and
corporate
social responsibility
ownership, management and accountability

report by peter l. walker

for tbl

“ Nothing is more central to an organisation's effectiveness than

its ability to transmit accurate relevant understandable information
among its members. All the advantages of an organisation…are of
no practical value if it's members are unaware of what other
members require of them and why

PIELLE Consulting Group conducted a research

Saul Gellerman
study in the United Kingdom among a self-defined
group from the FTSE 350 and international and
multi-national firms based in the UK taking or
demonstrating 'a leadership role or position in
Corporate Governance and Corporate Social
Responsibility.' The objective was to research, and if
possible identify, common approaches to the owner-
ship, management and forms of accountability for
both Corporate Governance and Corporate (Social)
Responsibility among this 'benchmark - lead group'
of companies. At the same time we set out to see
whether it was possible to identify:
i) The extent to which 'international' operational
issues and accountability play a role in the
process.
ii) What, if any differences existed between the
views/responses of the three distinct groups of
executives that participated viz:
Chairman/CEO; Company Secretary/Corporate
Counsel; Public Relations/Corporate Communi-
cations Director/Advisor.
”
The results of this study were revisited in 2006 after
the original work in 2004 and presented to a meeting
of the World Council for Corporate Governance at
the 7th International Conference on Corporate
Governance.
The Overlap of Governance, CSR and
Management
According to the website wisdom of one of the
leading institutions for directors, 'a non-executive
director's role is to provide a creative contribution
by providing objective criticism'. Perfectly logical,
but it comes close to suggesting that, between the
executive and non-executive directors, there is an
intellectual and cultural battleground for the soul
and direction of the corporation. It is not helpful
analysis when governance and CSR are part of a
mutual responsibility and, arguably the non-
executives have a key role to play in embedding
CSR into the boardroom.

42 www.tbl.com.pk
Prof Bob Tricker, the doyenne of corporate gover-
nance and author of several books including
Essential Director, put accountability as the axis
between management and 'governance and CSR' -
the point at which the roles of the executive and
non-executive directors are both clarified and com-
bined.
Reality not Rhetoric
PIELLE's research study on the 'Patterns of
Ownership, Management and Accountability for
Corporate Governance and CSR' among leading cor-
porations based in the UK sheds light on some of the
issues that are feeding confusion and debate. Their
research shows that 69 percent of leading UK based
corporations see CSR as 'Corporate Governance in
Action' and 85 percent of them have clear and
demanding systems in place for measuring ethical
and social performance throughout the business.
Company Disclosure under the 7th EU Accounting
Directive (2004) enshrines the principles for non-
financial reporting. It is for directors to judge
whether this information is material to an assess-
ment of the company's past performance or future
prospects. It will provide a good indication to the
extent to which corporate responsibility has become
'embedded in the boardroom'.
Accountability and Judgement
Until 2008, current evidence shows that the account-
ability of most businesses through their non-finan-
cial or social reports is all too frequently self-serving
and smacks of the "what did we do well that we can
highlight this year" approach. It may provide a basis
for a narrowcast judgement of a specific range of
activities or convey an impression of underlying
commitment. Nowhere can we find a clear, concise
year-on-year report on operational CSR issues that
companies themselves see as important - let alone
for employee welfare and development (human
rights), environmental standards and observance
which the critics view as important.
Accountability is the rhetoric of reporting.
Judgements are made on the reality of comparing
historic performance against clearly identified stan-
dards. Stick to the self-regulatory principle but
require the international stock exchange and finan-
cial regulators to make consistent annual CSR
reporting a listing requirement so that the world can
make a proper judgement of what we actually do -
not just what we say.
From Corporate Governance to CSR - Corporate
(Social) Responsibility
For the purpose of research, PIELLE adopted an
inclusive definition for CSR as follows: "CSR -
(Corporate Social Responsibility) is about how
companies manage the business processes to
produce an overall positive impact on society."
1. 'Corporate social responsibility and social
reporting have been defined as corporate
governance in action' - do you agree or
disagree with this statement?
69 percent of organisations surveyed
responded yes to this question.
Behind the Headlines - Taking Corporate (Social)
Responsibility Seriously…
2. Corporate Governance is now part of every
company's operating business strategy and every
tbl nov-dec 08 43
respondent business conducted a governance audit best practice criteria annually. For 43 percent it is
of some kind across all its business units. an annual rolling activity; for 50 percent it is part
of the business plan review. Only 10 percent con-
As can be seen in this graph, almost two thirds of duct any review on an ad hoc or 'as needed' basis.
respondents use an internal audit system to meet
their needs inviting the question whether the 39 per-
cent using an external audit process are anticipating
legislation.

6. How does your organisation evaluate the effec-

tiveness of CSR programmes?
3. Where does responsibility for corporate Through an external social audit 35%
governance reside within your organisation? By appraisal 18%
The Board 35% The audit procedures are evaluated 14%
Chief Executive 24% against a competency framework
The Chairman 21% Against pre-determined 11%
Specialist Committee of the Board 17% outcomes/measures
Company Secretary/Corporate Council 3% By continuously tracking a project 11%
There is no formal evaluation 7%
Specialist committees of the board are responsible for cor- Other 4%
porate governance in only 17 percent of businesses. In a
third of companies the board as a whole takes responsibil- Of those organisations that answered other,
ity while for 45 percent of businesses either the chairman methodologies identified included:
(21 percent) or the chief executive (24 percent) takes the o Using an AA1000 process
responsibility. o An external independent audit

4. Where does accountability for CSR activities rest Business has invested heavily in sophisticated and
within your organisation? systematic measurement and evaluation systems
and structures and established clear internal report-
Specialist committee of the board 23% ing systems for ethical and non-financial reporting
Corporate communications/ 24% to the board.
Public affairs
The board 19%
Chief Executive 14% 7. What systems do you have in place for measur-
The chairman 10% ing ethical and social performance?
Operating management 10%
The organisations that answered other,
Accountability to the board for CSR is vested in specified it as:
specialist committees of the board for 23 percent of o Annual CSR report
businesses and with Corporate Communications or Public o Disclosure of corporate donation and activities
Affairs in 24 per cent of businesses. o Social reporting, both centrally and at end
market level
o Dedicated board committee, targets and reporting
5. Over 90 percent of those businesses surveyed o Moving towards triple bottom line reporting
review their corporate governance standards and o Balanced business scorecard

44 www.tbl.com.pk
 Influence Benchmarking 14%
Stakeholder dialogue is kept to a 0%
minimum with all groups except
shareholders
Stakeholder dialogue is always to 0%
a minimum

Those that answered other, listed:

a. Enhancement of long-term shareholder value
b. Ability to learn and respond to needs of
stakeholders
c. Advancing the corporate reputation
d. Identify changes to policy and practice in order to meet
stakeholder expectations

Over half the main benefits of stakeholder dialogue

8. What internal systems are in place for feed straight into public relations strategy and plan-
ethical/social/non-financial reporting to the board? ning and nearly a quarter of all businesses make the
corporate communication or public affairs function
Annual strategic review 42% to be accountable to the board for - Corporate
Part of a routine monthly or (Social) Responsibility - CSR. There is more comfort
quarterly reporting process 24% to be drawn from the 28 percent of businesses that
Other 24% use the process to 'evaluate and report on social per-
Stand alone 5% formance over time' and the 14 percent who use the
None 5% exchanges with stakeholders and stakeholder groups
to influence internal governance and CSR bench-
The organisations that answered other, marking.
specified it as:
o Regional corporate social committees and board CSR
committees
Note
o Dedicated board committee, targets and reporting
This report has been tailored specifically for tbl and is a copyright of
o Annual via a social reporting process
PIELLE Consulting Group 2006 .

For the majority of businesses formal systems exist

to drive improvements that result from the 'social
audit' through the organisation. The only surprise is
that there is such a significant minority of businesses
with no structures or systems in place to respond to
audit identified issues.

There is no question of information being for inter-

nal consumption only and stakeholder dialogue is a
pro-active process for every company surveyed. The
survey also asked whether the organizations' stake-
holder dialogue is proactive and 100 percent of
organisations answered YES to this question.

9. What do you see as the main benefits of stake-

holder dialogue for your organisation?

Identify key activities for public

affairs, areas of reputation management 30%
Other 28%
Evaluate and report on social
performance over time 28%

tbl nov-dec 08 45
 global energy outlook
new energy realities
weo calls for
global
energy
revolution
despite
economic by OECD/International Energy Agency
for tbl
crisis
“We cannot let the financial and economic crisis
delay the policy action that is urgently needed to
ensure secure energy supplies and to curtail rising
emissions of greenhouse gases. We must usher in a
global energy revolution by improving energy effi-
ciency and increasing the deployment of low-carbon
energy,” said Nobuo Tanaka, Executive Director of
the International Energy Agency (IEA) at the launch
of the World Energy Outlook (WEO) 2008 - the latest
edition of the annual IEA flagship publication, held
in London. The WEO-2008 provides invaluable
analysis to help policy makers around the world
assess and address the challenges posed by worsen-
ing oil supply prospects, higher energy prices and
rising emissions of greenhouse gases.
In the WEO-2008 Reference Scenario, which assumes
no new government policies, world primary energy
demand grows by 1.6 percent per year on average
between 2006 and 2030 - an increase of 45 percent.
This is slower than projected last year, mainly due
to the impact of the economic slowdown, prospects
for higher energy prices and some new policy initia-
tives. Demand for oil rises from 85 million barrels
46 www.tbl.com.pk
per day now to 106 mb/d in 2030 - 10 mb/d less
than projected last year. Demand for coal rises more
than any other fuel in absolute terms, accounting for
over a third of the increase in energy use. Modern
renewables grow most rapidly, overtaking gas to
become the second-largest source of electricity soon
after 2010. China and India account for over half of
incremental energy demand to 2030 while the
Middle East emerges as a major new demand centre.
The share of the world's energy consumed in cities
grows from two-thirds to almost three-quarters in
2030. Almost all of the increase in fossil-energy pro-
duction occurs in non-OECD countries. These trends
call for energy-supply investment of $26.3 trillion to
2030, or over $1 trillion/year. Yet the credit squeeze
could delay spending, potentially setting up a sup-
ply-crunch that could choke economic recovery.
"Current trends in energy supply and consumption
are patently unsustainable - environmentally,
economically and socially - they can and must be
altered", said Nobuo Tanaka. "Rising imports of oil
and gas into OECD regions and developing Asia,
together with the growing concentration of produc-
tion in a small number of countries, would increase
our susceptibility to supply disruptions and sharp
price hikes. At the same time, greenhouse-gas emis-
sions would be driven up inexorably, putting the
world on track for an eventual global temperature
increase of up to 6°C."
In addition to providing a comprehensive update of
long-term energy projections to 2030, WEO-2008
takes a detailed look at the prospects for oil and gas
production. Oil will remain the world's main source
of energy for many years to come, even under the
most optimistic of assumptions about the develop-
ment of alternative technology. But the sources of
oil, the cost of producing it and the prices that con-
sumers will have to pay for it are extremely uncer-
tain. "One thing is certain", stated Mr. Tanaka,
"while market imbalances will feed volatility, the era
of cheap oil is over".
"A sea change is underway in the upstream oil and
gas industry with international oil companies facing
dwindling opportunities to increase their reserves
and production. In contrast, national companies are
projected to account for about 80 percent of the
increase of both oil and gas production to 2030", said
Mr. Tanaka. But it is far from certain that these com-
panies will be willing to make this investment them-
selves or to attract sufficient capital to keep up the
necessary pace of investment. Upstream investment
has been rising rapidly in the last few years, but
much of the increase is due to surging costs.
Expanding production in the lowest-cost countries -
most of them in OPEC - will be central to meeting
the world's oil needs at reasonable cost.
The prospect of accelerating declines in production
at individual oilfields is adding to these uncertain-
ties. The findings of an unprecedented field-by-field
analysis of the historical production trends of 800
oilfields indicate that decline rates are likely to rise
significantly in the long term, from an average of 6.7
percent today to 8.6 percent in 2030. "Despite all the
attention that is given to demand growth, decline
rates are actually a far more important determinant
of investment needs. Even if oil demand was to
remain flat to 2030, 45 mb/d of gross capacity -
roughly four times the current capacity of Saudi
Arabia - would need to be built by 2030 just to offset
the effect of oilfield decline", Mr. Tanaka stated.
WEO-2008 also analyses policy options for tackling
climate change after 2012, when a new global agree-
ment - to be negotiated at the UN Conference of the
Parties in Copenhagen next year - is due to take
effect. This analysis assumes a hybrid policy
approach, comprising a plausible combination of
cap-and-trade systems, sectoral agreements and
national measures. On current trends, energy-related
CO2 emissions are set to increase by 45 percent
between 2006 and 2030, reaching 41 Gt. Three-quar-
ters of the increase arises in China, India and the
Middle East, and 97 percent in non-OECD countries
as a whole.
Stabilising greenhouse gas concentration at 550 ppm
of CO2-equivalent, which would limit the tempera-
ture increase to about 3°C, would require emissions
to rise to no more than 33 Gt in 2030 and to fall in
the longer term. The share of low-carbon energy -
hydropower, nuclear, biomass, other renewables
and fossil-fuel power plants equipped with carbon
capture and storage (CCS) - in the world primary
energy mix would need to expand from 19 percent
in 2006 to 26 percent in 2030. This would call for $4.1
trillion more investment in energy-related infrastruc-
ture and equipment than in the Reference Scenario -
equal to 0.2 percent of annual world GDP. Most of
the increase is on the demand side, with $17 per
person per year spent worldwide on more efficient
cars, appliances and buildings. On the other hand,
improved energy efficiency would deliver fuel-cost
savings of over $7 trillion.
The scale of the challenge in limiting greenhouse gas
concentration to 450 ppm of CO2-eq, which would
involve a temperature rise of about 2°C, is much
greater. World energy-related CO2 emissions would
need to drop sharply from 2020 onwards, reaching
less than 26 Gt in 2030. "We would need concerted
action from all major emitters. Our analysis shows
that OECD countries alone cannot put the world
onto a 450-ppm trajectory, even if they were to
reduce their emissions to zero", Mr. Tanaka warned.
Achieving such an outcome would require even
faster growth in the use of low-carbon energy - to
account for 36 percent of global primary energy mix
by 2030. In this case, global energy investment needs
are $9.3 trillion (0.6 percent of annual world GDP)
higher; fuel savings total $5.8 trillion.
WEO-2008 demonstrates that measures to curb CO2
emissions will also improve energy security by
reducing global fossil-fuel energy use. But the
world's major oil producers should not be alarmed.
"Even in the 450 Policy Scenario, OPEC production
will need to be 12 mb/d higher in 2030 than today."
Mr. Tanaka noted. "It is clear that the energy sector
will have to play the central role in tackling climate
change. The analysis set out in this Outlook will
provide a solid basis for all countries seeking to
negotiate a new global climate deal in Copenhagen."
Note
This article has been shared with tbl with permission from IEA and is
a copyright of OECD/IEA, November 12, 2008, London.
tbl nov-dec 08 47
 csr talk

“the desire to
not stagnate”
Asif Qadir
CEO,
Engro Polymer & Chemicals Ltd.

by khadeeja balkhi
for tbl

F
or those of you who've interacted with me
recently, you know that among my current
CSR passions is almost anything to do with
value chain empowerment. And that's precisely
what the juicy parts of my conversation with Asif
Qadir, President and CEO of Engro Polymer, were
about. Now, at Engro Polymer, it's all about value
chain development, hard-core even. Upstream,
downstream, you name it. All the way to the farmer
who uses the drip irrigation that uses the PVC resin
his company makes. (Talk about a high for nerds
like me.)

tbl's interaction with Qadir started out in relatively
romanticizable drip-irrigated farms in Gadap, so this
interview may reflect the breezy informality of the
cheeku orchards and kerala vines.
The interview - in his office of course, no longer at
Allah Buksh's farms - really got started with him
asking us the right questions.
After unabashedly asking what the triple bottom-
line approach really meant, he promptly re-ordered
tbl's 'people, planet, profit' tagline.
"This is how the bottom line works," said Asif Qadir,
firmly announcing profit as the first bottom-line. Of
course, we at the barely-breaking even tbl offices
vividly understand this. But the 'how' behind profits
must be just as crystal clear.
"We're not just doing what the law requires, but
we're trying to do a little more," Qadir said when
asked about toasty areas such as governance and
transparency.
"As of July this year, we're a listed company," Qadir
began. "Prior to this, as far as the [three major]
shareholders were concerned, there was absolute
transparency. However even at that point in time,
we were following the SECP guidelines, in fact
slightly more than SECP requirements."
"We were looking at a new business line," Qadir
continued. "We didn't pursue this line, because this
has the potential of exposing our people to a
business line in which there will be underhand
dealings".
"This was about two years ago: a simple example of
a reaffirmation of our commitment to ethics".
Biodegradability >?< Minimalistic Consumption
So we've set the stage, you know we're more excited
about sharing the company's value chain (VC)
initiatives. At least, that's how tbl fondly refers to
Engro Polymer's market development work.
Now, if like us, Engro Polymer's value chain is a
little mystified for you too, here's the scoop: they
make the resin that is then used by a myriad of
industries to make PVC products. That includes

48 www.tbl.com.pk
everything from the ominous little 'sample' contain-
ers the medical lab hands you to window frames.
But first, we wouldn't be doing our job if we didn't
tell you that we did ask Qadir about the weighty
environmental impacts of his products. We skipped
through the lush green effluent pond and ongoing
operational efficiencies bit to this part.
"The fundamental environmental impact comes from
the nature of the product - it comes from chlorine",
he candidly states. Of course, we knew that, PVC
after all stands for polyvinyl chloride.
"The net energy consumed, is still the lowest of all
plastics," balanced out Qadir. "The quantum of ener-
gy consumed is the least too.
And get this revolutionary idea: to Qadir, its non-
biodegradability traits are among his products eco-
friendly traits.
"I don't take that as a criticism, I take it as a positive
effect". I'll admit, we weren't ready for that one. "I
find it to be more effective that a person will not be
consuming a new product every two to three years,"
he said. (Yes, we have a lot more to say about this,
but that'll be on tbl's online forum) "The basic
advantage is that it has an unlimited life".
"It's what you're going to use things for," he elabo-
rated. He estimates that 60-70 percent of the resin his
company produces goes into long life cycle prod-
ucts, such as pipes.
"What you need to know is, what's the chain?"
Grow Our Customers’ Businesses
Really, now we're going to talk about the VCs that
don't necessarily have anything to do with chlorine,
promise!
"Our customers are a wide range of people, from rel-
atively larger to some who are very small," shared
Qadir. "We've had reaffirmations over time that we
are an organization which focuses on a desire to
grow our customers, to grow their businesses".
"So, on the value chain side," thought Qadir, "it's a
very significant initiative we have, providing techni-
cal and managerial support to enhance our cus-
tomers' business".
"We work with all of our customers to … reduce
their power consumption, improve quality, reduce
wastages, and how to develop market access," said
Qadir. Of the roughly 400 businesses he counts as
customers, there's not a single one that Engro
Polymer teams haven't visited.
The teams weren't always missed and invited - as
they are now. They were initially refused entrance.
Yet now, the customers are fairly open about their
business needs or the areas they need help and sup-
port in. Of course, being a monopoly helps Engro
Polymer be so benevolent.
Customers of Customers
In addition to Qadir's passion for agriculture, that
has been conducive to encouraging the company to
invest creative energy in developing a simple, user-
friendly drip irrigation system - and thus boosting
Pakistan's agricultural sector. Allah Buksh's farms,
the hosting 'laboratory' for this model showcased the
almost fool-proof simplicity to us. One that will
prove a harbinger of inter-connectedness of the
triple bottom line, and all actors in a value chain.
Intriguing Numbers
Engro Polymer has also directly helped develop the
capacity of one of its major customer groups the
PVC pipe industry. Their processing capacity has
more than doubled over the last five years. Ten
years ago, the industry could manufacture pipes
with a maximum diameter of 4 inches.
"And this year they're producing 20 inch diameter
pipes - and obviously enhancing the usages of it,"
beams Qadir.
Another VC example: "We took an industry that had
been killed in Pakistan: the cable compounding
industry," Qadir shared. Of the 10,000 tons of cable
compound that was previously being imported in
Pakistan, now approximately 8,000 tons are being
produced in Pakistan.
Business Karma
The best part: this not only comes full-circle, the TBL
circle keeps growing.
If the cable compounding industry is producing
8,000 tons, half of their raw input is Engro Polymer's
product. So this patient support to the industry has
paid off with a 4,000 ton-strong market for the com-
pany. No wonder Qadir thinks "there is a phenome-
nal link between social investments and business".
"It's not the number that you're looking at today,"
Qadir emphasized, exhibiting just the kind of fore-
sight that excites tbl, "it's the potential you're looking
at in the future".
With successes such as these, the company's sales
have more than doubled in eight years, inherent
market growth and other factors included. In 2000,
Engro Polymer sold 37,000 tons of PVC resin. With
their market development (or VC development as
tbl might call it) taking shape in 2002, they will have
sold 100,000 tons this year, 2008.
This, is Qadir's bottom-line.
tbl nov-dec 08 49
in hindsight

bull’s-eye?
revisiting ‘07’s
forecast for ‘08
by michael hopkins
for tbl

his special CSR update

T for the year 2008 has

been developed by MHC
International Ltd (MHCi).
Director MHCi Michael
Hopkins and his team take an
annual look at where CSR has
been, how did their own pre-
dictions make out and where
do they think CSR is going this
year.

A. Introduction
My in-tray tells me that CSR has
gone off the boil. The environmental
aspects of company and institutional
offerings have jumped to the fore.
Corporate Sustainability are the
watchwords, it would appear. It is
not surprising that the word 'sustain-
ability' would be preferred by CEOs:
who would not like to see their com-
pany exist forever? I covered the
issue of CSR and corporate sustain-
ability (CSu) seven years ago and my
view today remains the same.
Terminology - CSR, CR, Citizenship or Sustainability?
Corporate social responsibility
Corporate responsibility
Sustainability
Corporate citizenship
It doesn't matter, it's all the same thing
The poll by Ethical Corporation -
never one to favour the phrase
CSR - shows that its readers still
prefer to use CSR. I have always
believed that throwing out the
word 'social' and leaving 'corpo-
rate responsibility' weakens the
notion of business in society. I
have discussed this elsewhere,
33% where I re-state the definition I
have used for some years and
25% mean social to include economic
(business case issues) and envi-
17% ronmental (including sustainabili-
ty). I also emphasize that CSR
6% means treating key stakeholders
both within the company and out-
18% side in a fair and ethical manner.

Source: Ethical Corporation Poll as of September 25, 2007. I am, however, realistic enough to

50 www.tbl.com.pk
accept that the word 'social'
throws many company execu-
tives. Eventually, I believe that
just about all companies (and
institutions) will accept the main
tenets of CSR and behave well
with stakeholders, simply as a
survival strategy. A company can-
not be sustained without treating
its stakeholders well -that is, ethi-
cally and socially responsibly.
What is wrong, for example, in
treating stakeholders well - con-
sumers for instance? I have also
often said that a CSR exit strategy
is obvious since CSR itself is obvi-
ous.
B. CSR - 2007 to 2008
1. On the question of CSR, we
said 'CSR is still the preferred
term among commentators,
the Government and NGOs
although companies hesitate
and prefer the term CR'. In
2008, we would substitute
corporate responsibility (CR)
with corporate sustainability
(CSu).
2. CSR is becoming greener, and
this trend has continued
throughout 2007. 2008 will
also see companies struggling
with the effects of the credit
crisis of last year and the wor-
ries of recession. Bank credit
will be difficult to obtain and
that will dampen investment
and down-the-line profits.
Issues of CSR will still be
important but will not be as
important a driver for compa-
ny policy as has been seen in
the past two years.
3. This year, CSR as PR may still
be on the agenda as economic
problems dominate.
4. This year, an issue which has
increasingly become impor-
tant in CSR is global warm-
ing. Another issue of growing
importance is how to deal
with human rights in global
operations.
C. CSR Review by EIRIS
In their review of CSR in the past
two years, EIRIS' (a think tank on
socially responsible investment)
has come to the following conclu-
sions:
Over the past 25 years CSR
has evolved from a mainly
philanthropic activity to a
more mainstream approach
that integrates responsible
business principles into core
business activities.
European companies have
well developed responsible
business practices across a
broad range of issues. This is
due to a sophisticated respon-
sible investment market,
NGO pressure and a strong
regulatory environment.
Japanese companies demon-
strate strong performance on
environmental issues,
although need to make
progress on other areas to
match European levels.
Beyond a core of companies
which have adopted responsi-
ble business practices, North
American companies signifi-
cantly lag behind their
European counterparts across
all the areas researched.
Large companies are more
likely to adopt responsible
business practices than small-
er companies.
Will these trends continue into
2008?
D. CSR in 2008
This year will be dominated by
three key concerns:
The rise of oil prices and the
rapid substitution of food
crops for bio-fuel production.
This, in turn, will lead to
sharp rises in food and con-
sumer price inflation.
The sub-prime credit crisis
will feed more and more into
the real economy as banks
become tighter in their ability
to lend even as interest rates
fall. This will lead to a fall in
investment and lower output
and employment.
The gradual trend toward
authoritarianism coupled
with rising instability caused
by poverty as often written
about in The Observer by
Henry Porter, will lead to
ever increasing restrictions on
freedom and human rights.
These three global trends,
depressing as they are, cannot be
ignored by proponents of CSR
since companies and institutions
will be forced to grapple with
these global issues and act accord-
ingly. It will mean that respect for
human rights and concerns about
supply chain exploitation will be
put on the back burner. The rise
of, and concerns about, China will
not be affected as it tries through
massive PR to show a new face, at
least temporarily, as Beijing hosts
the summer Olympics.
Companies will also have to face
some restructuring as unemploy-
ment starts to rise to cope with
falling economies which may, or
may not, experience a global
recession. Will companies restruc-
ture in a socially responsible man-
ner? There is not much evidence
that companies will follow such a
route as argued, for instance, by
luminaries such as George
Starcher. Certainly, companies in
the West will respect national
labour laws on redundancies but
even these are under attack -
sometimes justifiably as in
Sarkozy's new France.
The move from CSR departments,
and their clones, to mainstream-
ing CSR issues throughout com-
panies and institutions will falter
as the above concerns dominate
company policy this year. So a
difficult year ahead for the CSR
community is in prospect, espe-
cially those whose main focus is
not the environment. Therefore,
by year's end, we shall see the
term 'sustainability' used so much
that, like CSR, it may also be the
subject of questioning and even-
tual sidestep.
About the Writer
Michael Hopkins is Professor of Corporate and
Social Research at Middlesex University
Business School, and Managing Director of the
CSR advisory company and think-tank MHC
International Ltd.
tbl nov-dec 08 51
 csr toolkit
my choice
a model for a sustainable
future
by kurt archer
for tbl
My Choice! is a project that
aims to raise awareness
among the youth about
Sustainability. We offer a
holistic understanding of
sustainability taught through a
simple model known as
Society, Economy and
Environment.
The Environment is impacted
by our human footprint; this
footprint is the result of diverse
community interactions
(economy, leisure, family) in
any given society. Social
activism, or civil society, is
shaped by embedding values
in the people that are part of
the society and who will take
up responsibility for that
society. It is therefore vital for
youth to grab this inclusive
picture of sustainability to
ensure a positive future
generation of prosperity and
increased quality of life.
This toolkit aims to provide an
overview for the programme
and how it can be run in not
only colleges and institutes,
but also in companies of any
size.
All that is required is a
committed team to organize
some logistics, and a series of
individuals with a passion for
sustainability.
52 www.tbl.com.pk
The picture shows a circle of people connected by a web. This activity looks at interdependence of
global issues.
Stage 1: Around 20 motivated
individuals are selected and
trained as mentors
This number can vary depending
on how many schools or students
you want to reach out to. The
point to remember here is to
recruit individuals, who are fun,
can relate well with kids, and
have an interest in learning about
Sustainability. The big bonus here
is that through being a mentor,
the individual actually learns
more about him/herself and their
personal actions in sustainability
by going through this process.
It is important to establish rules of
conduct, and training on material
before hand so that the next stage
can run smoothly.
Stage 2: They share an under-
standing of sustainability
through a workshop in the
school.
The best part of this programme
is interacting with the kids; they
end up being our greatest teach-
ers. This stage is when the newly
trained mentors will go into the
classrooms and deliver a 1-1.5
hour presentation on sustainabili-
ty. Topics can be focused or
broad; the idea here is to make
sure the kids leave with a strong
understanding that sustainability
means making smart choices now
so that we don't suffer the nega-
tive consequences in the future.
Topics you should cover:
Defining sustainability.
Understanding the Venn dia-
gram of People, Business and
Nature (Society, Economy,
Environment).
Grasp the idea that all actions
and events in the world are
interrelated and interdepen-
dent - there are no such
things as isolated actions and
response.
Stage 3: The most interested
students get a deeper under-
standing through a simulation
game.
Are we having fun yet? If not,
then we surely will now! Stage 3
represents a simulation game
with a duration of 3 - 4 hours.
Here the mentors will plan and
facilitate a series of activity-based
learning games that will help
develop soft skills while teaching
them core ideas of sustainability.
Topics you should cover in the
simulation include:
Understanding the big pic-
ture of sustainability (that is,
global warming, pollution,
security, overpopulation -
nature, business and society).
Introduce the concept of
'Tragedy of the Commons'.
Guide them through a prod-
uct life cycle of their favourite
things, move from linear
product life cycle to closed
loop product life cycle.
What is a network or system,
how can we simplify it if it no
longer makes sense and is
overly ineffective?
Understanding interdepend-
ence from the perspective of
various decision makers
(Government, NGOs,
Companies, and Individuals).
What is their vision for a sus-
tainable future in 20 years
time?
Stage 4: Through mentorship
students will execute a project
in their school.
This is the most magical stage, as
anything can happen when you
put good intentions into the
hands of creative children. By
mentoring a group of kids, you
get to see a project and change
happen over the span of 3 weeks
to 1 month. The kids will surprise
you with their creativity and abili-
ty to grasp the concept of sustain-
ability. The goal of the project is
simple: Make one change in your
school that can help it become
closer to being zero-waste.
Project areas that kids can work
on include:
Waste and Disposal
Water Conservation
Soil and Plants
Energy Efficiency
The My Choice! Model
School Supplies and Books
Paper Usage
Transportation
Food
Make sure you start the projects
with an audit of the school, so the
kids can identify unsustainable
practices, then come up with
ideas, and measure the ideas
based on the Venn diagram
model. Does it make Business,
People and Nature sense? If not,
how can we improve it?
Stage 5: The projects are show-
cased and rewarded, raising
awareness in the community
about sustainability.
The last stage of this programme
is the most glamorous, as you
want to invite the public, part-
ners, other schools and dignitaries
to the event. This event can be
imagined in many ways, but it
should aim to capture the excite-
ment of the kids in presenting
their projects ideas, and reward-
ing them thoroughly for all their
hard work. The benefit of inviting
so much public is that they too
get to play a hand in learning
about sustainability.
Prizes should further the kids
development in understanding
about sustainability, such as
nature retreats or educational
books.
Stage 6: Taking our learning
virtually!
Yes that is right, we have a special
sixth stage not represented in the
diagram, but ever more impor-
tant. It is taking the learning of
this programme and giving the
students and mentors an online
platform to connect with other
youth across the globe, who are
passionate about sustainability.
By accessing the My Choice social
network, participants gain access
to networks of young people,
fresh media and resources to help
them learn more about sustain-
ability, and best of all: contribute
to the discussion.
You're done! You've made a great
contribution to society, you've
learnt a lot along the way, and
you've networked with others
building the same vision and pro-
moted your brand every step of
the way.
What could be more satisfying?
After all, it's your choice for a
sustainable future!
About the Writer
Kurt Archer originates in Canada and lived in
Karachi, Pakistan for two years where he estab-
lished international internship programmes for
both AIESEC and the Aga Khan University. He is
now on an eco-travel tour of Asia where he aims
to share his experience in working with and
learning about the top sustainability solutions in
Asia.
tbl nov-dec 08 53
 corporate diversity practices

examining the cracks

in the ceiling
report by calvert
for tbl

Overview
While the current landscape of diversity
in the corporate workplace evidences
cracks in the glass ceiling, women and
minorities continue to face barriers in
their quest for advancement. Nowhere
is this more evident than in the board
room, where men continue to occupy
the vast majority of board seats of
Fortune 100 companies - approximately
83 percent, compared to 17 percent for
women.

In 2006, Calvert initiated a survey of the

corporate diversity practices of the 636
companies in the Calvert Social Index
reveals that the majority of companies
have much yet to accomplish in
developing a comprehensive diversity
strategy; in fact, not a single company
earned a perfect score in this report's
analysis.

Rather than focusing exclusively on

diversity leaders, Calvert's diversity
ratings identify leaders, average
performers, and laggards, while
providing companies a road map that
can guide them as they seek to identify
and address gaps in their own internal
practices.

54 www.tbl.com.pk
Key Findings
In evaluating the companies'
diversity practices, ten indicators
were considered, including: Equal
Employment Opportunity (EEO)
Policy, Internal Diversity
Initiatives, External Diversity
Initiatives, Scope of Diversity
Initiatives, Family-friendly
Benefits, EEO-1 Disclosure,
Highest Paid Executives, Board
Diversity, Director Selection
Criteria, and Overall Corporate
Commitment. The analysis
reveals the following key
findings:
Increased disclosure is need-
ed. Poor disclosure on a num-
ber of indicators hindered our
ability to fully assess and por-
tray women and minority
representation at various lev-
els of the workplace, as well
as our ability to assess the
quality of certain diversity
initiatives.
- EEO-1 disclosure is the
worst performing indica-
tor, with 93 percent of
companies lacking any
public EEO-1 disclosure.
This is truly disappoint-
ing, as disclosure of
detailed demographic
data is critical to demon-
strating how successfully
women and minorities are
advancing throughout a
company's ranks, and
identifying potential
weaknesses in diversity
initiatives that may be
preventing them from
moving up the pipeline.
- Overall disclosure of
internal and external
diversity initiatives
remains weak, with 48
percent of companies
scoring zero on these indi-
cators.
A disconnect remains
between diversity on the
board and in the executive
suite. While 83 percent of
rated companies understand
the importance of board
diversity and have at least one
woman and/or minority on
their board, a disappointing
62 percent demonstrate no
evidence of women and/or
minorities in their top five
highest paid positions -
positions that are most often
the pipeline from which
future directors are chosen.
Despite significant room for
improvement, innovation
and creativity abound.
Diversity leaders in particular
are demonstrating innovation
in leveraging employee diver-
sity to reach out to new
demographic and geographic
markets and are evidencing
unique approaches to recruit-
ment and outreach, among
other diversity practices.
Corporate commitment is the
X factor. Top scores in corpo-
rate commitment translate to
higher scores in the nine other
indicators, demonstrating a
strong commitment to inclu-
sive EEO policies, a variety of
diversity initiatives and fami-
ly-friendly benefits, and exec-
utive and board level repre-
sentation.
Advocacy makes a differ-
ence. Two of the best per-
forming indicators - EEO
policy and director selection
criteria-represent areas where
Calvert has been focusing its
diversity advocacy over the
past five to ten years.
Performance varies by sector.
On average, companies in the
technology sector performed
the best, closely followed by
companies in the consumer,
cyclical sector. Companies in
the energy sector, on average,
significantly underperformed
the rest of our rated compa-
nies.
Market cap matters - at least
in most instances. Not sur-
prisingly the higher the mar-
ket capitalization of the com-
pany, the better its perform-
ance, at least on nine of the
ten indicators, the exception
being the five highest paid
executives.
The survey reveals that the major-
ity of companies are not currently
providing the wealth of informa-
tion investors need. With the
increasing importance of diversity
in the workplace and market-
place, investors expect far greater
disclosure from companies in
order to understand their capacity
to fully manage both the risks and
opportunities inherent in operat-
ing in our increasingly global
economy and society.
tbl nov-dec 08 55

Methodology
The Calvert Social Index is a
broad-based, rigorously con-
structed benchmark for meas-
uring the performance of
large, U.S.-based sustainable
and responsible companies.
The Index measures the per-
formance of those companies
that meet the social invest-
ment criteria selected from
the universe of approximately
the 1,000 largest companies in
the U.S., represented by
stocks listed on the NySE and
NASDAQ and AMEX (not
including closed-end mutual
funds, ADRs, REITS and non-
common shares). For this
analysis, a snapshot of the
Index as of September 21,
2007 was used.
How We Obtain the
Information
We base our analysis and
research on a number of pub-
lic sources, including compa-
ny websites, SEC filings, cor-
porate social responsibility
and sustainability reports,
and direct feedback from
companies. We also use third-
party sources such as
Diversity Inc., Working
Mother, and Human Rights
Campaign Foundation's
Corporate Equality Index.
Examining the 10 Key Indicators
Rated companies scored across
the entire spectrum of our
Diversity Ratings scale. Most
companies performed at the bot-
tom half, and only 3 percent of
the companies demonstrated
excellent diversity performance.
While only nine companies
showed no public commitment to
diversity, all companies have
room to improve.
Rather than weakening our indi-
cators to compensate for the lack-
luster performance of the majority
of rated companies, we hope to
raise the bar of diversity perform-
56 www.tbl.com.pk
ance by honestly reflecting the
landscape of current corporate
performance and providing a
road map that can guide compa-
nies as they seek to identify and
address gaps in diversity policies,
programs, and performance.
1) Equal Employment
Opportunity (EEO) Policy
66 percent of rated compa-
nies support EEO policies
inclusive of sexual orienta-
tion.
2) Internal Diversity
Initiatives
37 percent of rated compa-
nies offer training/devel-
opment and/or mentor-
ing/Employee Resource
Group (ERG) programmes.
3) External Diversity
Initiatives
43 percent of rated compa-
nies offer recruitment/out-
reach and/or supplier
diversity programmes.
4) Scope of Diversity
Initiatives
70 percent of rated compa-
nies disclose no evidence
of diversity programmes
targeting one or more
groups
5) Family-friendly Benefits
59 percent of rated compa-
nies offer at least one fami-
ly-friendly benefit.
6) EEO-1 Disclosure
93 percent of rated compa-
nies have no EEO-1
Disclosure.
7) Highest Paid Executives
62 percent of rated compa-
nies had no women or
minorities in their five
highest paid offices.
8) Board Diversity
83 percent of rated compa-
nies had at least one
woman and/or minority
on their Board of Directors.
9) Director Selection Criteria
53 percent of rated compa-
nies had some mention of
diversity in director selec-
tion criteria.
10) Overall Corporate
Commitment
28 percent of rated compa-
nies demonstrate an over-
all corporate commitment
to diversity.
Conclusion
Significant opportunities remain
for all companies in the Calvert
Social Index to improve their
diversity practices, particularly
regarding increased disclosure of
existing diversity policies, pro-
grammes, and performance.
Greater disclosure is essential to
further progress on diversity.
Once companies have reviewed
and reported on current diversity
practices, they can use this report-
ing to identify areas of opportuni-
ty and risk and in turn set man-
ageable, measurable goals to
address these areas.
Employees should be recruited,
hired, promoted, and retained
based on competency, not chro-
mosomes or the colour of their
skin. Their should be a level play-
ing field, where merit and hard
work - not bias and stereotype -
are what count in workplace
opportunities. Companies that
fully embrace this challenge and
commit to providing a fair and
equitable working environment
will recognize gains in both the
workplace and marketplace.
Note
This survey has been tailored specifically
for tbl and is a copyright of Calvert.
To read complete survey, please visit
http://www.calvert.com/pdf/CorporateDivers
ity2008.pdf
crossword

CROSSWORD
Across
1. What it’s all about! At least in the world of tbl
2. If I was as strong as your ability to account, your
organization would exist at a higher plane
altogether
4. This tbl issue’s current thematic focus!
6. Not the indecent kind. Just so public knows what
you’ve been up to in areas that do happen to
concern them
8. Do we really need all that talking?
11. An official raid on your company’s existence
13. The skewed concept that ever-expanding consump-
tion of material goods is advantageous to - any-
thing at all under the sun?
15. A system of values we all like to think we live by
16. Not the kind from a fresh green apple, but the one
the world’s in right now
17. Without these, how would we know we had quan-
tifiable success?

Down
1. Think of them as one among a group of many
stakeholders, but those that happen to hold the
strings to some of your purses
3. The spirit of which is what keeps all economies
fuelled
5. More with less (this was part of tbl’s third issue’s
title)
7. This sometimes translates into unbridled profiteer-
ing, if there isn’t a robust governance mechanism
in place
9. If you take me literally, your attire might be rather
objectionable but without me, governance doesn’t
mean anything to the public
10. If you’re on the cutting edge, you’re bound to have
some up your sleeve
12. By the bureaucracy, for the common people
14. One who muses in tbl

tbl Issue 5 Crossword Hints

Across
1. A situation favourable for attainment of a goal 5. ...Of change
7. Too many of these, but it is all for their sake 11. To enable or permit
13. What we must do to keep everyone on board
16. Make more of this, to do more
17. The effort to increase the well-being of humankind
18. Without this function, your CSR may go wild

Down
2. Bottomlines corporate citizens usually have
3. A person or group that has an investment, share etc
4. Exercising authority
6. Social and cultural forces that shape the life of a person
7. The difference between ethical and non ethical returns
8. Power derived from the force or energy of moving water
9. Combination or interaction of social and economic factors
10. To keep up or keep going, as an action or process
12. To treat or process so as to make suitable for reuse
14. Save it, to save yourself
Think you got it? Tell us at feedforward@tbl.com.pk
15. The only CSR magazine in Pakistan
and see what surprises we have in store for you!

tbl nov-dec 08 57
model for urban development
sustainable cities:
a model for the future
by kurt archer
for tbl
I
n October 2008, the Foreign Policy Magazine of
Washington D.C. published a list of the most
global cities in terms of business activity, human
capital, access to information, cultural identity and
political engagement. In this list, the city of Karachi
was ranked number 57 out of a total of 60 cities
reviewed. In an embarrassing communications error,
officials mistook the rankings of the 'mayor of the
moment' as referring to Syed Mustafa Kamal of
Karachi as the number 2 mayor in the world. For
many this was joyous news, until the mistake was
uncovered.
This mishap has brought a lot of attention to
Karachi's current development plans, and although
progress is underway, many citizens are not happy
with the way things are, or are moving towards.
Lahore, Pakistan's second largest city is not far
behind on public discontent with how things are
run. The good news is that neither of these two cities
are alone in facing these issues.
All over the world, developing countries' cities
struggle to meet the gross demands of urbanization
and rapid expansion. Little has prepared them to
manage such growth, and the results are higher than
normal crime rates; high levels of pollution leading
to an increased risk of respiratory disease, cancer
and skin problems; long lines of traffic jams, noise
pollution and an infrastructure that clearly separates
the economic classes.
Could it be that all of these are caused by poor
design management during the last forty or more
years when Karachi and Lahore have faced their
biggest population growth?
To draw an example of this: if a plane was poorly
designed, would it fly? It might fly, but chances are
much higher that it will crash - if not now, then in
58 www.tbl.com.pk
the near future. So if design plays such an important
role in how we make certain things run in a certain
way, the same can be true for cities.
So What Does a Sustainable City Look Like?
In 2007, e2 design shot a PBS documentary on
Enrique Peñalosa, the former mayor of Bogota,
Colombia from 1999-2001, as a best case practice for
urban transformation. The film, titled 'Bogota:
Building a Sustainable City' is narrated by Brad Pitt
(it just got steamier) and goes through the process of
explaining the achievements and challenges that
Bogota faced in becoming more sustainable.
Bogota, like many developing countries was faced
with the problem of rapid population growth, most-
ly due to urbanization. This led to ineffective infra-
structure for many parts of the city, which was con-
nected to rising crime rates. Overall, Bogota's quality
of life was pretty low.
Key Elements for Building a Sustainable City:
Vision and Leadership
In the words of Peñalosa, "I've never known a city
where their people hated it so much."
What was lacking in the city was vision and leader-
ship. Peñalosa was the man who had both - the
vision and leadership - for his city. His philosophy
was simple, sustainable design equates to social jus-
tice so he looked upon the cities infrastructure and
thought to himself: "Like fish need to swim, people
need to walk; not to survive, but to be happy"
Hounded by design plans to build overpasses and
widen highways, Peñalosa couldn't justify spending
such exuberant amounts of money to benefit only
the top 15 percent of the city, so he decided to focus
his efforts on the majority of the citizens where he
suspected the result would trickle up to a better
quality of life for everyone, even at the top of the
economic pyramid.
As Peñalosa commenced his journey to create a sus-
tainable design, he faced some challenges, which he
successfully overcame.
Design Challenge #1
Peñalosa's first design challenge was to transform
the thinking that cities are for cars, to cities are for
people.
He did this by spending money in lower income
areas to build parks and sidewalks. He shut down a
major road artery in the city for 8 hours on a Sunday
afternoon so pedestrians could walk, cycle or come
together for various reasons. This now attracts over
a million people who come out to enjoy the day and
socialize. This move alone has been credited with
lowering the crime rate by over 70 percent over ten
years, simply by making areas of the city more
accessible and more social.
Design Challenge # 2
The next task Peñalosa tackled was to create a public
transport system for the city to replace the current
one.
The problem with the current transport system was
that it was not very safe for the average commuter
due to non-existent policies and standards, so typi-
cally only the lower economic classes would use it,
out of necessity.
The transport industry was also run by a mafia,
which would do anything, including shut the entire
city down in a strike if they so chose. Peñalosa then
decided to bring the mafia into the deal and give
them control and input into the system as long as
they adhered to standards and policies set by the
government.
This now means that the government has full access
to control emission standards of the buses, and to
ensure safety measures are enacted to protect citi-
zens, thus returning the trust of the system to the
higher-class commuters - those with choices.
Real Game: New Name
One strategy that Peñalosa says worked well was to
call the new transport system something other than
a 'bus' because of its old associations with safety; the
new transport system is called the Transmilenio
(Trans Millennium) after the fact that it was intro-
duced as we shifted from the 20th to 21st century.
Design Challenge # 3
The third task, which ended up being more of a
challenge than an achievement was to transform the
roads themselves to include bigger sidewalks, and to
remove cars in general from most sidewalks, making
these areas more walkable.
The backlash came from the business owners who
feared that the cut to vehicle traffic would affect
their business. For some it was true that vehicle
access resulted in loss of clientele.
The challenge, says Peñalosa, was in improper nego-
tiations with the businesses in the area to get their
buy-in to the vision. Many neighbourhoods were
transformed and businesses adjusted to the change
in clientele by appealing to more of the walking
pedestrians that rose in the area instead. But it
became a very unpopular a move. As a result, the
opposition party used it to win back a majority seats
in the next election.
However the results are bearing fruit now. Eight
years later, and more than ever, Colombians look
back to Peñalosa as a hero for what he did for the
city.
A Successful Model: Bogota's Urban
Transformation
Peñalosa now travels to various countries in the
world to share his success story of urban transfor-
mation and has advised cities such as Cape Town,
Denver, Berkeley, Seattle, Melbourne, and Sao
Paulo. He has been featured by The New York
Times, Herald Tribune, PBS Television, BBC and
many others for his stewardship of urban develop-
ment.
On September 19, 2008 The LUMS School of Law
and Policy invited Mr. Peñalosa to give a talk to the
students and public about his experience, and how it
can be applied to the Pakistani reality. The talk must
have been influential to the audience because on
December 2, 2008, the Provincial government of
Punjab announced that it is going to launch a new
transport company called the LTC (jazzy acronym
baptism, eh…?), which will include all other trans-
port unions in the city in a move to bring up the
cities overall effectiveness in transportation.
The bad news, however is that Mustafa Kamal from
Karachi had other priorities and declined to meet
with Mr. Peñalosa during this visit.
About the Writer
Kurt Archer originates in Canada and lived in Karachi, Pakistan for two
years where he established international internship programmes for both
AIESEC and the Aga Khan University. He is now on an eco-travel tour of
Asia where he aims to share his experience in working with and learning
about the top sustainability solutions in Asia.
tbl nov-dec 08 59
musings
yours humbly
by praetor
for tbl
G
ood governance at the nation-state level is
measured in a variety of ways, with research
based rankings by independent agencies
being a popular methodology. And so you have the
Corruption Index, Ease of Doing Business Ranking
and so forth. Good governance is seen as being inte-
gral to economic growth, the eradication of poverty
and hunger and sustainable development.
Corporate good governance on the other hand has
as yet no universally practiced measurement tool,
although there are efforts under way to have nations
agree to quickly adopt the IAS - International
Accounting Standards - as their accounting stan-
dard. This move will make it easy to compare the
performance of corporations, in an industry, across
countries.
At the core of corporate good governance are of
course two inter-related issues - transparency and
accountability. Elsewhere in this issue of TBL are
undoubtedly sufficient explanations of what corpo-
rate good governance is, why it is needed and what
companies do to enact it. Praetor will therefore not
examine these facets, but as usual, will comment on
the more metaphysical manifestations.
Corporate good governance is expected to result in a
company's growth and longevity. However growth
alone cannot be the yardstick or the 'proof' if you
will, of corporate good governance. Otherwise we
would not have had the Enrons, Worldcoms,
Lehmann Brothers' of this world collapsing in spite
of great growth over the years. Post-mortems of
these and similar other corporate failures have
brought out a whole set of reasons why these mega
entities went under; corruption and malpractices
being at the fore.
But there is more. Something less tangible and
auditable than say corruption. And that is what you
can call ethos or culture. An integral goal of corpo-
rate good governance has to be to build a company
wide ethos of the finer qualities of human behaviour
60 www.tbl.com.pk
and interaction, like sensitivity, understanding and
even basic courtesy. Companies which lack these
attributes will sooner or later have serious issues
with their stakeholder groups.
If, for example, there was an arrogance measure-
ment tool, you would find that many highly
successful companies in financial terms are also high
on arrogance, which permeates into the day to day
behaviour of their employees. Is then arrogance a
pre-requisite of financial success? Or is it the
inevitable outcome of such success? A worthy
question to ponder over! What is sure is that
arrogance one day could very well spell the death
knell for these successful companies and we have
plenty of examples on hand to support this belief.
Examining arrogance at an international level, there
seems to be an east-west geographical divide, with
Pakistan on the dividing line. Are we not arrogant
as a nation? But go east from Pakistan and the
arrogance of the general public sharply reduces.
First stop India and you have the humble greeting of
submissive folded hands that indicate a lack of arro-
gance. Go further east, into Malaysia or Thailand
and the level of humility rises even further. No one
seems to be arrogant and everyone shows great
courtesy to others in daily life. On the other hand,
go west from Pakistan and arrogance rises in the
Middle East. Keep going west and at a nation-gov-
ernment level at least, the arrogance perhaps peaks
in the United States, with this superpower con-
vinced it can walk into and take over any country on
this planet.
Coming back to corporate good governance, one
would really like to see major companies introduce
policies and practices that cultivate positive values
in their employees, besides taking measures to
enhance productivity and performance. If corporate
arrogance is controlled and the bigger you are the
humbler you become, then surely your longevity is
assured, for the simple reason that you will be liked
and trusted more.