CAIRO: When the United Nations Global Compact in Egypt launched in 2003, its coordinator Mohamed El-Kalla had only a handful of Egyptian companies, and represented the only Middle Eastern country participating in the project. Since last summer, he now works with 69 local companies, and happily announces he will witness the launch of programs in more Middle Eastern countries, including Morocco and Tunisia.
Although the term “global compact might be unfamiliar, the increasingly popular phrase CSR, or corporate social responsibility, is what the whole story boils down to. The Global Compact, brainchild of UN Secretary General Kofi Annan, is an UN-backed group, formed by individual countries, that aims to assist and organize companies in developing socially responsible practices in their communities, and promote corporate transparency through peer pressure amongst involved companies. These concepts were relatively unknown territory for El-Kalla and his original 17 corporate members, and in truth, despite some growth, the concept still remains rather unknown here in Egypt today.
Amr Sheira, who runs the Egypt branch of the regional Internet and computer technology company CompuMe, says awareness remains the biggest issue to tackle here in the Middle East. He cited a study which said 5 percent of companies are familiar with social responsibility.
That means the problem is exponentially worse here, “I’d say only half a percent are knowledgeable about it, he says.
Not only were many companies here unaware of the issue; their concept of CSR was outdated. El-Kalla said that when the UNDP (United Nations Development Program) in Egypt first started the Global Compact here, companies were familiar with ideas such as philanthropy and environmental standards. But topics such as corruption, labor laws, and human rights were new ground.
These new principles actually reflect a new school of thinking on corporate charity. Noha Saad, manager of corporate responsibility projects for the telecommunications company, Vodafone, says the goal now isn’t merely philanthropic, but to develop sustainability, “The idea is not to hand out cash donations – give them a job, give them some kind of opportunity.
There are many aspects to the Global Compact plan. They not only invite companies to develop programs to better their communities, but to ensure that companies maintain equitable practices from within – such as fair wage and labor laws, and economically sustainable practices.
But this can still be a hard sell for many companies in the region.
Sherine Al-Maghraby, business development director for Talal Abu-Ghazaleh Organization (TAGO), is frustrated with the situation here, “How many companies here have transparency? How many work-out codes of conduct? We don’t have that here. Everybody is afraid to disseminate information.
Even statistics within the Global Compact reflect this problem. According to El-Kalla, Egypt’s Global Compact membership is still far behind countries in Asia and South America that often boast more than 200 members.
Sheira recalled a time he tried to sponsor a UN project. He asked for help from regional branches of his company. He needed to raise $50,000 (around LE 287,000). But the interest was too low, so Sheira dropped the project.
El-Kalla has discovered several explanations for the generally low turnout of Arab companies. He says that especially with small or middle sized companies, the problem isn’t that they don’t want to be involved, “but that they don’t have the time or capacity to carry it on.
Even among companies that are involved, one third to one half of companies involved did not submit the obligatory report to the UNDP declaring their accomplishments and problems.
At first, El-Kalla thought these companies weren’t serious about involvement. Instead he found that most were small or medium companies that didn’t have enough resources. “They didn’t have the expertise or sufficient staff to write the project reports.
But Sheira, who runs a medium business, was still doubtful. “I don’t think it’s a budget issue, he said. “I think it’s a commitment issue. He felt that many companies get involved hoping for good press, but brushed it off saying, “we’ve gotten used to that.
Saad of Vodafone disagrees. She criticized the press’s lack of reporting on the issue. “In a country like Egypt, where this is a very new trend, the press should cover CSR. In Europe or the U.S., this isn’t an issue, but here we’re just starting.
Yet UNDP statistics show that good press is among the smallest benefits of CSR. “It’s a proven fact that social responsibility leads to better internal performance, an increase in market share, and better business opportunities, said El-Kalla.
El-Maghraby described the unexpected benefit reaped by one agricultural business, “They grew potatoes, and bought expensive machinery to clean and purify the potatoes with water. They found they could then extract the starch and sell that. So companies can generate money by following sustainable practices.
The real problem, all interviewees agreed, is that most companies here are not used to looking for long term benefits.
Even if companies are reluctant however, they may not have much of a choice in the future. El-Kalla says that worldwide, the trend is growing so rapidly, it will soon hurt companies more not to engage in CSR. Places such as Europe and the U.S., and many multinationals, require products to come from socially responsible companies. “It’s no longer a privilege to implement such standards. It’s a demand.
El-Kalla knows that right now Global Compact membership in Egypt is small. But he says more and more companies will be at the UNDP’s doorstep very soon. “Sixty companies are incomparable to the number of companies in Egypt. But this is the best project growing that can target the issue.
