Cost management and public attitudes are more important factors for UAE companies when implementing ethical business practices than a desire to ‘save the planet,’ according to the 2011 Grant Thornton International Business Report. Just over half (51%) of businesses in the UAE are motivated to move to more ethical practices by a desire to ‘save the planet,’ compared to 65 per cent who are motivated by cost management and 57 per cent by public opinion.
Looking globally, an altruistic desire to preserve the natural environment remains low on the agenda of businesses. Just 36 per cent of businesses globally are motivated to move to more ethical practices by a desire to ‘save the planet’, down from 40 per cent in 2008.
However, businesses remain focused on the merits of corporate social responsibility (CSR) in terms of building brand, securing key staff and winning future contracts. Globally, 56 per cent of businesses cite public attitudes/brand building and recruitment/retention of staff as the key drivers (alongside cost management) this year, highlighting the importance of public opinion in shaping businesses’ CSR priorities.
As businesses in mature markets continue to grapple with sluggish growth, businesses in emerging economies appear most concerned with reducing their impact on the environment: 60% of the BRIC nations and 59 per cent of those in the ASEAN group cite saving the planet as a driver towards more ethical business practices, compared to just 30 per cent in the EU and 27% in North America.
Ed Nusbaum, CEO of Grant Thornton International, said: “In an increasingly crowded and dynamic marketplace, businesses globally are becoming more aware that adopting a proactive approach to wider corporate social responsibility issues can help them to stand out in the minds of employees, consumers and potential partners.
“Moreover, as businesses, and indeed consumers, in mature economies struggle with the fallout from the economic downturn, altruistic concerns over the environment have been forced into a backseat role. Businesses are focusing on the bottom line and consumers are looking for ways to make declining real disposable incomes go further. That said, businesses in emerging markets, as we have seen with the wider global economy, appear ready to take the initiative in driving the CSR agenda forward.”
Meanwhile, levels of CSR activity undertaken in relation to the environment, workforce and wider community vary significantly across the globe. Businesses in northern Europe and Africa, together with much of North America and the Asia-Pacific region lead the way in initiating socially responsible practices, with those in mainland Europe lagging behind.
The survey also uncovered some polarisation in the reporting of CSR practices. 33 per cent of UAE businesses report their CSR activity, compared to a quarter of businesses globally. However, globally this ranges from 53 per cent in Latin America and 41 per cent in the BRIC economies to 17 per cent in North America and 18 per cent in the G7 economies.
Moreover, businesses are divided as to whether the reporting of CSR activity should be integrated with financial reporting: 72 per cent of businesses in the UAE agree that this represents best practice, compared with 44 per cent globally.
Hisham Farouk, Managing Partner, Grant Thornton UAE, said: “With the UAE still in the process of emerging from the global financial slowdown, it is natural that cost management remains a primary consideration for business. It is clear, however, that many businesses in the UAE see implementation of ethical business practices as central to their long-term growth. Indeed, with an overwhelming majority of companies supporting integrated financial and CSR reporting, the UAE could be poised to take a lead in global CSR best practice.”
Ed Nusbaum added: “All businesses should look closely at the potential commercial benefits of reporting their CSR activity. A competitive advantage exists for those businesses which can demonstrate leadership in implementing socially responsible and transparent practices and seize the opportunity to attract and retain skilled workers, build brand value and secure future contracts with multinationals who frequently adopt strict CSR guidelines in selecting their suppliers.”
