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Rules of Global CSR Initiatives

Rules of Global CSR Initiatives

SHIN Hye-Jeong

Aug. 21, 2013

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The question over how to fulfill corporate social responsibilities (CSRs) in local communities is being raised in accordance with the rising status of Korean companies in the global markets. To answer this, three best practices of CSR in the healthcare and environmental fields were reviewed.

With more than 25% of its operations in Africa, ExxonMobil could not dare ignore infectious diseases such as malaria which directly affect employee health and corporate performance. ExxonMobil's commitment to combating malaria has extended beyond its workplace programs to the broader communities. As a result, it has contributed to reducing death from malaria by more than 25% worldwide. GE's African American employees had long asked "What will you do for Africa?" In response, the company developed a CSR program to improve healthcare in developing countries. Six years into the program, GE began to generate profit from it. Coca-Cola opened its eyes to the global water issues after being blamed for environmental degradation in local communities. Having been introduced as a way to restore its reputation, the company' action to tackle water shortages was successfully turned into a great CSR initiative.

Four factors of effective global CSR programs were derived from the three case studies. Among them, aligning strategic issues with business and building partnerships call for particular attention. Companies try to develop CSR programs related with their business, e.g. financial institutions provide economics classes for children. In foreign countries, however, meeting local needs is more important than aligning the programs with their business. As for building partnerships, the capabilities of non-government organizations (NGOs) operating in developing countries go beyond companies' expectations. Also, they have the knowhow on how to proceed with partnerships on CSR programs. Thus, partnerships with the NGOs will help companies tackle many issues.

The remaining two factors, committing to sustainable investment and documenting the outcome and impact are also important. The key to sustainable investment is maintaining CSR spending despite any fall in profits. This is only possible with meticulous CSR planning. The best practices show that performance management is based not on the input such as hours or dollars spent, but on the output and impact such as a drop in malaria-related deaths. Korean firms need to follow suit.

The paradigm of CSR has changed from 15 years ago, shifting from who gives the most to who is more effective. This should be remembered by any companies wanting to launch global CSR programs for local communities.

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