Central Asia: reimagining business for social good
Corporate social responsibility (CSR) can transform good intentions into actions. So how can emerging leaders harness CSR to create social impact? And what are the pitfalls?
John Smith Fellows Kumush Atayeva and Malika Sharipova joined environmental campaigner and entrepreneur Emma Shaw on 9 February to explore ways to implement and improve CSR. They were joined by other John Smith Fellows from Central Asia and the Caucasus.
Malika started working in CSR in Uzbekistan in 2015 when it was a new concept. She is now the country’s leading expert in CSR/ESG promoting responsible practices, accountability and equal rights for everyone, through her consultancy CARE CSR.
Kumush has 14 years of professional experience in HR Management. She currently manages Learning & Development and Equity, Diversity & Inclusion at Bouygues UK. She is also a certified soft skills trainer at the Union of Economists in Turkmenistan.
Emma is the founder of the Library of Things, a women-led circular economy business to provide affordable item rental to communities across London. She aims to reconcile business and protection of the natural world, and advises founders and funders working in the regenerative economy.
According to Malika, CSR “describes ethical business practices” that require organisations to consider the economic, social and environmental consequences of their activities. She calls these their “triple bottom line”. CSR can offer valuable benefits to businesses such as improving their reputation, attracting talent and gaining new customers and investors. It is, however, not as straight forward as it seems according to Malika.
Malika’s experience shows that businesses in Central Asia often misunderstand CSR as charity. For example, a company with good societal intentions might organise an event at an orphanage and publish the footage on their website and social media. The good publicity provides short-term benefits for the company’s reputation but fails to solve any of the underlying issues. Malika calls this “orphanage tourism” – a term she uses together with her colleague who is expert in disability issues.
Staying true to CSR principles
Kumush said that businesses use the same “quick fix” approach in Turkmenistan, and Emma has also encountered this “charitable sticky plaster” in the UK. When CSR is not built into the business but merely attached to it, she said, the principles are often diluted and the roots of problems, such as supply chains, are not properly addressed.
By establishing the Library of Things from scratch, Emma was able to design the whole business around CSR principles. This includes transparency over salaries and funding and giving employees a stake in the company.“We’re all stakeholders involved in making this business a success,” Emma said.
When Emma and her cofounders first raised over £500,000 through their ‘Fair Return’ investment instrument, they proved it is possible for a sustainable business to grow while staying true to its principles (and have since raised a further £1 million).
Endowments and legacies
According to Muzaffar Khusnidinov from Uzbekistan, the idea of CSR as charity in Central Asia also appears in the form of endowments. Central Asia has a long tradition of endowments and many business owners want their profits to contribute to good causes in the long term. But Uzbekistan and its neighbours lack the legislative framework and governance to enable this kind of endowment process.
Emma talked about the legacy of businesses in other parts of the world. The next five to ten years will see the biggest transfer of wealth in human history, as the post-war generation of business owners retire. These businesses are now worth many hundreds of millions of pounds. If their families don’t want to take over, philanthropy and other means to pass on the value for good present huge opportunities.
Endowments would allow social enterprises to create good from the beginning of their journey rather than first having to prioritise profit. Emma is excited by the idea of matching businesses with good intentions at the end of their journey with younger, socially minded businesses who need funding for growth.
The limitations of CSR
Malika explained that there are several barriers to applying CSR – particularly, but not exclusively, in Central Asia. A lack of understanding of new concepts like CSR can mean customers don’t demand responsibility from businesses. Limited resources sometimes dissuade smaller businesses from spending on CSR.
Although there are government subsidies for ‘green businesses’, there are not yet clear regulations or standards for CSR. This is something Malika regularly discusses during meetings with different ministry representatives in Uzbekistan. Another limitation is the the competitive nature of the business environment which makes it difficult for companies to prioritize CSR initiatives while they focus on maximizing profits and staying ahead of competitors.
One of the critiques of CSR in the UK, Emma explained, is that there is a difference between ‘do no harm’ and creating a ‘positive impact’. While many businesses commit to ‘do no harm’, such as not taking funding from arms manufacturers, it is also important to create a positive impact by consistently working towards something ‘good’.
Another issue in the UK is that legislation for social enterprises is not fully developed. They sit between corporate businesses and the charity sector and the legal system often forces them into one of these boxes. To navigate this, Emma was influenced by a steward-ownership model when drawing up the legal agreement for the Library of Things.
Diversity and inclusion
Across all contexts, CSR is closely related to diversity and inclusion. Malika emphasised that while CSR may be challenging for smaller businesses, a good place to start is looking within, for instance starting with inclusive recruitment practices.
In Uzbekistan, this involves a mindset change in addressing gender, race, ethnic background, disability and religion. If these are addressed from the top, with business leaders encouraging openness and a genuine commitment to change, then CSR becomes possible.
Kumush’s experience shows that structural changes, particularly in training and communication, are needed around the world. She encountered the issue of job applications asking for photos in Germany and France. If diversity is not embedded, social enterprises cannot unlock their full potential; for female founders in particular, they face systemic barriers to accessing funding: just 1% of UK venture funding goes to all women-led companies.” (Source: The Rose Review of Female Entrepreneurship, commissioned by UK Government) Note: this isn’t social enterprise specific.
Should CSR be mandatory?
Parviz Baghirov, from Azerbaijan raised the question of how to avoid constraining small businesses if CSR is imposed on them. The EU’s threshold for compulsory CSR is a minimum of 500 employees in a company. Malika suggests similar standards can protect smaller businesses.
When Mirzokhid Karshiev from Uzbekistan queried why people can’t request change from below, Malika explained that the lack of knowledge of the customers and workers rights in Uzbekistan means that no one is demanding it. Even foreign companies who apply CSR elsewhere fail to do so in Uzbekistan because it is not required by the government or the stakeholders.
As Kumush noted, there are many ways to raise awareness of CSR and integrate it into normal life and encourage personal social responsibility. Schools should teach CSR and implement projects at the simplest level, she said, while companies could find opportunities like hiring social enterprises for catering events, or enable employees to dedicate at least one hour to CSR activities.
Emma, Malika, and Kumush shared recommendations that everyone can take forward. For each of them, it is important to start from within.
Emma spoke about self-reflection and the need to recognise where your impact lies, as well as transparency and building accountability with others. Malika emphasised “responsibility at a personal level,” such as decreasing our environmental impact, so we can demand the same from businesses. For Kumush, it is vital to “do your own research and educate yourself.”
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