Author Archives: Marc Schleifer

India Improves Corporate Governance, But Also Mandates CSR

Corporate Affairs Minister Sachin Pilot (Photo: The New Indian Express)

Corporate Affairs Minister Sachin Pilot (Photo: The New Indian Express)

Last week, after nearly 12 years of debate, India’s parliament finally passed a sweeping new piece of corporate legislation. The 2012 Companies Bill replaces the previous 1956 law and introduces some major reforms to bolster corporate governance in the world’s largest democracy, which has faced questions about its potential for continued growth. According to Indian Corporate Affairs Minister Sachin Pilot, the law “aims at plugging loopholes in the system for a better… business environment,” and will “enhance transparency and ensure fewer regulations, self reporting and disclosure.”

Among other measures, the law defines the concept of “fraud” and empowers a new agency to investigate it; strengthens checks and balances in companies’ governance systems; makes board decisions more transparent; and seeks to increase the accountability of a company’s directors and auditors. The law also establishes that at least a third of directors should be independent, requires companies to rotate auditors, and tightens oversight of companies that take public deposits and of loans among a company and its subsidiaries.

At the same time, some of the reasoning behind other well-intentioned measures in the law is less clear-cut. For instance, certain classes of companies will now be required to have at least one woman board member. The overall goal here is important: to make boards more representative, thus building a more gender-equitable economy. Yet the effectiveness of such quotas has not been universally accepted, particularly because of the risk of creating “token” board slots.

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Watching for Signs of Progress in the Early Days of Pakistan’s New Government

karachi-stock-exchange-building

As reported two weeks ago in The Economist, the Karachi Stock Exchange (KSE) has boomed for the past two years, with returns over 40 percent, albeit on rather low volume. The article cites a range of factors for the KSE’s strong performance, including investors’ appetites for risky markets, a new IMF loan for Pakistan, and general optimism after the country’s reasonably peaceful elections in May. Those elections marked the first time that a democratically-elected government served out its full term and handed over power to another civilian government.

On top of that, the new PML(N) government is considered largely pro-business, both by the local private sector and international observers. PML(N) came into office having made a wide range of assurances on needed economic reforms, and as CIPE’s Pakistan Country Director Moin Fudda has written, it was the business community that was instrumental in pushing the political parties to offer concrete policy platforms in the run-up to the May elections.

But digging deeper shows that caution is in order. The $5.3 billion IMF package still requires approval by the Fund’s board in September, and the government must show that it can deliver on a long list of preconditions. Among those are reforms to the crippled energy sector. But in a recent meeting of the Council of Common Interests, which brings together leaders of the four provinces with key federal ministers, agreement on the PML(N) national energy plan was deferred for further discussion.

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CSR 2.0: More than Just Money

Photo: strikeael

Photo: strikeael

A recent New York Times report on Toyota’s work with a member agency of the New York City Food Bank has brought much-needed public and media attention to companies’ efforts to create shared value through corporate social responsibility (CSR) initiatives. Toyota’s engineers are applying efficient manufacturing principles to streamline operations at the Food Bank, getting more meals served more quickly, cutting costs and even reducing wasted transport space. This is a compelling example of what companies can do on the CSR front. Yet in some ways, the article and subsequent coverage is just as interesting as the program itself.

Consider the article’s headline – with emphasis added: “In Lieu of Money, Toyota Donates Efficiency to New York Charity” – which seems to reflect a popular notion (echoed in some online comments) that money is still the primary way in which companies deliver CSR programs.

In fact, for numerous firms, CSR has long meant more than just giving money. As noted in this report in the International Business Times, corporate volunteer programs – in which employees provide their unique and high-level business expertise to nonprofits, microenterprises, microfinance banks, or community groups – are key parts of the CSR profiles of firms like IBM, Dow Corning, Deloitte, and others. Toyota’s in-house efficiency experts support other nonprofits as well. The pro bono work done by law firms can be considered an early form of such CSR.

Such initiatives help employees feel they are part of the firm’s CSR efforts, which surveys show those employees value, thus building employee loyalty, as well as leveraging companies’ core business competencies – which is often worth more to a nonprofit than just cashing a check. Most nonprofits could not afford to purchase such consulting, skills, and advice at market prices. The companies are not just “donating”; by building the capacity of nonprofit clients, in turn helping these organizations carry out their social missions more effectively, the companies are contributing to those missions.

These principles are a key part of what is often called “CSR 2.0,” moving past philanthropy into more sustainable and effective forms of CSR. Such principles have been long accepted by the business world and CSR experts. As this recent coverage of Toyota’s work demonstrates, more work needs to be done in terms of information and awareness, in order to communicate the diversity of CSR programs to a wider audience.

Marc Schleifer is Senior Program Officer for South Asia at CIPE.

Interview with Hammad Siddiqui on Chambers and Associations in Pakistan

CIPE Pakistan Deputy Country Director Hammad Siddiqui was interviewed by the Business Recorder this week, discussing the history and reform of the country’s chambers of commerce and business associations. Siddiqui highlights the role that CIPE has played in strengthening the chamber and association movement since launching its program in 2006, beginning with an effort to re-register all Pakistan’s associations.

As Siddiqui points out, “Back then a lot of these associations did not have offices; they were operating from homes; they lacked staff and had other traits of what is oft termed ‘brief case associations.’ Over 30 percent of these briefcase chambers and associations vanished through the re-registration process.” Siddiqui also illustrates some of the problems that typically face chambers and associations in South Asia generally, including that the original founders have “a hold on the chamber or the association, even when they do not directly hold a position” and that “when they appoint a CEO to run the association’s affairs, they do not really see them as CEOs…. and in spirit, the board does not treat that person as a CEO.”

Siddiqui lays out some recommendations for the further development of chambers in Pakistan, including the need for more competition among chambers and associations, more emphasis on service provision, and a push to empower staff. Read the whole article here.

Marc Schleifer is Program Officer for South Asia at CIPE.

10 Years of Empowering Business Women in Bangladesh

Selima Ahmad with CIPE Senior Program Officer Marc Shleifer and Regional Director Andrew Wilson.

BWCCI founder Selima Ahmad with CIPE Senior Program Officer Marc Schleifer (left) and Regional Director Andrew Wilson (right).

Selima Ahmad, founder of long-time CIPE partner the Bangladesh Women’s Chamber of Commerce and Industry (BWCCI), traveled to Washington DC this week to be honored with the Jeane J. Kirkpatrick Award, established by the International Republican Institute’s Women’s Democracy Network. This award honors those who have made contributions to the advancement of women through politics and civil society around the world.

Ahmad and BWCCI certainly fit that bill, having built an organization in less than ten years from two dozen members to more than 3,000, providing training to over 1,500 women entrepreneurs to improve their business skills, and taken numerous women business owners on trade expositions to allow them to establish trade links with potential partners.

Most importantly, BWCCI has kept the focus on policy advocacy to improve the business environment for its members, to allow them to flourish and to move from microenterprises to the small and medium-sized enterprise (SME) level. In particular, BWCCI has worked on the issue of access to finance for women-owned business, as well as access to marketplaces around Bangladesh.

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Building Women’s Chambers and Associations in South Asia

south asia women entrepreneurship symposium

Hammad Siddiqui, Deputy Country Director for CIPE’s Pakistan field office, contributed to this report.

To begin addressing the issue of why some women’s business organizations thrive while others do not, CIPE recently launched a project to build links among women’s chambers and associations in South Asia.

CIPE identified 11 organizations, from Pakistan, Bangladesh, Nepal and Sri Lanka – and for the first time reached out to groups from India and Bhutan – to participate. With the assistance of long-time partner the Bangladesh Women’s Chamber of Commerce and Industry (BWCCI), conducted a diagnostic survey of these organizations’ governance, finances, membership, strategic planning, advocacy, services and other issues. The organizations were then invited to participate in a networking meeting held this February in Dhaka, Bangladesh. CIPE’s efforts complement a U.S. State Department program to build links among women entrepreneurs in the region, the South Asia Women Entrepreneurship Symposium.

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A Taxonomy of Social Entrepreneurship

A Malaria Consortium vendor sells bed nets in Mozambique. (Photo: DFID)

In a recent blog post, my colleague Molly Brister investigates the rise of social entrepreneurship, which she rightly characterizes as a phenomenon whereby local actors are able to achieve development goals or address social and economic issues when “the government may not have the capacity or ability to do so.” Having recognized the power of social entrepreneurship, many donors are eager to provide needed resources, whether financial or technical, to further these initiatives. Indeed, supporting social entrepreneurship is an attractive area for companies seeking to maximize the impact of their corporate social responsibility (CSR) dollars, as mentioned by Anna Nadgrodkiewicz in her piece on recent trends in CSR.

But in analyzing the social entrepreneurship landscape, one quickly sees that the term means different things to different groups. As Brister points out throughout her blog, the players here include “for-profit companies, nonprofits and NGOs, or even… existing resources… in government.” The landscape can be difficult to navigate, with overlapping understandings that can be difficult to unpack. To keep the conversation going, I propose a small taxonomy of social enterprise and social entrepreneurship.

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