Insights and Analysis

In Cambodia: Is Corporate Social Responsibility a Luxury or a Possibility?

December 10, 2008

By Véronique Salze-Lozac'h

One might wonder whether, at a time of financial turmoil and economic uncertainty, Corporate Social Responsibility (CSR) is the most urgent economic issue to discuss.  One might argue, when hundreds of thousands are expected to lose their jobs and as many enterprises are struggling to simply survive throughout the world, that companies would be better off focusing on their primary needs, concentrating on reducing costs, and improving productivity and market shares. Indeed, one might think that CSR is a luxury that enterprises cannot afford at a time of economic crisis or that for a country like Cambodia, which is still in its early stage of development, not a priority.  However, it is precisely the issues of productivity, competitiveness and economic development that were discussed a few days ago at the first conference on Corporate Social Responsibility organized in Phnom Penh. 

This private-sector initiative supported by United Nations Development Program (UNDP) offered an opportunity for executive managers from large multinationals, but also entrepreneurs from local Small and Medium Enterprises (SMEs), civil society representatives, and officials from the public sector to share their views on the importance of CSR in the economic development of Cambodia. To the participants, CSR makes perfect business sense, even at a time of economic crisis — maybe especially at a time of crisis.

At the conference, CSR was presented as a way to mitigate risk by improving the image of the company and its attractiveness for clients, partners, and employees.  CSR is often seen as a company’s reaction to pressure from buyers, investors or governments; but the trend is moving towards including CSR and philanthropic activity as part of the enterprise’s regular strategy of doing business.  CSR becomes proactive management and a voluntary act of organizations to take responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities, society, and the environment.  The idea is for companies to integrate innovative measures in employee relations, environmental sustainability, governance and transparency, and stakeholder engagement as a way to develop a management style and image that will translate into a comparative advantage in the marketplace.

Research is still needed on whether or not there are strong, direct correlations between CSR and improved productivity — or increased market shares. However, at the conference, several enterprises, such as ANZ Royal Bank, or the local Yejj Group, have not been waiting for quantitative evidence to adopt CSR as a clear and deliberate strategy to reduce turn-over, increase job satisfaction, develop a positive image, and ultimately, in their view, contribute to the competitiveness of the company.  Similarly, some public officials in Cambodia stressed the opportunity to use CSR as a “marketing tool” to enter new markets, attract foreign investments, or develop new partnerships.

Such approaches have already been tested in Cambodia.  The country gained its positive reputation in the garment sector for its high level of compliance, ensured by Better Factories Cambodia, a program managed by the International Labour Organization (ILO) and supported by the Royal Government of Cambodia, the Garment Manufacturers’ Association in Cambodia (GMAC), and unions. Based on this experience and other initiatives such as the “Clean Business Initiative,” CSR was presented at the conference as an opportunity for Cambodia and its enterprises to engage in sustainable development.

However, many challenges face Cambodia and Cambodian enterprises before CSR can become standard practice in the country. These challenges include developing a culture of transparency and consultation at the macro and micro level; building CSR competencies in the public and the private sector; adopting environmental good practices and adapting CSR to SMEs that constitute the majority of local enterprises. It also means creating and implementing a supportive legal environment and improving economic governance, which is the macro-economic counterpart for CSR.

CSR supporters may still be a minority within the private and the public sector in Cambodia, but their common statement at the end of the conference shows the beginnings of what will hopefully be a long-term trend.  Participants agreed that they would “work together to promote CSR in Cambodia and promote the image of Cambodia as a land of CSR, around the world.” More importantly, the conference proved that it is time to stop looking at CSR as a luxury for large multinationals and to start looking at it as a business strategy from which SMEs can benefit, too. CSR may not be the panacea we are all looking for, but it might very well be one of the possible long-term responses to the crisis.

Véronique Salze-Lozac’h is The Asia Foundation’s Regional Director for Economic programs. She is based in Phnom Penh and can be reached at [email protected].

Related locations: Cambodia
Related programs: Good Governance, Inclusive Economic Growth


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