CSR Guidelines for the Financial Sector - page 34

An organization should be particularly careful, however, about rejecting stakeholder concerns because of cost
considerations. Addressing stakeholder concernsmay involve additional costs, however, over the long run, these
costsmay be offset in other ways, such as ease of project expansion or reduced site vandalism, or even avoidance of
product sabotage by disgruntled employees drawn from the affected community.
Example
I was at a client’s offices confronted y strong resistance to stakeholder engagement. To bring the topic to life, I asked
my client to tell mewhat their business risks are?
The answer: The safety and security of the factory sites that are in remote areas within the poverty pockets of the
country.
My response: CSR is a tool that can address those risks to ensure the sustainability and growth of your operations.
Allowme to demonstrate how. . .
Safety and security of the factory sites that are in remoteareas that arepoverty pockets of the
country.
Naturally establishing factories in poverty pockets aremore financially feasible because of all the tax brackets and
financial incentives offered by the government to operate there. However, in principle the ideawas not just to set up
factories but also to create economies of scale to allow for the improvement of the living andworking conditions of
such areas. Therefore, to operate factories there, it is essential to engage the local communities for support as
oppose to alienate them.
The natural consequences of alienating them is lack of security, high rates of vandalism or in the best case no
support or back up from the local community.
By engaging the local community, the organization can identify the causes behind the dissatisfaction or lack of
support from the local community and address such causes in an effectivemanner. For example, the dissatisfaction
caused by the local community could be out of spite, out of a need for food, shelter etc. or formere entertainment.
The organizationmay resolve the substantial business pain by simply undertaking any of the following:
- If out of spite, then it would be valuable to address why such spite arises and address such issue be it spite for
environmental waste, spite for congestion or a number of other causes.
- If out of a need for food, shelter etc. then it would be valuable for the organization to identify how to support these
communities to attain sufficient food or shelter – by training them and increasing their employability can
substantially influence this.
- If formere entertainment then an investment into the encouragement of sports or alternativemeans of
entertainment is worthwhile.
Each of the above options ismore sustainable and provides a longer-term solution that ismore cost effective than
upgrading the security of the parameters of the factories. This is what stakeholder engagement andCSR aspires to
achieve; business benefit, community satisfaction – awin-win situation.
CSRGUIDELINES FOR THE FINANCIAL SECTOR
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