Corporate
social responsibility is on the increase in Israel, but it still has a long way
to go before it catches up with other Western countries.
On the very day Bank Hapoalim topped
Transparency International-Israel’s 2016 report on corporate transparency, the
scandal involving its former CEO, Zion Kenan, came to light. It was a stinging
irony for customers, who learned about the claims of sexual assault, secret
mediation and a huge payout that, essentially, came out of their pockets.
Beyond dismay at the apparent grievous
violations of the basic elements of corporate responsibility in the Hapoalim
case, those who advise on corporate responsibility in Israel take a longer
view: “Every such crisis is an opportunity to insist once more how vital it is
to adopt the principles of corporate responsibility as a business and a general
strategy – and how, in the long-term, these principles also reduce risk and
contribute to profits,” says one experienced consultant in the field.
The European Union defines corporate social
responsibility (CSR) as “the responsibility of enterprises for their impacts on
society, and outlines what an enterprise should do to meet that
responsibility.” In other words, if it wants to earn public legitimacy, a
corporation cannot donate generously to hospitals and simultaneously conceal
worker exploitation by its subcontractors; it cannot boast of its employees’
communal involvement while simultaneously polluting the environment; it cannot
misuse public funds and then absolve itself by donating to children in need.
“This outlook takes into account not just how
much money you make, but how you make it, and how this activity impacts those
around you,” says Elaine Cohen, CEO of CSR consulting firm Beyond Business.
Easier said than done: A corporation’s
conduct can often adversely impact workers, customers, suppliers, the local
community, the environment and the public at large.
Box-ticking operation
While the concept of corporate responsibility
has been around for over a century, it made its first real inroads in Israel
about two decades ago – largely thanks to the local branches of global
companies that operated by the parent company’s standards.
By 2008, several dozen companies here had
full- or part-time corporate responsibility managers. Maala, an NGO that works
to promote corporate responsibility, says there are now 150 CSR managers in the
business sector in about 50 companies: 50 are employed full-time and 25 of
these are also senior executives, with a good chance of participating in and
affecting decision-making. For the remaining 100, CSR is just one of a number
of areas under their responsibility.
About 80% of CSR managers in Israel are
women. Revital Bitan, CSR director at Intel, believes the high number of women
in this position is indicative of the holistic abilities required to perform
the job.
“Our job is to look at all the worlds, to be
in touch with all the branches and all the relevant parties and to identify
opportunities, to create connections and bridges,” she says. “Women are
naturally gifted with such abilities.”
Data from Maala, which has been ranking the
ethical, social and environmental conduct of Israeli companies since 2005, show
that the number of companies adding a CSR position has grown at a rate of 10%
every year. But Daniela Prusky-Sion, CSR director for Strauss, says that “even
the placement companies don’t always know what it means. After years in the
profession, I still have to explain what I do over and over again.”
In many ways, a CSR director’s job is very
similar to that of the CEO, says Nir Koren, head of CSR and sustainability for
accounting firm BDO Ziv Haft. “This person is supposed to see the company as a
whole, to measure the achievements of all the departments, to set goals, to see
what’s happening in the world, to identify risks and opportunities, and bring
the necessary pressure to bear in order to harness all the relevant parties to
move the organization forward,” he explains.
The other side of the coin, of course, is the
lack of correlation that often exists between the prestigious title and the
ability to have real influence.
“In the worst cases, there are companies that
just want to ‘check off the box’ – the ones that tell you, ‘I have a bidding
process coming up next week, draw up an ethical code for me.’ It’s clear from
the start that such companies only view CSR as a superficial thing; that it’s
not something they actually believe in,” says Ivri Verbin, CEO of consultancy
firm Good Vision.
“On the other hand, you have organizations
that spend a year and a half working on their ethical code because they’re not
satisfied and want to improve,” he says. “A lot depends on the CSR manager, but
it also depends a lot on the organization. Not every place attaches the kind of
importance to CSR that we would like to see.
“Another parameter for a CSR manager’s
effectiveness is the organization’s ability to measure, report and set goals,”
continues Verbin. “When a CSR report merely reports what was done in the
previous year, that’s not sufficient. A good manager has to be able to listen
to all the parties involved and make innovative connections. He can do a
certain project just because the regulator compels him to, but he could also
find opportunities within that project to improve employee conditions and
reward customers.”
Some recent examples of CSR directors leading
companies to take innovative steps: Last year, Roche Pharmaceuticals, in
conjunction with the Israel Cancer Association, issued a guide – in Hebrew,
Arabic and Russian – for women diagnosed with breast cancer, to aid in managing
the disease and the daunting bureaucratic process that often follows diagnosis;
and Delta Galil Industries was recognized for excellence by the Israeli Society
for Human Resources Management for its Be Yourself program, which encourages
employees to be proactive toward better living, healthy living and
self-improvement in both their personal lives and the workplace.
Beyond greenwashing
With more and more companies adopting
practices that, in CSR parlance, go “beyond compliance,” the question must
still be asked whether corporate responsibility in Israel largely comes down to
“greenwashing”: the addition of some esoteric activity mainly intended for
image-boosting purposes, but which pales in comparison to the company’s primary
business activity – which may be seriously detrimental to the public.
“Every CEO and CSR director, and the public
as well, should be looking at how authentic a company’s conduct is in this
regard,” says Maala Director Momo Mahadav. “Of course a company has to make a
profit, but the motivation for success only increases with the understanding
that it has to provide something that is inherently valuable.”
Beyond Business’ Cohen feels Israel is still
far behind in terms of CSR. “A lot of things involving CSR are done for
business considerations, or outside pressures, or a desire to avoid risk,
rather than out of thought about the opportunities that such activity can
hold,” she says. “Many companies submit annual CSR reports because they know
they need to do so to be on the playing field. But they haven’t yet developed
much of a commitment to it, or an awareness of the long-term profitability that
can come with it.”
Changing attitudes
Mahadav believes that corporate
responsibility in Israel is maturing. “As you mature, although you lose the
innocence and boundless hope of youth, you also learn what to focus on,” he
says. Much of this maturity derives from the change in public attitudes toward
corporations. A 2016 Maala-GlobeScan survey of public expectations from Israeli
businesses found that in the food and drink industry, for example,
healthfulness and the quality of ingredients in a product was of the highest
concern; the previous year, price was the top concern. For the pharmaceutical
industry, the top concern last year was the development of new drugs; the
previous year it was accessibility and price.
“This is a real revolution,” says Mahadav.
“The public is saying, ‘Go ahead and make a profit – but we also expect some
absolute good from you, some inherent value.”
“In the past couple of years, we’re not just
talking about how much a Milky pudding costs, but what’s in it,” agrees Amir
Adar, founder and CEO of Kaima Research, which does sustainability research and
analysis.
“Consumers, and worker associations, are
showing much greater awareness,” he notes. “The global companies understand
they have to listen more closely to the public. We’re starting to see this
change with local companies, too, though not at the pace we anticipated.”
The idea is that every step a company takes
to create financial value should simultaneously yield some social value, so
it’s a win-win for the company and its stakeholders. Thus, in its project to
build the Ashalim solar thermal power station – which includes the use of
numerous mirrors – Shikun & Binui pledged to the banks financing the Negev
project that it would employ local Bedouin in the adjacent mirror factory.
“We were committed to principles of
sustainability before this, but this project set a new threshold for us,” says
Uri Ben Porat, the company’s vice president for sustainability. “We do it
willingly not only because we care about protecting the environment, but
because we also benefit: The more we involve the stakeholders, and the more we
concern ourselves with renewable energy and environmental preservation, the
more we also protect the company from risks and fines, from project delays, and
from potential legal troubles,” he says.
Despite the frequent frustrations they
encounter and their awareness of how far Israel lags behind Europe and the
United States when it comes to corporate responsibility, CSR directors in
Israel are generally optimistic. “Five years ago we wouldn’t have been having
this conversation,” says BDO Ziv Haft’s Koren.
“The change is sinking in,” he says. “Outside
investors, the standards overseas, regulation, clients and the public are all
telling companies: We don’t care where you volunteered or what cause you
donated to; we care about your core activity – your product or service, your
business environment and your treatment of stakeholders. The pressure to
improve is coming from all directions.”
-Harretz
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