Operating in politically and socially volatile regions need not be a potential recipe for disaster. Mike Penrose gives some guidelines for a strategy that will benefit both your business and the local community

Despite having emerged as a distinct concept around 40 years ago, it is only relatively recently that corporate social responsibility (CSR) has evolved from a crude PR tool, into a core element of companies’ approach to their overseas operations. Among more forward-thinking organisations, CSR is now a key tool for managing a wide range of risks associated with operating in challenging environments. From maintaining the health of workers to retaining lucrative contracts and even pre-empting violence, genuine engagement with local populations can deliver benefits which vastly outweigh the up-front investment.

The shift in corporate perceptions of CSR has accompanied a widening of its scope and purposes. For decades, the responsibility in question was viewed as only covering charitable donations, the wellbeing of employees and, latterly, the natural environment. However, a number of factors have pushed corporations into viewing CSR as a means to other, broader ends.

This is perhaps best demonstrated in the extractive industries in Africa, where changes in the political landscape, as well as the consequences of previous mistakes, are forcing real change.

In many African countries suffering from endemic corruption and a long history of conflict, long-term contracts for lucrative mining and extraction sites were awarded in a questionable manner. These contracts have benefited their recipients a great deal, but have often delivered very little back to the community, either socially or economically.

But with the emergence of democratically elected leaders, like Ellen Johnson Sirleaf in Liberia and Joseph Kabila in the Democratic Republic of the Congo (DRC), the license-holders are finding their benefactors are now in the dock and their tenure has become decidedly shaky. Even some legitimate players face renegotiation of their contracts, and are having to demonstrate their benefit, either to the government or directly to the local environment.

In this new climate, the ability of the extractive industries to demonstrate a lasting benefit to the host population has become a powerful bottom-line issue. This is reflected in the formation of organisations such as the Extractive Industries Transparency Initiative, which has done a great deal to spread best practice, as well as allowing businesses to demonstrate their commitment.

Investing in improvements to the immediate environment can also have significant operational security and cost benefits for any organisation setting up in a medium-to-high risk region. It is, perhaps, in this area where the increasingly sophisticated approach to CSR has gone farthest in overturning outdated orthodoxy.

Clearly, the specific issues to be considered will vary from country to country and site to site. But when assessing the impact a new operation will have on an area – and the risks it will face – organisations must cast their net over environmental, social, medical, economic and political factors.

To give an example relevant to most large western organisations, any new base in an area with high unemployment will draw large numbers of would-be workers, predominantly young men, from the surrounding area. There probably will not be jobs for everyone, so what may have been a relatively small local community is quickly swollen by an influx of unemployed young men. Unless managed carefully, this can be fertile ground for social disorder, prostitution, drug abuse and crime.

Planning is crucial

Such scenarios have to be tackled at the planning stage. The first step is to manage expectations by initiating a national recruitment programme, which is very clear about the nature of the work and the kind of people sought. Then the local infrastructure needs to be in place for the new workers and their families, not just in terms of accommodation, but also social infrastructure including education, health and policing. In most cases, it would be impractical to expect existing services to cope with the kind of population growth a major new operation will trigger.

Particularly in developing countries, western organisations are likely to bring their own resources in for expatriates and other employees. For example, to meet their duty of care to workers, such companies are likely to have healthcare facilities on the ground which are far in advance of what has historically been available to the local population.

This presents a fantastic opportunity to channel some existing resources and expertise into improving the standard of living among the local people, through initiatives such as clean water programmes, malaria management and HIV/AIDS prevention.

However, it is vital that any such infrastructure is sustainable. Often in the past, companies have built expatriate-level clinics for the local population, have stayed there for ten years and then left. The support then available through the state has not proven sufficient to support that kind of facility, and communities have been left with a lot of sophisticated, expensive equipment which they cannot use.

A far better option is to assist the local community in developing its own infrastructure. This might start with a health impact assessment, looking at the endemic health challenges, as well as the scaling challenges which might emerge as the growing operation attracts more people to the area.

Finally, to get full buy-in, it is important to ensure those initial resources benefit not only the migrant workers, but also the people who are indigenous to that area. If handled correctly, even rapid expansion can benefit everyone, with incoming employees contributing to the local economy and stimulating businesses.

&#8220Global corporations are not typically geared up for social development


As part of the broader security picture, winning the loyalty of the local population by being a good corporate citizen is one of the best risk management strategies an organisation can take. They are more likely to protect you if they recognise you are a resource which is valuable to them and, surprisingly often, the earliest indication of incoming trouble will be a local person saying ‘don’t worry, we’ll look after you, but just to let you know…’.

Of course, CSR is not going to replace walls, barbed wire and CCTV any time soon, but organisations should look at broadening their recruitment away from the traditional base of security experts. The kind of ex-services security specialists who often fill such roles will tend to approach the security challenge from a purely tactical standpoint. Such expertise remains invaluable in more challenging environments, but employing exclusively tactically-focused individuals will result in a purely tactical solution. Organisations need to balance traditional security with people who understand the concept of social development, economics and how countries and economies can change and be influenced.

The final area of cost saving is investing in the education and training of local employees, turning them into more skilled, qualified workers. This will have a huge impact on the bottom line in the long term. Initially, organisations typically have to pay a lot of expatriates large sums to do even moderately skilled jobs. By developing local skills, companies can benefit their stakeholders by greatly reducing the cost of their workforce while still making employees relatively wealthy and keeping that money in the local economy.

There are many arguments for investing in improved CSR, and these are now widely accepted by the majority of companies. But global corporations are not typically geared up for social development and, in some cases, will not be setting out with an enormous reserve of goodwill in the bank. Delivering change in a way which meets the goals of improved commercial and physical security, reduced costs and sustainable improvement of the local environment can be a serious challenge. The solution needs yet more bridge building.

Select your partners

In the past, the relationship between the corporate world and non-governmental organisations (NGOs) has typically ranged from wary to openly hostile. But looking at the high-level engagement which now exists between organisations, such as BP and Save the Children, it is astonishing to see how much and how quickly this relationship has improved.

Of course, this makes perfect sense. The NGOs are trusted, have a very deep understanding of the environments in which they operate and an invaluable network of contacts and relationships, but are often under-resourced. The corporations have colossal resources, in terms of both funds and potentially useful expertise, but need help engaging with local populations and targeting their resources to the maximum effect.

While the old image of tie-dye, kaftans and the magic bus to Marakesh is largely outdated, it is still important to select NGO partners that have relevant expertise as well as good intentions. The larger organisations, such as Save the Children, Médecins Sans Frontieres and Action Against Hunger, are highly professional and have decades of experience and credibility, doing an exceptional job under often very difficult circumstances.

That said, NGOs will only deal with organisations which are squeaky clean, or can demonstrate they are trying to be. The intention has to be honourable – if there is any suggestion the business is simply trying to ‘make nice’ to overcome errors, an NGO is unlikely to help.

Even when an organisation has established itself as a valued part of the local community, risks may arise which cannot be averted or managed into the margin of acceptability. During major violence, political unrest or natural disaster, it may be necessary to evacuate temporarily. This represents a huge moral dilemma and, unless it is handled sensitively, can wreck many years of hard work and investment in CSR.

International convention dictates that companies cannot evacuate local people, but that does not mean they should be left to their fate. Preparation is the key here, and an emergency plan, detailing the provisions made for those left behind – including a sustenance allowance and security arrangements – should be set out in detail on day one. These details should also be made very clear to everyone affected, to minimise the risk of the community feeling that they have been abandoned or misled. Quite apart from the moral obligation, this approach will help keep company property secure and greatly ease any subsequent return once the crisis has passed.

The bigger picture

Finally, it is important to consider the bigger picture and the very long term role our corporations play in global security. Understanding this and the risk management challenges it presents is important.

In areas like the DRC, where conflict, corruption and violence are endemic and western organisations are viewed as exploitative, retrofitting social development policies is never going to be easy. But that does not mean we should not try. In the DRC, decades of war have de-skilled the population, the educated elite have died and the education system has withered away. This has taken place over generations, so it is going to take generations to put right. This is a very different challenge to somewhere like Zimbabwe, where there is still an educated middle class and time for them to rebuild the country.

With changing attitudes among governments, customers and partners, businesses can no longer afford to treat CSR as an isolated exercise. We can see the terrible consequences of failing to engage with local populations. Traditional security methods have a role to play, but sustainable business also means tackling the long-term risks, and that cannot be achieved at the barrel of a gun.

For more analysis: Positive loval engagement