Beyond the bottom line

Updated September 23, 2019

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Most corporate leaders in Pakistan are as ignorant about SDGs as they are about the cosmos. — Dawn
Most corporate leaders in Pakistan are as ignorant about SDGs as they are about the cosmos. — Dawn

Most corporate leaders in Pakistan are as ignorant about the Sustainable Development Goals (SDGs) as they are about the cosmos.

But many heard with patience when they were told that the first five of the 17 SDGs were alleviating poverty, ending hunger, ensuring health care, providing quality education and achieving gender equality.

“What am I supposed to do?” asked the managing director of a mid-sized textile unit. And as an afterthought, he pulled out a file from his desk drawer and spread out the company’s balance sheet. He tapped the dark red on the profit-and-loss account and said: “See, this is what I get from the hard work that I and my sons put in throughout the year.” And the conversation shifted quickly to the lamentations about the rising cost of production, unavailability of power, water and electricity, change in the government’s economic policies and the uncertainty that shrouds the corporate scene.

“Still, I look after my employees. Give them enough salary and have an in-house doctor if an employee is injured.” Some of the company bosses rolled up their sleeves when it was suggested that ensuring minimum pay and quality health care and education for their employees and their family members were the responsibility of the employer as a good corporate citizen.

They fiercely argued that if they were paying in taxes more than three-fourths of the meagre profits they earned, the responsibility for taking care of these people lay squarely with the government.

An official at the regulator’s office said that the Code of Corporate Governance did not deal with the SDGs as no compulsory burden can be placed on companies. He equated philanthropy with the SDGs and pointed out that companies as well as their bosses were more generous than most other civilised nations. The Policy Board of the Securities and Exchange Commission of Pakistan provides guidance to the commission on different matters. “The board is interested in unwinding the onerous regulations rather than adding new ones,” a member of the Policy Board said.

‘The SECP Policy Board is interested in unwinding the onerous regulations instead of adding new ones’

It is preposterous to expect most listed companies, which are generally owned by old-fashioned owners, to think beyond their bottom lines. But big corporations, which are usually the subsidiaries of multinational companies, have to adhere strictly to the work manual handed down by their head offices in developed countries.

Flipping through the pages of their annual reports and accounts, one finds the SDGs and adherence to them mentioned, although not necessarily by that name. The regulatory requirements stipulate that companies should provide a mission statement, vision, nurturing values and statement of compliance with the Code of Corporate Governance. While it is taken as a routine matter by most local companies that bring forward the same old stuff year after year, big conglomerates and multinationals provide latest information about their contributions society during the year under review.

A committee that oversees the “Best Corporate and Sustainability Report Awards” scans through all major company reports to verify that such areas are covered and adequately explained according to the standard international practices.

In its Management Report for 2018, Nestle Pakistan states: “Globally, we have defined three overarching ambitions for 2030, which guide our work and support the achievement of the United Nations Sustainable Development Goals.” It lists its goals as helping 50 million children live healthier lives, improving 30m livelihoods in communities directly connected to the company’s business activities and striving for zero environmental impact on the company’s operations. The company goes on to explain: “Nestlé Pakistan believes in Creating Shared Value (CSV) for the communities in which it works and lives. Our global focus areas are firmly embedded in our purpose. Individuals and families, our communities and the planet as a whole are interconnected, and our efforts in each of these areas are supported through our 42 specific commitments. These commitments will, in turn, enable us to meet our ambitions for 2030 in line with the timescale of the SDGs.”

Engro Corporation, another major conglomerate, states in the Social Capital chapter of its integrated financial report for 2018: “Our strategy has focused on social wellbeing of communities in the areas of our operations. Our inclusive business model does not restrict itself to only community-based social welfare programmes, individual welfare within society is also a key element to our overall value creation model.”

The company adds: “The model ensures financial contributions from Engro Corporation’s subsidiaries along with our external donations are invested by Engro Foundation in to our key thematic areas of livelihood, skills development, education, health, and infrastructure and disaster relief. However, Engro Corporation does not restrict itself to value creation through foundation alone. Our subsidiaries are fully independent to exercise social and economic welfare initiatives on their own whenever and wherever possible.”

Published in Dawn, The Business and Finance Weekly, September 23rd, 2019