Originally perceived as a crude public relations tool some 40 years ago, corporate social responsibility (CSR) is now a vital element in reducing the economic, social and environmental impact of overseas business operations or re-location.

Local community

Maintaining good relations with local communities can prove to be a real test of resilience, particularly in markets where the emergence of Western brands may be met with distrust or outrage. In a bid to better understand unpredictable markets and reduce damage to profitability or reputation, many companies now look to formal partnerships with non-governmental organisations (NGOs) for guidance.

CSR is a malleable term, with little consensus among businesses as to how it should be approached. The absence of a proven cut-and-paste strategy frequently presents new challenges to businesses across a wide range of sectors. But changes in the social, political and commercial landscape over the past several decades have prompted businesses to take a fresh view of CSR as a broader, much more effective approach to overseas operations.

This is particularly evident in several African countries with prominent extractive industries, such as mining and oil, which may be linked to a history of endemic corruption, war or conflict. However, the days of getting into bed with dictatorships to negotiate long-term contracts - with promises of a share in resulting profits - are catching up with companies. It is time for these businesses to show revenue is being used to benefit the local community.

Relocation - foreign venture

The emergence of democratically elected leaders, such as Joseph Kabila in the Democratic Republic of the Congo and Ellen Johnson Sirleaf in Liberia, has sent a warning shot across the bows of businesses dealing in this unscrupulous manner. Now the real challenge for these companies is to prove their worth, either to the government, local community or directly to the local environment, if they are to retain these valuable licenses. There are lessons to be learned here for any company operating internationally, looking to relocate or considering a foreign venture.

There are many ways in which a business can approach CSR, although specific issues will vary between countries and regions. Prior assessment is required in order to gauge the impact a new venture will have on an area and the health and security risks it will face. At this stage, nothing must be overlooked, giving consideration to economic, political, medical, environmental and social factors.

Western organisations often encounter issues when creating a new base in an area with high unemployment. For example, this can draw large numbers of potential workers, predominantly male, where there are, perhaps, limited positions available. In turn, this may lead to an influx of unemployed young men to the local community, creating fertile ground for drug abuse, social disorder, prostitution and criminals preying on desperation.

National recruitment programme - social infrastructure

Again, the nature of this impact must be considered at planning stage and can be prevented by setting up a national recruitment programme. This must clearly state the positions available and the type of candidate required to reduce a rush of unemployed to the surrounding area. When these positions have been filled, the company must help the community scale up to cope with its increased population, by establishing a social infrastructure which provides, medical care, education, accommodation and policing to workers and their families.

Sustainable impact

In developing countries, Western companies may bring these resources with them to provide for expatriates and other workers, setting up health care facilities on the ground far more advanced than what has previously been available in the region. This creates an opportunity to use these resources to improve, for example, the medical care available to the local community. However, multinationals must ensure these resources are targeted sensibly, to achieve the maximum sustainable impact. Tapping into the expertise of NGOs, in order to gain an understanding of what the local community needs, is increasingly recognised as one of the most effective approaches to this challenge.

NGO relationships

While relationships between NGOs and the corporate world have proven inconsistent in the past, even openly hostile, they have recently grown to be incredibly effective in enabling companies to engage with local communities and avoid issues such as those encountered in Africa. This turnaround in attitudes is thanks to high-level engagements between companies and NGOs, which have proven to be a great success.

Although they are often under-resourced, NGOs must never be discounted. These organisations are trusted, have intricate knowledge of the environments in which they operate and have established an invaluable network of relationships and contacts. Conversely, businesses looking to establish a foreign venture have significant resources, but very limited knowledge of how to apply them effectively when attempting to engage with local populations.

While the third sector has professionalised considerably in recent times, it is still crucial for a company to engage with an NGO partner which is reputable and has the relevant expertise required for the task at hand. Organisations such as Action Against Hunger, Save the Children and Medicines Sans Frontier have decades of experience and credibility.

Honourable intentions

However, NGOs will only engage with a company which has honourable intentions and is not simply trying to paper over the damage it has done already. Unless a business can show it is genuinely trying to make amends, or operate ethically and in the best interests of the host community, then an NGO is unlikely to help.

Corporate citizenship

Failing to engage with local communities can have severe consequences. Even viewed in cold, commercial terms, good corporate citizenship is in the best interests of any business looking to remain sustainable in foreign markets at the risk of protest, strike action or worse, terrorist activism. CSR is not simply a means of ensuring a profit in difficult overseas markets: But it ensures the safety of expatriates, local employees and the community at large, the value of which cannot be gauged in monetary terms.

Mike Penrose is Regional Security Director for International SOS. He is a former senior conflict and humanitarian affairs adviser to the UK Department for International Development (DFID) and lead humanitarian adviser to the Secretary of State for the Great Lakes and Horn of Africa. Since joining International SOS, Mike has been seconded to the UN World Health Organisation as the Head of Operations for Banda Aceh, following the 2004 tsunami, and to the UK Foreign Office and DFID as response adviser and Honorary British Consul for Northern Pakistan, following the earthquake in 2005.