At Ale of Three Sectors

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Social Auditing in Pakistan ± A Tale of

Three Sectors

Friday, October 22 2010

Khurram Aziz Fani (Kaif Associates, Pakistan)

Dr. Nadeem Bashir (King Saud University, KSA)

ISOSS, Superior University, Lahore.



2

Sequence of the Presentation

Background

Main Area of ResearchFocus and its Importance

Methodology

Findings

Conclusion

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Social auditing - issue evoked under Code of Corporate

Governance. Last 2 decades, pressure f r om stakeholder

to comply social responsibilities makes it important.

Seminal wor k of Bowen (1971) who argued thatbusinessmen should focus on businesses discharging

their social responsibilities.

Steiner and Steiner (1991) highlighted importance of

social auditing.

Frederick et al. (1992), social evaluation needs to have

disclosure in some for m.

Background ± Social Auditing

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Main Area of Focus «.

Stewardship Theory

Vs

Agency Theory

Vs

Stakeholder Theory

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S A creates impact upon Governance.

Linked with Social, Economic and Envir onmental issues

of organization.

Measures organizations¶¶ shared values and objectives(Prakash, 2006).

Results in impr ovement in management practices and

accountability.

Important tool in building trust (Gao and Zhang, 2006)and impr oving accountability and transparency (Zadek

and Raynard, 1995, Ebrahim, 2003, O'Dwyer and Owen,

2005).

Social Auditing « Importance

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S A is gaining pr ominence. Gr owing awareness among

stakeholders.

Aim is «««.. to analyze the current state wor k

on Social Auditing and its application in Pakistani context.

Analyze application of social auditing in a telecom sector.

Analyze application of social auditing in a food sector.

Analyze application of social auditing in oil and gas sector.

Research Aims and Objectives «.

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Theoretical Framework of Research «

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Methodology - I

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Methodology - II

Stages of Resear ch ««

1. Identif ication of issue to be

studied.

2. Investigation of published

material on CSR and Social

Auditing so as to enable the

candidate to develop

understanding about the areaand shape the resear ch

design.

3. Development/identif ication of

Resear ch instrument.

4. Conduct of case study and

collection of relevant f acts.

5. Analysis of infor mation

collected in the preceding

stage.

6. Drawing up the conclusion

about the resear ch objectives

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Methodology - III

Stages of Resear ch ««

1. Identif ication of issue to be

studied.

2. Investigation of published

material on CSR and Social

Auditing so as to enable the

candidate to develop

understanding about the areaand shape the resear ch

design.

3. Development/identif ication of

Resear ch instrument.

4. Conduct of case study and

collection of relevant f acts.

5. Analysis of infor mation

collected in the preceding

stage.

6. Drawing up the conclusion

about the resear ch objectives

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Methodology - IV

Detailed Literature Reviewwas carried out in area s like:

Need for Organizational

Governance.

CS

R ± Histori

cal Perspe

ctive.

CSR ±Area in Focus.

CSR ± Def initions and

Features.

Advantages of CSR

Recent Resear ch in CSR

Dimensions of CSR.

Social Auditing, Envir onmental

Responsibility and

Sustainability Reporting.

Diversity Acr oss Countries

Ref erence Documents weref r om Emeraldinsight, JStor andEbscoHost ,Governmental andNon-Governmentaldocuments.

Data was collected thr oughstructured interview-guides.

Questionnaire developed byBalboni et al. (2007) was used.

Conducted resear ch for

³Ministry of Housing, Planningand the Envir onment´ of Trinidad and Tobago incollaboration with UN andSouth Trinindad Chamber of Industry and Commer ce.

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Methodology - V

Data was collected f r om threef ir ms.

SNGPL, Telenor and Nestle.

Qualitative Resear ch in thefo

r m

of

CaseS

tudy wascarried out.

Data Collected during June2010.

Survey Instrument used asInterview Guide, Key

Infor mants Interview + severalunstructured interviews.

Content Analysis applied onvarious reports and websites.

Most of the interviews wereconducted in Urdu.

Triangulation of Data

Resear ch ethics were not

vio

lated Infor med response,

Sharing only what was beingtold by the respondent,

Correct reporting of thef indings,

Authenticating collectedinfor mation.

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Methodology - VI

Yin (2008) suggested that thevalidity and reliability can beImpr oved thr ough

Co

nstruct Validity,

Internal Validity,

External Validity and

Reliability

Co

nstruct C

SR is widelyaccepted and Resear ched So

construct validity is assured

Balboni et al., 2007, samepurpose (yet diff erent settings)so questionnaire would oughtto measure the same thingswith same reliability level.

Internal validity, not relevant to as descriptive resear ch insteadof causal resear ch.

Conduct of case study inactual f ield setting enables thedissertation candidate ingeneralization of f indings.

Triangulation of data ensuresthat data is collected f r om reliable sour ces.

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Findings «. Telenor - I

(Pvt.) Ltd., f inancial statementsnot required , Not ListedCompany so no code of Cor.Governance.

CSR pr o jects done insidedepartment

2008, awarded ³Envir onmentalExcellence Award´ at 5th

Annual Envir onmental Awards´.

Maintains acom

prehensivehealth and saf ety policy to save envir onment f r om potential hazards of itspr oducts and services.

For employees,comprehensive healthassurance and a medicalscheme, pension, maternityleaves, employee assistance

pr ograms, etc. Encourages participation of

previously deprived socialsector in job participation.

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Findings «. Telenor - II

has high respect for ecologicalconcerns.

As compared to other telecom o

perato

rs, Teleno

r has lim

itedinf luence on the externalenvir onment but still it iswor king to reduce the impactto its minimum.

State of the art technology andhas limited inf luence on thehuman masses.

Using ³outdoor BaseTransaction Station´ towers.,energy eff icient and able to manage tough envir onmentalconditions.

Uses better quality of generators on its cellular tower sites. Reduce gas and noisepollutions.

Extensive site audits,confor mation to own andpolicies of PTA.

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Findings «. Telenor - III

Solar Energy Generators

Emergency ResponsePr ogram. Trained employeesto cope and contribute in caseof any disasters (f lood, earthquakes, air/rail/r oadaccidents).

Khuddar Pakistan (NayaQadam)

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Findings «. Telenor - IV

Engaged in extensive mobileradiation resear ch, unlikeothers. Also f inancing.

Maintained a helpline wherecustomers can launch their complainants. Fr om other networ ks, as well.

Customer serviceinf rastructure is nations¶ stateof the art customer servicecentres.

Only company adhering to therequirements of TL 9000.,QMS is a special purposesystem designed for telecom suppliers and servicepr oviders.

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Findings SNGPL - I

Mar ket leader in pr ovision of gas. Operates in North Centralarea of Pakistan, operations inPunjab and newlycommissioned Khyber

Pakhtoon Khwa. With anexperience of more than 45 years,

Incorporated under ³Companies Ordinance 1984´of Pakistan and is listed on

Lahore, Islamabad andKarachi stock exchanges of Pakistan.

Arranges diff erent socialgatherings, employees f r om allcadres participate.Independence daycelebrations, Eid f estivity, etc..

Very recently, company hascompleted an impr oved designpr o ject in collaboration withlocal engineering university.Impr oved ther mal/combustioneff icient, Organization¶s

envir onment sustainabilityendeavours. In 2009,upgraded its ³OSHA´ to 18001-200t f r om previously held 1999standards.

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Findings «. SNGPL - II

Listing requirements of stock

exchanges and in compliance

with code of corporate

governance, the company

issues quarterlyf inan

cialstatements. The reports are in

accordance with applicable

accounting and auditing

standards and applicable

GAAP.

Rating Agency (PACRA)

changed f r om s AA to A1+,

OSHA for employees and

contractors.

Compliance to legal

requirements.

The company is also strivingfor making itself a better and

saf e wor king place.

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Findings «. SNGPL - III

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Findings «. SNGPL - IV

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Findings «. Nestle -I

One of largest f ir ms of

Pakistan which is operating in

food sector. Listed at LSE and

KSE, 1988, Switzerland.

Milkpa

kLtd.

Milk, dairy and chilled dairy,

beverages, bottled water, food,

breakf ast cereals, chocolates

and conf ectionary.

CSR initiatives include

sponsorships, charity,

community welf are pr ograms,

ecological sustainability,

employment generation, etc.

Pr ograms designed at Head

off ice while regional off ices are

given autonomy.

Regional Off ices, In charge of

identif ying and reporting CSRpr o jects

Head off ice then evaluates and

develop f ull pr ograms.

Aim is to bridge gap which was

not lef t un-f illed by the Public sector.

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Findings «. Nestle - II

Major areas are education,

community welf are, impr oving

quality of lif e and investment in

health.

Major contribution inagriculture, helped sports and

cultural events f lourish in the

country.

Spent considerable amount of

money on school rehabilitation

and advancement of

education. APWA college

mobile laboratory.

Earthquakes support in

Pakistan.

Health and Saf ety policy for its

employees, Emergency

response for employees.

Employee training and

development, skills at par Nestle S A.

Wor kplace is continuously

monitored.

Wor k-lif e balance, ethics

training, etc. health insurance,pension, entertainment / gym,

maternity/paternity privileges,

employee assistance

pr ogrammes.

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Findings «. Nestle - III

Manuf acturing pr ocesses are

so well designed that they

minimize pr oduction wastes.

Sustainability of envir onment

as less and less of thematerials are required in the

pr ocesses.

Being in the food and

beverages business, the

compliance of health and

saf ety policies are very

important for the f ir m and it is

giving due regard to this.

Helpline for complaints.

Abides by all relevant pr oduct

quality and saf ety legislation

Adaptation of ³World Health

Organization¶s Codex Alimentarius´ on

manuf acturing food items.

Laboratories at Sheikhupura

and Kabirwala were given top

grading by Nestlé S A.

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Conclusion «.

CSR and S A are on the boom.

Industry wise compliance.

Organization are complying to their Envir onmental

and Social Accountability and are increasinglyreporting these pr o jects.

Envir onmental and Social Accountability initiatives

diff er f r om industry to industry with lot of similarities

and dissimilarities.

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Question Answer Session