Etisalat Group: Corporate Social Responsibility

Introduction

The company chosen for this Corporate Social Responsibility (CSR) report is Etisalat Group. According to the company, it is one of “the world’s leading telecom groups in emerging markets with a market cap of 87.7 billion AED (23.8 billion USD)” (Etisalat, 2015). Its net profits and revenues have exceeded several billions in the last fiscal year. In fact, it is among the most profitable telecom companies in the world. Its long-term performance and good credit rating have earned it a favorable reputation. The company is headquartered in Abu Dhabi. The company has been in operation for the last 40 years and currently operates in 19 countries mainly in the Middle East, Africa and Asia. It serves more than 169 million customers.

Business Ethics and CSR

Companies are expected to uphold their moral obligations and act right in their activities. This is business ethics. For many people, ethics refers to knowing the difference between right and wrong at jobs or organizations and then doing the right thing. Theoretically, ethics in business look at ethical principles and moral issues that may occur in a business environment. It is important because acting ethically is often difficult because of competing business interests. In this regard, an organization considers its activities on products and services in relation to impacts on various stakeholders, including the community. This is the nexus between CSR activities and ethics, and Etisalat seems to have recognized this fact.

The concept of CSR is now common in multinational, regional and local companies. CSR reflects organizational practices that involve taking part in activities that have direct benefits to society from a theoretical perspective. It reflects corporate citizenship or endeavors toward sustainability developments and benefiting society. CSR is a part of strategic development for many multinational corporations (MNCs) irrespective of their origins or locations of operations (Crane, Matten, & Spence, 2008). Companies have the moral responsibility to promote CSR initiatives. Today, CSR has gained considerable recognition, and it is more prominent in many firms with global operations. Thus, focused organizations have included sustainability initiatives into their core business practices to promote shared value for all stakeholders, including society (Group Corporate Communications, 2012).

Actions of firms show that CSR is not only relevant to society and the environment, but it is now a critical part of organizational competitive advantage and subsequent success (Porter & Kramer, 2006). There is business in doing social good. Globally, communities face myriads of challenges, including persistent poverty, climate change, wars, and famine among others. On this note, the business case for taking part in CSR activities remains simple and straightforward. Business will lose much more if responsible organizations fail to act.

A View at Corporate Social Responsibility

Despite the growing awareness and widespread adoption of CSR, it continues to present several sources of concerns to organizations, shareholders and society. It has many unanswered questions, particularly in relation to ethical business practices and elements that constitute CSR activities. These responsibilities of ethical behaviors rest with individuals who make up organizations (Brickley, Clifford Jr., & Zimmerman, 2006). For several years, researchers in CSR have significantly concentrated on the link between CSR and financial performance of a company. On this note, it is argued that without a strong ‘business case’ (financial performance linked with CSR), important questions remain to be explored regarding these initiatives. Hence, it could be difficult to understand why organizations continue to undertake CSR initiatives without financial benefits.

Academics relate CSR outcomes to quality of leadership or individuals in an organization (Brickley et al., 2006). For instance, they argue that individual differences could affect CSR outcomes. This observation is made under trait theories of leadership. In this regard, CSR initiatives start with the comprehension of leadership traits of senior level managers, values, personal traits and idiosyncratic characteristics. Within this argument is the idea that leaders shape strategic objectives of their firms and that leaders’ personality, traits and values are reflected in their choices of activities. Hence, leadership from this theoretical perspective is imperative for CSR outcomes.

A lack of business results from CSR could be a critical challenge in many organizations. In fact, several firms have the notion that CSR should be treated as a business discipline and different initiatives associated with it should lead to business results. This could be demanding too much from CSR and fail to understand the overall objective of CSR initiatives (Porter & Kramer, 2000), which is to align organizational social and environmental responsibilities with the strategic objectives and values of an organization. If by engaging in such acts, CSR initiatives reduce risks, improve organizational reputation and directly contribute to business performance, then that is positive for an organization. Modern consumers are also critical of ethical organizational practices, including their initiatives on CSR. However, for several CSR initiatives, these are not their core goals but rather spillovers and not the major reasons for their existence.

Hence, one can argue that there are issues associated with the CSR in organizations due to poor alignment of CSR activities with strategic business goals (Porter & Kramer, 2000). This implies that there is a general lack of systematic ways to enhance coherence and involvement in CSR strategies.

It is imperative to comprehend how organizations devise and implement their CSR initiatives. In this case, managers, directors and senior executives are the best employees to lead organizations in driving CSR agendas. They are either directly or indirectly involved in CSR strategy development of their organizations.

Porter and Kramer (2000) show leadership is vital for CSR initiatives because they have to justify CSR activities with bottom-line profits. However, the ideal of shared value of doing good to society is the maxim that drives CSR in organizations. That is, creating economic value for an organization in a manner that also creates value for community. However, research shows that shared value does not exist and is not the norm in many organizational practices (Porter & Kramer, 2000). Instead, many organizations tend to focus on a multifaceted form of CSR that runs the scope from pure philanthropy, environmental conservation efforts to the active aim for shared value for their organizations and communities. In addition, well-managed firms are not keen on integrating CSR with their business strategies and objectives totally, but rather focus on developing forceful and convincing CSR initiatives that tend to reflect organizational values and purpose. This is a wide approach of CSR common in many companies, which can face challenges because of poor coordination of different activities.

Currently, it is depicted that CEOs and other senior managers are increasingly taking part in CSR initiatives. However, CSR activities are normally started, managed and run by internal managers in poorly coordinated manners and in most cases, without involvement of senior executives.

It is therefore important for organizations to devise and execute CSR initiatives that are coherent and well coordinated in areas in which they conduct their business operations. In fact, senior level executives and other managers should make CSR initiatives a critical part of their roles. On this note, companies are required to conduct, develop inventories, and audit current CSR initiatives. They can focus on the above-mentioned areas of CSR initiatives to drive their agenda. By determining the best CSR initiative to adopt for a given area, organizations create strong foundations for their activities.

However, it simple to observe that CSR activities in companies are limited and depend on several factors such as size of a firm, level of diversification, labor market practices, government regulations, profitability and diverse needs of communities among others. Nevertheless, a company can find a suitable level of CSR, which it can identify through cost-benefit analysis and they should determine the neutral relationship between CSR and financial performance of their companies.

Generally, it is observed that several companies have disparate and poorly coordinated CSR activities. In most cases, however, senior executives are not aware of these initiatives because they are devised and executed by managers. Consequently, such organizations fail to impact communities positively through CSR initiatives.

The case of Etisalat is a good example to show how the company has formulated and implemented various CSR activities to enhance its corporate strategies and bottom-line profitability.

Types of CSR Used by Etisalat Group

Various forms of CSR activities exist and Etisalat uses them to meet its CSR agendas. Organizations have created a wide range of practices to meet their unique CSR practices. These may involve giving donations from profits, offering services or products to deserving recipients.

Environmental Stewardship

Etisalat notes that the telecom sector has a significantly low impact on the environment and is therefore not a major polluter relative to other industries (Group Corporate Communications, 2012). Nevertheless, the world has scarce resources. On this note, Etisalat has recognized the need to conserve the environment irrespective of its carbon footprint. It focuses on reducing energy consumption and reducing the environmental impact of the life cycles of their products and services to ensure its long-term success in various (Group Corporate Communications, 2012). The company strives to ensure that its broadband and telecommunications services have a balance between social, economic and environmental needs. Consequently, the company if focused on reducing its consumption if water, energy and emission of greenhouse gases. Thus, it has adopted environmentally sustainable practices in its “technical, commercial, managerial and administrative activities and services” (Group Corporate Communications, 2012). The company’s environmental policy protection policy contains:

  • Wellness of its people and the environment
  • Entrench ecological criteria to minimize impacts
  • Innovation to develop and market sustainable telecommunication solutions
  • Etisalat Go Green – paper collection and recycling, photocopy cartridge recycling, use recycled paper to replace farmed paper for, office use, and Network printing and photocopying.
  • Use alternative energy such as solar
  • Energy Star member

Some MNCs focus on environmental affairs to meet their CSR obligations (Crane et al., 2008). It is recognized that organizations, irrespective of their sizes, have carbon footprint or interact with the environment in a given manner. Any activities that they can pursue to curtail environmental degradation are considered good for the business and communities.

Philanthropy

Etisalat philanthropic activities included commitment to international community practices. The Etisalat Group manages its operators offering best practice and advice in order to help improve social investments and corporate philanthropy in community activities (Group Corporate Communications, 2012). The aim is to ensure that Etisalat enhances the effect it is able to exert and create a strong and positive contribution to the communities in which it operates. On this note, the company’s philanthropic donations and activities have focused on two main areas, namely Health and Education (Group Corporate Communications, 2012).

In the previous years, Etisalat has worked with education, health, humanitarian aid and charity, and civil society to meet its philanthropic CSR obligations. Some of the company’s undertakings are notable in various initiatives to support Ayaadi Electronic Library, One Laptop Per Child, Adopt-A-School Program, Teacher Training Program, Fight Malaria Initiative in Nigeria and the expansion of the Kidney Centre in Karachi.

Scholars have noted that businesses also engage in philanthropic acts to meet their CSR obligations (Crane et al., 2008). They can donate proceeds to any charity organizations to support their noble course. Time, financial support and other resources can benefit most not-for-profit organizations.

Community-based programs

To enhance shared values, Etisalat works with local organizations on social projects that can have a positive effect on communities. The company chooses these activities strategically and then evaluates them in order to start suitable dialogue with key stakeholders (Group Corporate Communications, 2012). Some of these activities include Green Power for Mobile; Mobile Health (mHealth); Supporting women in resource poor countries (mWomen); Mobile Money for the unbanked; Support of agriculture and rural communities (MAGRI); Education (mLearning) and Disaster Response among others.

Labor Practices

Etisalat also considers employee relations as a component of CSR activities (Group Corporate Communications, 2012). According to the Group, it is responsible for its employees with the aim of developing a company that understands and lives its values and thus creates a culture of motivation. It strives to meet needs and expectations of all its employees. The company aims to ensure that employees are engaged in strategy developments supported with strong social goals e.g., to be among the preferred employers in the main countries where it operates (Group Corporate Communications, 2012). It strictly adheres to labor laws in countries in which it operates. Ethical labor practices are also recognized as part of corporate social responsibility. Some organizations strive to act according to ethical and moral standards when dealing with employees. In this respect, labor laws are the center of focus in CSR, and MNCs are usually monitored for any exploitative labor practices along their supply chains.

Today, Etisalat has a large number of skilled and educated employees because the company works hard to ensure that only the best talents are attracted, trained and retained. This is a key issue in its business strategy since 2013 and beyond.

In addition, Etisalat Group considers customer experience, public policy participation and human rights activities as core parts of its CSR activities.

The Company’s Policy on Ethics

The company ethical policy is reflected on its practices and involvement with all stakeholders through CSR activities. Being the most innovative and profitable mobile operator in the UAE, Etisalat engages in CSR activities to enhance its ethical practices and standards. For instance, the Rotary Club has commended Etisalat for enhancing ethical standards through community activities, business and professional conducts. According to the company, it represents a global leadership brand, and thus it believes that Corporate Social Responsibility (CSR) means “creating sustainable value for the society through innovative and sustainable products and services, while minimizing environmental impact as well as ensuring best ethical standards in dealing with our stakeholders” (Nweke, 2010).

This statement reflects Etisalat’s commitment to enhance shared value in communities. These factors include size of the company, labor market conditions, level of diversification, the industry type and products and services offered among others.

Comparison with du

Relative to other companies in the same sector, Etisalat seems to be doing well in ethical practices and CSR activities. du, for instance, CSR policy claims “the continuing commitment by business to behave ethically and to contribute to economic development while improving the quality of life of the workforce, their families, the local community and society at large” (du, n.d). For instance, du concentrates on fair labor practices and community development and ensures ethical and legal practices.

Etisalat has comprehensive CSR activities that cover several spheres of the environment, business, community and professional practices compared to du’s policy.

This may be attributed to Etisalat’s global presence and several years of operations.

While du plans to release its CSR report, Etisalat has been providing its CSR annual report for the past five years. In addition, Etisalat also evaluates them to ensure that all activities meet the set standards and promote core objectives and strategic goals of CSR while it is not clear if du reviews its CSR performances.

Overall, all these entities strive to ensure that they create shared values to communities, promote ethical standards in business practices and ensure sustainable exploitation of natural and human resources.

In the case of du, as previously mentioned, other factors influence CSR objectives of a company.

Improvements

Currently, Etisalat is doing well with its CSR initiatives and ethical practices. Nevertheless, the company can still improve in other areas through sustained practices.

  • Etisalat should continue to review and provide reports on its current CSR initiatives to align them with the overall business strategic objectives. So far, Etisalat has achieved immense success, but it must always find innovative ways to have greater impacts.
  • Coordinate CSR activities, borrow the best practices, and adapt them to other locations in which it operates.
  • Etisalat must continue to provide strong leadership to support the implementation of CSR initiatives in all areas in which it conducts business and even beyond
  • Societies are dynamic and so are there practices. On this note, Etisalat should develop new metrics to gauge CSR initiatives performance.

The company has done well on CSR activities because it includes three aspects of CSR, which are environmental practices, philanthropic activities and community-based developments. In addition, Etisalat believes that other areas such as fair labor practices, customer experience, public policy participation and human rights activities are also core parts of CSR activities.

Views on the Company’s Policy on Ethics

Etisalat has a long history of engaging in social activities and long-term commitment to CSR activities and ethical practices. The company shows its commitment to CSR activities through involvement and contributions to the Abu Dhabi community, other areas in Africa and Asia in issues related to environmental protection, donations, water conservation efforts, social activities, health and safety, and education among others. In the past, the company has promoted education, provision of health care services to the community and other services that support marginalized communities, particularly women.

The company works alongside other private and public stakeholders to implement its CSR initiatives in areas in which it conducts its business. It started health (mHealth), mobile banking for the unbanked and environmental campaigns, agricultural support services in partnership with direct beneficiaries and other bodies in order to promote CSR activities in the communities and enhance good labor relations in markets. The company notes that education is the best approach for sustainability and a core part of its CRS activities. Hence, it develops several articles and publications on health, safety, and environment for communities and schools.

A Reflection

Organizations use CSR activities to ensure to promote ethical business practices and professionalism through sustainability developments and benefit communities. It reflects corporate citizenship and the aim to create shared value. Clearly, CSR has a significant role to play on a long-term sustainability of various organizations in different industries. It enables organizations to account for their impacts on stakeholders and the environment.

Etisalat has demonstrated that a balanced approach to CSR activities as it focuses on social, economic, and environmental issues to promote greater good and shared value to all stakeholders. The company notes that it selects various CSR initiatives to undertake within a given period in order mitigate some of the identified “local economic development; education; environment; health and personal finance” (Etisalat, 2015) in areas in which it has footprints.

CSR practices should engage all stakeholders and in fact, Etisalat engages communities to discuss and initiate their preferred projects. It also needs innovative approaches, skills, and closer cooperation with social partners.

In this case study, Etisalat demonstrates how CSR initiatives are used to create shared value for all stakeholders by promoting environmental conservations, community-based development and philanthropic activities to support various projects. This case shows that Etisalat has successfully implemented its CSR strategic objectives to support its business long-term success and promote ethical and professional business practices.

Etisalat’s CSR activities strive to go beyond the normal regulatory and compliance requirements. Instead, the company focuses on a greater outcome for the entire community. For instance, Etisalat has reached out to schools, communities, health centers and areas of social interests to support them through its mobile platforms.

Etisalat has shown that its key business strategy is based on sound CSR activities to limit environmental impacts and promote sustainability agenda and therefore the CSR initiatives were generally successful.

The case findings show that CSR initiatives are ambitious, evaluated, coordinated and reported to the public and are aligned with strategic business objectives. In addition, the company has not experienced any implementation challenges because of constant evaluation practices. The supportive leadership has played a critical role in the overall success of CSR initiatives. The growth of the company and commendations indicated that the company CSR initiatives are successful, and are noticed by other stakeholders.

Despite this success, the company must continue to improve its CSR initiatives, introduce new standards of evaluation and focus on program evaluation and reporting.

It is noted that the recommendations provided would be adequate to address any possible CSR challenges that the company might have.

While businesses are driven by profits, CSR initiatives go beyond profits. Executives must not find it hard to explain the bottom-line profits when implementing CSR initiatives because consumers tend to support organizations that focus on enhancing greater good to society. In this manner, companies create strong consumer base that will support them to achieve their long-term objectives, including profitability.

Conclusion

This report covers business ethics and CSR initiatives by using the case Etisalat. It shows that business ethical issues may arise in business environments and thus CSR activities are required to enhance moral good and benefits to society. Businesses may achieve CSR initiatives through community development, philanthropy and environmental initiatives, and Etisalat has adopted all these three approaches. It also shows that companies in the same industry may not achieve same levels of CSR involvement because of various factors. Etisalat can improve its CSR initiatives through constant evaluation, innovative approaches and reporting.

References

Brickley, J. A., Clifford, Jr., W. S., & Zimmerman, J. L. (2006). Business Ethics and Organizational Architecture. 1-25.

Crane, A., Matten, D., & Spence, L. (2008). Corporate Social Responsibility: Readings and Cases in Global Context. London: Routledge. du. (n.d). Corporate Social Responsibility Policy. Web.

Etisalat. (2015). Company Profile. Web.

Group Corporate Communications. (2012). Etisalat CSR & Sustainability Report 2012. Web.

Nweke, R. (2010). Nigeria: Rotary Club Commends Etisalat On Ethics. All Africa. Web.

Porter, M. E., & Kramer, M. R. (2000). The Competitive Advantage of Corporate Philanthropy. Harvard Business Review, 5-16.

Porter, M. E., & Kramer, M. R. (2006). Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review, 2-16.