By Dale Lee, Co-Founder & Managing Director at CoffeeWORKS Limited
Corporate Social Responsibility (CSR), sustainable business practices, business ethics, and similar terminology are now well familiar to most people, including companies operating in Thailand. Those of us in business recognize the continuing importance customers and communities place on the way companies and brands operate in regards to environmental impact, worker livelihoods including those in far away supply chains, and even government subsidies, or corporate greed, depending perhaps on one’s political views, as seen in the recent Amazon second U.S. headquarters – New York City (Queens) deal collapse.
To those of us owning and running small to medium size enterprises (SMEs) in Thailand, daily focus tends to be, and indeed should be on revenue growth and profitability. Does this mean though that SMEs can’t, or even should not undertake the effort to develop a CSR program? Alternatively, might creating a CSR program enhance the sales and profits of SMEs? Before discussing these questions, we need to review what defines a SME, and consider a working definition for CSR.
The Bank of Thailand and Ministry of Industry defines SMEs across two sizes, small and medium, and across four categories as in the following table, https://www.bot.or.th/Thai/FIPCS/Documents/FPG/2547/EngPDF/25470053.pdf
|Industry||Small Enterprise||Medium Enterprise|
|Manufacturing||Employees<50 or assets<50-million THB||Employees=51 to 200 or assets=50 to 200-million THB|
|Wholesale||Employees<25 or assets<50-million THB||Employees=26 to 50 or assets=50 to 100-million THB|
|Retailing||Employees<15 or assets<30-million THB||Employees=16 to 30 or assets=30 to 60-million THB|
|Service||Employees<50 or assets<50-million THB||Employees=51 to 200 or assets=50 to 200-million THB|
Thailand’s Office of SME Promotion (OSMEP) defines SMEs as companies with no more than 200 employees and not more than 2-million Baht in assets.
Moving on to CSR definitions, the European Commission (EC) has defined CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.
Well established examples meeting the EC’s CSR definition are world class programs like Ronald McDonald House Charities https://www.rmhc.or.th/en/we_house.php that build housing which keep families with sick children together and near the care and resources they need, or such as Siam Cement Group’s (SCG’s) Fish Habitat and Beautiful Beach Project inspired and driven by the recycling component of SCG’s sustainable resource management policy. Multinational company (MNC) CSR examples are typically propelled by well-resourced efforts in funds, people, management, and third party subject matter expertise. It’s not hard to guess that the level of MNC CSR resources are out of reach for most SMEs, but this does not mean that meaningful CSR results are not possible for SMEs.
CSR starting points can begin with the employees that work for you, suppliers to your business, a program to mitigate possible negative environmental outputs your business might produce, or even complying with buyer sustainability requirements, which can be a very effective way for a SME to engage in and develop meaningful CSR outcomes. Buyer sustainability requirements come with the added benefit of you as the supplier receiving world class CSR consulting from perhaps a large customer, who is essentially paying your business to perform and achieve their sustainability or CSR requirement through the products or services they buy from you.
When trying to develop your SMEs own CSR program, it is often encouraged to begin with a topic or goal that the owner, and/or management team and employees feel personally motivated by. Integrating personal ethics or values into the development of your CSR program helps to ensure the long-term program progress won’t fade from view in heat of the day-to-day fires small business owners or management teams might be facing. It could start out something as simple as developing a service of collecting from customers a used up product container each time your business delivers a recurring product sale to each customer.
It means a SMEs CSR program has the chance to become everyday work, not difficult, and definitely not costly. As mentioned earlier, business behavior and the importance of transparency for customers continues to grow, so communicating your company’s CSR program tends to be almost as important the program itself. This aligns with the CSR best practice standard of tracking your CSR program’s intended goals and results on a recurring basis. Once done, communicating the goals and results on your company’s website, LinkedIn page, and other social media becomes routine and not at all costly.
Based on the experience of CoffeeWORKS, the obvious CSR opportunity existed within one of our local raw material (green, unroasted coffee) supply chain partners called the Integrated Tribal Development Program, Thailand’s largest and oldest coffee growing NGO.
Starting 15 years ago when CoffeeWORKS was far smaller, and with significantly less resources, we saw the opportunity to fund the development of a post harvest coffee processing method (natural pulped coffee, often referred to as honey processed coffee) that had the strong potential to increase in-the-cup quality of Thailand’s Arabica coffee output over time, significantly reduce post-harvest water usage, and create measurably higher incomes for the participating ethnic minority hill tribe coffee growing communities in northern Thailand, which for the past 3 years has averaged a 90% price premium above the commodity coffee prices traded on global exchanges. See our program’s annual Agro-graphic and more information here, https://www.linkedin.com/pulse/coffeeworks-thailand-2018-direct-trade-update-dale-lee/
For CoffeeWORKS’ CSR efforts, quality drove higher value, which drove higher farmer incomes, which drove wider farmer participation, which drives greater quantities of higher value coffee, which creates ongoing sustainability. The fact that this positive circle is able to continue irrespective of our company’s participation evidences one of our program’s sustainability goals. We believe this is “fair trade” coffee at it’s best.
Look inward into your own business, and you will likely find a CSR program that your company has the ability to start, and can make a real difference to your business performance, branding, stakeholders, and customers. According to Thai Commerce Minister H.E. Sontirat Songtijirawong in a July 2018 news report, 1Q18 Thailand SME output accounted for a whopping 42.8% of Thailand’s GDP. Thus there is a strong case to be made that more CSR programs coming from the SME sector has the opportunity to create enormous benefits for participating companies and stakeholders.