Terms of Reference
National Consultant for Research Study on Evaluation of the state of Corporate Social Responsibility in Pakistan and Strategy for Implementation
Background of Project:
Pursuant to the introduction of the Code of Corporate Governance, the Securities and Exchange Commission of Pakistan (SEC) signed a MOU with the United Nations Development Programme (UNDP) and the Economic Affairs Division (EAD) in August 2002 to undertake a one-year Project on Corporate Governance. The underlying objective of the Project was to encourage compliance with the principles of good corporate governance.
With the technical and financial assistance from the UNDP, the SEC established a Corporate Governance Cell at its offices and undertook a number of activities i.e. workshops, seminars, publications, in-house as well as external research, etc. to develop and implement good corporate governance practices as well as establish a sound regulatory framework for the corporate sector in Pakistan. While the project ended in July 2003, the need was felt to sustain the efforts undertaken during the one-year period. Accordingly, the project has been extended with the primary objectives to (i) improve transparency and accountability; and (ii) capacity building of the SEC. Various activities have been identified to achieve these objectives, ranging from research studies to establishment of corporate governance cell at the SEC.
Purpose and Objective of the Assignment:
Corporate Social Responsibility (CSR) relates to the alignment of business operations with social values. It includes taking the interests of stakeholders into account in business decisions and plans so that there is a positive impact on society along with business growth. Stakeholders can be classified in two categories: Primary Stakeholders including management, shareholders, owners, employees, consumers, and suppliers; and Secondary Stakeholders such as the government and the community at large. Resultantly, CSR involves a business taking into account more than just commercial relationships; it denotes contributing to economic growth while improving the community and the environment.
The Securities and Exchange Commission of Pakistan (SEC) is committed to improving transparency and accountability in the corporate sector in Pakistan. Supporting the Code of Corporate Governance, CSR would help to strengthen accountability of corporations to their stakeholders.
As a first step towards achieving the above, the SEC in coordination with UNDP is conducting a study on state of CSR and to evolve a strategy for effective implementation of CSR practices in Pakistan. To undertake this study, SEC requires the services of a National Consultant.
The study will focus on the following: 1) The need for CSR in Pakistan 2) CSR approaches being presently practiced in Pakistan 3) Factors driving social responsibility, like reputation enhancement, brand loyalty, etc. 4) Barriers to implementation of CSR 5) WTO requirements 6) Assessment of potential threats and opportunities 7) How policy or regulatory measures would create a supportive environment for CSR in Pakistan 8) Output targets that companies/industriers can set to undertake and report on socially responsible practices 9) To identify best practices 10) Strategy for effective implementation of CSR practices.
Scope of Work:
The study shall involve the following:
1. A sample of 100 companies (including listed, multinational and public sector enterprises) shall be chosen in consultation with the SEC. The sample should be balanced in terms of size of companies, their geographical location and the sector of their operation. Representation will be given, among others, to companies in the following sectors:
· Textile (spinning, weaving and composite)
· Fuel and energy
· Chemical and fertilizer
· Cement and building
· Financial institutions (commercial banks, NBFCs and insurance companies)
· Leather and Tanning
2. A survey of companies shall be conducted on the basis of a questionnaire to be filled in through visits or correspondence to determine companies’ view on CSR, assess CSR practices currently being followed, impediments to CSR, and scope for improvement. Major issues to be covered in the survey will pertain to a company’s responsibility towards:
· Shareholders (adherence to corporate values and mission, profit and wealth maximization, protection of shareholders’ rights).
· Employees (fair compensation, recognition for good performance, healthy and safe working conditions, safety and security considerations etc).
· Suppliers and creditors (honoring contracts, repaying loans etc).
· Government (taxes, compliance with laws, disclosures etc).
· Community (protection of environment, charity schools, health projects, etc).
3. An assessment shall be made of the need for CSR in the country, the existing CSR approaches and barriers to implementation.
4. The impact of CSR practices on business shall be determined, keeping in view the factors driving social responsibility and business opportunities and potential threats to CSR.
5. A strategy for effective implementation of CSR practices in the country shall be recommended along with output targets that companies can set to undertake and report on socially responsible practices.
6. A concluding brain-storming session will be held engaging a diverse representation of stakeholders regarding CSR issues, recommendations, and future policy direction.
7. Policy recommendations shall be formulated while also incorporating feedback from the brain-storming session for creating a supportive environment for CSR in Pakistan.
Outputs Expected from the Consultant:
1. An interim report followed by a final report from the consultant, which shall include:
a) Executive Summary of the main findings and recommendations, followed by other sections;
b) Identification of sample companies and basis for their selection;
c) Methodology of the survey, information obtained and survey findings;
d) Comprehensive assessment of existing CSR practices and approaches followed by sample companies and barriers to implementation of socially responsible practices;
e) Detailed analysis of the need for CSR in the country and impact of adoption of CSR practices by companies.
f) Feedback received from the brain-storming session.
g) Recommendations and strategy to implement CSR in Pakistan.
2. A brain-storming session to include a diverse representation of stakeholders for discussing CSR issues, recommendations and future course of action. The scope, size, and duration of the exercise are to be decided in consultation with the SEC.
3. A presentation to share the final recommendations of the research in a workshop or to a selective audience proposed by the project.
4. The consultant will provide three hard copies and one soft copy of the report to the SEC.
Duration of Assignment: The duration of the proposed study will be four months.
The consultant shall share with the SEC the list of sample companies immediately upon their selection. An interim report shall be submitted to the Project Management Unit of the SEC within 3 months from the commencement of the assignment. Based on the feedback received, the final report shall be submitted to the National Component Director immediately upon completion of 4 months.