Civil groups must count what counts

James Rose, Brisbane

By now we've all heard a lot about (and some of us have made a living commentating on) something called corporate responsibility (CR). CR is meant to be about generating greater levels of accountability and transparency from mainly, though not exclusively, for-profit organizations, especially big multinational corporations. It is hoped that through such improvements, governance, ethics and stakeholder relations can be bettered in the interests of all.

In Asia, the concept of CR is still largely misunderstood and loosely applied, but the corporate sector is, by and large, making some headway. It's often ponderous and perhaps cynical, but there are signs of life.

But what about charities and advocate groups? Why shouldn't they have the same obligations as big companies?

In recent years, charities, voluntary organizations and activist groups (generally called non-government organizations or NGOs) have gained new power and influence right across the region. In some cases, their clout has rivaled that of major foreign multinationals.

Take for instance the actions of the conservation and human rights groups in Indonesia, which have taken court action against mining giant Newmont that may yet lead to that company's local boss facing a jail term in Indonesia.

Then there's been stalling actions by anti-privatization activists in India, Cambodia and Korea.

In China, the power of NGOs has led to rare concessions. Recently Beijing announced it would fund registered NGOs to carry out anti-poverty work in the country. It's a unique admission by the communist government that they may not be the best to administer to every ill in that vast country.

Most recently, Hong Kong has been the host of a major civil putsch as the WTO ministers swung into town.

And this high profile cuts two ways. In Singapore, the National Kidney Foundation (NKF) scandal has cast a stark spotlight on the CR obligations of NGOs.

The headlining NKF case has revealed a rottenness at the top of the world's largest charity provider of kidney dialysis equipment. The organization was rife with conflicts of interest, falsified reporting, poor stakeholder relations and shoddy handling of contracts.

The example of the NKF offers insights into how NGOs too can go off the rails in terms of governance and basic ethics.

Many of the problems have arisen after the organization was restructured from a society to an incorporated company without setting up the mechanisms to deal with the shift in emphasis.

It was then, according to the local minister responsible, around then the NKF may have "lost its moral compass."

Similar morality claims have been made in the case of the work of Indonesian activists against mining companies like Newmont. Many argue these groups are more about scoring political points and are taking pot-shots at easy targets like foreign multinationals to gain some kudos and credibility among their own stakeholders as well as political license.

We might also ask questions about the co-opting of NGOs on mainland China and ponder whether cozying up to closely to governments will set-up the opportunity to ignore issues of transparent and ethical organizational culture.

What Asian NGOs need to realize is that their growing prominence, no matter how legitimate it might be or hard won, will attract powerful critics. Already in the U.S. and in other advanced economies, NGOs are the target of major industry groups and lobbyists, who seek to undermine their credibility by pointing out their often less than open governance systems.

What might be their response?

The most important thing for any NGOs is not to be cowed into running themselves too much like businesses. Many mechanisms that are considered proper for the private sector will not be appropriate for NGOs. For instance, businesses are measured to some considerable degree on their financial returns. NGOs should not feel compelled to mirror this in toto. Also, businesses tend to be measured against the power of their brand or reputation among consumers. Again, if we transpose the term consumers to donors or members, this should not be a major issue for NGOs.

NGOs do of course need to be open and accountable for their financial records. Monies should be accounted for, spending and income figures should be readily accessible.

But the real measure of NGO success is how successful are they impacting on those stakeholders or communities whom they purport to directly serve.

The most important thing for NGOs and their regulators in Asia to base their approaches to corporate responsibility on is this: account for what counts, not just what's countable. CR need not be an accountants' picnic. Let's develop the means to improve the CR of NGOs across Asia in ways that will improve civil, political, economic and social structures, not degrade these valuable areas of life by adopting useless mechanisms.

James Rose is Editor Asia-Pacific for the magazine and website Ethical Corporation www.ethicalcorp.com.