Issue 5, 2011. October-November



From banking to energy, education to transportation, companies from sectors across the Georgian economy are finding policies that promote safety and economic security are good for business.

Keti Khukhunashvili

KPMG Georgia, together with the David Mikeladze Fund for Future Scientists, started an annual charity football tournament in June. For more photos of projects, click here.

From the Board Room to the Living Room

From cultivating a healthier workforce through training and safety gear, to supporting healthier children by financing sporting events, Georgian businesses are finding innovative ways to blend ethics and business strategies to build stronger, more secure communities - while also bolstering the bottom line.

The practice of corporate social responsibility, known as CSR, can easily be confused with only charity or brand promotion. In fact, AmCham's CSR Committee Chair Michael Cowgill stressed it produces concrete results that can benefit any business. AmCham and its CSR Committee serve as the Secretariat, or operational body, in Georgia for the United Nations Global Compact Program which is a worldwide effort to promote CSR-related issues.

Cowgill, co-founder of Georgian American University (GAU) and a vice president on AmCham Georgia's Board of Directors, together with the Global Compact Steering Committee, is spearheading efforts to educate Georgian businesses on how social responsibility is essential for creating a strong company.

For example, all companies seek to win consumers' trust and CSR can help to deliver just that. Cowgill explains that the best way forward is to "make [responsibility] part of the company's operational scheme and its long-term sustainability vision".

Viktor Baramia, the program manager of Economic Development Programs at the Eurasia Partnership Foundation, agreed that corporate social responsibility should revolve around a "strategic vision" and not just company marketing.

"The companies that try to look into the future - they do more today in terms of long-term CSR," he said.

This may begin as a simple code of ethics, an HR policy or a volunteering incentive. For British Petroleum (BP), community-focused projects combine the best of the company's corporate skills with local needs like infrastructure development, skill building and fundraising.

In addition, the company is using a volunteer incentive program to encourage its employees to reach out to the community. Rusudan Medzmariashvili, the Social Responsibility Manager at BP, noted when a BP employee volunteers at a charitable organization, the company matches the value of the employees' time in a monetary donation to the charity.

The work of organizations like AmCham, together with businesses like BP, Wissol and many others, mirrors an increasing need and desire from communities and civil organizations to work with the private sector.

A 2007 survey by the Center of Strategic Research and Development of Georgia (CSRDG) found that 93% of the population believes implementing social projects is a "voluntary obligation that should be assumed by businesses".

Many Georgian companies are keen to respond to this demand. In fact, business-driven projects are plentiful, ranging from TBC Bank's efforts to build a school for families displaced during the August 2008 war, to Bank of Georgia's investment in Tsagveri forest rehabilitation.

From Arts to Science

In Georgia, businesses are also developing more long-term, sophisticated methods to assist communities with core social issues. At Bank of Georgia, Brand Executive Sophie Balavadze explained that the bank is moving past its traditional role in finance to create social projects that support "themes that are important for our population, raising awareness and putting them at the forefront".

"[Corporate social responsibility] is beyond sponsorship and philanthropy ... [it] is not the same as simple advertising - BOG is now trying to do what is innovative and catch up with worldwide trends and tendencies," she said, adding, "... this is the private companies' job as [they] are visible on many levels and touch a lot of people lives."

Across the globe, corporations have discovered similar success using their business platforms to tackle serious social and medical issues.

In the UK, for example, Barclays Bank is a corporate sponsor for Macmillan Cancer Support, as is a chain of health and beauty shops that delivers cancer support services through its stores, fundraises for the cause and encourages its employees and colleagues to volunteer for the organization.

A large balance sheet is, however, not essential in order to answer the various needs that exist in Georgian communities. Large corporations with nationwide outreach and established track-records of educational projects, as well as service-based companies can help small organizations by offering expertise and advice.

Companies like DLA Piper, an international law firm in Georgia, are providing pro bono work in the country, donating their time and resources to serving clients in special need for free.

Lawyers at DLA Piper also support student competitions, sharing knowledge and experience through lectures and public talks - opportunities that larger companies like Wissol and TBC also make use of.

Good Business Makes "Cents"

Pro bono legal work, a program offered by DLA Piper, and Wissol's efforts to promote healthy lifestyles are an important bridge between corporate sponsorship and companies taking an active role in promoting better lives.

At the heart of the international drive towards more socially responsible businesses is the push for higher standards in ethics, corporate practices and investor relations. In international practice, companies that prioritize ethics and consumer relations have been better positioned to weather crises.

The U.S. healthcare and pharmaceutical giant Johnson & Johnson is a good example: in 1982, the company's best-selling painkiller Tylenol caused the death of seven consumers and sparked a media frenzy. While pundits predicted the company's demise, executives rolled out a progressive strategy of recall and free replacement. Several months - and over $100 million - into the crisis, Johnson & Johnson had reclaimed most of its market share, regained public trust and maintained its brand integrity.

Cowgill noted that many Georgian companies are establishing ethical standards for business operations. Leading Georgian banks manage this by working towards transparency and self-regulation, keeping policies in place for financing responsible businesses. Bank Republic, for instance, implements meticulously designed crisis-management and reporting policies, a strict code of ethics, and staff protection and development initiatives. BP has also made social responsibility its everyday business. The company begins each project with extensive research and assessment (including environmental and social impacts), a component of planning that, Cowgill pointed out, is often minimized in other Georgian business operations. However, safety and security, Cowgill noted, are not simply competitive advantages; as well as being marketing tools, they are core to good business practices.

"CSR does not always have to be part of the company's competitive edge. In fact, it should be a standard of doing business that is upheld throughout the industry," he said.

"For example, the energy business [companies] always talk about safety. Safety issues should not be thought of as a competitive advantage - this is something that helps everyone. This should be something that is above competitiveness."

For more information about Global Compact and CSR, please contact Keti Sidamonidze.