Bizcuits | CSR the PR tool vs Transparent Externalities

Leanda Lee

With the retendering process for the gaming licenses on the horizon, incumbent concessionaires are informing the public about what they are doing to support the local community.

There are many worthwhile projects, not all of which are directly related to the business models of the gaming companies: the upskilling of personnel through training, experience and promotional opportunities; supporting local SMEs through preferred-supplier status and advice on quality standards and efficient operating systems; direct community work with the aged, and the physically and mentally challenged; scholarship endowments; financial and in-kind gifting to NGOs and charities. Recently we have seen all six gaming concessionaires, with Nam Kwong Group juxtaposed into the mix, as co-organisers and financial supporters (to the tune of MOP18 million+) of the Art Macao 2019.

Activities that enhance business operations and a return on investment such as upskilling staff and suppliers are self-sustaining, as there is little argument against spending shareholder’s funds for these returns. However, gifting and other forms of community outreach are not self-perpetuating unless there are philosophical, regulatory or risk minimization reasons to do so.

CSR can be an insurance against losing community and actual licence to operate, particularly if there is recognition that there are disadvantages to the public from those businesses. These externalized costs are rarely made transparent, although the existence of sustainability programs does acknowledge damage being done.

Were there no externalized costs – costs that businesses do not directly bear themselves and impose on a community, the natural environment, or publicly owned infrastructure – there would be no need to focus on sustainability. Just as “a pain-free dentist” implies there is normally pain, programs that work towards sustainable business models imply the existing ones are not sustainable. Businesses can maximise profits by off-loading indirect costs and forcing negative effects elsewhere; the more costs can be externalized, the greater the profit.

These costs include air, water, land, light and noise pollution, underpaying suppliers, poor working conditions or toxic management leading to physical, emotional and psychological harm which are then borne by the local public health system, addictive behaviours, customer numbers breaching the capacity of local utilities and waste management systems that subsequently dump waste into the natural environment, or burn it, or export it…the list goes on.

We, as individuals, also externalise costs that allow us to live sanitised, time-wealthy lives. Our urban lifestyles have divorced us from the impacts of the way we live. We don’t have to deal directly with the stuff that we don’t want or the waste we produce. We reckon – evidently wrongly – that someone else is managing it. If we were in direct contact with what we use from a product’s cradle to grave – the farmer’s soil, the abattoirs, the processing, the packaging, the transport – and if we had to be self-sufficient in handling our own waste – nightsoil removal, waste sorting and water purification – we might reconsider what we use as we would be fully aware of the range of external costs that a community bears for individuals and businesses. Clearly, people are losing touch with their environment and self-sufficiency when they rely on official storm warnings to prepare raincoats for their children rather than look out the window before leaving for school.

Publicity about CSR tells us the good that companies have done, but companies also need to take accountability for the burdens imposed by their externalities, even if the public can’t see them. Transparency about what is happening at the interface where waste and bi-products leave the business would show true corporate responsibility: how much and where it ultimately ends up, whether is reused (upcycled back into the value chain) and how much of it is dumped, wasted or pollutes.

Blindingly insufficient is the concept of customers being responsible for reducing, reusing or (ridiculously) recycling. Responsible suppliers design externalities out of their systems.

Categories Opinion