Study: UAE companies shirk social responsibilities

Fewer than one in ten consider social and economic impact of their activities according to study.

ABU DHABI // In the 1970s, the economist Milton Friedman delivered a withering assessment of the idea that companies need to be socially responsible. Writing in The New York Times Magazine, he said, "There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

Many UAE-based companies seem to agree. According to a study carried out by researchers from the Dubai Chamber of Commerce and Industry and the UK's Sheffield University, 66 per cent of companies are aware of the concept of social responsibility. However, the researchers found that fewer than one in 10 consider the impact their business has on their local community and the environment when making decisions.

The study, carried out between June and October of last year, was based on 334 surveys completed by companies in all seven emirates. Many of the firms said their efforts to be good corporate citizens were being hamstrung by the global financial crisis. More than one-third reported that the fiscal difficulties would "delay progress in their efforts towards a socially responsible agenda", and that they were directing less resources to social responsibility programmes.

Kamal Mellahi, a professor of strategic management at Sheffield University, said most UAE firms that practise social responsibility do so by giving cash to worthy causes, rather than initiating long-term programmes. "There is also a lack of co-ordination between companies when it comes to social responsibility. Each one works in isolation," Prof Mellahi said. However, corporate responsibility is "undergoing a revolution in the UAE" and large companies were leading the way, he said.

Notably, 34 per cent of the businesses said they had implemented social responsibility policies to comply with Islamic values and practices, or zakat. Views on the relevance of corporate social responsibility varied among companies reached yesterday. Some said it was a company's "duty, not favour" to help out their local community. Shell, for instance, which operates an official social responsibility programme, said such efforts were part of being a good "corporate citizen".

"Over the past decades, Shell has broadened its contributions to Abu Dhabi beyond maximising knowledge and technology transfer, to include playing an important role as a corporate citizen, focusing on education, environment, human development and safety," said Salar Babajan, the oil company's country chairman and managing director. But other executives said their companies did not view things that way. A branch director of a large clothing retailer argued that employing a large number of workers was "more than sufficient" as a service to the community.