Social Auditing in Pakistan – A Tale of

Three Sectors

Friday, October 22 2010

Khurram Aziz Fani (Kaif Associates, Pakistan)

Dr. Nadeem Bashir (King Saud University, KSA)

ISOSS, Superior University, Lahore.

Sequence of the Presentation

 Background
 Main Area of Research
Focus and its Importance
 Methodology
 Findings
 Conclusion

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Background – Social Auditing

 Social auditing - issue evoked under Code of Corporate

Governance. Last 2 decades, pressure from stakeholder
to comply social responsibilities makes it important.
 Seminal work of Bowen (1971) who argued that
businessmen should focus on businesses discharging
their social responsibilities.
 Steiner and Steiner (1991) highlighted importance of
social auditing.
 Frederick et al. (1992), social evaluation needs to have
disclosure in some form.

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Main Area of Focus ….

 Stewardship Theory
Vs
 Agency Theory
Vs
 Stakeholder Theory

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Social Auditing … Importance

 SA creates impact upon Governance.

 Linked with Social, Economic and Environmental issues
of organization.
 Measures organizations’’ shared values and objectives
(Prakash, 2006).
 Results in improvement in management practices and
accountability.
 Important tool in building trust (Gao and Zhang, 2006)
and improving accountability and transparency (Zadek
and Raynard, 1995, Ebrahim, 2003, O'Dwyer and Owen,
2005).

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Research Aims and Objectives ….

 SA is gaining prominence. Growing awareness among

stakeholders.

 Aim is ……
….. to analyze the current state work
on Social Auditing and its application in Pakistani context.

 Analyze application of social auditing in a telecom sector.

 Analyze application of social auditing in a food sector.
 Analyze application of social auditing in oil and gas sector.

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Theoretical Framework of Research …

Corporate Social Responsibility

*Employee Welfare
*Equal Opportunity Employment
*Support to Environment
*Safeguarding stakeholders’
* Waste Disposal
Interest
* Energy Efficiency
* Social Welfare

Environmental
Social
Compliance
Compliance

Social
Auditing

** Application in 3 Sectors

Oil and Gas Telecommunication Food

Findings

Conclusion and
Managerial Insights

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Methodology - I

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Methodology - II
Stages of Research ……
1. Identification of issue to be
studied.
2. Investigation of published
material on CSR and Social
Auditing so as to enable the
candidate to develop
understanding about the area
and shape the research
design.
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3. Development/identification of
Research instrument.
4. Conduct of case study and
collection of relevant facts.
5. Analysis of information
collected in the preceding
stage.
6. Drawing up the conclusion
about the research objectives
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Methodology - III
Stages of Research ……
1. Identification of issue to be
studied.
2. Investigation of published
material on CSR and Social
Auditing so as to enable the
candidate to develop
understanding about the area
and shape the research
design.
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3. Development/identification of
Research instrument.
4. Conduct of case study and
collection of relevant facts.
5. Analysis of information
collected in the preceding
stage.
6. Drawing up the conclusion
about the research objectives
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Methodology - IV
 Detailed Literature Review was
carried out in area s like:
 Need for Organizational
Governance.
 CSR – Historical Perspective.
 CSR –Area in Focus.
 CSR – Definitions and
Features.
 Advantages of CSR
 Recent Research in CSR
 Dimensions of CSR.
 Social Auditing, Environmental
Responsibility and Sustainability
Reporting.
 Diversity Across Countries
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 Reference Documents were
from Emeraldinsight, JStor and
EbscoHost ,Governmental and
Non-Governmental documents.
 Data was collected through
structured interview-guides.
 Questionnaire developed by
Balboni et al. (2007) was used.
 Conducted research for
“Ministry of Housing, Planning
and the Environment” of
Trinidad and Tobago in
collaboration with UN and
South Trinindad Chamber of
Industry and Commerce.
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Methodology - V
 Data was collected from three
firms.
 SNGPL, Telenor and Nestle.
 Qualitative Research in the
form of Case Study was
carried out.
 Data Collected during June
2010.
 Survey Instrument used as
Interview Guide, Key
Informants Interview + several
unstructured interviews.
 Content Analysis applied on
various reports and websites.
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 Most of the interviews were
conducted in Urdu.
 Triangulation of Data
 Research ethics were not
violated
 Informed response,
 Sharing only what was being
told by the respondent,
 Correct reporting of the
findings,
 Authenticating collected
information.
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Methodology - VI

 Yin (2008) suggested that the  Balboni et al., 2007, same

validity and reliability can be
Improved through
 with same reliability level.
Construct Validity,
 Internal Validity,
 External Validity and
 Reliability
 Construct CSR is widely
accepted and Researched So
construct validity is assured
purpose (yet different settings)
so questionnaire would ought
to measure the same things
 Internal validity, not relevant to
as descriptive research
instead of causal research.
 Conduct of case study in
actual field setting enables the
dissertation candidate in
generalization of findings.
 Triangulation of data ensures
that data is collected from
reliable sources.

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Findings …. Telenor - I

 (Pvt.) Ltd., financial statements  For employees,

not required , Not Listed comprehensive health
Company so no code of Cor. assurance and a medical
Governance. scheme, pension, maternity
 CSR projects done inside leaves, employee assistance
department programs, etc.
 2008, awarded “Environmental  Encourages participation of
Excellence Award” at 5th previously deprived social
Annual Environmental sector in job participation.
Awards”.
 Maintains a comprehensive
health and safety policy to
save environment from
potential hazards of its
products and services.

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Findings …. Telenor - II
 has high respect for ecological
concerns.
 As compared to other telecom
operators, Telenor has limited
influence on the external
environment but still it is
working to reduce the impact
to its minimum.
 State of the art technology and
has limited influence on the
human masses.
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 Using “outdoor Base
Transaction Station” towers.,
energy efficient and able to
manage tough environmental
conditions.
 Uses better quality of
generators on its cellular tower
sites. Reduce gas and noise
pollutions.
 Extensive site audits,
conformation to own and
policies of PTA.
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Findings …. Telenor - III

 Solar Energy Generators

 Emergency Response Program.

Trained employees to cope and
contribute in case of any
disasters (flood, earth quakes,  Khuddar Pakistan (Naya Qadam)
air/rail/road accidents).

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Findings …. Telenor - IV
 Engaged in extensive mobile
radiation research, unlike
others. Also financing.
 Maintained a helpline where
customers can launch their
complainants. From other
networks, as well.
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 Customer service
infrastructure is nations’ state
of the art customer service
centres.
 Only company adhering to the
requirements of TL 9000.,
QMS is a special purpose
system designed for telecom
suppliers and service
providers.
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Findings SNGPL - I
 Market leader in provision of
gas. Operates in North Central
area of Pakistan, operations in
Punjab and newly
commissioned Khyber
Pakhtoon Khwa. With an
experience of more than 45
years,
 Incorporated under
“Companies Ordinance 1984”
of Pakistan and is listed on
Lahore, Islamabad and
Karachi stock exchanges of
Pakistan.
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 Arranges different social
gatherings, employees from all
cadres participate.
Independence day
celebrations, Eid festivity, etc..
 Very recently, company has
completed an improved design
project in collaboration with
local engineering university.
Improved thermal/combustion
efficient, Organization’s
environment sustainability
endeavours. In 2009, upgraded
its “OSHA” to 18001-200t from
previously held 1999
standards.
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Findings …. SNGPL - II

 Listing requirements of stock  OSHA for employees and

exchanges and in compliance contractors.
with code of corporate  Compliance to legal
governance, the company requirements.
issues quarterly financial  The company is also striving
statements. The reports are in for making itself a better and
accordance with applicable safe working place.
accounting and auditing
standards and applicable
GAAP.
 Rating Agency (PACRA)
changed from s AA to A1+,  

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Findings …. SNGPL - III

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Findings …. SNGPL - IV

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Findings …. Nestle -I
 One of largest firms of
Pakistan which is operating in
food sector. Listed at LSE and
KSE, 1988, Switzerland.
Milkpak Ltd.
 Milk, dairy and chilled dairy,
beverages, bottled water, food,
breakfast cereals, chocolates
and confectionary.
 CSR initiatives include
sponsorships, charity,
community welfare programs,
ecological sustainability,
employment generation, etc.
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 Programs designed at Head
office while regional offices are
given autonomy.
 Regional Offices, In charge of
identifying and reporting CSR
projects
 Head office then evaluates and
develop full programs.
 Aim is to bridge gap which was
not left un-filled by the Public
sector.
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Findings …. Nestle - II
 Major areas are education,
community welfare, improving
quality of life and investment in
health.
 Major contribution in agriculture,
helped sports and cultural events
flourish in the country.
 Spent considerable amount of
money on school rehabilitation
and advancement of education.
APWA college mobile laboratory.
 Earthquakes support in Pakistan.
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 Health and Safety policy for its
employees, Emergency
response for employees.
 Employee training and
development, skills at par
Nestle SA.
 Workplace is continuously
monitored.
 Work-life balance, ethics
training, etc. health insurance,
pension, entertainment / gym,
maternity/paternity privileges,
employee assistance
programmes.
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Findings …. Nestle - III
 Manufacturing processes are
so well designed that they
minimize production wastes.
 Sustainability of environment
as less and less of the
materials are required in the
processes.
 Being in the food and
beverages business, the
compliance of health and
safety policies are very
important for the firm and it is
giving due regard to this.
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 Helpline for complaints.
 Abides by all relevant product
quality and safety legislation
 Adaptation of “World Health
Organization’s Codex
Alimentarius” on
manufacturing food items.
 Laboratories at Sheikhupura
and Kabirwala were given top
grading by Nestlé SA.
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Conclusion ….

 CSR and SA are on the boom.

 Industry wise compliance.
 Organization are complying to their Environmental
and Social Accountability and are increasingly
reporting these projects.
 Environmental and Social Accountability initiatives
differ from industry to industry with lot of similarities
and dissimilarities.

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Question Answer Session