State of Corporate Social Responsibility in Afghanistan

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State of Corporate Social Responsibility in Afghanistan This report was made possible by the generous support of the American people through the United States Agency for International Development (USAID) under the terms of its Associate Cooperative Agreement Number 306-A-14-00001 (Afghan Civic Engagement Program) implemented by Counterpart International and its partners. The contents and opinions expressed herein are the responsibility of the authors and the Afghanistan Institute of Civil Society (AICS) and do not necessarily reflect the views of USAID, Counterpart International or the Aga Khan Foundation. ABOUT AICS The Afghanistan Institute for Civil Society (AICS) was established in 2014 to support a credible and competent civil society sector in Afghanistan by linking civil society organizations (CSOs), donors, government and capacity building services through culturally appropriate certification schemes. The Institute’s main objectives are to raise the credibility of the civil society sector by certifying Civil Society Organizations (CSOs) using locally defined and internationally recognized standards; to systemize capacity building efforts by coordinating initiatives using measurable performance indicators; to strengthen the role of civil society in Afghanistan’s development through policy dialogue and active engagement with the government, donors and the broader development sector; and to provide a channel for resources for civil society by strengthening philanthropic and corporate social responsibility efforts.

ABOUT LUDIN CONSULTING, LLC is the symbol of efficiency. Ludin Consulting, LLC was established in August 2006 in Colorado, USA, to offer services that enhance efficiency and sustainability of government, non-governmental and private sector organizations. Ludin Consulting offers a variety of services including developing strategic and business plans, identifying errors and waste, developing entrepreneurship development initiatives, creating operational systems and developing personnel and organizational capacities to maximize organizational efficiency. With a strong and diverse team of organizational development, change management and financial/business modeling experts, Ludin Consulting ensures efficient use of your organizational resources.

ACKNOWLEDGEMENTS AICS acknowledges and appreciates the contribution of the civil society, large- and medium-sized corporations, small businesses, government agencies and officials as well as academia in this study. We understand that their contribution was instrumental in making this report possible. AICS would also like to extend its appreciations to the United States Agency for International Development (USAID) and the Aga Khan Foundation for providing funding and support for this study. AICS would like to acknowledge Mr. Rafaat Ludin and Mr. Sultan Maqsood Fazel for authoring this report, Mr. Windhan Loopesko for his edits and Mr. Zubair Fazel for his invaluable contribution in data collection. Lastly, a special thanks to entire AICS team for their support throughout the research process.

Prophet Muhammad Peace Be Upon Him Said: Every one of you is a shepherd and is responsible for his flock

(Ṣaḥīḥ al-Bukhārī 6719, Ṣaḥīḥ Muslim 1829) TABLE OF CONTENTS

ABOUT AICS...... 3 ABOUT Ludin Consulting, LLC...... 3 ACKNOWLEDGEMENTS...... 3

SUMMARY...... 11 KEY RECOMMENDATIONS...... 13 OPERATIONALIZING KEY RECOMMENDATIONS...... 14

Introduction...... 17 1.1 Definition...... 17 1.2 Historic Evolution...... 18 1.3.1 Drivers of CSR...... 19 1.3.2 Legal and Regulatory Support for CSR...... 21 1.3.3 Anticipated Future of CSR...... 22

CSR in the Region...... 25 2.1 CSR in Central Asian Countries...... 25 2.2 CSR in Iran...... 26 2.3 CSR in Pakistan...... 26 2.4 CSR in India...... 27

CSR in Afghanistan...... 31 3.1 Religious and Cultural Context of Social Responsibility in Afghanistan...... 31 3.2 Evolution of Modern-Day CSR in Afghanistan...... 32 3.3 Present Condition of CSR in Afghanistan...... 34 3.3.1 Legal and Regulatory Situation of CSR in Afghanistan...... 34 3.3.2 CSR Support by Government Officials...... 35 3.3.3 The Legal Environment in Afghanistan...... 35 3.3.3.1 The Constitution...... 35 3.3.3.2 Corporate Law...... 36 3.3.3.3 Labor Law...... 36 3.3.3.4 Environmental Law...... 36 3.3.3.5 Mining Law...... 37 3.3.3.6 Accounting Regulations...... 38 3.3.3.7 Tax Law...... 38

Research Findings...... 41 4.1 Research Methodology...... 41 4.2 Research Limitations...... 41 4.3 Overview of Findings...... 42 4.4 Sentiments & Engagement of the Business Community...... 43 4.4.1 Overview of Sentiments...... 43 4.4.2 Engagement of Business Community...... 44 4.4.3 Assessment of Business Community...... 44 4.4.4 Summary of Corporate Engagement and Sentiments ...... 49 4.5 CSR Preference of CSOs...... 49 4.6 CSR Preference of International NGOs and Donors...... 50 4.7 General Consumers’ Views on CSR Overview of Consumer Sentiment:...... 51

CSR Impacts and Compliance in Afghanistan...... 59 5.1 Measuring the Impact of CSR in Afghanistan...... 59 5.2 Corporate Governance...... 60 5.3 The Ethics of Doing Business in Afghanistan...... 61 5.4 Compliance...... 62 5.4.1 Environmental Compliance...... 62 5.4.2 Social Compliance...... 63

Future Potential for CSR in Afghanistan...... 67 KEY RECOMMENDATIONS...... 71 7.1 Vision Statement for CSR in Afghanistan...... 72 7.2 Awareness Creation for CSR...... 72 7.3 Creating a Legal and Regulatory Environment for CSR...... 72 7.4 Enabling Environmental for Corporations...... 73 7.5 Creating a Corporate Social Responsibility Index...... 74 7.6 Enabling Environmental for CSO and Community Activists...... 74 7.7 Enabling the Environment for Government Agencies...... 75 OPERATIONALIZING KEY RECOMMENDATIONS...... 79 8.1 Overview...... 80 8.2 Identify the Strategic Objective of the CSR Drive...... 80 8.3 Awareness Creation Campaign ...... 80 8.4 Creating the Corporate Social Responsibility Index...... 80 8.5 Political Advocacy Campaign...... 81 8.6 Certification of CSOs...... 81 8.7 Verification of CSO Projects...... 81 8.8 Launchpad for CSR Programs...... 82

Conclusion...... 85 Appendix I - Abbreviations:...... 86 Appendix II – List of Corporate CSR initiatives...... 87

SUMMARY

KEY RECOMMENDATIONS 13 OPERATIONALIZING KEY RECOMMENDATIONS 14

SUMMARY Responsibility (CSR), namely ‘Takaful’2,3, . The In their 1970 published articles titled “The question is, how does a corporation reflect Social Responsibility of Business is to Increase upon that sense of responsibility and what Its Profits” (Friedman) and “The Myth of actions should it take to ensure that this sense Corporate Responsibility” (H. Manne), of responsibility is converted into actionable Friedman and Manne “believed that corporate contributions that reflect its obligations towards executives have only one obligation, which is the client and the communities. to make as much money as possible for their stockholder”1. Over the years, this view was Today, most developed countries have passed mostly rejected, and the role of a business in laws and regulations that govern many aspects society was defined as ‘socially responsible’, of the responsible behavior of corporations, in the sense that it owes duties not only to including in such domains as environmental its shareholders (to whom its profits may protection, employee rights, workplace safety, accrue), but also to its workers, clients and financial transparency, prevention of corrupt the community in which it develops its activities practices and corporate governance systems. (collectively, “stakeholders”). In spite of the trend, most countries in the world still treat CSR as an essentially voluntary This approach to “socially responsible” undertaking. So far, India is the only country corporations is also aligned with the Islamic that has opted to incorporate in its laws a principle of mutual responsibility as so mandatory CSR contribution of 2% on profits eloquently described in the Prophetic Tradition before taxes for certain corporations. Other of: countries are now also looking at CSR as a potentially government-mandated initiative. “Every one of you is a shepherd and is responsible for his flock. The leader of In developing countries, CSR is mostly introduced people is a guardian and is responsible by multinational corporations (MNCs), which for his subjects. A man is the guardian has been the case also in Afghanistan, especially of his family and he is responsible for in the telecommunications industry. Coupled them. A woman is the guardian of her with in-country-based telecoms companies’ husband’s home and his children, and she initiatives, CSR soon became popular, causing is responsible for them. The servant of a other large corporations such as the Moby man is a guardian of the property of his Group, Alokozai Group, Aziz Hotak Group, master and he is responsible for it. No Azizi Bank and others to launch their own CSR doubt, every one of you is a shepherd programs and contribute with charitable giving, and is responsible for his flock.”Ṣaḥīḥ al- mostly through their in-house foundations. In Bukhārī 6719, Ṣaḥīḥ Muslim 1829. Afghanistan, much of corporate charitable giving is the product of Zakat and Sadaqa (Khairat) A corporation is also a shepherd and is also contributions of the company owners, rather responsible for those that benefit from its than a systematic corporate-owned initiative products and services. After all, the corporation that can be sustained in the long run. also benefits from the clients it serves and the communities in which it operates. Islam There are no laws or regulations in Afghanistan has a term that signals social solidarity and for charitable giving by corporations and no establishes the umbrella for Corporate Social tax or other types of government incentives

1: Corporate Social Responsibility European Style by Olivier de Schutter, European law Journal, Vol. 14, No. 2, March 2008, pp. 203-236 2: Corporate Social Responsibility: An Islamic Perspective, by Hussein Elasrag, published on October 30th, 2015 at the Munich Personal RePEc Archive (MPRA) 3: Takaful is derived from the root word ‘Kafala”, which means responsibility, guarantee, amenability or surety.

11 to encourage CSR. Hence, corporations CSR even among the educated population, the are left to their own devices to claim what CSOs have a special responsibility to create they want without verification, to do what an environment that is conducive to more and how they please to demonstrate their enhanced and structured CSR in the country. social responsibility. Thus, there is a significant Meeting this responsibility may include lobbying need and demand by everyone, including the government officials and lawmakers to pass corporations themselves, that the government laws in support of CSR and initiating extensive come up with laws, rules and regulations to awareness creation campaigns. Well-aware govern CSR, which will even out the playfield consumers will offer demand-side pressure on for everyone and enable a sustained, structured corporations to be socially responsible. and, by extension, more effective CSR work. The general population is demanding at a rate Corporations, on the other hand, need to of 88% that the government offer corporations understand the importance of consumer incentives to engage in charitable giving, sentiments and to adjust their business practices while 77% of the consumers want charitable to ensure that their reputation as responsible giving to be mandated for corporations. members of the society is not tarnished, and that The consumers in Afghanistan also want they are actively and continuously respected corporations to enhance their charitable giving as responsible members of the society. and social responsibility initiatives in the areas of healthcare, education, safe drinking water CSR in Afghanistan is at its infant stages. supply, environmental stewardship, and care However, because Afghanistan is a country for community and the country. If they do so, whose inhabitants prefer to follow the example more than 90% of the consumers will prefer of others, it is very likely that great initiatives to buy their products and services and will by corporations really and truly take off in an recommend them to their friends and family. enormous manner, provided they are given a slight push in the form of regulations and Because there is a basic lack of awareness about some publicity.

12 KEY RECOMMENDATIONS

Urgent Moderately Urgent Not Urgent Corporations Government Target AICS CSO Create enabling environment Create enabling environment Create enabling environment Create Corporate Social Re Create and regulatory legal Create awareness for CSR sponsibility Index (CSRI) for government agencies environment for CSR Develop vision CSR for corporation Objective for CSOs - CSR policy/strategy CSR from and support specialized companies to structureSeek assistance company Restructure company policies CSR laws, rules and regulations of CSR in support of Economics to develop of Finance and Ministry Collaborate with the Ministry engagement the types of incentivesArticulate that corporations need to enhance their CSR Make or components thereof and rigorously CSR obligation a legal enforce it. responsible. Create rules, regulations and disincentives for corporations not to be socially or increaseOffer incentives corporate social to start responsibility Create corporations to programs. set up viable CSR that support organizations Create projects CSO a system to for certify viability. CSR Create to create/enhance a system certification of CSO their credibility Lobby lawmakers/regulators to pass laws/regulations. Create awareness government among general public, officials and corporations. environment that enables greater and more systemic in CSR. engagement the governmentSupport to regulatory create and political legal, the necessary Implement the model Develop operational model for CSRI Identify key indicators Create to programs organization help launch corporations’ CSR Lobby actively the government to create laws, rules and regulations Create demand-side pressure and formulateIdentify vision for the CSO in Afghanistan CSR Table 1 - Summary of KeyTable Recommendations of 1 - Summary

Activity – ACCI, Community CSO ACCI ACCI, Community CSO ACCI omy, Justice, Parliament Econ Ministries of Finance, President’s office driving community CSO AICS AICS community CSO community CSO community CSO AICS AICS community CSO newAICS, organization community CSO community CSO AICS Government Responsible - Urgency

13 AICS AICS AICS AICS AICS AICS CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat Responsibility -

). org Activity www.bsr. Table 2 - Summary of Recommendations Table Operationalizing Key ), Business for Social Responsibility ( Social Responsibility ), Business for Evaluating project narrative and justification as well as documents and justification as narrative Evaluating project Holding regular meetings with government officials meetings with government Holding regular interviews discussions, roundtables, Holding TV/radio and seminars Organizing workshops rules and regulations Helping in drafting laws, and financial viability technical for Evaluating projects with other projects as coordination as well the project supportEvaluating community and need for do the project and management skills to technical CSO’s Verifying

www.csr-ca.com Review the strategic paths for CSR campaign, e.g. voluntary, semi-voluntary, or mandated and select a path to pursue and select a path to or mandated semi-voluntary, CSR campaign, e.g. paths for voluntary, the strategic Review projects portal a web market to Create the CSRI finance and market to a strategy on how Develop Organize meeting of CSOs to appoint main Secretariat for CSR CSR campaign. AICS Secretariat is a potential for main Secretariat Organize appoint meeting of CSOs to manage CSR campaign to within CSO community a taskforce Create . CSR campaign Design a strategy for finance CSR campaign Raise funds to Launch CSR campaign include: to political advocacy a strategy for Develop - - - - work Budget and fund the political advocacy campaign Launch political advocacy underway Already to include: CSO certificationapproach model and Develop - - - - component include a fee-for-service kickstartRaise funds to the approach, . the certificationto CSOs, corporations and donors Market chari practices, ethical work impact, environmental factors, include workplace components of a CSR Index to Identify key and others. table development giving, community . Launch the initiative support launch CSR to initiatives corporations to strategy on how Develop e.g. CSR Central Asia or globally, in the region done this work already entities/organizationsIdentify that have potential ( Afghanistan for setting up the CSR launchpad Raise funds for in Afghanistan and start the CSR launchpad for Establish operations a presence - paign of CSR projects Objective Certification of CSO Certification of CSOs Identify a driver for CSR for Identify a driver Awareness creation cam creation Awareness Identify strategic objective objective Identify strategic Create a Corporate Social a Corporate Create Political advocacy campaign advocacy Political Responsibility Index (CSRI) Responsibility Create a launchpad for CSR for a launchpad Create 1 2 3 4 5 6 7 8 # OPERATIONALIZING KEY RECOMMENDATIONS OPERATIONALIZING

14 01 INTRODUCTION

1.1 Definition 17 1.2 Historic Evolution 18 1.3.1 Drivers of CSR 19 1.3.2 Legal and Regulatory Support for CSR 21 1.3.3 Anticipated Future of CSR 22

INTRODUCTION and contribution to economic development”. Ultimately, CSR aims at driving “change towards 5 1.1 DEFINITION sustainability” . Investopedia defines Corporate Social Responsibility (CSR) as a Mallen Baker considers CSR as a tool that helps companies to “manage their business “self-regulating business model that helps processes to produce an overall positive impact a company be socially accountable — to on society. It covers sustainability, social impact itself, its stakeholders, and the public. By and ethics, and, done correctly, should be practicing corporate social responsibility, about core business - how companies make also called corporate citizenship, companies their money - not just add-on extras such as 6 can be conscious of the kind of impact they philanthropy” . Shareholders are having on all aspects of society, including customers Employees economic, social, and environmental. To unions engage in CSR means that, in the normal e W c o la r course of business, a company is operating tp k e p l k a r c in ways that enhance society and the a e M Quality of

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v y n E Investopedia claims that while CSR can be CSOs government beneficial for the society and the communities Local Impact on communities as a whole, it can also have significant benefits Society for the corporations, which will help to boost Figure 1- Two Dimensions of Corporate Operations their brands. CSR helps to “forge a stronger bond between employee and corporation” and According to Mallen Baker, companies must enables employers to “feel more connected answer to both requirements, namely “the with the world around them”4. quality of their management – both in terms of people and processes” and the nature and The Financial Times defines CSR as a “movement “quality of their impact on society in various aimed at encouraging companies to be more areas”. aware of the impact of their business on the rest of society, including their own stakeholders and The World Business Council for Sustainable the environment”. It is “a business approach Development defined CSR as the “continuing that contributes to sustainable development by commitment by business to behave ethically delivering economic, social and environmental and contribute to economic development benefits for all stakeholders”. The Financial while improving the quality of life of the Times considers CSR as “a concept with workforce and their families as well as of the many definitions and practices. The way it is local community and society at large ”7. understood and implemented differs greatly for each company and country”. CSR covers In summary, CSR is the “humane” or “good” numerous areas, including “human rights, side of a corporation that recognizes the corporate governance, health and safety, importance of a) “do no harm”, namely to environmental effects, working conditions avoid harm altogether or, at the very least,

4: https://www.investopedia.com/terms/c/corp-social-responsibility.asp 5: http://lexicon.ft.com/Term?term=corporate-social-responsibility--(CSR) 6: http://mallenbaker.net/article/clear-reflection/definitions-of-corporate-social-responsibility-what-is-csr 7: http://www.ceads.org.ar/downloads/Making%20good%20business%20sense.pdf

17 minimize harm to the environment and society “the obligations of businessmen to pursue in general and particularly within the affected those policies, to make those decisions, or to communities; b) mitigate any harm caused by follow those lines of action which are desirable its actions and operations; c) ensure the safety in terms of the objectives and values of our and well-being of its employees and others society”. By 1963, it became accepted that affected by its work; and d) consistently behave “ the corporation has not only economic and in an ethical manner. legal obligations but also certain responsibilities to society12” extending beyond them, which 1.2 HISTORIC EVOLUTION include “politics, welfare of the community, According to Archie B. Carrol of the University education, happiness of its employees and the of Georgia8 , it is possible to “trace evidences of whole social world”. Similar to the essence of the business community’s concern for society the Islamic approach to ethics, responsibility for centuries”. While much of the modern-day and justice, McGuire suggested that “business writings on CSR are rooted in the developed must act ‘justly’, as proper citizens should.” world, starting around 1950 it is evident that “related notions may have developed in theory Over the years, CSR has evolved to include and practice in other countries and at different alternative themes such as corporate social times.” responsiveness, public policy, business ethics, and stakeholder theory/management (Carol). The social responsibility of individuals and New concepts such as global social investment, corporations has always been a recognized corporate reputation, community partnerships, and required concept in the Muslim world. and corporate social policy were launched. “Islamic ethical principles provide a broader Management policies of strategic giving, cause- framework for CSR. In terms of responsibility related marketing, international donations, and accountability”, Muslims believe that employee volunteerism, sustainability, and they will be accountable in the hereafter for global corporate citizenship emerged to whatever they do in this world9. The foundation characterize many CSR initiatives. CSR has of responsible living in Islam is the Hadith that become a recognized and well-appreciated proclaims, “Every one of you is a shepherd and component of doing business. All major is responsible for his flock”10. The corporation is corporations include CSR policies, divisions and no exception to this rule and is held responsible activities. Efforts are underway to maximize the before God, the law and the society for what marketing effect of CSR activities, as the general it does and how it behaves. It is responsible population is demanding that corporations because it undertakes business operations and behave responsibly towards their communities, benefits from the wealth that the customers the environment and their employees. and the societies provide it. 1.3 PRESENT STATUS AND In 1953, Howard R. Bowen11 argued that ANTICIPATED FUTURE OF CSR “several hundred largest businesses were The advancement of the Internet and the vital centers for power and decision making penetration of social media into peoples’ and that the actions of these firms touched lives, including Facebook, Twitter, Instagram, the lives of citizens at many points”. Bowen Tumbler, etc. have dramatically changed the offered an initial definition of CSR to include

8: Corporate Social Responsibility – Evolution of a Definitional Construct 9: Corporate Social Responsibility: An Islamic Perspective, by Hussein Elasrag, Published on October 30th, 2015 at the Munich Personal RePEc Archive (MPRA) 10: Ṣaḥīḥ al-Bukhārī 6719, Ṣaḥīḥ Muslim 1829 11: Social Responsibilities of the Businessman, by Howard R. Bowen, as narrated by Archie B. Carrol in his book titled Corporate Social Responsibility – Evolution of a Definitional Construct 12: Business and Society by Joseph W. McGuire (1963)

18 level of attention paid to the views, opinions While the developed world is busy coming up and preferences of consumers and users. with innovative solutions to their corporate Politicians and business people use social responsibility schemes and objectives, many media to connect to the consumers with their corporations in the developing world are ideas and products, and consumers use social barely starting to engage with CSR. Their media to learn about trendsetting products, understanding of CSR is, however, often still services and approaches to living and doing limited to stages one and two, which stipulate business. Activists use social media to draw a defensive and charitable approach. Some attention to issues in the political, economic, are slowly engaging in CSR as a “promotional” social and environmental spheres, while the tool, although they don’t know fully well how general public reacts to the push by everyone to maximize the benefits of CSR as a marketing to take action, and to support or mobilize for tool. Nor do their customers understand or against issues, causes, products, persons, or trust the value of the corporations’ CSR and companies. As an example of the power initiatives for themselves or their societies. of such a movement, we cite the experience of Ms. Ivanka Trump with social media. After 1.3.1 Drivers of CSR the election of President Trump, a social media There are many reasons why corporations movement started to call for a boycott of engage in social responsibility schemes. Ivanka Trump’s fashion products, resulting in a While some corporations may just be led by very short time in the abandonment of multiple altruistic individuals that want to give back to outlets of her products, eventually leading to the society some of what they have received, the closure of her product lines. There are most corporations do it because they expect to many other similar initiatives that have caused get something in return or because they would significant adjustment to corporate structures, be penalized by law or by their customers if products or systems. Such initiatives are part they fail to engage. All of these factors are the of the new communication system that can drivers of CSR and should be considered while potentially promote or disrupt businesses in assessing the motivations of corporations to a very significant way. engage in CSR initiatives.

According to Wayne Visser13, over the past 1. The legal regime within the country is decades corporations in the developed world one of the key drivers of CSR. Many have gone through four stages of CSR, which developed countries have passed laws include (i) a “defensive” approach to their that either encourage or deter activities social responsibility; (ii) a “charitable” approach, that may involve environmental protection, where they consider themselves with high consumer protection, worker safety, moral standing to help those in need; (iii) to the worker compensation, equal pay, gender “promotional” approach, where CSR is primarily equity, employee harassment (sexual, seen as a tool to enhance their marketing efforts religious, racial or otherwise), price and develop a stronger customer base; and (iv) fixing, monopolistic corporate behavior, today, smart corporations are venturing into a protection of intellectual property, corrupt state where they consider their approach to practices such as bribery, favoritism, CSR as “strategic”. Thus, corporations count on official enrichment, etc. and other related the long-term impact and effect of corporate situations. Such laws, rules and regulations responsibility to enhance their sustained guide the behavior of organizations, and the operations for decades to come. level of intensity and scrutiny with which

13: http://www.foodfocus.co.za/home/Industry-Topics/Corporate-Social-Responsibility/Future-trends-in-CSR---the-next-10-years

19 they are enforced enhances the level of will make sure that such conditions are adherence of corporations to the text and either not prevalent or that they are not spirit of these laws, rules, and regulations. exposed to the public to prevent a backlash against their products. The same may apply 2. Government incentives, such as tax for Shell and other oil and gas companies deductions, tax breaks and other that are struggling against general public inducements encourage corporations to perception against global warming causing engage in CSR knowing that the government CO2 emissions from the burning of fossil will compensate or cover either all or a fuels. As a result, Shell has rebranded itself major part of their CSR expenses and as an energy company and has initiated will enable the corporations to do good significant investment in renewable energies while not necessarily affecting their to create the impression that it is minimizing bottom lines. As a matter of fact, studies its carbon footprint and making an active in the USA have shown that on average contribution to environmental protection. corporations with a strong and visible CSR Thus, the activist nature of customer and program14 pay around 1.7% lower taxes consumers has become a significant driver than corporations without such programs. for CSR in many countries around the After controlling for other factors that world, which has gained even more traction affect tax rates, such as corporations with the help of social media and greater that file for losses, it translates to about connectivity of people with each other. 6% lower taxes than their competitors. 5. Marketing effect and enhancing the image 3. Shareholder preference is also a critical of a corporation to be socially responsible driver of CSR. With tax savings of 1.7% to and as such a better corporation are 6%, compared to corporations without an yet another driver for CSR. In the age aggressive CSR program, CSR has become of constant media coverage, leading to a key profitability indicator, as additional perceptions and overall impressions as good taxes directly affect shareholder value, or bad with few grey shades, corporations as shareholders increasingly demand that want to be seen as responsible citizens their corporations engage in effective and hence engage in socially responsible CSR to enhance their investment value. behavior that differentiates them from other less responsible corporations. In 4. Customers’ expectations and preferences the developed world, with the prevalence are another key driver for CSR. Where of very significant CSR engagement by customers have a preference for social most corporations, the differentiator is engagement in certain areas or all areas of no longer which corporation engages in engagement and are willing to take active CSR, but rather which corporation is more action to promote their preferences, the engaged and effective in socially responsible corporations will follow suit and engage in behavior. Thus, CSR has become not a those activities. For examples, if a customer choice but rather a necessity without which refuses to buy Nike sports shoes that were the public image of the corporation would manufactured in sweat shops in Bangladesh face significant harm and directly affect (where horrible and inhumane worker the valuation of the corporations, and by conditions prevail, child labor is practiced extension the compensation of its leadership and social injustice is the norm), then Nike and the shareholder investment value.

14: http://www.cfo.com/tax/2015/12/socially-responsible-companies-pay 15: Microsoft 2018 Corporate Social Responsibility Report

20 6. Altruistic and philanthropic motivations titled “Legal Aspects of Corporate Social of business owners and leaders are a Responsibility”17 that CSR has critical driver of CSR. For example, in 2018 alone Microsoft donated “more than “ . . . links with many areas of law, including $1.4 billion15 . . . in software and services international law and European law, to institutions and organizations through corporate law and corporate governance, Microsoft Philanthropies, helping non- tort law and contract law, procedural profits get access to technology they greatly law, labor and environmental law, and need.” In addition, Microsoft employees, criminal law. All of these areas contribute using their employee giving program, importantly to the development of CSR, donated more than $158 million (including and ultimately to respond to the serious corporate matching) for their non-profits challenges that this world faces.” of choice. Furthermore, the co-founder of Microsoft, Bill Gates, through his Bill and Since these laws and regulations are extremely Melinda Gates Foundations, has created extensive and vary from country to country, we the largest endowment in the world, valued have chosen not to address them individually at $4016 billion . The organization, which or even list them in this assessment. is a tax-exempt entity, spends 5% of its endowment (a total of $2 Billion) every One standard that many corporations adhere year on programs and advocacy concerning to when evaluating their CSR activities and education, health, poverty, climate change, using as a guidance tool, is ISO 2600018 or and “clean energy”. We assume that Bill and CSR.ISO 26000. In conjunction with other ISO Melinda Gates are not motivated by image standards such as ISO 1400019, ISO 3100020, or customer satisfaction but rather are ISO 4500121, ISO 1800122, etc., a corporation driven by the pleasure of giving and making is able to ensure that its footprint is socially a difference in the lives of millions of people. and environmentally sound as well as ethically in compliance with best practices. 7. Religious motivation is a critical driver of CSR. Some business owners and leaders The laws may vary from country to country may also be motivated by their religious and from one environment to another, yet they belief that encourages them to spend of cover a wide range of issues that govern CSR what they have been given and to fulfill their and mandate either voluntary or induced action responsibility towards their society and as for social benefit. India was the first country such engage in socially responsible behavior ever to mandate CSR; it passed a law within as a corporation and as individuals. the 2013 Companies Act, which mandates that 2% of pre-tax income of qualifying 1.3.2 Legal and Regulatory Support for CSR corporations be spent on CSR activities, Whereas CSR is typically and traditionally either through its own non-profit entity or a voluntary engagement by corporations, in through an unaffiliated non-profit organization. some cases, laws governing different aspects of corporate activity encourage or require In most developed countries, philanthropic corporations to behave in a responsible donations by corporations are also tax exempt, manner. Tineke Lambooy writes in his editorial so that corporations may, in the case of the 16: https://www.influencewatch.org/non-profit/bill-and-melinda-gates-foundation/ 17: https://utrechtjournal.org/articles/10.5334/ujiel.bz/ 18: ISO 26000: Social Responsibility Guidance Standard 19: ISO 14000: Family of Environmental Management Guidance Standards 20: ISO 31000: Risk Management 21: ISO 45001: Occupational Health & Safety 22: ISO 18001: Health & Safety Management

21 USA, deduct “up to 10% of their taxable corporation based on their offering and services income23”. For example, a corporation with but will merely rely on codes and logos, such an annual taxable income of $1 million, will be as Energy-Star, Recycled, Fair-Trade Product, able to spend up to $100,000 for philanthropic etc., to choose the products of their choices purposes and receive full credit for the same. (Visser). If the company does not record any profits for a fiscal year, it cannot deduct anything Similar to existing Generally Accepted for charitable giving. Thus, corporations are Accounting Procedures (GAAP), Generally encouraged to behave in a philanthropic manner Accepted Sustainability Practices (GASP) will to benefit from the tax deduction offered by be created that will regulate how corporations the government. ensure sustainability. Hence, adherence to the standards will no longer be voluntary but will 1.3.3 Anticipated Future of CSR be mandatory, and corporations will have to CSR’s future evolution will depend on a number abide by generally accepted norms for business of critical technology trends that enable real operation that are sustainable and socially time access to data, analysis of information compliant (Visser). through artificial intelligence and non-traditional communication methods such as Facebook, Corporations in the developing world are Twitter, etc. Customers are able to check nowhere close to achieving the standards that without delay the activities of a corporation developed world corporations are undertaking. and take immediate decisions to support its However, the trends set by developed countries products and services or reject them. The will force developing world corporations to number of “ethical consumers” will, in the follow suit. MNCs operating in developing future, be so large that companies will not need countries will play the role of trendsetters to self-select “ethical consumers”. Government for national corporations and will enable incentives and regulations will encourage specialized, culturally sensitive and domestically corporations to no longer offer “less ethical” viable approaches to corporate sustainability product ranges. Thus, the consumer will not to take shape. need to worry about the ethical nature of the

23: https://www.quora.com/Are-corporate-social-responsibility-payments-donations-by-the-US-companies-tax-deductible-If-not-what-is-their-tax-status

22 02 CSR IN THE REGION

2.1 CSR in Central Asian Countries 25 2.2 CSR in Iran 26 2.3 CSR in Pakistan 26 2.4 CSR in India 27

CSR IN THE REGION and the economic development is also very Assessment of CSR in the region assumes different. Whereas India is considered to be an understanding of the different context of almost a first-world country, at least from CSR in developing countries as compared to technological and economic development developed countries. “Contextualizing the point of view, Pakistan and Iran are fairly active macro, meso and micro level dynamics that emerging markets. The Persian Gulf countries are at play in specific environments24” plays have access to significant oil wealth, which a critical role in understanding the issues at has helped them to invest in technological stake in developing countries. Regional as well advancement and to attract hundreds of as institutional differences account for much top global corporations to engage in their of the need for contextualizing CSR, which markets. On the other hand, the Central will eventually help nations to come up with Asian countries of Tajikistan, Uzbekistan, their specific CSR guidelines and policies. In his Kyrgyzstan and Turkmenistan are somewhat thesis on CSR in Afghanistan, Dr. Sameer Azizi developed but are lagging behind in attracting believes that CSR approaches in developing global corporations and with it their ways of countries as well as in the region are affected doing business. Afghanistan is a country at war by a combination of MNCs with their mostly for the past 40 years. However, it is making “Anglo-Saxon” context and local players using some strides in the right direction, and CSR is culturally sensitive and locally adapted CSR gradually gaining more traction in the country. initiatives and approaches. As a result, the CSR The following chapters look at the particular context “is shaped by a national institutional conditions of the groups of countries with context rather than by the simplified global associated relevance for CSR25. The objective diffusion . . . These conflicting pressures and is to evaluate if there are some lessons that the complexity of global convergence vs. local Afghanistan can learn to enhance CSR within divergence claims often translates into CSR the country -- lessons that are aligned with cross-vergence”. As a result, the conditions and cultural context of the country. “CSR expressions of MNCs take more explicit forms, while those of small and 2.1 CSR IN CENTRAL ASIAN medium-sized enterprises (SMEs) take COUNTRIES more implicit forms. Where salient global CSR is a new but evolving concept in the institutional pressures continue to shape Central Asian countries, including Tajikistan, MNC’s CSR activities in these countries, Uzbekistan, Turkmenistan, Kazakhstan and it is the national business system, the local Kyrgyzstan. Much of the CSR activities are cultural and religious norms, and the salient currently launched by MNCs, which are institutions that together shape SME’s CSR following their global agenda and processes. activities.” Tajikistan and Kazakhstan are making some significant strides to operationalize CSR, while The differing levels of engagement with CSR other countries of the region seem to still be in in different countries also manifest themselves early stages of their evolution. In Kazakhstan, in the approaches taken by different players to The Organization for Economic Cooperation offer CSR initiatives and leave differing levels of and Development (OECD)26 has drafted a impact on their communities and stakeholders. national concept of CSR for the country, which was adopted by the government. The National The region around Afghanistan is very diverse, Chamber of Entrepreneurs has taken on a 24: “CSR in Afghanistan: A Global Agenda in Areas of Limited Statehood”, by Sameer Azizi & Dima Jamali, South Asia Journal of Global Business Research, 5(2), 165-189 25: The Persian Gulf countries have not been addressed because their CSR context is significantly developed, so that they are more comparable to first world countries. 26: https://primeminister.kz/en/news/finansi/kazahstan-mozhet-stat-liderom-tsa-v-sfere-razvitija-korporativnoj-solidarnoj-otvetstvennosti-oesr

25 number of its social programs and developed awareness programs that could result in monitoring and implementation strategies. In greater use of CSR as a social enhancement Tajikistan, the Aga Khan Foundation, in early tool. Nejati also considers the manufacturing 2010, initiated a round table discussion27 with industry to be more engaged in CSR than significant businesses having potential for CSR service organizations32, although the results of in the country. This discussion was one of his study are limited by the very small number of the first initiatives in this direction and has corporations that actually offer CSR activities. received some significant support over the past nine years. Uzbekistan, Turkmenistan and The nature of CSR in Iran is fairly unique. A Kyrgyzstan have yet to launch serious national direct transfer of the Western model of CSR CSR programs, so that their CSR activities into the Iran context is challenging (Fateme are currently self-driven and motivated by Mudabber33). However, adaptation of Western MNC policies and operational requirements28, CSR to the Iranian context should be a not driven or guided by any national policies. reasonably achievable task. The United Nations Reporting for CSR activities, especially in the has initiated a number of programs to support environmental conservation area, is challenging CSR in the context of sustainability and social and plagued by corruption and inadequate cohesion. There are some significant efforts capabilities, which make it difficult if not underway by MNCs as well as the government impossible to measure the actual impact of and the United Nations’ (UN) agencies to CSR29. Throughout this region, philanthropy maximize the contribution of CSR in the society and charitable giving seem to be the only venue and engage corporations in a systematic and of channeling CSR activities. systemic manner to achieve great social good.

Within the context of greater visibility and In Iran, CSR is currently more aligned with receptibility of CSR in Central Asia, dedicated philanthropy and sponsorship of different organizations have emerged that support cultural/sport events, donations for natural corporations in initiating and implementing disasters, building schools, mosques, hospitals, CSR programs. One such organization is etc. (Mudabber, 209). Where there is a CSR “CSR Central Asia”, which according to its program, it is aligned with the European documents serves as a “center of collaboration Foundation for Quality Management between business and society, and implements framework. Otherwise, they are guided by programs and projects that contribute to social, Islamic traditions of Khums, Zakat and Waqf. environmental and economic effectiveness30”. CSR Central Asia could be a good model to 2.3 CSR IN PAKISTAN be replicated in Afghanistan as well. Pakistan, like most other developing countries, applies CSR mostly philanthropically, so that it 2.2 CSR IN IRAN covers only a fraction of the CSR landscape. CSR is still in its infancy in Iran. According to Such CSR initiatives include providing Mehran Nejati, researcher in the School of medications for hospitals and scholarships to Management, Universiti Sains Malaysia31, there students, distributing relief goods during natural is a need for significant public and corporate disasters, and contributing in the community

26: https://primeminister.kz/en/news/finansi/kazahstan-mozhet-stat-liderom-tsa-v-sfere-razvitija-korporativnoj-solidarnoj-otvetstvennosti-oesr 27: https://www.news.tj/en/news/akf-promotes-corporate-social-responsibility-tajikistan 28: Corporate Social Responsibility as a Tool of Public Relations in Kyrgyzstan”, by Kamilla Alieva, American University of Central Asia, Journalism and Mass Communication Department (April 2013) 29: “An Assessment of Corporate Environmental Responsibility in Central Asia’s Mining Industry”, by Estella Snowden, The University of Edinburgh, Edinburgh Medical School, Biomedical Sciences 30: http://csr-ca.com/en/about/about-csr-ca/ 31: https://www.emeraldinsight.com/doi/abs/10.1108/17471111211272552 32: https://www.researchgate.net/publication/258049478_Corporate_Social_Responsibility_in_Iran_from_the_Perspective_of_Employees/download 33: “Implementing Corporate Social Responsibility in a Developing Country – A study of Iran”, Fateme Mudabber

26 development programs in rural and urban areas systems for operationalizing and regularizing of the country34. Similar to other countries CSR activities that would enable adequate in the region, the level of public awareness measurement of the impact and sustainability of CSR is very limited. There appears to be of their contributions. International standards no systematic approach to CSR, so that UN for reporting on CSR activities need still to take Global Impacts principles have not been fully into consideration Pakistan’s special cultural addressed. Pakistan, like its neighbors, has a and economic conditions to ensure adequacy cultural context that forces corporations to and relevance of their CSR activities. behave in a philanthropic manner. 2.4 CSR IN INDIA A 2016 Corporate Philanthropy35 Survey by India has reached significantly enhanced CSR the Pakistan Center for Philanthropy indicates status as compared to other countries in the that total donations by Public Listed Companies region. In the 2013 Companies Act of India, (PLCs) increased by more than 32 times during which replaced the 1956 Companies Act, CSR 2000-2016 and contributed a total of 0.7% has become mandatory for corporations that of their profits before taxes (PBT) to CSR meet any of the following three conditions: related activities. 51% of PLCs are involved a) net worth of more than 5 billion Rupees, in philanthropy. About 23 percent of private b) annual turnover of more than 10 billion unlisted companies (PUCs) and 26% of Rupees, or c) annual net profit of at least private listed companies (PvLC) participated 50 million Rupees. If a company meets any in philanthropic activities. PUCs (109 out of of these three criteria, which are known as 474) donated about PKR 0.86 billion, while the “Triple-Bottom-Line-Approach” (TBL), PvLCs (94 out of 360) contributed PKR 1.33 they are required to create a committee to billion in the year 2016. The share of top 25 enforce their CSR mandate to approve CSR companies participating in CSR is 80% for PLCs, policy, ensure its implementation, disclose the 88% for PUCs, and 93% for PvLCs. Oil and contents of CSR policies in its report, place gas exploration is the largest contributing sub- the same on Company’s website, and ensure sector, with an approximate donation of PKR that statutory specified amount is spent by the 608 million. company on CSR activities.37 These activities may include eradicating poverty and related There have been significantly more studies efforts, promoting education, gender equity of the status of CSR in Pakistan than in Iran and related efforts, ensuring environmental or the Central Asian countries. As a result, sustainability, protecting national heritage and there is more data available on CSR for other similar activities. Pakistan than in the other countries. One study36 has developed a set of CSR indices Because India is applying the TBL to CSR, for Pakistan based on different industries, Saurabh Kumar38 expects that total corporate including petroleum, banking, telecoms, media, giving in India will increase from about $600 fertilizers and chemicals. According to the same million per year to more than $2 billion. Kumar study, the government of Pakistan has still not reports that data provided by CSOs indicate regularized CSR-related policies and does not that in 2017 the total money spent on CSR has regulate CSR-related activities in the country. jumped by 20% as compared to the previous Corporations have also not established any year, and the number of defaulters has gone

34: Corporate Social Responsibility in Pakistan: Its status and ways forward”, by Mushtaque Ali Jariko and Tom Borsa of Aalborg University and Ashique Ali Jhatial of University of Sindh, Jamshor, 2016 35: http://pcp.org.pk/uploads/CP_Report_2018_printed.pdf 36: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.920.6032&rep=rep1&type=pdf 37: https://www.edupristine.com/blog/corporate-social-responsibility 38: https://blog.ipleaders.in/csr-laws-india/

27 down to 36%, compared to 44% during the of the qualified corporations are still defaulting previous year. About 33% of the surveyed 100 on their social responsibilities, which means companies have also indicated spending more that the road to better regulations, laws and than the mandated 2% of their net profits for processes, as well as better reporting and CSR activities. These figures demonstrate an enforcement, is still long. Credible recipients ever-growing acceptance and adoption of a of the financial contributions and credible government-mandated CSR push. programs, coupled with a strong awareness creation and educational effort, must be in place The Indian experience has shown a great to make it easier for corporations to benefit increase in social responsibility demonstrated from the opportunities that CSR offers them by corporations. However, more than 1/3rd and the society at large.

28 03 CSR IN AFGHANISTAN

3.1 Religious and Cultural Context of Social Responsibility in Afghanistan 31 3.2 Evolution of Modern-Day CSR in Afghanistan 32 3.3 Present Condition of CSR in Afghanistan 34 3.3.1 Legal and Regulatory Situation of CSR in Afghanistan 34 3.3.2 CSR Support by Government Officials 35 3.3.3 The Legal Environment in Afghanistan 35 3.3.3.1 The Constitution 35 3.3.3.2 Corporate Law 36 3.3.3.3 Labor Law 36 3.3.3.4 Environmental Law 36 3.3.3.5 Mining Law 37 3.3.3.6 Accounting Regulations 38 3.3.3.7 Tax Law 38

CSR IN AFGHANISTAN regulations for many years. However, these According to Export.gov, activities were never categorized as CSR- related. For example, the Afghan Red Crescent “ Afghan awareness of the term Society (ARCS) has been a direct beneficiary ‘Responsible Business Conduct’ is nascent, of a number of taxes, including a 2% tax on all but the government has encouraged large imported goods into the country, around AFN companies and foreign investors to invest 10 per issued passport tax, and a vehicle fee in [CSR]. Large mining contracts include paid by vehicle owners during the Red Crescent stipulations for environmental protection Week celebrations, which occur once every and community inclusion. A comprehensive year. As such, imposition of a tax on parts of mining law passed in October 2014 requires the society for charitable purposes has been mining contract holders to consult with practiced, recognized and appreciated by the communities that will be affected by mining government and the population at large. It projects and to implement a community is these taxes that enable ARCS to support development agreement that includes its operations in Afghanistan. This example details of the firm’s environmental and offers a window of opportunity for CSR tax social impact assessment. The law also to be imposed in other sectors of the Afghan requires extractive sector companies to market place. safeguard and maintain any archeological and cultural relics they come across during In spite of these positive trends, Afghanistan the extraction operations until the Afghan has a long way to go before it has a functioning, government removes them.” structured and sustainable CRS sector. In later chapters, we will assess the response and The article also describes that priorities of government officials as well as corporate, CSO and academic representatives, “ a number of the competing mobile who may have different views on the possible network operators have well-developed imposition of mandatory taxes on CSR and CSR outreach programs that include health, the development of additional regulations education, job creation, environmental governing CSR initiatives. protection and outreach to refugees. For instance, the largest telecom operator 3.1 RELIGIOUS AND CULTURAL in Afghanistan, Roshan, whose majority CONTEXT OF SOCIAL owner is the Aga Khan Fund for Economic RESPONSIBILITY IN AFGHANISTAN Development, has received recognition for The overwhelming majority of Afghans are its social responsibility mission, including Muslims. Islam mandates that Zakat (poor’s from Forbes and B Lab as one of the 16 ‘Best due) be paid on an annual basis at the rate for the World’ midsize companies in 2015. of 2.5% of an individual’s annual savings. In addition, some Afghan entrepreneurs, Whereas Zakat is a religiously mandated and such as Ihsanullah Bayat, the Barakat Group, compulsory charitable giving, Sadaqa, or as is the Ghazanfar Group, Hotak Azizi, and locally called ‘Khairat’, is a voluntary yet strongly the Alokozay Group, have foundations recommended practice within the religion and that provide assistance in the fields of in Afghanistan. As has been discussed at length health, education, and the eradication of in the Preface and in Section 2.2 above, the 39 poverty ”. religious mandate for social responsibility is deeply rooted in the society, is taken fairly CSR tax has been part of governmental seriously by Muslims and is a key driver of CSR 39: https://www.export.gov/article?id=Afghanistan-corporate-social-responsibility

31 in modern-day Afghanistan. influencing the national settings”, if such players, including corporations, choose to assume a Corporations receive no exception to the greater role. Hence, the popular attention religious and cultural mandates and have and expectation is directed away from a sole traditionally engaged in activities that indicate reliance on the government and includes other social responsibility. However, often the scope non-state actors such as corporations as a of social responsibility has been limited to source of delivering products and services to charitable giving and some basic community meet basic popular needs. Afghanistan, with a development efforts, because alternative “weak institutional setting”, is a good candidate venues to demonstrate social responsibility for CSR to take shape and effectively address have not been widely promulgated, and gaps in service delivery to the population. the level of awareness on issues such as environmental stewardship, workplace safety, In Afghanistan, the mobile telecommunications equal employment opportunities, support for industry has been the initiator of modern-day regulatory and legal environment, adherence CSR and as such warrants some scrutiny. There to basic principles of respect and the dignity are four telecommunications companies in of workers, customers and associates, as well Afghanistan, two of which (AWCC [Afghan as other factors that are part and parcel of a Wireless Communications Company] and sound Islamically-compliant CSR plan, have not Roshan) are national entities, while two are been adequately addressed. MNCs (Etisalat and MTN). Together, all four are responsible for more than “$2.4 billion in 3.2 EVOLUTION OF MODERN-DAY foreign direct investment in Afghanistan” (Azizi). CSR IN AFGHANISTAN About 40% of the GDP contribution is by the Afghanistan is a country still at war. As such service sectors, with the telecommunications the government does not exercise sovereignty industry being a major contributor. On average over all parts of the country, and the services this industry contributes about $139.6 million delivered to the population are also inadequate, in taxes per year and employs about 100,000 missing in some areas and filled with deficiencies people (Azizi). where such services are delivered. Hence, there is a need for non-state actors, such as According to Azizi, the CSOs and private corporations, including MNCs, to fill any gaps in governance and “ . . . CSR topics raised by the four services offered by the state. According to Dr. corporations have two interesting features. Sameer Azizi40 , engagement of non-state actors First, it is interesting that the practices are “directs attention away from state-centric mainly targeted towards the wider-society conceptualizations of institutional settings or community issues, tailored specifically acknowledging the existence of certain peculiar to local communities – whether in rural or state formations that shape business-society urban areas. In other words, internal issues relations and thereby the CSR”. Additionally, such as labor and working conditions and “the emphasis on non-state actors underlines supply-chain issues are not high on the the important role that corporations can agenda in terms of explicit CSR themes assume in the business-society interface . . for these corporations. Second, in this . with/without state engagement”. Hence, societal approach some variations can non-state actors receive greater prominence be seen in the CSR topics raised by the and have “larger room for maneuvering and corporations. While all telecommunication

40: Corporate Social Responsibility in Afghanistan – A critical case study of the mobile telecommunications industry, Sameer Aziz, Doctoral School of Organisation and Management, PhD Series 11.2017, Copenhagen Business School,

32 Corporation s/ AWCC Roshan MTN Etisalat CSR topics Health Supports hospital constructions Debtak & Health climic and Community Healthcare NA and equipment walk to Help Save workshops for employees Medical centers in remote areas an Afghan Mother and Child in Health Insurance for employee beyond the reach of CSOs USA Telemedicine in 3 public hospitals Mobile Clinic Support to ’Gynaecolgy” Community Water well construction Cash Support for orphanages Build A Well Reconstructing bridges Social Welfare Development grants for children and orphanges Project Pamir Power Project Water- and digging water wells projects Annual Wenter Aid pakage Afghan Tarcker Alternative Livelihoods Support to Internally Food Distribution Symposium on Humanitarian and Programme TV Programmes Displaced People (IDP) to underprivileged Leadrership Earth Day initiatives Playground Project Soup Kitchens Due to war or civil conflict children Afghan Trusted Network Stars Sign Out Education, Support Orphannge schools Teacher consultation Line E-learning Scholarship for Graduate Tranee Capacity building Educational Learning Centers center in 30 location School students Contribute in programme Several Women grants Construction One Laptop Per Child reconstrueting school and support initiatives Roshan/Cisco Networking Academy orphanages to educational Teacher consultation line institutions Private sector Empowering Women Grants for Women’s Publlic Call Offices NA Public call office development business justice and humanity Bicyele for handicapped Sport Sponsorships Sports grants to Olympic Youth Sport Center Afghan Prermier NA Sport sponserships medallist bicycle racs league football and support for national cricket team Religious practices Ramadan Food Distribution NA NA Building 38 Islamic Mosques Annual Quran Recitation Compatition Hajj Support Disaster relief Disaster relief NA NA Emergency support NA M-services My Money Malomat M-Paisa M-docttor, M-Mufti, M-Hawala M-Lawyer, M-Paisa Table 3 - Summary of CSR operational areas in Afghanistan’s Telecom Industry corporations explicitly address topics such Azizi references the introduction of M-Paisa as community development, education/ services by Roshan, which is “directly copied capacity building and M-services, not all of from the Kenyan market, where Vodafone has them address the remaining topics . . .” been successful in implementing the mobile technology”. In Afghanistan, the additional Because “neither the current national regulatory advantage of donor support as a kick-starter framework nor industry-level policies address of community-benefitting initiatives has played CSR as a mandatory obligation or guidance a critical role in launching new projects. For in Afghanistan” and “local civil society example, “Association of Mobile Money organizations do not impose pressure on Operators in Afghanistan – AMMOA” was corporations with relation to business-society “financially supported by USAID to promote relations”, corporations are left to their own development of mobile money projects”. devices to undertake any social responsibility initiatives in the country. As a result, while the AWCC was the first company to enter the two MNCs were guided by “coercive pressure” telecommunications market in Afghanistan from their corporate headquarters to have and, together with Roshan, faced significant well-defined and systematically- implemented challenges in the areas of trained personnel and CSR initiatives, the two national corporations adequate operational infrastructure. Hence, (AWCC and Roshan) were guided by their AWCC was forced to train their own staff and own internal desire to engage with the create their own distribution channels, which in society. In addition, “mimetic processes” also turn created “opportunities for CSR practices, contribute to offering some CSR services. where education, health and private sector

33 development practices are targeted towards Barakat Group, the Ghazanfar Group, Hotak potential future staff ”. Azizi further elaborates Azizi, and the Alokozay Group have established that education of employees raised issues of dedicated philanthropic organizations, while labor rights and benefits to employees that have others, such as AIB Bank, Serena Hotel, Maihan resulted in Roshan being the first company to Steel, Zahir Plastic, Moby Group, Afghanistan offer its employees private medical insurance. Beverage Industries, and Insurance Corporation Competition is also a driver for CSR activities of Afghanistan are undertaking their own in Afghanistan. For example, Roshan and philanthropic work or collaborating with CSOs AWCC imitated each other in introducing CSR and educational institutions to disburse their programs and topics with a significant focus on CSR contributions. community development, education, health and other services. They aimed at building Under any circumstances, over the past a trusting relationship with “customers and few years, the level of CRS awareness has communities in the area” where they operate significantly increased, and “copycat” imitations and where the government is not able to offer are part of the new trend as and when those services (Azizi). companies become large enough to generate some level of attention from the general public. With the telecommunications companies serving There is anecdotal evidence and a general as role models for social engagement and social perception, at least among the educated responsibility, soon other corporations started urban population, that large corporations have following suit. Today all major corporations in a responsibility to give back to the society. Afghanistan exercise either pure philanthropic Therefore, where large corporations do not social responsibility or a more expanded version have philanthropic operations, they are looked of CSR. upon as “irresponsible” members of the society.

Study of the academic field, however, indicates 3.3.1 Legal and Regulatory Situation of CSR that CSR in Afghanistan is still not part of the in Afghanistan educational process and of the curriculum of There are no rules, laws or regulations students in relevant fields. This lack is likely governing CSR in Afghanistan. However, as due to the inadequate level of penetration that cited earlier, during the negotiation of major CSR has achieved within the society and the contracts for mining sector, the government shortfall in the level of awareness of CSR as obliges the contractor to take sustainability and a corporate mode of operations among the protection of the environment, cultural heritage corporate players and academia. and social as well as economic development of the target communities into consideration. 3.3 PRESENT CONDITION OF CSR Such conditions are stipulated in Article 77 of IN AFGHANISTAN the Mining Law and Chapter XV of the Mining In Afghanistan, there is no system of Regulations titled “Environmental and Social encouragement, oversight or guidance for Protection”. The regulations stipulate that the CSR sector. Hence, corporations are left prior to exploration, mining operators must to their own accord to do what they please. identify the areas of safeguarding, develop Nevertheless, over the years, CSR has taken a plan including budgets and operational more structured forms, so that today a number schedules, and fully fund a mitigation plan to of large corporations are actively pursuing ensure minimal damage to the environment. CSR either through a dedicated philanthropic Such mitigation measures are based on organization or through their marketing “International Best Practice Obligations” as departments. Major corporations such as described under Chapter XVI, Article 88 of

34 the Mining Regulations. 3.3.3 The Legal Environment in Afghanistan The mining laws, as well as some other laws or In evaluating the legal environment, we have internal regulations (Tarz ul Amal) within other chosen to look at specific laws and see to what ministries governing prevention and mitigation extent they either promote or hamper CSR- of damages to the environmental and social related activities. Below is a description of the fabric, are still case-specific and do not offer laws and their relevance for CSR initiatives in an all-inclusive solution for all investments the country. and corporations. According to an official from the Ministry of Commerce and Industry, 3.3.3.1 The Constitution there are some inter-ministerial documents that Multiple articles of the Constitution of the encourage social, economic and environmental Islamic Republic of Afghanistan have references considerations by corporations. However, to issues that are of relevance to CSR initiatives. all such stipulations are voluntary in nature Article Six of the Constitution stipulates that and are not consistently applied or enforced. “The state shall be obligated to create a Therefore, corporations can continue to cause prosperous and progressive society based on harm to the environment and to the social social justice, preservation of human dignity, fabric without any financial responsibility for protection of human rights, realization of their actions and their harmful operations. democracy, attainment of national unity as well as equality between all peoples and tribes 3.3.2 CSR Support by Government Officials and balance development of all areas of the At present, there are no indications that country.” Most of these state responsibilities government agencies offer any type of also apply to individuals and corporations, who preferential or even enhanced support for are also citizens of the country. As such, the CSR-related activities. There are no tax responsibility of the state to ensure “social incentives in place, and there are no eminent justice”, preservation of “human dignity”, plans to introduce such incentives. Also, “protection of human rights”, and “equality there is no systematic awareness creation between all . . .” are also part and parcel of or encouragement system in place to the scope of CSR activities. Thus, it makes reward corporations for socially responsible sense that the government would mandate behavior. Government officials whom corporations to enact initiatives that promote we interviewed for this assessment indicated all of these conditions. their appreciations for CSR-related work by corporations. However, they also indicated that Under Article Ten of the Constitution, the there is nothing that the government is doing, “state shall encourage, protect as well as pursuing or planning to pursue to effectively ensure the safety of capital investment and encourage CSR, provide incentives for start of private enterprises in accordance with the CSR or enable and facilitate the expansion of provisions of the law and market economy.” existing CSR activities. There are no efforts in Article Thirteen stipulates that “The state shall place that even create the regulations necessary design and implement effective programs for to ensure that CSR operations are effective and developing industries, expanding production sustainably managed throughout the country. as well as protecting activities of craftsmen This vacuum offers an opportunity for actors to to raise the standard of living of the people”. lobby in favor of the right set of regulations to These Articles stipulate that the government enhance the quality, intensity and effectiveness create an environment conducive to initiation of CSR activities. and development of the private sector as well as guarding the right of all citizens to “raise their standard of living”. Under Article Fourteen, the

35 Constitution stipulates that the state, that “Every Afghan shall pay taxes and duties to the state in accordance with the provisions “within its financial means, shall design and of the law. No taxes or duties shall be levied implement effective programs to develop without legal representation. Tax rates and agriculture and animal husbandry, improve duties as well as the method of payment shall economic, social and living conditions of be determined, with due respect to social farmers, herders and settlers as well as justice, by law”. Thus, the state may levy such the nomads’ livelihood. The state shall taxes that will enhance the environment and adopt necessary measures for provision of the social, economic and cultural condition of housing and distribution of public estates the country, while ensuring an equitable and to deserving citizens in accordance with judicious treatment of all categories of the the provisions of law and within financial population through direct contribution of every possibilities.” member of the state, including corporations.

Also, this Article describes the responsibility These articles suggest that there do not seem of the government to ensure that whatever to be any objections to the state enacting laws, economic activities are undertaken, happen rules and regulations to encourage, induce or with the full aim of improving the “economic, mandate active engagement of corporations in social and living conditions” of the target socially responsible initiatives and to discourage, population, including “provision of housing dissuade or penalize the same, if they fail to and distribution of public estates to deserving meet the legal requirements. citizens”. We assume that Article Fourteen also implies that the government may enact laws, 3.3.3.2 Corporate Law rules and regulations to encourage corporations A detailed study of Afghan corporate law to support in these objectives, including by concluded that there are no provisions that means of directing some of the potential state would prevent a corporation from engaging in revenue in the form of tax exemptions and CSR, even though there are no mandates for tax credits to support CSR-related initiatives. corporations to so engage. The results of this study do not mean that the state cannot enact Article Fifteen stipulates that the “state shall laws under the corporate law or other laws be obligated to adopt necessary measures that would encourage or mandate corporations to protect and improve forests as well as to engage in CSR initiatives. the living environment.” This Article makes catering to and the protection of forests and 3.3.3.3 Labor Law the “living environment” an integral part of A detailed study of the labor law concluded the state’s responsibilities, for which the state that there are no provisions that would prevent needs to develop adequate policies and laws. or encourage corporations to engage in CSR. Engagements in the areas of environmental Similarly, this study does not mean that the protection squarely fall under traditional CSR state cannot enact laws under the labor law or responsibilities. Therefore, the state may enact other laws that would encourage or mandate laws that encourage corporations to support corporations to engage in CSR initiatives. environmental protection by preventing harm to the environment and facilitating strategic and 3.3.3.4 Environmental Law operational efforts to enhance the quality of Article 6 of Afghanistan’s Environmental Law the country’s environment. titled “Rights and Duties of the State” under Subsection (3) stipulates that the state Article Forty-two of the Constitution stipulates

36 “ . . . has the duty, for the welfare of identification and amendment of policies people, both present and future, to and other measures which encourage adopt and implement programmes unsustainable use of natural resources.” aimed at maintaining and re-establishing essential ecological processes and natural Hence, the state can enact and impose under resources, conserving and rehabilitating the environmental laws regulations to promote environment, preventing and controlling corporations’ CSR activities to preserve and pollution and ensuring that the benefits of protect the environment. the use of genetic resources are shaped equitably.” 3.3.3.5 Mining Law As described under Section 4.3.1, Article 77 of Under Sub-section (4), the same law stipulates the Mining Law and Chapter XV of the Mining that the state “has the duty to provide the Regulations titled “Environmental and Social public with information and opportunities to Protection” stipulate that prior to exploration, participate in making decisions affecting human mining companies must identify the areas of health, the environment, and natural resources.” safeguarding, develop a plan including budgets This provision allows the government to and operational schedules, and fully fund a a) ensure that any negative impacts on the mitigation plan to ensure minimal damage to environment due to operations of corporations the environment. Such mitigation measures are mitigated by the corporations, and b) are based on “International Best Practice the public – including the corporations – is Obligations” as described under Chapter XVI, given ample information and opportunities to Article 88 of the Mining Regulations. contribute towards safeguarding and protection of the environment. During a Key Informant Interview, Mr. Mohammad Fahim Hashimi of the Policy Article 24 of the Environmental Law, with Department at the Ministry of Mines and the heading “Economic Incentives and Petroleum stated that these laws are rigorously Disincentives”, provides that enforced. For example, the copper mining contract with the Chinese company MCC “The National Environmental Protection obligates them to build roads, buildings, schools, Agency, in cooperation with the Ministry of to create safe working conditions, to respect Finance, relevant institutions and Provincial and protect historic heritages, etc. These Councils and District and Village Councils, obligations are enforced with small, medium shall develop and implement measures as well as large mining companies. Offerors are providing for: (1) appropriate economic also required to submit a bank guarantee as incentives to encourage prevention and assurance against any environmental damages control of pollution, and protection of caused by the extracting company, which can the environment from adverse effects; (2) then be used to mitigate the negative effects appropriate economic disincentives for of such damages. engaging in activities which do not encourage sustainable use of natural resources, The requirements to safeguard and offer conservation of biological diversity, social and economic development support for prevention and control of pollution, communities affected by the mining activities and protection of the environment are also included in requests for proposals from adverse effects, or disincentives as pre-conditions for award. Those offers that lead to the use of technologies that which provide the greatest amount of social, are not environmentally sound; (3) the economic and environmental support initiatives

37 and commitments receive higher scores and any circumstance, there is an absolute need are more preferentially treated. for greater awareness creation, training and better accounting guidelines and rules that The Ministry of Mines & Petroleum is currently would prevent this form of duplicity. working on two regulations that will enable the contractors as well as the government to Afghanistan applies the GAAP rules, which more effectively identify and support social, ensure that corporations maintain accounting environmental and economic projects in the systems that are transparent and legally and target area, which will further streamline these logically structured. efforts. Mr. Hashimi also indicated that they expect mining contractors and investors to 3.3.3.7 Tax Law spend between 5-8% of their budget on social The tax law of Afghanistan does not foresee welfare activities. The Ministry monitors the any type of tax credits, incentives or deductions work of the companies to make sure that for CSR-related activities. Hence, there is a their social engagement is aligned with their significant opportunity for the government to contractual obligation. initiate laws and to develop rules and regulations that encourage CSR by minimizing the cost of The Ministry of Mines also offers incentives social responsibility or channeling at least some for investment by mine extractors with flexible of the taxable income towards CSR-related royalty payments, so that complete processing initiatives. During interviews with Ministry of of raw material will mean royalty payments of Finance officials, they indicated that neither at 2.5%, semi-processing at royalty payments of present nor at the foreseeable future is the 5% and unprocessed ore at royalty payments Ministry planning to initiate any tax incentives of 7%. These incentives enable the creation for CSR. Because the state is currently focused of thousands of additional employment on increasing the tax revenues and tax credits, opportunities in Afghanistan. it “would be counter-productive” to give tax breaks and incentives for CSR-related activities 3.3.3.6 Accounting Regulations or any other activities. Such positions by the The existing accounting laws do not allow Ministry of Finance officials offer an opportunity expensing CSR-related costs as normal taxable for dedicated entities to create awareness line items. However, during the study, a that enhanced CSR activities by corporations number of corporations appear to be booking can yield larger economic prosperity and CSR- related activities as business expenses benefits, which in turn can create more wealth and are being credited for these expenses and by extension larger tax revenues for the by the Ministry of Finance. This behavior government. As such, the need for rules could be due to a lack of awareness of the and regulations that incentivize greater CSR tax authorities or a misunderstanding of the engagement exists in the short as well as the corporations about the state of the law. Under medium and long term.

38 04 RESEARCH FINDINGS

4.1 Research Methodology 41 4.2 Research Limitations 41 4.3 Overview of Findings 42 4.4 Sentiments & Engagement of the Business Community 43 4.4.1 Overview of Sentiments 43 4.4.2 Engagement of Business Community 44 4.4.3 Assessment of Business Community 44 4.4.4 Summary of Corporate Engagement and Sentiments 49 4.5 CSR Preference of CSOs 49 4.6 CSR Preference of International NGOs and Donors 50 4.7 General Consumers’ Views on CSR Overview of Consumer Sentiment: 51

RESEARCH FINDINGS of Finance, Economics, Commerce, Justice, and Labor and Social Welfare; 4.1 RESEARCH METHODOLOGY The assessment included a combination of 2. CSO representatives, national and quantitative and qualitative data collection to international NGOs, including major provide consistent, realistic and comprehensive NGO coordinating bodies such as Agency information about the state of CSR in Coordinating Body for Afghan Relief (ACBAR) Afghanistan and the perceptions as well as and Afghan Women’s Network (AWN); the priorities of consumers concerning social responsibility by corporations. 3. Large- and medium-sized corporations representing manufacturers and The assessment was carried out in the cities service enterprises operating in of Kabul, Herat, Mazar e Sharif, Kandahar Kabul and throughout the country; and Jalalabad. This procedure enabled access to five critical markets where manufacturing, 4. Academic representatives and persons with enterprise development and larger scale knowledge about CSR-related matters; and business operations are prevalent. We placed greater emphasis on the Kabul market, which 5. Small-scale businesses and the general serves as the policy as well as the business and population. CSO hub of the country. In Herat, Jalalabad, Kandahar and Mazar e Altogether we conducted 230 survey Sharif, we interviewed people in the following interviews, met and interviewed approximately categories: 50 observers, and held three focus groups in Kabul. We did not hold focus groups in 1. General population (customers) and Herat, Kandahar, Jalalabad and Mazar e small-scale businesses; Sharif, because Kabul is where most large- scale corporations are present, most domestic 2. Manufacturers and larger scale construction, and international NGOs are headquartered service and supply businesses; and and numerous academic representatives with significant connections with the government 3. CSOs headquartered in the respective system reside, resulting in significantly higher provinces. impact than in other cities. The findings described below are a reflection For each category of interviewees and of their views, expectations, and perceptions. participants, we developed and presented different sets of questions to ensure that their 4.2 RESEARCH LIMITATIONS responses were relevant to their circumstances Because of the specific circumstances of and that we collected both qualitative as well as Afghanistan, this research encountered a number quantitative data. Specifically, we interviewed of limitations, which include the following: or engaged with the following categories of the population: 1. A significant number of corporations were not willing to share any financial In Kabul, we interviewed/surveyed some or numbers for their company or their CSR all of the following categories: programs with the research team. The reasons are not clear. Their websites, 1. Government officials from the Ministries available annual reports or other publicly

41 available documents also did not include secondary data to make a statement about the financial figures. As a result, there were their effectiveness. no opportunities to quantify the amount of CSR spending in absolute numbers We were able to overcome (mostly) other or as a percentage of corporate profits. limitations in the process of collecting data, so that we can categorize the reported data as 2. Nearly all of those interviewed did not fully a sound reflection of the realities of the state understand the scope of CSR. Of those of CSR in Afghanistan. who did have some understanding, it was challenging to disentangle their mindset 4.3 OVERVIEW OF FINDINGS from a purely charitable-giving dimension of We compiled and analyzed the data collected CSR. Hence, it is not clear to what extent through the desk studies, interviews and focus the respondents’ views reflected their groups for relevance, consistency, contradiction, understanding of the full scope of CSR. system strengths, weaknesses, threats, and opportunities. Research indicated that there 3. A significant number of donors and is a significant amount of social engagement international NGOs were not interested by the corporate world in Afghanistan. Much in participating in the study. Hence, the of the engagement is in the form of charity, qualitative views reflected in this survey philanthropy, sense of responsibility towards are just an indication of their opinions the community, and, to a very small extent, and do not have any statistical value. out of a need for a good image. It seems that the overall driver for social engagement 4. Large national corporations such as by corporations is the cultural, religious and Alokozai Group, Barakat Group, Bayat moral compass of the business owners. The Group and others as well as large concept of CSR, as is known and practiced in multinationals such as MTN, Etisalat and the developed world, is mostly still unknown in some US government-funded corporations Afghanistan. Some corporations that operate were not interested in participating in the with a strong Western influence use CSR in study. Even though sufficient numbers did their marketing material, including websites, participate, we could not collect the views annual reports and brochures, and some of the large corporations with potentially MNCs have relatively well-structured CSR significant CSR programs. The study had programs, because of their headquarters’ to rely on secondary research to bring to overall mandates. Local corporations, large bear their considerations and concerns. or small, are typically following their gut feeling, their sense of responsibility and their religious 5. Corporations were not willing to share convictions, as was stated by a number of the any details about the specifics of their CSR interviewed key informants. It can be reasonably engagement strategies and how they have argued that CSR, as a comprehensive inward- used their CSR engagement for enhanced and outward-looking concept to a responsible marketing effects, stakeholder engagement corporate operation, is still not available in with their products and services or to Afghanistan. enhance the quality of the production/ services in response to stakeholder demands.

6. Studying the impact of past and active CSR programs was not part of the study. Therefore, research had to rely on

42 4.4 SENTIMENTS & ENGAGEMENT and other types of assistance during the holy OF THE BUSINESS COMMUNITY month of Ramadan. We heard claims that during the recent elections the same lists 4.4.1 Overview of Sentiments have been used by owners of some of the The business community in Afghanistan companies, who became candidates for is generally fairly generous. However, in the Parliament, to secure nominations and absolutely the majority of cases, their charitable eventually extract votes for themselves. We giving is due to personal initiative of their heard further claims that the same lists are being owners and a direct outcome of his/her/their used to offer support for candidates during the religiously obligatory Zakat contributions. Their upcoming Presidential election scheduled for charitable giving is not based on a percentage July/August 2019. In one cited case, the owner of the revenue or profits of the company of a private university in Kabul is said to have but rather at the discretion of the owners. offered a one semester scholarship for every Some large corporations have established ten votes secured by the students and more charitable foundations, which distribute scholarships up until free education for more the owners’ charitable giving to persons in votes. We heard warnings that unless proper need or for establishment of public buildings rules and regulations are available and enforced, such as schools, mosques, water wells, etc. misuse of charitable giving for illicit objectives A number of large corporations, including will continue and undermine the humanitarian Roshan, AWCC, Moby Group, and others nature of corporate giving, affecting not only are expanding the scope of their stated CSR those with the negative intentions but all initiatives to include sponsorships, public corporate giving. awareness creation through TV commercials and related activities. Appendix 1 includes a Corporations are somewhat clear about chart with a list of large corporations that offer the potential marketing effect of their CSR various degrees of social engagement through initiatives, while the surveyed consumers clearly projects and initiatives. Some corporations prefer products and services from companies indicate in their website that they engage in that engage in CSR/charitable giving. However, CSR, while the realities on the ground could be we did not see any evidence that corporations different, have either not been surveyed or have actively pursue strategies, with the help of not been available for survey and interview, so CSR, to enhance their customer and consumer that their claims cannot be verified. At the same satisfaction and to improve production. We time, a survey by Mr. Abdullah Adil, as part of were not able to secure sufficient cooperation his preliminary PhD research at University of from corporations to be able to evaluate Bochum in Germany, indicates that the level whether the corporate stakeholders, including of effectiveness, impact and credibility of the shareholders, were able to see CSR as a ‘shared declared and advertised CSR projects may value’ or a ‘strategic investment’. It was evident leave much to be desired. Consequently, there that their engagement is generally philanthropic are questions about the scope of active CSR in nature and self-serving in some contexts, programs, their effectiveness, sustainability such as – in the case of telecommunications and verifiability. companies - “bribing” the armed insurgency with communal projects such as the construction of Focus groups raised the issue of politicization mosques, etc. to maintain operation of their of CSR/charitable giving by large corporations. mobile phone towers. Identifying developmental Some large corporations maintain lists of priorities of the country or even a sound post- thousands of people that receive food, clothing construction sustainable operation of their assets does not seem to be high on their agenda.

43 Mr. Adil, in his Ph.D. research, has identified a CSR-related spending figures. All interviewed number of cases of abused, misused, damaged corporations indicated that they offered in- and alternatively purposed assets that were kind as well as cash donations to persons or provided to institutions or communities by communities in need. Only about 15% of the some companies as part of their declared CSR interviewed indicated that they did not offer programs. staff volunteering opportunities for welfare purposes. Among medium-sized corporations, the level of engagement is dependent on the moral Most large corporations indicated that compass of the owner and his/her mood. in addition to their CSR contributions, Medium-sized corporations are more prone they also paid the required taxes to the to ups and downs of the market, and as such Afghan Red Crescent Society through their their profits/losses fluctuate more intensely import duties and vehicle registration fees. than their larger corporate peers, causing their philanthropic giving also to fluctuate. Whereas We interviewed a total of 14 medium-sized among the large corporations there are other companies, out of which five (36%) companies than philanthropic giving tendencies, e.g., had active CSR programs. These companies offering health care for all employees and their established these programs around 2003-2004, dependents, environmental contributions, and with one each established in 2014 and 2016. other related social responsibility initiatives, With the exception of just one corporation, medium-sized corporations typically engage none of those surveyed were willing to offer only in charitable giving. insight into their annual revenue and CSR- related spending figures. Only three out of The dynamic of small companies in Afghanistan five (60%) companies interviewed offered in- is significantly different from those of medium kind donations to persons or communities in or large-scale companies. Small companies need, while 40% offered staff volunteering typically have very limited capital, work with opportunities for welfare purposes. very low margins and are used to supporting just one family to make a reasonable living. They We interviewed a total of 43 small-sized typically do not have a systematic accounting companies, out of which 14 (32%) were in system and are extremely susceptible to ups and Kabul and five companies in each of Mazar downs of the marketplace, potentially losing e Sharif, Herat, Kandahar and Jalalabad. The all their capital and assets with the smallest of types of businesses they represented included the tremors. As a result, their footprint in the pharmacies, grocery shops, hardware stores, charitable giving arena is minimal, and CSR clinics, restaurants, mobile shops, ice cream programs are non-existent. shops, clothing stores, real estate agents, gas (fueling) stations, bakeries, etc. 4.4.2 Engagement of Business Community To develop a good understanding of CSR 4.4.3 Assessment of Business Community in Afghanistan, we interviewed a total of 17 We based the assessment of the business large corporations, out of which 10 (65%) community on a number of factors, which corporations had active CSR programs. All are categorized as follows: of these programs were established between 2003 and 2016, with the majority around Motivation for CSR Engagement: 2008-2012. With the exception of just one When asked what their motivation was for corporation, none of the surveyed were willing engaging in CSR, while being able to select to offer insight into their annual revenue and multiple choices, the majority of large

44 corporations responded that they engaged %90 %45 %10 in CSR for ethical (50%) and “giving back” Khairat/Sadaqa Annual zakat Support Local (irregular (Poor’s Due) Mosque charity) /Institution (60%) reasons, while 30% did so for marketing reasons.

%60 %50 Giving back to Ethical business %30 society Practices To build public image/good will %0.0 %0.0 None of the All of the above above

%30 %10 %0.0 To Support Other ( Allah’s Tax beneﬁt Development agenda Pleasure) fo the government

Figure 4 - Type of Small Business Charitable Giving

Figure 2 - Motivation for Charitable Giving As a result, 100% of the interviewed indicated Allah’s blessing as their main motivation for Among the medium-sized corporations, 40% charitable giving, with only 10% indicating some engaged in CSR for ethical reasons, 80% for level of community recognition as a secondary “giving back” reasons, while 40% did so for motivator. marketing reasons (some having more than Sectors of CSR Expenditure: one reason). When asked in what sectors they spent their

%80 %40 %40 charitable giving, while having a choice of Giving back to To build public Ethical business society image/good will Practice multiple sectors, most large corporations responded that they spend their CSR funds on programs in the areas of education (60%) and social/cultural wealth preservation (50%), while other large corporations supported initiatives %0.0 %0.0 %0.0 To support in the areas of healthcare, community and Other ( Allah’s Tax beneﬁt development agenda Pleasure) of the government economic development, disaster relief and human/women’s rights issue.

%40 %40 %60 %50 Community & Environment Education Social protection Economic Figure 3 - Motivation for Charitable Giving culture & Arts Development

Because of the nature of small companies, most of the issues of small business owners in Afghanistan are synonymous with those of %30 %10 %30 Disaster Relief/ Human rights the general consumers. Hence, their charitable Healthcare shelter /women empowerment giving is generally Zakat (45%) and general Khairat – a.k.a. Sadaqa – (30%) as well as some contribution to their local mosques or other institutions. Figure 5 - Sectors of CSR Giving

Most medium-sized corporations spend

45 their CSR funds on programs in the areas own business units. None of them relied on of education (80%) and healthcare (80%), external sources to spend their CSR funds. with social/cultural wealth preservation and the environment at 40% each. Support for None of the large- or medium-sized community and economic development, corporations maintained a department that was disaster relief and human/women’s rights directly responsible for channeling CSR funds. issues received support from about 20% of About 30% of large corporations channeled medium-sized companies. their CSR expenditure through their finance %80 %80 %60 %50 departments, while others used their marketing Health Education Disaster Relief/ Social protection shelter culture & Arts department (20%), administration, human resources and partnership departments to channel their CSR funds.

%60 %20 %10 Finance Markiting Partnership & Communication %40 %20 %20 Environment Community & Human rights Economic /women Development empowerment

%10 Administration %10 %0.0 Human Resources CSR Management Deportment Figure 6 - Sectors of CSR Giving

Methods of Channeling CSR Funds: Some 70% of large corporations used their Figure 8 - Department Managing CSR Activities own internal channels to spend their CSR funds. Some corporations channeled their CSR funds All interviewed medium-sized companies used through the government (40%), including the either administration or finance departments Directorate of Disaster Relief, the Afghan Red to channel their CSR funds to the needy. Crescent Society and other organizations/ agencies. Others channeled their funds through CSR Budget: CSOs, external foundations, trust funds, etc. About 40% of large corporations did not have

%70 %40 %10 a pre-set budget for their CSR activities, while Directly to Through Partnership with beneﬁciaries Government CSOs 30% stated that they did have a pre-set budget for CSR activities, even though most of them were not able to or did not want to cite the allocated budget for the present or previous fiscal years. About 30% of respondents declined

%10 %0.0 to answer this question altogether. Through your All of the own trust above %40 %30 %30 /foundation No undecided Yes

Figure 7 - CSR Distribution Channels Figure 9 - Share of CSR Giving

All of the medium-sized companies have None of the medium-sized corporations had channeled their CSR funding through their a pre-set budget for CSR activities.

46 Internal or External Policy/Guidelines: Medium-sized companies responded that it The vast majority of large corporations in would have no upwards or downward impact Afghanistan neither follow an internal guide/ on their CSR expenditures. policy (60%) for CSR, nor are they guided by an external policy/guide (70%) such as a Impact of Government Incentives: government policy, UN mandate, regional When asked if they would change their pacts or any other such guiding documents corporate giving if the government offered to regulate/structure their CSR- related %71 %43 %7 %7 activities. They mostly rely on ad-hoc principles Increase Engage in CSR Decrease Continue CSR Spending Spending CSR Spending with the and systems to identify the areas of CSR Same Rate engagement, the methods of engagement, the amount of contribution and other related factors. All respondents indicated that they would appreciate any guidance offered by the government or any other regulatory Figure 12 - Effects of Government Tax Incentives organization.

%70 %60 %20 %10 tax incentives such as credits on taxable CSR NOT guided by Internal Guideline No Internal CSR guided by External Rules for CSR Guideline External Rules for CSR income or other arrangements, 78% of large corporations with an active CSR program responded that they would either maintain their existing levels of CSR engagement or increase it. Some 43% of large corporations Figure 10 - Rules Guiding CSR Ac ities did not have an active CSR program. All of them stated that they would start to engage None of the medium-sized companies follow in CSR activities if the government offered any internal or external guidelines or rules to some incentives. manage their CSR operations. Hence, their activities are ad-hoc and personal preference Some 90% of medium-sized corporations based, rather than being structured or stated that they would either maintain their systematic. existing levels of CSR engagement (70%) or increase it (20%). Impact of No Government Policy on %70 %20 %20 %0.0 CSR: Increase Continue Engage in CSR Decrease CSR Spending with the Spending CSR Spending When asked if they planned to change their Same Rate existing CSR expenses if government policies remained unchanged, the absolute majority (80%) of large corporations stated that they would either continue their existing levels of giving or increase them. About 20% of Figure 13 - Effects of Government Tax Incentives respondents did not answer this question. Among those medium-sized companies %40 %40 %0.0 Continue Increase Decrease that do not have an existing CSR program, with the Company Company Same Rate CSR Spending CSR Spending 100% indicated that they would either start a formal program and or increase their CSR expenditures if the government offered financial incentives to socially engage. Some 93% of small business owners interviewed indicated Figure 11 - CSR Giving based on Existing Laws

47 that they would increase their charitable giving Some 40% of medium-sized corporations if the government offered incentives including cited financial constraints and 20% a lack of tax breaks, etc. government incentives as their main reasons for not having an active CSR program. About 20% Benefits from Social Engagement: were either not familiar with CSR at all or did All large corporations interviewed were positive not know that it was a business activity/tool. about the benefits they received from social %40 %20 %20 Limited Financial Lack of Gov Lack of engagement, which included business benefits Resources Incentive Awareness (50%) as well as religious benefits (14%).

%36 %14 %14 %0.0 Use CSR to Use CSR Other (Allah’s Use CSR as enhance customer to increase Blessing) Marketing Tool loyalty Custtomer Base %20 %0.0 %0.0 Other Protecting Social Dev is shareholder Gov Responsibility interest only

Figure 14 - Corporate Advantages of CSR

Most medium-sized corporations did not Figure 16 - Causes of No CSR Programs respond when asked about the benefits they receive from their corporate giving program. Receiving Appreciation for CSR: Among those that did, the majority considered Corporations like the idea of being recognized it as a marketing benefit, while some cited and appreciated for being socially responsible. religious benefits for their social giving. Some 71% of large corporations,

%71 %8 %21 Undecided Cause of Lacking CSR Program: No Yes Among those large companies that did not already have an active CSR program, 29% indicated financial constraints and 7% a lack of government incentives as their main reasons. Figure 17 - Corporate Expectations About 14% were not familiar with CSR or were unfamiliar with CSR as a business activity/tool. 60% of medium sized corporations and 52% of Some 50% of respondents did not answer this small businesses appreciate being recognized question. for their socially responsible actions.

%29 %14 %7 Limited Financial Lack of Lack of Gov Resources Awareness Incentive Government Mandated CSR: The majority of large corporations (57%) and medium-sized corporation (60%) do not appreciate the idea of a government- mandated CSR tax. However, this number is significantly %0.0 %0.0 %0.0 Gov Responsibility Protecting Other shareholder below expectations, especially since about 43% interest only of large corporations and 30% of medium- sized corporations indicated that they either supported or did not have any objections to a government-mandated CSR tax. Figure 15 - Causes of No CSR Programs

48 %58 %36 %8 the government, in addition to some sort of No Yes No Comment government financial incentive for engaging in CSR. There appears to be significant differences between MNCs and local Afghan companies, predominantly because of the mandates that Figure 18 – Government Mandated CSR (Large MNCs receive from their headquarters. Some Corporations)) good examples of sustained and institutional

%8 CSR by local corporations, especially in the Undecided %30 telecommunications industry, by Afghan %60 Yes No corporations such as AWCC and Roshan can also be observed. Other companies with a more in-depth CSR program include media conglomerates Moby Group and Hotak Azizi Group. Figure 19 - Government Mandated CSR (Medium Sized Corporations) Medium-sized companies are not much different than their large company peers. Some 90% of small business owners indicated They do not have a standard CSR program. that they objected to a government-mandated They do not maintain a budget, and the CSR charitable giving level or requirement. spending is at the discretion of the business owners. They prefer to spend on education, Legal and Regulatory Context for CSR: healthcare and humanitarian assistance. They All large- and medium sized corporations were differ from their large corporation peers in clear that they wanted some level of clarity that they exclusively spend their CSR monies on the legal and regulatory context of CSR through their own channels and do not rely in Afghanistan. Laws, rules, regulations, tax on others to give their money away. They do incentives, or other related guidelines and not like government-mandated CSR spending directions by the government would make but appreciate any incentives and regulatory their engagement significantly more effective support the government can offer them. and easier to manage. Some level of subsidy They like to be appreciated for their work for engagement of corporations in socially and will contribute more if their recognition is responsible initiatives such as tax incentives supported with government incentives. would also be highly welcomed and will likely increase corporate social responsibility. Medium-sized corporations stress that pollution of the air and waters should be penalized by 4.4.4 Summary of Corporate Engagement the government, and more environmentally and Sentiments friendly technologies should be encouraged In summary, large corporations in Afghanistan and incentivized. Greater awareness about either do not have a systematic CSR program or benefits of corporate social responsibility and cannot quantify such programs in a budgetary the manners of achieving them will help them sense. Their understanding of CSR is limited to enhance their social contribution. to charitable giving, which they exercise due to the corporate owners’ religious and 4.5 CSR PREFERENCE OF CSOS cultural preferences and not out of a business We interviewed altogether 12 CSOs in Kabul, operational need. They prefer not to have the Herat, Mazar e Sharif, Kandahar and Jalalabad. government mandate a CSR tax but welcome Each employed an average of 78 persons, with clarity on laws, rules and regulations from the largest employing 250 persons and the

49 smallest employing just seven persons. Some 4.6 CSR PREFERENCE OF 8% of the interviewed CSOs operate in urban INTERNATIONAL NGOS AND areas, while 17% operate in rural areas and 75% DONORS in both rural and urban areas of the country. International NGOs are similar to Afghan Some 50% of the CSOs work in the human CSOs in their sentiments towards CSR. They rights and advocacy sector, while 17% covered consider it a necessity yet understand that the service sector. Some 25% are operating in the Afghan dynamic around CSR is more of a other miscellaneous sectors. The thematic areas “hands off ”, “I do not get it”, “anyways they of operation of these CSOs were healthcare do not care” mentality. Hence, international (25%), education (33%), Water, Sanitation and NGOs also stress the need for awareness Hygiene (WASH) (25%), environment (33%), creation, advocacy and active engagement with human rights (17%) and women empowerment the corporate world, with the government and (42%). with the population at large.

The interviews indicated that most CSOs do not International NGOs have the added advantage have much information about the role of CSR that their headquarters are typically dealing within the economic dynamics of Afghanistan. daily with corporations and have been privy They do not really understand the implications to their financial support for their normal that CSR can have for their operations, their operations as well as specialized and dedicated funding sources and their ability to diversify programs. For example, in one year, The Asia their funding portfolio, while enhancing the Foundation received around $22 million from opportunities available to their stakeholders corporations, which they spent on different in the communities they serve. Some that did programs in various countries. have a well-defined understanding of CSR rely on organizations such as AICS to help create International NGOs (INGOs) typically struggle awareness, provide education and support the with the notion that they should get their funding creation of systems through advocacy, lobbying from overseas and bring such funding to spend and regulatory support services. in Afghanistan on various programs. Some INGOs serve also as donors, which creates Most CSOs believe that even though they have additional expectations among the Afghan the potential to be a valuable partner for the population. Hence, their role in promoting private sector (especially large corporations), CSR is somewhat limited, as their advocacy they are not being seriously considered for in favor of CSR by Afghan corporations and partnerships and their expertise and grassroots Afghanistan-based MNC operations can be presence is not always appreciated when it misconstrued. The INGOs’ role in advocacy comes to channeling CSR initiatives. for CSR is, therefore, limited to their support for government entities to create the regulatory Most CSOs believe that it is the corporations environment for CSR and their support for and encourage or entice them to take local NGOs and CSOs to create the right responsibility for their society, the environment infrastructure for themselves, the government and the welfare of the communities where as well as the corporations. they operate. Awareness creation, developing rules, regulations and guidelines for socially responsible corporate behavior as well as enforcing such regulations are some of the desired objectives to be worked on.

50 4.7 GENERAL CONSUMERS’ Cities # of Interviws Percent VIEWS ON CSR OVERVIEW OF Kabul 67 33.0 CONSUMER SENTIMENT: Herat 36 17.7 A consumer is also a product of the society, Mazar 40 19.7 and his/her level of understanding of CSR Jalalabad 35 17.2 Kandahar 25 12.3 is reflective of the overall conditions of the Total 203 100.0 country. The qualitative survey indicated that the general consumer does not really Table 4 - Interviews per Province understand the comprehensive role of CSR The consumers interviewed were engaged in corporate engagement. Thus, during the in different industries, including working for quantitative assessment, we replaced the large- and medium-sized corporations, small term “CSR” with “corporate philanthropy” or businesses, CSOs, in academic institutions, “corporate charitable giving”. This replacement in government and among the general public enhances the understanding of the concept, with no direct organizational association. while providing the study a point of reference Hence, their views as reflected in the report for the general direction of the consumers’ are comprehensive and representative of every preference with respect to socially responsible category of the population in the country. behavior by corporations. Unfortunately, because of the nature of the cultural context in the country, by far the The Demographic Data: majority of our interviewees were male (89%), To develop a reasonable understanding of with only 11% of females. the consumer’s sentiments, we carried out a Interviews Associated Frequency Percent qualitative survey of more than 200 persons in with five major cities of Kabul, Herat, Mazar e Sharif, Consumer 97 47.8 Jalalabad and Kandahar. The majority of the Large Corporation 23 11.3 Medium Sized Company 21 10.3 interviewees were in Kabul (33%) because of Small Company 7 3.4 the nature of the city and the level of available CSOs 22 10.8 information about CSR among the general International NGO 7 3.4 population. Other cities were relatively equally Academia 28 12.8 represented at around 12-19% each, so that Total 203 100.0 the total survey offered a representative view Table 5 - Affiliation Group of the perceptions of the general populations %41 %34 in all major cities. Even though we did not 20 to 30 31 to 40 %14 40 to 50 interview the rural population, and their views are not reflected in this survey, we assume that their level of awareness and understanding of the roles of CSR and the general consumer’s %3 %4 expectations from the corporations to Below 20s 50 & > demonstrate a level of socially responsible engagement will be relatively comparable to these findings. We observed some differences between the views of consumers in different Figure 20 – Interviewee Age Groups cities, even though as a whole they were fairly comparable. About 75% of the interviewees were in the age category of 20-40 years, which is fairly representative of the general distribution of

51 the population in Afghanistan (68% under the of learning about CSR through social media, at age of 30 years). about 20% less than in other cities. In Mazar e Sharif, about 10% more consumers learned The level of education of the interviewees is about CSR through friends and family than in not reflective of the actual average educational other cities. level in the country, which puts the adult literacy %68 %52 %26 %11 rate at around 32% (UNESCO). We carried TV & Radio Social Media Personal exp Friends out the survey among mostly educated to highly educated persons, with 64% with a bachelor’s degree or higher. This difference %10 %7 %6 %5 is understandable, since the urban population is News Youtube Other Ads None mostly more highly educated than the national average. As such, their income levels were also generally higher, with mean monthly incomes of around AFN 42,000 and the median at around AFN 26,500. Figure 22 - Source of Information o CSR

%43 %21 %20 %7 Bachelors Master & Higher High School None Consumer Appreciation for CSR: We found a general sense of appreciation among the public for those corporations that engage in charitable giving. Some 79% of those interviewed stated that they preferred to buy Figure 21 - Educational Level of the Surveyed a product or service from a company that engaged in charitable giving and behaved in a Source of Information about CSR: responsible manner. They also responded at a As such, when given multiple choices to select, rate of greater than 90% with “Strongly Agree” about 85% of the interviewed population were or “Agree” when asked if they preferred buying aware of corporate philanthropy, and about products and/or services from companies that 82% believed that it contributed towards social offered free healthcare, education services, development of their communities. They safe drinking water, care for the environment, mostly learned about corporate philanthropy had a strong charity program or demonstrated through TV/radio (67%) and social media respect and care for their society and country. (52%), with about 26% through their personal On average, across all services provided by experience with corporate giving. We noticed corporations, Herat demonstrated a lower some differences in the different provinces, level of appreciation by about 7% compared to where Mazar e Sharif and Kandahar population other cities. Other cities’ level of appreciation rated the engagement of corporations’ CSR was fairly comparable to each other at the for social development at around 10% lower stated averages. than in the other three major cities. In Mazar e Sharif, about 10% fewer consumers believed that engagement in CSR enhanced the image of corporations. Other cities’ view on this issue were comparable. The medium of learning about CSR in Kabul was less weighted towards radio/TV at around 15%, while social media was about 10% less critical than in other cities. Herat demonstrated an exceptionally low level

52 The Consumer as a Corporate Marketing %96.6 %95.6 %95.6 Companies with Companies that Companies that Agent: a good charity o er free o er free program education for water supply for the public the public Some 67% of those interviewed also stated that they do not hesitate to recommend to their friends and family to purchase products and services from companies that engage in a %91 socially responsible manner. This number was %94.6 %93.7 Companies that Companies Companies that o er free respect for society cares for the Healthcare for significantly lower in Kandahar (by about 23%), /country environment the public while Kabul consumers were more willing to recommend them to their friends and family by about 9%. Thus, consumers are willing to serve as extensions and marketing agents for those Figure 23 - Customer Preference for corporations that have good CSR programs. Responsible Corporations Such programs are thus a significant “value-add” These results indicate that if companies properly for corporations that should be best utilized advertise their corporate giving programs, to enhance the distance that their marketing customers would more likely choose them over budgets will take them. other brands. Our surveys of corporations do not corroborate this assessment (refer Government Incentives for CSR: to Figure 12); they indicate only about 14% Our interviews with government agencies, of large corporations and 10% of medium- including the Ministry of Finance, indicated that sized corporations appreciate that greater CSR they are not willing to offer any tax incentives spending would trigger an increase in sales. for charitable giving, because the government’s Moreover, only 36% of large corporations and priority at present is to increase tax collections 30% of medium-sized corporations stated that and not offer tax breaks. The consumers greater CSR engagement would enhance their disagree with this notion of the government and customer loyalty. It appears that corporations say with a clear voice (88%) that the government have not done their homework and as such should offer incentives for corporations that do not see the potentially greater revenue engage in socially responsible behavior. Kabul that they can achieve if they behave more demonstrated a lower average by about 11% socially responsible and advertise it accordingly. compared to other cities. Only 5% of the They do not appreciate that their customers respondents objected to such incentives, which support socially responsible corporations at is a significant mandate from the population. the expense of their not socially responsible These findings offer a strong tool for AICS competitors. This survey finding is aligned and the corporations to lobby in favor of such with the global trend that corporations with incentives. It would be short-sighted of the a well-defined and advertised CSR program government to underestimate the value and see an increase in their sales and profitability effect of a strong CSR program as a tool for numbers. It is critical that Afghan corporations enhancing the quality of life of the population are a) made aware of this important dynamic, and contributing to the social, economic, b) encouraged to engage more intensively environmental, and political development of and effectively in CSR-related activities, and the country. c) market their involvement in CSR to their customer base more effectively to see the actual benefits of their socially responsible behavior and actions.

53 %47 %41 %8 the respondents, with more than 90% offering Agree Strongly Don't know agree their support. Thus, while consumers strongly object to government-imposed CSR, in reality, the consumers want the government to set a mandate for CSR and to offer incentives for

%3 %2 CSR-related costs. Strongly Disagree disagree The respondents understand very well that small companies have a unique dynamic, which leaves them vulnerable, both financially and Figure 24 - Government to offer incentives for also legally. As a result, 57% of respondents CSR rejected imposition of a CSR requirement on small companies. In Kabul, this number was Government Mandate for CSR: significantly higher, at 78%, with Mazar e Sharif The consumers strongly favor government- and Jalalabad significantly lower at around 46% mandated charitable giving programs. Some and 35%, respectively. 77% of the respondents either “Agree” or “Strongly Agree” with such a mandate, while Spending CSR Money: only 2% disagreed. None of the respondents About 66% of the respondents want “Strongly Disagree” with a government mandate corporations to spend CSR money themselves for charitable giving. There were no significant instead of channeling it through the government differences among the five cities, even though or third parties. This number is lower in Kabul Kabul and Herat did indicate a lower support and Herat by about 20% and higher in the for mandated corporate charitable giving by other cities by about 25%. This preference for about 6-8%. corporations spending CSR funds themselves is likely because of the lack of trust of the When the question shifted from charitable consumers for the government or third parties. giving to the overall concept of CSR, which is Such distrust, may have been caused, among clearly not well understood by many consumers, other reasons, by inadequate communication the response was different. Some 65% of the and public awareness about the work that respondents objected to the imposition of CSR others such as CSOs offer in the country requirements on corporations (Kabul less by and which could yield significantly more 23% and Herat less by 13%, while Mazar e Sharif, effective outcomes than if the corporations Kandahar and Jalalabad were higher at 14-23%), engaged in humanitarian work on their own. and about 46% of the respondents agreed to Additionally, because a well-known and well- penalize corporations for not engaging in CSR publicized program to screen CSO projects initiatives (Herat and Mazar e Sharif showed for corporations is nonexistent, consumers are more support for a penalty by about 22%, hesitant to risk allocation of corporate CSR with Kandahar and Jalalabad a lower support funds to others for spending. In Kabul and by about 25%). This apparent contradiction Herat, where trust for CSOs is more prevalent, can possibly only be explained by the lack of their responses were significantly less harsh clarity of the respondents on the topic of CSR. towards CSOs, at around 45%. Similarly, the The concept of corporate charitable giving, respondents also rejected, by a margin of 41% as well as other components of CSR such as to 34%, the notion of the government collecting care for the environment, the country, the and then distributing CSR money, with Kabul community, safe drinking water, good education consumers more in favor than in other cities. and good healthcare, are strongly supported by

54 Summary: In a competitive environment, it is critical that In summary, consumers want corporations to corporations pay attention to such factors that be socially responsible and are willing to reward can differentiate them from competitors. them for their social responsibility by buying their products and services and by encouraging The government must recognize and realize their families and friends to buy them. They that consumers want it to take a leadership role are willing to push the government to offer in encouraging, enticing and even compelling incentives for corporations to encourage corporations not only to worry about their and entice them to be socially responsible. immediate bottom line but also to take their However, if they do not do so, consumers responsibility in giving back to the society in a are also willing to support the government to serious manner. Hence, the consumers want mandate charitable giving by corporations and, the government to initiate laws, rules, and where needed, to levy fines for the failure to regulations that guide the process of CSR in the be socially responsible. country. They also want them to then enforce those laws, rules and regulations and ensure General consumers want corporations to take that corporations are an effective player for responsibility in their own hands to distribute the wellbeing of the society as a whole. their allocated financial contributions. They consider it unwise for the government to collect Civil society organizations know that neither and disburse such funds to those in need. They the government nor the corporations will understand that small companies are vulnerable necessarily undertake any significant measures to economic and political changes and want to engage in a socially responsible corporate them to be left to their own accord to assume system. Hence, it is the responsibility of the socially responsible behavior. government to convert consumer sentiment into actionable policies, laws and support Consumer sentiment is a significant factor for systems that make the engagement of corporations, the government as well as civil corporations in socially responsible behavior society to watch and respect. better organized, more streamlined and void of tension and resistance. Corporations need to recognize that consumers are sensitive to their behavior towards the The combination of government, corporations community, the country and the society at large. and civil society organizations is the key to Consumers will take a conscious decision in successful CSR development in Afghanistan. favor of more socially responsible companies.

05 CSR IMPACTS AND COMPLIANCE IN AFGHANISTAN

5.1 Measuring the Impact of CSR in Afghanistan 59 5.2 Corporate Governance 60 5.3 The Ethics of Doing Business in Afghanistan 61 5.4 Compliance 62 5.4.1 Environmental Compliance 62 5.4.2 Social Compliance 63

CSR IMPACTS AND were further exacerbated by the absence of responsible departments that could be a COMPLIANCE IN formal counterpart for Mr. Adil. As a result, AFGHANISTAN in most cases, he could not identify or visit projects listed in the corporate websites. 5.1 MEASURING THE IMPACT OF The visited projects included services in the CSR IN AFGHANISTAN areas of hospitals, schools, e-learning centers, Measuring the impact of CSR-related in water wells and telemedicine project. Mr. Adil Afghanistan activities is very difficult. An Afghan obtained the following key results: PhD student, Mr. Abdullah Adil, studying at the University of Bochum in Germany made 1. All large companies are doing some an effort in 2017 to research the “Practices social activities, but only some of them and Economic Impact of Corporate Social are familiar with the term “CSR”. Responsibility (CSR) in Afghanistan”. The intent of the research was to “explore different 2. Telecommunications is the dominant patterns of CSR in Afghanistan and the ideas sector where private companies have behind CSR initiatives from the business regular social activities. side”. He wanted to develop country-specific typologies of CSR activities and compare 3. Most social projects of private companies are them with similar work in other developing short term projects where beneficiaries are and developed countries. The research also difficult to trace (such as disaster response aimed at “analyzing deeply some selected cases and food distribution, etc.). Furthermore, (CSR projects)” for their “economic impact on some projects are implemented in locations local communities using economic evaluation where the same services in the same area are methods”. He wanted to find out if “CSR could provided by CSOs, which makes it difficult be an alternative or substitute for public utility to measure the pure impact of CSR projects. provision” in Afghanistan. 4. Due to unsustainable maintenance Evaluating corporate websites of Afghan mechanisms behind CSR projects, companies and online explorative survey, nearly all projects are either destroyed Mr. Adil assumed that CSR-related activities or were less effective after a few years. were significant in number and warranted field research to evaluate their “existence” and 5. The overall business and economic “impact”. However, after his initial field survey, situation caused some companies to he had no choice but to abandon his research cut funds from their social projects. because of the challenges and resistance that he faced in identifying, visiting and evaluating 6. Most of the companies established CSR initiative sites. separate foundations for social activities. His research was supported with more than However, in some companies marketing 18 official letters from relevant Ministries and and human resources departments are institutions as well as more than 70 official responsible for CSR projects, which made and unofficial e-mails exchanged to support it difficult to pinpoint the actual projects. a formal research-based assessment of the projects. Altogether Mr. Adil could visit only 11 7. Some projects (e.g., construction of locations in four provinces to review projects, hospitals, schools, small water wells and as companies raised privacy and trust as well playgrounds) could be considered for as other undisclosed issues. The challenges the economic impact analysis; however,

59 measuring their impact is difficult 5.2 CORPORATE GOVERNANCE because the corporation itself is not Good corporate governance and good involved in operation of these facilities. corporate citizenship go hand in hand. If a corporation is well-governed, it will be 8. Very few projects were interested cognizant of its responsibility not only towards in further research; among them, its shareholders but also towards its employees, however, were a telemedicine the community it serves, the government to project by Roshan and a scholarship which it pays taxes and whose regulations it provision project by MTN-Afghanistan. has to follow, and the social and environmental concerns that it must address. A well-governed The overall assessment of the research project corporation will also be able to deliver on its was that because of lack of a proper regulatory promised CSR goals and obligations. Therefore, environment, an inadequate understanding of the relevance of a good corporate governance the concept of CSR (including the associated system and of good corporate governance reporting mechanisms, the short term nature within the context of CSR is significant. of the commitments that limited the corporate influence on sustainability of the initiatives, the Boards of directors of corporations are critical lack of adequate coordination with government components of the governance system. They and the CSO actors in the target area, etc.) ensure that the direction chosen for the made it very difficult to assess the impact of corporation is conducive to becoming an entity such initiatives. In addition to the research with a sound social conscience and that the conclusions, it is fairly likely that the possible policies and strategies selected will also be misrepresentation of the extent, the scope and implemented by the corporate management. the success rate of CSR by some corporations also affect the actual impact that CSR initiatives A German corporation’s board of directors achieve. typically consists of persons representing shareholders, workers/employees, government Mr. Adil’s findings are also aligned with other agencies, social welfare organizations, financial comments received during the assessment, institutions (banks) and other relevant which significantly fault lacking regulations stakeholders. The combination ensures that and government oversight for ineffective decisions are taken with the interests of each CSR initiatives. In addition, the lack of proper of the players taken into consideration and awareness of the scope and context of CSR that the corporation has a good likelihood of by the affected corporations, as well as the becoming and remaining a “good corporate targeted communities, have contributed to the citizen”. inefficiency of CSR initiatives in the country. In Afghanistan, there are no systems or Mr. Adil’s damning findings on the effectiveness regulations in place to guide the corporation and impact of CSR in Afghanistan are only an to even become a responsible entity, let alone indication of the state of CSR in the country a “good citizen”. Where corporations have, from the point of view of philanthropic on their own, created a healthy governance engagement of such corporations. We address system, there is no oversight and/or regulatory other aspects of CSR -- such as corporate system to ensure that they function as planned. governance; the ethics of doing business; and Domestic corporations are typically solely- compliance with environmental, labor and or family-owned, and the dynamics of the other social guidelines – below.. governance system is accordingly dependent on one person or one family. MNCs may

60 have some governance system that has been for the law of the land, respect and concern imported from their corporate headquarters; for others, fairness in business dealings, being however, such systems are also neither trustworthy, sticking to commitments and controlled nor regulated by any external promises, accountability and a commitment entity in Afghanistan. As a result, even if the to excellence. corporation is well-led and has developed some level of social conscience, consistency and One critical social responsibility of a corporation sustainability of the conscience is mostly prone is to behave ethically and to ensure that its to chance rather than to a well-developed and operations meet the highest ethical standards. well-executed governance system. In Afghanistan, business ethics are far from where they should be. In its 2018 annual 5.3 THE ETHICS OF DOING Corruption Perception Index, Transparency BUSINESS IN AFGHANISTAN International has ranked Afghanistan number Encyclopedia Britannica makes a slight 172 out of 180 countries. This ranking is a distinction between morals and ethics. “Both significant improvement compared to the past morality and ethics loosely have to do with decade or so, when Afghanistan was considered distinguishing the difference between “good and either the most or one of the top five most bad” or “right and wrong.” Many people think corrupt countries in the world. In 2012, The of morality as something that’s personal and Civil Military Fusion Center issued a paper titled normative, whereas ethics are the standards “Corruption and Anti-Corruption Issues in of “good and bad” distinguished by a certain Afghanistan”, in which it stated that corruption community or social setting41”. The difference in Afghanistan between morals and ethics in business is, thus, likely that morals may be based on the personal “has become widely recognized as a key compass of a business leader, while ethics are challenge for governance and rule of based on the standards, guidelines and rules law and as an obstacle for sustainable, established by the business, the government or private-sector-led economic growth . . . any other regulatory agencies to operate in a The Afghan government has made several “respectable” and “legal” manner. In an article commitments to address corruption at titled “Is there a Difference Between Ethics previous conferences and within the scope and Morality in Business?” Bruce Weinstein of the Afghan National Development came across a number of different definitions Strategy (ANDS). However, the problem of what those differences were. One such is still widespread, according to major non- definition was “Morals come from within one’s governmental organizations (NGOs) such own internal compass. Ethics are more extrinsic as Integrity Watch Afghanistan (IWA) and rule sets to guide us all.42” Transparency International”.

Investopedia defines business ethics as The business sector is part and parcel of “the study of proper business policies and corruption in Afghanistan. Businesses are either practices regarding potentially controversial drivers of corrupt practices or directly affected issues such as corporate governance, insider by them, either positively or negatively. Focus trading, bribery, discrimination, corporate social group participants stated that one of the main responsibility and fiduciary responsibilities”. causes of lack of trust in the effects and impacts Some of the principles included in business of CSR is the widespread culture of corruption ethics are integrity, loyalty, honesty, respect within the business sector. Violations of every aspect of ethical business practices, as listed 41: https://www.britannica.com/story/whats-the-difference-between-morality-and-ethics 42: https://www.forbes.com/sites/bruceweinstein/2018/02/27/is-there-a-difference-between-ethics-and-morality-in-business/#2cd056e32088

61 in the second paragraph of this chapter, are obligatory form, when corporations take an rampant. One focus group member stated that “internally-facing” view of CSR obligations and a private university collects a certain percentage see themselves “as part of a larger societal of the professors’ salaries as a contribution framework and correspondingly assume towards charitable giving. However, no one responsibility towards that society”43. It is in knows if the money will eventually end up with this context that we evaluate CSR compliance the beneficiaries or not, because the level of in Afghanistan. trust needed to feel at ease is generally very low. 5.4.1 Environmental Compliance As described under Chapter 4.3.3.4 above, Because of a lack of adequate regulatory Article 24 of the Environmental Law enforcement and selective enforcement of stipulates that the government (the National the law in general, corporate ethics decisions Environmental Protection Agency [NEPA] are not by design but rather purely dependent in cooperation with the Ministry of Finance, on the morality of the business owners and relevant institutions and provincial, district their level of adherence to the basics of moral and village councils) may offer incentives or behavior. In most cases corporations neither disincentives for companies and individuals have a written ethical code of conduct, nor do to encourage environmental protection and they strictly enforce it. As such the ethics of discourage individuals and corporations doing business in Afghanistan, in its entirety as from pollution. Thus, compliance with the defined in paragraph two above, are haphazard environmental laws is not the problem; it is at best and a very minor factor at worst. converting the law into regulations and then enforcing such regulations that pose significant 5.4 COMPLIANCE challenges in Afghanistan. Compliance deals with laws, rules and regulations from external sources, including government In response to a survey by the United Nations and regulatory agencies, contractual obligations, about the implementation of and compliance voluntary membership-based organizations with of Article 9 of the Basel Convention against and others that serve as obligatory guidelines illegal dumping of waste, the then Deputy for companies and may be supplemented by Minister, Mr. Ghulam Mohammad Malikyar44, internal policies and codes of ethics. They are stated that Afghanistan has no “adequate closely interlinked with governance systems and legal framework to prevent and punish illegal risk management undertakings by corporations. trafficking of hazardous waste.” He further complained of lacks of communication and CSR by definition is a voluntary undertaking by coordination between entities at the national a corporation, while compliance assumes an level, of a legal framework to enforce the obligatory framework. Within the context of framework, of awareness about the provisions CSR, compliance becomes relevant when some of the Basel Convention, and of capacity to aspects of the internal CSR activities, such detect cases of illegal trafficking. The situation as some environmental conservation issues, indicates the overall system of the government health and safety matters, human resource as it relates to enforcement of compliance with issues such as equal pay, workplace harassment, the environmental mandates and regulations. etc., are regulated by government agencies or contractually obligatory, e.g. mining contracts There are no adequate mandates for in Afghanistan. Compliance may also take an environmental protection, possibly with the

43: https://blog.eqs.com/how-grc-compliance-and-csr-work-together 44: ICC Implementation & compliance with Article 9 – AFGHANISTAN

62 sole exception of the Ministry of Mines & guidance and direction on dealing with Petroleum. There is no mechanism to punish customers, competitors, employees, suppliers, violators against the environment, and the level government regulators and the general of awareness of issues and factors associated public with integrity and ethical conscience. with environmental protection is also very The standards facilitate the creation of an low. In the absence of adequate and effective environment where respect for human rights, communication and coordination among labor and other relevant rights become the various government agencies, enforcement norm. A corporation may align its policies and of compliance suffers significantly. standards to already developed international norms such as the International Labour At the corporate level, there is a general lack Organization’s Declaration on Fundamental of awareness for the importance of “doing Principles and Rights at Work, the Universal no harm” to the environment. Where such Declaration of Human Rights, and other awareness is available, profits trump responsible similar standards. Under any circumstances, behavior, resulting in situations where brick internal as well as external guidelines provide kilns burn tires for fuel, factories dump waste the foundation for social compliance within a water in the rivers and streams, and others corporation. violate other aspects of the environment. Kabul is the second most polluted city in the In Afghanistan, there are laws that govern world, while Kabul’s underground water table labor relations, others that deal with religious is constantly decreasing, and the aquafers are rights, and guidelines that address the rights polluted with sewage water, resulting in more of women in workplace. Where such laws than 70% (WHO) of illnesses in Kabul being are available, there are guidelines for their caused by unhealthy water. implementation. However, typically there is barely any enforcement of the laws by Environmental compliance is, therefore, corporations and the government, unless a not available in Afghanistan, even though significant violation of the laws occurs. At the environmental protection is an area that same time, most corporations either have not requires urgent attention, since Afghanistan’s developed any internal policies and standards air, water and soil are becoming more and more on these issues or have done so on paper alone. polluted, with urban centers most severely The combination of these factors translates affected. to an environment where social compliance of corporations has turned into a non-starter. 5.4.2 Social Compliance The absence of corporate “self-policing” offers Social compliance stipulates that a company a significant opportunity for CSOs to identify has developed internal systems, structures, venues for advocacy and activism and enables standards and codes of conduct that offer the creation of change that the country badly needs.

06 FUTURE POTENTIAL FOR CSR IN AFGHANISTAN

FUTURE POTENTIAL FOR CSR follow. It furthermore triggered investments in many other sectors that relied on the IN AFGHANISTAN telecommunications network to communicate CSR has just started in Afghanistan. Among the and operate effectively. The same can be educated population, there is a good level of replicated with the CSR engagement of a handful understanding and awareness about the social of corporations in Afghanistan. With a push responsibility role of corporations. However, by the government to create the policies, laws, the scope and extent of social responsibility rules and regulations that enable a structured is still not clear to the vast majority of the CSR industry in the country, corporations will population, including the educated. Currently, be encouraged, enticed and even compelled social responsibility is mostly linked with to start, expand or innovate in the CSR arena. philanthropic activities of the business owners At the same time, CSOs can create the right rather than an all-inclusive responsibility of the infrastructure to enable them to attract CSR corporation to a) fix what they have broken, contributions from corporations and facilitate b) be responsible for the well-being of their a teaming arrangement with the corporate workers, and c) give back to the communities and the government sectors to maximize the from what they have been given. benefit of CSR initiatives for the society as a whole. A strong and effective marketing It took the developed world nearly a century for campaign can create a comprehensive level of its corporations to understand the importance understanding among the population for the of their contribution to their society. However, scope and effects of CSR within the society, Afghan businesses will not take that long, thus creating a demand-side dynamic to further because while the developed world evolved push social responsibility by corporations to the organically to enshrine into its systems the next level. Thus, Afghanistan can leapfrog the sense of responsibility, and is still struggling remaining transitional steps of corporations with it, Afghan businesses will be impacted by and communities to enhance engagement of the precedents set for them by their peers in corporations in the social responsibility arena. other countries. Whether this leapfrogging will happen or not is In a post-2002 environment, Afghanistan solely dependent on how the civil society as well chose to not fix the broken landline as the government behave and what measures telecommunications industry of the country they are willing to take to push the CSR agenda. but rather leapfrogged straight into 21st century Traditionally, governments are slower to adopt wireless communications. Today, Afghanistan more socially and environmentally sound has one of the most advanced and best approaches to governing. It is pressure and developed wireless communication systems lobbying from the general population, the in the developing world. The key to this change media and CSOs that can break the cycle was a good understanding of the then Minister of complacency and enable urgently needed of Telecommunications, Mr. Massom Stanikzai, change. Thus, it is the responsibility of the who chose to set up the infrastructure, policy civil society to take the lead in encouraging and motivational foundations for the industry and lobbying for change to laws, rules and to kickstart, as well as the willingness of regulations by the government as well as businessmen, such as Mr. Ihsanullah Bayat, to to encourage corporations to feel and act invest in the sector. The combination not only responsibly. critically enhanced the potential for growth and new creations but also served as example for other businesses, local and international, to

07 KEY RECOMMENDATIONS

KEY RECOMMENDATIONS 71 7.1 Vision Statement for CSR in Afghanistan 72 7.2 Awareness Creation for CSR 72 7.3 Creating a Legal and Regulatory Environment for CSR 72 7.4 Enabling Environmental for Corporations 73 7.5 Creating a Corporate Social Responsibility Index. 74 7.6 Enabling Environmental for CSOs and Community Activists74 7.7 Enabling the Environment for Government Agencies 75

KEY RECOMMENDATIONS

Urgent Moderately Urgent Not Urgent Corporations Government Target AICS CSO

Create enabling environment Create enabling environment Create enabling environment Create Corporate Social Re

Create and regulatory legal Create awareness for CSR ) for government agencies sponsibility Index (CSRI environment for CSR Develop vision CSR for corporation Objective for CSOs - CSR policy/strategy CSR from and support specialized companies to structureSeek assistance company Restructure company policies CSR laws, rules and regulations of CSR in support of Economics to develop of Finance and Ministry Collaborate with the Ministry engagement the types of incentivesArticulate that corporations need to enhance their CSR Make or components thereof and rigorously CSR obligation a legal enforce it. responsible. Create rules, regulations and disincentives for corporations not to be socially or increaseOffer incentives corporate social to start responsibility Create corporations to programs. set up viable CSR that support organizations Create projects CSO a system to for certify viability. CSR Create to create/enhance a system certification of CSO their credibility Lobby lawmakers/regulators to pass laws/regulations. Create awareness government among general public, officials and corporations. environment that enables greater and more systemic in CSR. engagement the governmentSupport to regulatory create and political legal, the necessary Implement the model Develop operational model for CSRI keyIdentify indicators Create to programs organization help launch corporations’ CSR Lobby actively the government to create laws, rules and regulations Create demand-side pressure and formulateIdentify vision for the CSO in Afghanistan CSR

71 7.1 VISION STATEMENT FOR CSR towards their employees, their customers, IN AFGHANISTAN their communities, their governments, the We suggest the following Vision Statement for environment and the world as a whole. CSR in Afghanistan: “To create a regulatory environment and enable demand-side pressures The objective of these activities will be to create in Afghanistan that encourage, entice and an environment that enables the general public compel corporations to behave ethically and to demand socially responsible behavior from responsibly towards their employees, the corporations, for corporations to respect the general public, the communities they benefit wishes and demands of the general population from, their country and the environment as a and the government to ensure that CSR-related whole”. activities are adequately regulated and that such regulations are properly enforced on 7.2 AWARENESS CREATION FOR corporations. CSR It is the responsibility of the civil society in 7.3 CREATING A LEGAL AND Afghanistan to develop a comprehensive REGULATORY ENVIRONMENT nationwide advocacy and awareness creation FOR CSR strategy, and to fund and implement it to The government has a responsibility to ensure achieve the following key objectives: that adequate laws, rules and regulations are in place to ensure that corporations behave 1. To create demand-side pressures that in a socially responsible manner. Appropriate firmly place irresponsible corporations and measures include the following: government agencies in a negative bracket and cause an immediate response from a. Amending corporate laws to include corporations and government regulators for references to the social responsibility effective steps to enhance CSR. Creating of corporations. Corporate governance these pressures can be achieved by a systems should be mandated that concerted mass media campaign to highlight facilitate the implementation of CSR. every aspect of corporate responsibility Such governance systems should include and create the desired level of awareness mandates for boards of directors, human among all segments of the society. resource departments, operations, 2. To actively lobby with government agencies marketing and other related divisions to create the right infrastructure for the of corporations to offer an enabling evolution of laws, rules and regulations environment for CSR. Financial reporting that entice and even compel corporations should be ethical and transparent and to realize and meet the full scope of their should take the concerns of shareholders social responsibility. and government into full consideration. 3. Create organizations, institutions and Systems should be in place that cater to alternative channels to identify best the social responsibility of the corporation practices, encourage and reward and ensure their full implementation as part responsible corporations and censure of the daily operations of the corporation. corporations that do not behave in a The ethical system of governance also socially responsible manner. Such efforts should fully take into consideration the legal may include the creation of a Corporate obligations of the corporation to abide by Social Responsibility Index (CSRI) that sets laws, pay taxes, take care of the employees, apart corporations that behave responsibly treat employees with respect and dignity,

72 and ensure that no harm is caused to the necessity. environment due to corporate operations, while ensuring that the business is profitable 7.4 ENABLING ENVIRONMENTAL and prospering. FOR CORPORATIONS b. Amending tax laws to include incentives for There are three critical paths to enabling corporations to engage in CSR activities. corporations to engage in CSR or to enhance Such incentives may include tax rebates, such operations: tax deductions or the expensing of CSR- related costs. Tax law changes may also • Offering incentives to start or increase CSR include imposition of a CSR tax, similar to • Creating rules, regulations and disincentives the Indian CSR model. for corporations that are not socially c. Amending labor and related laws to responsible. incorporate clear requirements for worker • Making CSR a legal obligation and rigorously rights, payment of living wages, workplace enforcing such obligation. safety rules and other requirements which must be enforceable by functioning The first path is achieved by creating financial regulatory agencies such as the equivalent incentives such as tax breaks, rebates and of the United States Occupational Safety deductibles and allowing corporations to and Health Administration and include expense CSR-related activities. Such measures workable penalties for violators. will reduce the burden of CSR costs on d. Amending environmental laws to enhance corporations and encourage them to spend existing protection mechanisms for water, more on all types of activities, internally as air, soil, flora and fauna, wildlife and related well as externally, to meet and exceed their environmental components. NEPA should social responsibility. be converted into a regulatory entity with the authority to regulate environmental The second path of creating rules and affairs and impose fines and other punitive regulations that increase the cost of not measures that facilitate enforcement of engaging in socially responsible activities will the laws. encourage corporations to avoid fees, penalties e. Amending the National Procurement Law to and levies charged to corporations when they incorporate clear and concise responsibilities fail to respect labor laws, environmental laws, for all government contractors to behave workplace safety, health and equity laws, social ethically towards their employees, the cohesion laws, contract laws, corporate laws environment, the communities that they and other related laws, rules and regulations. work in, and the social impact that they Thus, corporation will find it more feasible to may have. The government should develop adhere to these laws, and thus save costs for a system to ensure that the contractual their shareholders, rather than to break the obligations of the contactors are properly laws. and systematically enforced and that there is zero room for tolerance during such The combination of paths one and two will enforcement. ensure a maximum voluntary engagement by corporations, which is typically done in most The government must adjust and revise other developed countries. relevant laws to enable the creation of a regulatory and legal obligation for corporations The third path is the one taken by India, which to be proactively engaged in social responsibility, imposed CSR expenditures as a percentage of not by choice but out of legal and regulatory

73 profits before taxes and some other conditions. development, where the beneficiaries are An elaborate set of laws, rules and regulations communities as a whole, such as support for that support this legally binding CSR law enable the education sector, for healthcare, for water its adequate enforcement, which should be and sanitation, employment creation, efficient coupled with fines against those that do not exchange of goods and services, awareness engage in the level of CSR expenditure that creation and other general social enhancement. has been legally mandated. For developing The combination of all of these efforts countries, such fines may be the path of least constitutes a comprehensive CSR program resistance, because they can be seen as an and must be targeted by everyone involved additional tax and thus adjusted to relatively in this sector. easily. We urge the design and implementation of a The three paths can be further supported Corporate Social Responsibility Index (CSRI), and enhanced by CSOs which may undertake which rates corporations based on their level activities that will make it easier for corporations of social engagement and responsibility. to identify takers or venues for taking donations Corporations can be certified, rated and and contributions by the corporate world. recognized for their engagement with a positive competition to be higher and better rated than the next corporation. Corporations can 7.5 CREATING A CORPORATE then use this rating to support their marketing SOCIAL RESPONSIBILITY INDEX. campaigns and enhance their customer base CSR has many components that jointly create and loyalty. the CSR programs that corporations today strive for. One component of a CSR program 7.6 ENABLING ENVIRONMENTAL is to create a sustainable workplace, which FOR CSOS AND COMMUNITY includes a healthy, safe and rewarding job, ACTIVISTS that ensures gender equity, equality in pay, CSOs and community activists have five prevention of racial and sexual harassment significant tasks to undertake in support of and offering benefits such as employee greater CSR engagement by private and public health insurance, education reimbursement, corporations. etc. Another component is to minimize the company’s environmental footprint by using 1. Create awareness among the general public, technology and approaches that reduce air, soil government officials and corporations as and water pollution; that protect wildlife, flora to the importance and ethical foundation and fauna; and that create an environmentally of greater CSR within Afghanistan. forward-looking and responsible approach to These actors can create this awareness doing business. Yet another component of CSR through mass media campaigns; through engagement of corporations is ethical work education at schools, universities and practices such as avoiding bribery, negative other academic institutions; and through influencing and other unethical practices. organizing workshops, roundtable Corporations can also demonstrate social discussions and seminars on the importance responsibility by supporting the poor and of CSR in Afghanistan. They can use a disadvantaged members of the society through combination of positive reinforcement charitable giving that make peoples’ lives easier and critical analysis to encourage further and supports them in their hour of need. understanding of what can be and what Corporations can also engage in community should be done by corporations to meet

74 their social responsibility. They can achieve team then displays the rated projects and positive reinforcement by highlighting good offers them to corporations for support examples of CSR within Afghanistan, in or adoption as part of their CSR initiatives. the region as well as globally. They can highlight the conditions before and after 5. Create organizations or divisions of existing direct engagement of corporations in CSR organizations that help corporations to for their workers and the workplace, for develop comprehensive CSR programs the communities where they engage, for the that include internal as well as external countries of their operations and globally. initiatives and undertakings. Such organizations can help corporations 2. Lobby lawmakers and government agencies change their governance systems, their to pass laws, rules and regulations and to employee relations, their environmental enforce the same across the board and on footprints, their adherence to laws, rules all violators of the laws. Such laws, rules and and regulations as well as their philanthropic regulations should cover every area of the and charitable activities that enables society and offer incentives for engagement them to give back to their communities. in CSR as well as disincentives for those that ignore their social responsibility. The combination of the five enabling activities We have highlighted these legal and will ensure a functioning and feasible CSR regulatory changes in Chapter 4.8.3 above. engagement in the country.

3. Create a system for enhancing the credibility Enabling the CSO work to create such of CSOs as viable and feasible organizations infrastructure requires that donors, government that corporations can effectively support agencies and corporations that already are within their CSR initiatives and budgets. engaged in promotion of CSR support, fund This system relies on CSO certification and encourage CSOs to push forward this body, with AICS and CSOs as organizations significant agenda and ensure its realization. with strengths and capabilities in fiscal and operational management in a series of 7.7 ENABLING THE ENVIRONMENT sectors in specified regions and locations FOR GOVERNMENT AGENCIES with specific target communities. For Government agencies have a responsibility example, organization “X” has the right to create the enabling environment for set of governance systems, financial corporations to engage in a socially responsible management and control mechanisms and manner. However, the government also operational capabilities to serve women and needs an enabling environment to create children in the areas of income generation the necessary legal, regulatory and political in the provinces of Kabul, Herat and Farah. environment that supports greater and more systemic engagement in CSR. The enabling of 4. Create a system to evaluate certified these changes is primarily the responsibility of CSOs’ projects for feasibility, desirability, CSOs and their donors, as well as those media effectiveness and cost efficiency. This outlets that support greater CSR engagement. system enables CSOs to submit their This group will help to further empower and projects for review to a team that will embolden such government officials that have then verify the various aspects of the the vision for a greater social responsibility project and rate them based on a series push by corporations. Their initiatives can of criteria for feasibility, viability, desirability, be strengthened, and their moves can be effectiveness and cost efficiency. The sharpened to eventually create the desired

75 legal, regulatory and political environment. Items 1) and 2) in Chapter 4.8.5 above are critical activities that can achieve the creation of the enabling environment for government. 08 OPERATIONALIZING RECOMMENDATIONS

OPERATIONALIZING KEY RECOMMENDATIONS 79 8.1 Overview 80 8.2 Identify the Strategic Objective of the CSR Drive 80 8.3 Awareness Creation Campaign 80 8.4 Creating the Corporate Social Responsibility Index 80 8.5 Political Advocacy Campaign 81 8.6 Certification of CSOs 81 8.7 Verification of CSO Projects 81 8.8 Launchpad for CSR Programs 82

OPERATIONALIZING KEY RECOMMENDATIONS # 8 7 6 5 4 3 2 1 Create a launchpad for CSR

) Political advocacy campaign Create a Corporate Social Identify strategicIdentify objective Responsibility Index (CSRI Awareness creation cam Identify a driverIdentify for CSR

Certification of CSOs of Certification Certification of CSO of Certification Objective projects of CSR paign - Establish a presence operations Establish for launchpad the CSR and start in Afghanistan Raise funds for launchpad setting up the CSR for Afghanistan ( potential that haveIdentify entities/organizations already done this work in the region or globally, Central Asia CSR e.g. Develop on how strategy corporations to initiatives to launch CSR support Launch the initiative . giving, community developmenttable and others. keyIdentify Index to components of a CSR include workplace factors, environmental impact, ethical work practices, chari Market CSOs, corporations and donors to the certification . the approach,Raise funds to kickstart include a fee-for-service component - - - - Develop model and approach certification CSO to include: Already underway Launch political advocacy campaign Budget and fund the political advocacy work - - - - Develop for a strategy political advocacy to include: campaign Launch CSR Raise funds toCSR campaign finance forDesign a strategy campaign CSR . Create a taskforce community within CSO to campaign manage CSR to meeting of CSOs appointOrganize main Secretariat for is a potential Secretariat campaign. AICS CSR CSR Develop on how a strategy to finance and marketCSRI the Create to market a web portal projects Review the strategic voluntary, paths for campaign, e.g. CSR semi-voluntary, or mandated and select a path to pursue www.csr-ca.com

Verifying CSO’s technical and management skills to do the project and need forEvaluating community support the project as well as coordination with other projects Evaluating projects for technical and financial viability laws,Helping in drafting rules and regulations workshopsOrganizing and seminars Holding TV/radio discussions, roundtables, interviews Holding regular meetings with government officials Evaluating project narrative and justification as well as documents Table 6 - Summary of KeyTable Recommendations (similar to Table of 6 - Summary 1) ), Business for Social Responsibility ( www.bsr. Activity org ).

- Responsibility CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR Secretariat CSR AICS AICS AICS AICS AICS AICS

79 8.1 OVERVIEW We do not expect that either the government or 8.3 AWARENESS CREATION the corporate sector will take the lead in setting CAMPAIGN up a formal CSR program for Afghanistan. AICS will need to team up with a marketing Because of the social responsibility and social firm to develop a comprehensive marketing service objective of the civil society, it is the campaign that includes a combination of media responsibility of CSOs to take on this enormous campaigns, such as radio, TV, social media, etc., task of leading the way in CSR formalization and a billboard campaign in all major cities of in Afghanistan. The Afghan Institute for Civil the country. The audience should be both Society (AICS) has taken the initiative in this the corporations as well as the general public. area for some time now. It has already initiated The theme of the campaign will be to highlight an CSO accreditation/ certification program; it the positive contributions of corporations has developed the core competency to engage towards the economic development of the CSOs in issues of capacity development and country and their existing and expected social, enhanced credibility, and it has already taken the environmental, humanitarian and developmental lead in assessing the state of CSR in Afghanistan. contributions. Also, AICS should highlight the Therefore, AICS is best positioned to take the role of a positive partnership between the lead in driving the push for formalizing CSR in corporate and CSO worlds in these campaigns. Afghanistan. To undertake this gigantic task, AICS needs to secure donor support, raise The media campaign should also be funds, and launch a significant undertaking, supplemented with roundtable discussions, which includes all of the following: workshops, seminars and conferences that discuss CSR and create literature and case 8.2 IDENTIFY THE STRATEGIC studies for measuring the impact of CSR as well OBJECTIVE OF THE CSR DRIVE as enhancing the effectiveness of its initiatives. This assessment offers a series of recommendations and paths to create the 8.4 CREATING THE CORPORATE legal and regulatory environment conducive SOCIAL RESPONSIBILITY INDEX for effective CSR in Afghanistan. They include AICS can develop a Corporate Social a purely voluntary path, which is currently Responsibility Index (CSRI), which includes underway in Afghanistan; a semi-regulatory ratings based on the following critical factors compliance path, which is the case in much of social engagement by corporations: of the developed world; and a full-fledged regulated CSR environment, which is the case 1. Workplace Factors: Maintaining a in India. Each path has merits and demerits. healthy, safe and rewarding workplace. It is critical that AICS seek to build consensus Such a workplace includes gender equity, on one path to drive the CSR campaign in the equality in pay, prevention of racial country. To specify the strategic direction and and sexual harassment, and offering the desirable path, AICS will need to initiate benefits such as employee health a discussion within the CSO community and insurance, education reimbursement, etc. reach conclusions on one path or a combination of paths to be taken to institutionalize CSR in 2. Environmental Impact: Maintaining a Afghanistan. AICS will then push strategically minimum environmental footprint by using the selected path over the coming years with technology and approaches that reduce concerted awareness creation, political lobbying air, soil and water pollution; protecting and related business campaigns. wildlife, flora and fauna; and creating an

80 environmentally forward- looking and a. Holding regular meetings with law makers, responsible approach to doing business. government officials and political parties to push for political action in favor of a 3. Ethics: Engaging in ethical work practices structured CSR. such as avoiding bribery, negative b. Holding TV/Radio discussions, roundtables influencing and other unethical practices. and interviews on the importance of creating the regulatory structure for CSR 4. Charitable Giving: Supporting the in the country. poor and disadvantaged members of c. Organizing workshops and seminars in the society through charitable giving support of a structured CSR. that make peoples’ lives easier and d. Supporting political action by drafting laws, support them in their hour of need. rules and regulations for CSR in the country and then pushing for passing of the laws 5. Community Development: Supporting and regulations as desired. communities as a whole, such as support e. Creating momentum in favor of a structured for the education sector, for healthcare, for CSR through the regulatory environment water and sanitation, employment creation, and maintaining the pressure until final efficient exchange of goods and services, achievement of the set objectives. awareness creation and other general social enhancement. This undertaking should be adequately funded and supported; mechanisms for its funding The Index will ensure that corporations have should be identified that are in compliance systems to cater to every factor and that with the laws of the land and the concerns of describe them at different levels of engagement the donors. Where donors are constrained within each of these factors. Corporations will for getting engaged in such political advocacy, be required to pay for receiving a CSRI rating alternative alliances with the private sector, and will be able to use the rating for marketing foundations and other CSOs should be created purposes. AICS will likely need to partner with to enable achievement of the set objectives. the International Standards Organization and other international bodies to properly manage 8.6 CERTIFICATION OF CSOS the index and ensure its sustained credibility. AICS is already engaged in the certification of CSOs. It should push this effort to reach 8.5 POLITICAL ADVOCACY sustainable fruition. CAMPAIGN Utilizing its network of CSOs, AICS should 8.7 VERIFICATION OF CSO develop a strategy for political advocacy/ PROJECTS lobbying in favor of developing regulatory AICS should create a division that is tasked to structures for CSR in Afghanistan. The teams verify, validate and “certify” projects by CSOs in charge of political advocacy should organize in all parts of the country. a consistent and persistent set of activities that aim at capitalizing on the media campaigns The division should offer its opinion on the to shift the political will in the direction of a quality and worthiness of the CSO projects. structured CSR as had been defined under It should pre-screen projects and then Section 8.1 above. This campaign should recommend them for funding. The screening include: of project should include the following main evaluation criteria:

81 • Evaluate all listed projects for 8.8 LAUNCHPAD FOR CSR Technical viability PROGRAMS Financial viability AICS can establish an entity that will serve as a Community support launch pad for CSR initiatives by corporations. • Verify that the project meets a clear need in Any corporation that wishes to start a the target area and that the need is clearly comprehensive CSR program can hire AICS defined to develop such strategy for their CSR and • Determine whether then help them to launch the strategy. The Other CSOs are offering the same/ corporations will pay AICS a fee for its services, similar services. If yes, how well is the which will help AICS to support its other CSR- project coordinated with other players? related initiatives, including marketing campaign, The project is within the field of advocacy, etc. expertise of the CSO. The project budget is properly laid out, “CSR Central Asia” is a comparable company suitably/reasonably priced and within that offers similar services in the Central Asian the normal requirement of donor region. Their website describes them as “an agencies. expert organization in the area of corporate The CSO has the technical and sustainability and responsibility in Central operational capabilities (onsite presence, Asia, whose goal is to improve the social, technical staff, etc.) to effectively environmental, and economic performance implement the project. of organizations.” They “help organizations The project is adequately justified to be build responsible policies and activities in such a convincing to the donors. way that they can ensure economic growth of • Other factors of relevance to the specific their businesses while preserving the ecological nature of the project. stability and social development” in the region. Developing a similar charger could be an ideal A project that is approved and featured for task to be undertaken by AICS or an alternative funding has to meet these qualifications and organization. AICS may also choose to invite more. To carry out this due diligence, the CSO CSR Central Asia to either team up with it will need to pay a fee to AICS, which will be or to set up its own presence in Afghanistan used to cover the cost of the project review. to replicate their work in this country. Under any circumstance, corporations in Afghanistan AICS should market featured projects through require the assistance of a professional its website/portal and beyond to the website organization that fully understands CSR, is to donors and corporations from every sector able to define the extent to which CSR can to secure funding. make a difference in people’s lives and is able to structure the corporate CSR program to make This portal will enable corporations to identify it most effective and operationally sustainable. viable projects in every sector and throughout the country to ensure that their CSR budgets are effectively spent/utilized.

82 09 CONCLUSION

Appendix I - Abbreviations: 86 Appendix II – List of Corporate CSR initiatives 87

CONCLUSION Corporate Social Responsibility is a necessary As a Muslim-majority country, Afghans need path that Afghanistan must take to ensure to be in the driving seat in identifying, realizing long-term sustainability of the development and contributing to their religious and cultural initiatives that have started a decade and a obligations, not just as individuals, but also as half ago. Over the past decade, Afghanistan’s corporations, politicians, the civil society and private sector has reached sufficient levels of every other sector within the country. maturity to be able to venture into a more structured and sustainable effort to enable This study of the state of CSR has aimed at corporations to meet their religious, ethical describing the path that corporations have and legal obligations to mitigate the harm taken in the developed world, in the developing they cause to the environment, the society world, in the neighborhood of Afghanistan and and the economy of the country. It is also an within Afghanistan to get to where they currently opportunity for corporations to give back to find themselves. The recommendations and the society some of what they have taken and operationalization paths described in this report to ensure that their contribution to the society are what can take Afghanistan to the next level. is multi-faceted and comprehensive. Such a program is their opportunity to structure their It is human nature to dream, so let’s dream humanitarian, development and philanthropic about a day, not far from today, when there work and maximize their effectiveness are regulations that govern CSR in Afghanistan and where corporations feel responsible, want CSR is also a “must-have” tool to ensure to be responsible and behave responsibly sustainable development of Afghanistan even towards their employees, their customers, in the absence of international donor support. the communities where they operate and their It enables Afghans to choose what they want society at large. Whether this dream remains to do to develop their country and not always a dream or is realized is solely dependent on be subject to the preferences of international God’s grace and the reader’s efforts. donors.

85 APPENDIX I - ABBREVIATIONS:

AFN Afghani – Local Afghan Currency AICS Afghan Institute for Civil Society AMOA Association Mobile Money Operators in Afghanistan ANDS Afghan National Development Strategy ARCS Afghan Red Crescent Society AWCC Afghan Wireless Communications Company BSR Business Social Responsibility CED Committee for Economic Development CSO Civil Society Organization CSR Corporate Social Responsibility CSRI Corporate Social Responsibility Index GAAP Generally Accepted Accounting Procedures GASP Generally Accepted Sustainability Practices IACS International Association of Classification Societies INGO International NGO ISO International Standards Organization IWA Integrity Watch Afghanistan MNC Multi-National Corporations MTN MTN Group (a South African Telecommunications Company) NEPA National Environmental Protection Agency NGO Non-Governmental NGOs OECD Organization for Economic Cooperation and Development OSHA Occupational Safety and Health Administration PBT Profit Before Taxes SME Small and Medium Sized Enterprises TBL Triple-Bottom-Line Approach UNESCO United Nations Education, Scientific and Cultural Organization WASH Water Sanitation Hygiene WHO World Health Organization

86 APPENDIX II – LIST OF environmentally sound CORPORATE CSR INITIATIVES • Air purification and exhaust systems are installed Company: Afghanistan Beverage Industries CSR Start Year: 2006 Company: Microfinance Investment Support CSR Spending: AFN 5-10 million (2018) Facility for Afghanistan (MISFA) CSR Projects/Recipients: ARCS and CSR Start Year: 2005 municipality through import duties CSR Spending: Not provided CSR Projects/Recipients: A clear guideline Company: Azizi Bank for CSR has been developed and a coordinating CSR Start Year: 2016 agency is set up to effectively utilize CSR resources CSR Spending: Not provided Company: Moby Group CSR Projects/Recipients: 2018 activities: • CSR Start Year: 2012 • Blood Donation Campaign • CSR Spending: Not provided • Trees Plantation, Mazar-e-Sharif, Kabul and CSR Projects/Recipients: Jalalabad Received AFC award for CSR for football • Kardan University Student’s Study Tour to through Afghan Premier League. Azizi Bank • Received Peace through Sport Award from • Financial support for the Empowerment & European NGO. Capacity Building of Women • Worked with UNICEF on prevention of • Assistance to Mazar IDPs Polio (provided discounted advertisement • Celebrating International Yoga Day time) Study tours by students from Kateb University, • Created the Afghan Premier League. Mashaal University, Bakhtar University, Maryam • Produced short (30-60 second) clips on University, and Khatam Al Nabieen University social issues and publicized them on TV channels. Company: Insurance Corporation of • Supported environmental issues such as Afghanistan (ICA) use of paper bags instead of plastic bags. CSR Start Year: Not provided • Developed short clips and advertisement CSR Spending: Not provided for free, encouraging the population to pay CSR Projects/Recipients: Free medical their taxes, water conservation, helping insurance to all personnel in addition to security forces, discouraging women abuse, other contributions obeying traffic rules, encouraging social cohesiveness, collecting waste, etc. Company: Kabul Package Factory • Collected donations through Iftar programs CSR Start Year: Not provided in Ramadan, broadcasting Islamic issues CSR Spending: Not provided including Hadith etc. in support of social CSR Projects/Recipients: Not provided issues (e.g. last year AFN 400,000 was raised for returnees in western Afghanistan) Company: Maihan Steel Company CSR Start Year: Not provided Company: Serena Hotel CSR Spending: Not provided CSR Start Year: 2012 CSR Projects/Recipients: CSR Spending: Not provided • Offers housing for workers including medical CSR Projects/Recipients: facility, worker safety, lunch areas, etc. • Support for the SHAMSA Foundation run • All equipment and machinery are by Mariam Gilani (providing stationery, clothes, medical services, internet services,

87 food etc., training for foundation, meeting CSR Spending: Not provided other requirements) CSR Projects/Recipients: • Donation Box at Serena Hotel (collecting • Environmental – Responsible Development donations from guests and giving to Shamsa Social – % donated (Zakat and other and AFSECO, providing legitimacy to charitable relief) – Hire Afghans and AFSECO through donation collection, Afghani companies when possible Financial inviting companies to support AFSECO) – Economic Prosperity – Make money and • Voluntary works such as cleaning of the accelerate its velocity surrounding areas to the Serena Hotel and • Focus on health, education, culture, rural supporting the municipality development, institution building and the • In-house doctor to support the staff and promotion of economic development. It the foundation. is dedicated to improving living conditions • Sponsorship of sports activities, mainly and opportunities for the less fortunate, cricket and football, and offering high without regard to their faith, origin or discounts for their events at Serena Hotel. gender. The Ghazanfar Foundation works in the following major areas: Education Health Company: Zahir Plastics Care Employment Housing Community CSR Start Year: 2012 Development & Rehabilitation CSR Spending: Not provided • Capacity Building Program: Educational CSR Projects/Recipients: Scholarships Training Programs Enhancing • Support 12 students for their education the abilities and Skills of Afghan Citizens, costs (every year since 2008) Internships Afghan Citizen First Economic • Buy AFN 25,000 worth of books for Development Job creation, Economic students Prosperity through Sustainable Development. • Pay around AFN 500,000 every year • Support around 20 families with AFN 2500/ Company: Azizi Foundation (affiliate of Hotak month Azizi Group) • Provide partial wedding expenses of a CSR Start Year: Not provided groom every year CSR Spending: Not provided • Provide medical expenses for all workers CSR Projects/Recipients: AF has objective and their close family members to help poor and disabled and martyred • Provide up to AFN 200,000 as bonus per families, widows, orphans’ almshouse, prisons year for workers on death, marriage and and correction houses. other special circumstances • Taking part in building schools, health • Train and provide internships for poor clinics and digging wells to provide hygienic family youth. drinking water. • Cleaning canals, streams and building macro Company: Gulbahar Group hydroelectric dams. CSR Start Year: Not provided • Helping students in providing desks, chairs, CSR Spending: Owner’s Zakat money uniforms and stationery. CSR Projects/Recipients: Gulbahar • Taking part in building, reconstruction and Charitable Foundation provides all types of repairing mosques, religious madrasas, support such as clothes, earthquake relief, building helping religious scholars, school teachers schools, distributing Zakat and other donations. and establishing libraries. • Sharing in building and reconstruction of Company: Ghazanfar Group bridges, culverts and roads to remove the CSR Start Year: Not provided inhabitants’ problems.

88 • Helping promptly in the event of an outbreak year, Stevie international business awards, of natural catastrophes like earthquakes, November 2013 floods and cooperation in preserving the • Sustainability commercialized, ethical environment. corporation’s responsible business awards, • Contributing dynamically in social, cultural August 2013 and economic development of Afghanistan • CSR program of the year in the Middle East by providing the ground for learning and and Africa, Stevie awards October 2012 conducting a campaign against illiteracy and • Best community development project, poverty throughout the country. telecom world Asia, April 2011 • Drawing attention to support of • Best corporate social responsibility women’s rights and paving the ground contribution, telecom world awards Middle for native ceremonial and etiquette of East awards, November 2008. the country for active and instructive sharing in social and cultural affairs. Health: We piloted a telemedicine project in Company: Barakat Group conjunction with the French medical institute CSR Start Year: Not provided for children (FMIC), the Aga Khan University CSR Spending: Not provided Hospital (AKUH) in Karachi, Bamyan CSR Projects/Recipients: By early 2007, provincial hospital (bhp), and Cisco Systems. Barakat Company had devoted more that USD 600,000 to construct a primary school Aschiana: with 16 classrooms and modern facilities The problem: In Afghanistan, malnutrition is a for the education of girls. The school is common problem, especially among children one of the very few schools in Afghanistan in returnee camps and street-working children. equipped with computers, laboratory room, conference hall, and air conditioning/heating Our solution: we provide over 40,000 meals system. High voltage generator is being packs each month, and support street-working used to maintain regular power supply. children by reintegrating them into the formal school system and offering vocational training. Company: Afghanistan Holding Group Our partners: we work with various Aschiana CSR Start Year: 2014 centers and emergency shelters for IDPs. CSR Spending: 2018: $154,166 (8.74%), 2017: 147,152 (5.76%), 2016: 106.232 (3.40%) Roshan clinic CSR Projects/Recipients: Not provided The problem: limited access to cheap and quality healthcare services Company: Roshan Telecommunications Company Our solution: through Roshan community’s CSR Start Year: Not provided inaugural project, fees for expatriate patients CSR Spending: Not provided are used to subsidize costs for Afghan nationals. CSR Projects/Recipients: Paving the way for other companies, Roshan Recognitions received include was the first company in Afghanistan to provide • Social contribution award, Asia its employees private medical insurance. The communications awards, July 2014 Roshan clinic has also hosted a variety of health • Most innovative company of the year in and dental workshops over the past decade the Middle East and Africa, CSR program to support improved quality of life and care of the year in the Middle East and Africa for Afghans. and customer service department of the Our partners: Aschiana, Afghanistan Demain &

89 Afrane. Dental and health workshops: hosting The problem: lack of clean and safe water in topics, including education on clean water, Afghanistan. diarrhea, and tuberculosis were developed by Our solution: using an Interactive Voice MSH/REACH/USAID. Afghan medical health Recording (IVR) solution, we created the insurance: lifecare international. Watertracker phone service, which allows illiterate Afghans to call in from rural areas Telemedicine and check the status of their local well or The problem: limited access to affordable, report a fault. Between 2010 & 2011, 1000 quality healthcare services in remote and rural well communities were trained in using areas. Watertracker. As a result of the service, nearly Our solution: the telemedicine project 30 wells have been restored. Our partner: connects hospitals with Roshan’s broadband USAID technology to facilitate the rapid delivery of medical solutions. Through video conferencing, Education specialists are able to diagnose and treat illnesses In addition to building schools and playgrounds, in rural areas of Afghanistan and provide training we support educational programs that sessions for the new generation of Afghan harness the power of technology, including doctors. The goal of this service is to provide the one-laptop-per-child program and remote tele-radiology, e-learning, hospital Roshan/CISCO networking academies. management, nursing education and specialized clinics. This technology enables specialists to Playgrounds: diagnose illnesses, provide proper treatments, The problem: Afghanistan, a country that has medical education to doctors while they work, been suffering from war and social problems and access to health services for patients in for decades, has a limited social space where villages. Also, this technology reduces the cost it can support the community and provide a of travel for patients, employees and health platform for children’s development. workers. Currently, a network of medical Our solution: recognizing the importance of centers in Kabul, Bamiyan and Badakhshan playing in the growth of self-confidence and social are connected to each other as well as to the skills in children, Roshan creates playgrounds in Aga Khan University Hospital in Karachi. strategic areas, which can be used as a venue Our partners: government of Afghanistan, the for the gathering of different ethnicities in Aga Khan University Hospital (AKUH) in Karachi, Afghanistan as well. These playgrounds eliminate Aga Khan Health Services, the French Medical social barriers and provide a safe environment Institute for Children (FMIC) in Kabul, FMIC, for children to play and grow together. CISCO, Bamyan Hospital, Faizabad Hospital, CISCO Systems and other telecoms suppliers. School construction The problem: when we first started operations Water wells in Afghanistan, we visited a school with seven The problem: lack of clean and healthy drinking dilapidated blocks and one purpose-built water in Afghanistan. block. Many of the 7,000 school students Our solution: we started with the creation were studying in shifts in tents. of two water wells in 2006, which currently Our solution: the Roshan community support 1000 families living on the outskirts has invested in the construction of a large of Kabul. To date, we have built 70 wells that modernization that has 24 classrooms and a provide clean water to over 100,000 people. playground equipped with. Till now, we have Roshan’s innovative technology feature (health): invested in many schools. Watertracker Our partners: AKF, etc.

90 OLPC: discount package will be provided. This package The problem: Afghan children are deprived of will include a mobile phone, SIM card, antenna, the resources and tools they need to compete charger, 12500 contact units and an official in the global economy Roshan PCO signboard. The WPCO operator Our Solution: OLPC is designed to improve will use a portion of the profit to pay back the level of learning by presenting two-way her microfinance loan and to buy more units versions of curriculum content and providing of airtime. Each time an operator from the guidance and suggestions to schoolchildren. project purchases more airtime, she receives More than 3,600 children and teachers have an additional 60% credit. This added discount benefited from this project in the provinces of is to ensure profitability and maximize the Baghlan, Herat, Kabul, Jalalabad and Kandahar. earning potential of the women. Although the Our partners: OLPC, the ministry of education, operation of a WPCO does not in itself defeat the ministry of communication and information poverty, it provides a stable and sustainable technology (MOCIT), and USAID’s Afghanistan source of income, which enables women to Small-and-Medium Enterprise Development climb steadily out of poverty and provide better (ASMED). living conditions for their families. Our partners: AFGHANAID & USAID. Commerce We support women in setting up their Shahrara Garden Sports Facility own sustainable businesses and foster an The problem: due to decades of conflict, entrepreneurial spirit among Afghans. women are vulnerable and lack safe spaces to Alternative livelihoods program meet in public. The problem: due to decades of conflict, Our solution: Roshan community built women are vulnerable, especially in rural areas, the Shahrara Garden, a women-only where opportunities to generate income are gym facility that supports community and limited. capacity- building, by encouraging healthy Our solution: in 2009, the Roshan community and active lifestyles for women and girls. started supporting CARE’s Humanitarian Assistance for Women of Afghanistan (HAWA) Roshan’s innovative technology feature project. The project provides livestock for (commerce): Malomat vulnerable women to earn a living through Malomat is a national price information system them. providing farmers, traders and wholesalers Our partners: CARE with access to commodity information in 14 provincial markets. Using a mobile phone, WPCOS farmers are able to access real-time market The problem: due to decades of conflict, trends, either through short message service women are vulnerable and have limited (SMS) or Interactive Voice Response (IVR) opportunities to generate an income. technology. The Malomat service is available to farmers in Dari, Pashto and English. IVR is Our solution: Roshan launched a telephone a particularly important feature in Afghanistan, booth project for women, through which where 70% of the population is illiterate. women will be provided with the opportunity Our partners: Mercy Corps and USAID’s idea- to start a business. Through this project, new project Afghan aid will nominate women to the first The problem: in the autonomous province of microfinance lending bank in Afghanistan Gorno-Badakhshan, Tajikistan. (FMFB-A) so that women can get loans and Our solution: at a low proposed tariff rate, start a business. For each WPCO operator, a we supported the creation of a transmission

91 line from Khorog in Gbao to Bahshor village The problem: a nation torn apart by decades in Afghanistan, which now supplies electricity of war and social tensions, Afghanistan suffers to 360 households, the local hospital, the from a lack of social spaces that support government building and more, throughout community and foster youth development. the year. Our solution: The Roshan community built the Our partners: the Aga Khan Foundation for indoor youth, sports, and social development Economic Development and Pamirenergy. center. With separate areas for boys and AKFED developed a pioneering subsidy scheme girls, the center provides a safe space for 800 for Pamirenergy that ensures a minimum children and teenagers in and around Kabul ‘lifeline’ monthly supply of power is provided to exercise and socialize with extracurricular to households at one of the lowest rates in the activities. It is also a space for games, world among privately-owned utilities. presentations, and seminars for community and Social development social development, so that they can exercise In partnership with domestic NGOs, we have and participate in extracurricular activities. provided more than four million food packs for Afghans and creative solutions for capacity D-light building. The problem: after decades of war, Afghans The problem: lack of educational material and lack the proper infrastructure to improve their shortage of trained teachers in rural areas to earning potential and quality of life. support children’s intellectual, social and moral Our solution: Roshan has collaborated with development. D.Light to replace dangerous kerosene lamps in households with durable, solar-powered Our solution: The Roshan community has lanterns. The lanterns improve children’s acquired the rights to publish children’s ability to study effectively at night, increase the educational TV programs, which are income-generating potential of their families, currently being broadcasted internationally. and overcome the severe lack of infrastructure These programs are dubbed in Dari and in the country. Pashto, which are made available through Our partners: D-light local TVs throughout Afghanistan. E-learning centers Sports: The problem: Afghans are deprived of the The problem: Afghanistan, a country that has resources and tools they need to compete in suffered from war and social problems for a technology-based global economy. decades, has few social spaces to support the Our solution: the Roshan community uses community and provide a platform for young containers equipped with durable solar panels people to grow. to create online learning centers that have Our solution: Roshan is a proud title sponsor laptops and other communication equipment. of the Roshan Afghan Premier League, which These centers are held locally and by the brings together millions of Afghans to cheer people who were given this equipment to for national pride and unity, while bonding over meet the needs of local areas. Users of football matches. RAPL’s fourth season in 2015 these centers are able to get their hands- was the most celebrated event to date, reaching on technology, trade, and communicate over 10 million fans across the country. Since with their family and friends from far away. 2010, we have also partnered with the NGO Skateistan to promote skateboarding and self- Roshan/Cisco Systems: expression throughout Afghanistan. The problem: Afghans lack the tools and Youth, sports, and social development center: resources to compete in a tech-driven global

92 economy. today announced the opening of the Cordaid Our solution: in 2007, Roshan teamed up Enterprise Academy. The Academy, a with partners to support an initiative aimed one-of-a-kind center for skills training and at preparing students for networking and it- entrepreneurship, will provide business related careers in the public and private sectors. development, networking and training Providing higher education tools in engineering, opportunities to young Afghan entrepreneurs. computer science, and other related fields, the initiative supports the education of 600 Afghan Located in Kabul, the Cordaid Enterprise students across the country. Academy began operations on February Our partners: UNDP and Cisco Systems 18, 2019. The Academy’s debut—and the Roshan’s innovative technology feature importance of its mission—was celebrated (education): teacher consultation line with an opening-day dedication ceremony. In collaboration with partners, the Roshan Attendees at the dedication ceremony community developed a distance, mobile- included Cordaid representatives Jaap van learning model, which allows greater access Hierden and Mohammad Anwar Alvi, to quality secondary education for Afghan boys Mr. Sebghatullah Poya of The Bayat and girls. The educational content falls within Foundation, Mr. Musharaf Shirzad of the the framework of the visions of the Ministry Hamika Baramaki Organization for the Rule of Education. of Law and Mr. Maitullah Rahmati of the Our partners: Saba Media TV, Cha, Butterfly- 1% Club. Oxfam Novib and Ministry of Education. Following the welcoming ceremony, the Company: MTN Afghanistan Cordaid Enterprise Academy sponsored its CSR Start Year: Not provided first program, a networking event introducing CSR Spending: Not provided young Afghan entrepreneurs to share potential CSR Projects/Recipients: Sustainability forms strategic networks and opportunities. the foundation of the MTN Group’s investment philosophy. Actively embedding sustainability “The Cordaid Enterprise Academy will principles in the way we do business ultimately play a vital role in our mission to support impacts on our people, our reputation and our the establishment of Afghan owned small profits. We want to be here, as successful as and medium sized companies—the types ever, in the future. of businesses that are absolutely essential Therefore, we acknowledge that to Afghanistan’s economic progress,” said while we must make a profit, it is our Dr. Ehsanollah Bayat, the Co-Founder and responsibility to be a relevant contributor Chairman of The Bayat Foundation. “We to the development and sustainability of the are proud to be a founding member of communities we touch and interact with. Bright Future Afghanistan.”

Company: Afghan Wireless Communications Bright Future Afghanistan, funded by the Company (AWCC) Dutch Ministry of Foreign Affairs, is being CSR Start Year: Not provided implemented by a consortium of four Afghan CSR Spending: Not provided non-profit organizations: The Bayat Foundation, CSR Projects/Recipients: The Bayat Cordaid (www.cordaid.org), the 1% Club Foundation (www.bayatfoundation.org), (www.onepercentclub.com), and the Hamika Afghanistan’s largest, private Health, Education Baramaki Organization for the Rule of Law and Social Development Organization, in (www.hborl.org.af). Bright Future is a five- partnership with Bright Future Afghanistan, year program designed to teach important

93 business skills to Afghan entrepreneurs and that is transparent and ethical in all its dealings to create a thriving Afghan private sector of and making a positive contribution towards small- and medium-sized enterprises (SME’s), the local Afghan community. EA is committed capable of providing thousands of employment towards the core values in all its business areas opportunities to Afghans—especially Afghan that include the fulfillment of its corporate youth. social responsibility.

About the Bayat Foundation: One of Etisalat’s core values is service to the Since 2005, the US-based Bayat Foundation, a community, a commitment to give back to 501 (c) (3) charitable organization, has promoted improve the lives of people and to protect the well-being of the Afghan people. Founded the environment for future generations. We and directed by Ehsanollah Bayat and Fatema do so by supporting a wide array of social, Bayat, the Foundation has contributed to more economic, and environmental initiatives across than 300 projects dedicated to improving the the country. quality of life for the youth, women, poor, and elderly of Afghanistan; including construction of Working closely with government, foundations 13 maternity hospitals that have now treated and other companies, we support, sponsor over 2,000,000 mothers and babies. and participate in events and programs that further the causes of education, social welfare, Projects have included the construction of new international relations and culture, both within facilities and sustainable infrastructure in needy Afghanistan and throughout our extended regions, and the promotion of health, education, enterprise. economic, and cultural programs. In addition to his charitable initiatives, Ehsanollah Bayat We firmly believe education makes a difference founded AWCC in 2002, which was the first to people’s lives; we provide financial assistance GSM wireless and Internet Service Provider in to literacy projects and educational institutions. Afghanistan, and later established Ariana Radio We support the development of schools, and Television Network (ATN), which includes colleges, and labs and encouraging talented Ariana Radio (FM 93.5). For more information, people to pursue higher education in the field please email [email protected]. of their choice.

Company: Etisalat Telecommunications Within our own organization, we build products Company and services for those with special needs in the CSR Start Year: Not provided firm belief that all members of society deserve CSR Spending: Not provided the same freedom of communication. CSR Projects/Recipients: Etisalat Afghanistan (EA) is fully committed to this We will continue our commitment to corporate principle of CSR and intends to implant social responsibility, aiming always to bring CSR, where appropriate, into its policies and change for the good and to build a better world practices, to benefit the staff, stakeholders in which we all may live. and the wider Afghan community. Many key initiatives have already been carrying out under Awards and Appreciations: this umbrella, which lays down the outlines Etisalat was announced the winner of the of the future CSR strategy within Etisalat “Achievement in Social Inclusion” 2012 award Afghanistan. by the Connected World Forum at their annual international conference on mobile EA aims to be renowned as an organization money. The event, held in Dubai, attended

94 by international leaders in the Banking and GSM Reconstruction of Masjids: Network industry, brought together the 2012 One of the recent honorable initiatives finalists which included: Etisalat, Citibank, Tata undertaken by the EA is the reconstruction Teleservices, Telecommunications de Mexico and renovation of mosques throughout the and Unistream Commercial Bank. country. The renovated mosques will provide a comfortable praying facility for the local EA earned a “best” award from the UAE communities and facilitates the noble teachings embassy regarding their cooperation for the of Islam. Being a United Arab Emirates Afghan people in 2011. company, the reconstruction of mosques and other projects is in line with the vision of our EA got the support of the Afghanistan leadership in supporting the re-building of government for establishing the Quran Afghanistan. competition in Afghanistan. EA earned an appreciation letter from Hajj Annual Holy Quran Awards: Awqaf Ministry of Afghanistan. Etisalat Afghanistan has been organizing the “Annual Quran Recitation Competition” for five Key governors of Afghanistan thanked EA consecutive years running in collaboration with for supporting poor people in all regions of the Ministry of Hajj & Awqaf and the Ministry Afghanistan during the year 2011. of Media & Information of the Government of Afghanistan. The winner of Etisalat Afghanistan The UAE Office for the Coordination of Holy Quran Awards is representing Afghanistan Foreign Aid prints a book that includes a special in the annual Holy Quran Awards held during page about EA which expresses our value and Ramadan in Dubai, UAE. quality of assistance. The link is also available in our website. For the 2013 event, Etisalat Afghanistan held the event starting 2 weeks before Ramadhan. Etisalat Afghanistan’s CEO, Mr. Ahmed Alhosani, Two hundred Qaries (reciters) participated received a special award from Shamshad TV from all provinces of Afghanistan. EA grants the in recognition of the incredible work done by prize for five winners with total value of USD Etisalat Afghanistan for its support of Islamic 10,000. Winners are Qaries from Laghman, values and traditions in Afghanistan. Nangarhar and Kabul.

On June 21, 2011; Mrs. Amina Afzali, Minister Food Distribution\IfftarSaem activities: for Labor & Social Affairs, Islamic Republic Every year during the holy month of Ramadan, of Afghanistan, has appreciated the efforts Etisalat distributes thousands of food and ration and determination of Etisalat Afghanistan for bags to the poor and needy people across investing and partnering in the development Afghanistan. of human capital of the country. Hajj Events: EA got a certificate of the best humanitarian Over the years, Etisalat has been providing agency in 2010 from the UAE foreign ministry. basic necessities (a complete hajj kit) to Hajj pilgrims to make their travel comfortable. A Community Development free SIM card is also included in this package Etisalat Afghanistan had undertaken the to enable them to keep in touch with their following CSR initiatives: families back home.

95 Women Empowerment Team is the reigning holder of the ICC Inter Women’s Garden: Continental Trophy and has also gained the ICC Women in Afghanistan have been a deprived One Day International Status (ODI) in 2013. segment. Etisalat Afghanistan, as part of its activities, strives to empower women by Afghanistan National Volleyball sponsoring an exclusive women’s garden, Federation sponsorship: where women can meet and share ideas for Etisalat Afghanistan is also the official sponsor growth. of the “National Volleyball Federation”. EA believes that empowering the youth with sports Women’s Volleyball Team: is a platform to express their individuality in Etisalat Afghanistan is the proud sponsor of the country in a current state of flux; such the “Afghanistan National Women’s Volleyball empowerment is also a factor in diminishing Team” by empowering them to participate in anti-social activities. international tournaments. Buzkashi (‘goat grabbing’) sponsorship: Etisalat mHawala Women Agent: Etisalat Afghanistan is also the official sponsor In cooperation with USAID-FAIDA, the Ministry of the National Game of “Buzkashi”. The of Woman Affairs and Mujtahid Microfinance, tournament is organized on the auspicious Etisalat Afghanistan is training women to make occasion of “Nauwroze”- New Year them capable to work as women agents for Celebrations - every year in the city of Mazar. mHawala. At the end of training, the women People of Afghanistan are proud of their will start their business, which will be facilitated national heritage; such sponsorship creates by Etisalat Afghanistan through its distributor. an emotional connection with Etisalat.

Sport Sponsorship Supporting Education Afghanistan Cricket Board (ACB) Sponsorship: Graduate Trainee (GTs) Induction Program: Etisalat Afghanistan is committed to the Etisalat Afghanistan stands committed to its development of the sport of cricket at the long-standing resolution of partnering in the grass roots level since the inception of the development and enhancement of human Afghanistan Cricket Board in 2009. EA is the capital and skill levels of local Afghan employees, official sponsor of the Afghanistan Cricket which is evident from the fact that 93 per cent Board (ACB) and the National Cricket Team. of Etisalat Afghanistan staff is comprised of local Afghans. Cricket in Afghanistan is considered as one We have already inducted 60 graduate of the most popular sports in part due to the trainees and have given extensive training and recent brilliant performances of the National development both locally and overseas. Cricket Team on the world stage. The ascent Graduate trainees have been groomed to take of the Afghanistan National Cricket team, as on critical work functions and take on positions well as the rising popularity of the game in the of responsibility with Etisalat. country, is considered arguably one of the most scintillating stories in the history of sports. Building computer labs with Internet facilities: In spite of limited resources and the short As part of its ongoing support to education history of cricket in the country compared sector with emphasis to encourage primary to some of the biggest names internationally, education in Afghanistan, EA has recently the Afghanistan National Cricket team has launched a drive to construct the computer been ranked among the top ten cricket-playing labs with internet facility in various schools and nations across the globe. The National Cricket universities of Afghanistan.

96 Distribution of Schools Bags, Stationery Items and Gifts: A team from Etisalat Afghanitan recently has distributed more than 6,000 gifts and souvenirs among the children of schools including school bags, shirts, caps, notebooks and other stationery items. The team visited Mahmoud Hotaky School, Amena-e-Fedawi Girls School, Zarghona Kindergarten in Kabul and Paghman Girls School in Paghman District.

Aghanistan Institute For Civil Society (AICS) Address: House # 58, Street # 12, Qala-e-Fatullah, Golahi Paikob Opposite Sehat Afghan Clinic, Kabul Afghanistan Website: www.aicsafg.org Twitter: AICSaf Email: [email protected] Facebook: AICSafghanistan Phone: +93 (0) 792829122