EGYPTIAN CORPORATE RESPONSIBILITY CENTER This publication marks the second edition to the pilot UNDP/Ministry of Investment report entitled Business Solutions for Human Development launched in 2007 at the first International CSR Summit jointly organized by UNDP and the American Chamber of Commerce. The main premise of the 2007 report was to better understand the CSR & philanthropic context in Egypt and to reinforce the role of the private sector in achieving the Millennium Development Goals. The Report showcased a number of innovative private sector and market-based solutions to alleviate poverty building on the UNDP global report entitled Growing Inclusive Markets. UNDP is driven by a strong conviction that the private sector remains the greatest untapped resource, providing both investment and innovation, both of which are vital to achieving the Sustainable Development Goals (SDGs). It is in this context that the second edition of Report entitled "Development at a crossroads: the rising role of the private sector in Egypt" was produced. The Report has been prepared by a team of independent authors within the framework of a joint project of collaboration between UNDP and Industrial Modernization Center (IMC), namely the Egyptian Corporate Responsibly Center (ECRC). The 2016 report does a trend analysis focusing on new forms of private sector engagement in society including: Base of the Pyramid (BOP) business models, social enterprise, supply chain integration, environmental protection and sustainability while also maintaining a strong emphasis on the importance of corporate governance, combating corruption, gender equality, business compliance & promotion of the UN Global Compact principles. The 2016 report demonstrates good practices of business engagement, identifies gaps and proposes some approaches to better include the poor in market economies. The strong policy angle in the report relates much to the way forward for all stakeholders including government, civil society, and private sector and how they can all work in partnership to contribute to the achievement of the newly endorsed SDGs. Disclaimer The Expanding Horizons in Development 2016 report is a major output of the Egyptian Corporate Social Responsibility Center (ECRC) Project, executed by the Industrial Modernization Center, affiliated to the Ministry of Trade and Industry, Egypt, in cooperation with the United Nations Development Programme (UNDP). Responsibility for the information and views expressed in this publication lie solely with the authors. Copyright 2016, United Nations Development Programme (UNDP), and the Industrial Modernization Center (IMC), Egypt. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission or reference to this source. All photographs contained within the report are the property of UNDP. Cover Design by Jose Sanchez Photo credits: Chapter 1: CC0 Chapter 2-3: José Sánchez/UNDP Chapter 4-5: Fatma Elzahra Yassin/UNDP Chapter 6: Abdelhamid Ezzat/UNDP Printed by: Print Right Expanding Horizons in Development: the Rising Role of Egypt’s Private Sector TABLE OF CONTENTS FOREWORD ....................................................................................................................................................vii ACKNOWLEDGEMENTS ..................................................................................................................................xi ACRONYMS & ABBREVIATIONS......................................................................................................................xi INTRODUCTION ...............................................................................................................................................1 1. Approach ...................................................................................................................................................................................1 1.1. The Private Sector: An Integral Part of the Development Equation ...............................................................1 2. Context .......................................................................................................................................................................................1 2.1. Socio-economic Conditions in 2010 ......................................................................................................................3 2.2. Socio-economic Conditions in 2015 ......................................................................................................................3 3. The Role of Egypt’s Private Sector and the Current Report ....................................................................................3 CHAPTER ONE: THE POST-2015 DEVELOPMENT AGENDA: WHERE DOES THE PRIVATE SECTOR FIT IN? .7 1. UN Frameworks for Engaging the Private Sector: From Compliance to Inclusive Market Growth ..........7 1.1. Global Compact and its History in Egypt ..............................................................................................................7 1.2. The Egyptian Corporate Responsibly Center (ECRC) ..........................................................................................8 1.3. Promoting Base of the Pyramid Models and Growing Inclusive Markets .....................................................9 1.4 UNDP’S Private Sector Strategy ............................................................................................................................12 1.5. John Ruggie: Business and Human Rights .........................................................................................................13 2. The Post-2015 Development Agenda ......................................................................................................................... 13 2.1. Egypt and the Post-2015 Development Agenda ..............................................................................................14 3. Conclusion and Recommendations ............................................................................................................................. 15 3.1. Traditional CSR: Philanthropy Activities .............................................................................................................15 3.2. Core Business .............................................................................................................................................................16 3.3. Compliance with UNGC Principles and UN Conventions: ..............................................................................16 3.4. The New Generation of CSR: Inclusive Markets and BOP ................................................................................16 CHAPTER TWO: CORPORATE COMMUNITY ENGAGEMENT: CHARITY OR SOCIAL INVESTMENT? ...........19 1. Defining CSR ......................................................................................................................................................................... 19 2. The Revelations of Language .......................................................................................................................................... 19 2.1. Available Online Information ................................................................................................................................20 2.2. Reports and Networking Events............................................................................................................................20 3. Corporate Community Engagement Practices ........................................................................................................ 23 3.1. Case Study: S&P EGX ESG Index .............................................................................................................................23 4. Qualitative Insights ............................................................................................................................................................. 27 5. Conclusion and Recommendations ............................................................................................................................. 28 CHAPTER THREE: COMPLIANCE OR COMPLICITY: IN SEARCH OF THE EGYPTIAN MODEL .......................33 1. The Egyptian Eco-System ................................................................................................................................................. 34 1.1. The Private Sector: From the Mahalla Riots to Post-2011 ..............................................................................34 1.2. Labour Relations .......................................................................................................................................................35 1.3. Good Governance and Ethical Performance .....................................................................................................38 1.4. Product and Service Quality ..................................................................................................................................40 1.5. Environmental Protection ......................................................................................................................................41 2. Conclusion and Recommendations ............................................................................................................................. 42 CHAPTER FOUR: