Monday, February 8, 2010

EMBA GBI: Corporate Social Responsibility (CSR) and Social Bussiness - Global and Malaysian Cases For Pharmaceutical Sector

Well.. another of my GBI assignment that I believe have better place in the cyberspace than linguishing in my hardrive :)


Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance,[1] is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms. Business would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, business would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profit. (Wikipedia).

Recent cases include;
• GlaxoSmithKline (GSK) is balancing the CSR as well as ensuring profits to its shareholders. It announced in early 2010 will only charge five percent profit on manufacturing costs for Malaria vaccine to ensure availability and affordability in poor countries as well as creating an $8 million fund for scientists in discovering newly accessible chemicals potential for new drugs.
• In 2009, GSK stated that it would grant South African firm Aspen the rights for manufacturing HIV drug Anacavir royalty-free in its effect to make medicine accessible to the poor. It had also announced a new fund to support NGOs working with HIV infected pregnant women in Afrika as well as contributing for patent pool focused on neglected diseases.
• Pfizer had also agreed to provide 60% price reduction on tuberculosis drugs for patients taking second-line HIV/AIDS medications and therefore improving access.
• Merck had also taken step to do R&D and produced drug Mectizan for threating river blindness or onchocerciasis which affected 80 million people or 2 per cent world’s population in poor developing countries. Without government and NGOs investments, Merck had provided the drugs for free as well as setting the initial distribution. Since 1987, Merck had contributed 2.5 billion tablets of Mectizan worth $3.9 billion on top of $35 million in their Mectizan Donation programme.
• Research by Roberts Environmental Center (REC) at Claremont Mckenna College found out the leader for CSR reporting for pharmaceutical sector are Bristol-Myers Squibb (U.S.) and Sanofi-Aventis (France).

o By analysing online sustainability reporting for the 26 largest pharmaceutical companies world-wide, REC scored the firms based on the transparency, intent, and performance for both environmental and social issues. The results are as follows:

 Highest Overall Scores
Bristol-Myers Squibb
Abbott Laboratories

 Highest Environmental Reporting Scores
Bristol-Myers Squibb
Johnson & Johnson
Abbott Laboratories

 Highest Social Reporting Scores
Bristol-Myers Squibb
Abbott Laboratories

 Lowest Overall Scores
Forest Laboratories
King Pharmaceuticals

• The winner, Bristol-Myers Squibs Foundation is created with the aim of reducing health disparities around the world. In 2008, the foundation allocated $150 million on R&D for least developed countries and vulnerable properties. They also increased access for HIV/AIDS treatments and maintaining the policy of no enforcement of patents for HIV/AIDS medicines in sub-Saharan African with process at level of no profit.

Cases against CSR:

• In 2009, Swiss drug conglomerates Novartis had raised comments when it refused to donate swine flu vaccines to World Health Organization (WHO) in the event of it making the breakthrough. The company would only provide the vaccine discounted price to poor nation. In contrast, Sanofi and GSK had offered 100 million and 50 million flu vaccines respectively.


Only in the last few years that Malaysia had finally join the CSR forays with its aspiration ingrained in the National Integrity Plan, the 9th Malaysia Plan and the Capital Market Master plan. Significant boost to CSR was given during the Budget 2007 requirement for Public Listed Companies to report their CSR initiatives followed by Bursa Malaysia’s launched of CSR frameworks for Malaysia PLCs which were also directed to adopt CSR reporting. As part of its GLCs transformation programme, Khazanah Nasional had also release the Silver Book containing GLCs’ CSR Guidelines.
Other initiatives include the PM’s CSR Award aimed to honor the companies making a difference in the communities they served through their CSR programmes. The Prime Minister’s Corporate Social Responsibility Award 2009 will be awarded on March 10, 2010. Its aims is to recognise companies that have made a difference to the communities in which they operate through their Corporate Social Responsibility (CSR) programmes. There were 316 entries from 161 companies for the award. DiGi Telecommunications Sdn Bhd was named as the overall winner after being awarded the top prize in the best workplace practice and culture and heritage categories.

Other winners included British Petroleum in Malaysia (environment), Petronas (education), Intel Technology Sdn Bhd (community and social welfare) and Masterskill College of Nursing and Health (small company CSR).

Current initiatives include the establishment of Yayasan 1MDB (1 Malaysia Development Berhad) to manage the RM100 million CSR Fund by launching of efforts towards ensuring 1Malaysia value such as equal opportunity to education as well as quality of life.

Malaysian companies are also urged to set up childcare centre as part of CSR and will be entitled to a 10% tax reduction per annum on the cost of setting them up for a period of 10 years. Meanwhile, government agencies offering childcare centres at the workplace would be given a RM80,000 grant to create the facility.
Sample of Malaysian CSR for Pharmaceutical / Health Firms:

Given the nature of Pharmaniaga's core businesses and its focus on knowledge, it is no surprise that it has chosen a consumer awareness campaign as its flagship social contributions programme dubbed mesti ambil tahu! (MAT), which loosely translates into "Must find out!”. Officially launched by Health Minister Datuk Seri Dr Chua Soi Lek in April last year, MAT aims to persuade Malaysians to be more proactive in understanding health issues and the basics of healthcare. Pharmaniaga's other CSR activities also revolve around healthcare such as its support of Mercy Malaysia in carrying out disaster relief missions and National Diabetes Institute in the Fight Against Diabetes programme. Last year, the company donated surgical masks to traffic cops, postmen, firemen and students.

Top Glove Foundation (“TG Foundation”) was officially launched on Sunday, 14 June 2009 as a non-profitable organisation established solely for charitable purpose. The main objectives of TG Foundation are as follows:
• To provide funding for charitable purposes especially for the needy Community through donations, sponsorships and other means.
• To provide funding for educational purpose by giving out scholarships, advancement of education and other educational related funding.
• To carry out other activities in relation to environmental and community that are allow under the legislative provision of the Government of Malaysia.


A social business is a non-loss, non-dividend company designed to address a social objective. The profits are used to expand the company’s reach and improve the product/service. Social business is a cause-driven business. In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company, no personal gain is desired by the investors. The company must cover all costs and make profit, at the same time achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way. The impact of the business on people or environment, rather than the amount of profit made in a given period measures the success of social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goal/s (Wikipedia).

Based from the first website to proclaim as the global hub for social business, social enterprise and social investment: :

Right to Sight is designing a scalable eye care ‘product’ and provision system with the aim of eliminating avoidable blindness in developing countries. The company plans to partner with organisations and governments that can facilitate its work.
Dragonmobility designs, manufactures and supplies unique, customised, elevating powered-wheelchairs to provide independent mobility to its severely disabled customers. Dragonmobility's managing director originally designed the world's first powerchair (for use by those around 5 years of age) for his daughter, who used it to access mainstream education and work and who is now Dragonmobility's general manager. The company's experience allows it to provide a proven holistic approach to users who have all kinds of disabilities and who are aged from 11 months to more than 65 years old.

Elixir Foundations is a Community Interest Company that helps people suffering from drug addiction to become and remain abstinent.

CellAegis Devices is an early stage company developing a safe, non-invasive, and cost-effective medical device that reduces the magnitude of a heart attack by up to 40-50%. The external device automates the process of preconditioning which activates the body’s innate protective mechanisms to significantly reduce the amount of damage to the heart muscle during a heart attack. Validated in numerous clinical trials, preconditioning also reduces pain during angioplasty, results in few subsequent adverse events following cardiac surgery and is beneficial for high risk patients in non-cardiac patients

As such, most of the companies are in its infancy stage.

In Malaysia however, there is yet an entity able to claim itself as a social business entity.


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