Pakistan is in the midst of a severe economic crisis; We are almost on the verge of bankruptcy. The financial downturn has started to make inroads in the Pakistani corporate sector which, till recent past, was quite immune to the ‘crunch’ phenomenon.

As I have discussed many times on this blog that the global economic crisis will seep through the thin membrane that separates the annual financial statements and socially responsible investments. But, we don’t see any significant changes in global CSR spending despite this gloom. Experts have varied opinions on this issue but most of them are agreed that companies will continue with their social investments. They opine that corporate entities have to take care of environmental and social aspects of their businesss if they want to ‘remain in the business’. The equation is simple; consumers in developed countries are now so much educated that they might stop endorsing a company if it’s not socially responsible.

Coming down to Pakistan, I am hard pressed to say that Pakistani companies are not thinking on the same lines. The first thing that comes to the mind of a Pakistani entrepreneur when the profits are going down is to curb spending on social causes, if any. Although Pakistani companies mostly don’t spend even 1% of their pretax earnings on social causes but still many have started to spend some amount, in recent years.

Now if the conditons take a turn for the worse and more and more Pakistani companies see their profits change to losses or a win-win situation; the social spending will come to a halt. While one can’t force companies to spend on society if their coffers are not-so-full but they have to be considerate enough to give back to the society.

Pakistanis, like citizens of other developing countries, don’t have any idea of socially responsible business yet. They are so naive that anyone can coax them into buying their products as they flaunt their spending on the community. Under these conditions, a common man would hardly care if a company cuts its CSR spending or not. However, the reduced spending will impact the society oveall especially the fields of education and health where these companeis do some interventions.

So what is a workable solution? It’s actually very simple. The first thing is to create awareness among the masses so that they can hold these companies accountable. As for the corporate sector, they can do away with the lavish working environment and sky-high executive compensations. That’s the global trend these days and you have to follow it to save money. Axing the social spending will do no good.

Share This