Corporate Social Responsibility in Armenia:
Business

Corporate Social Responsibility in Armenia:

How Did We Get Here and Where Are We Going?

Around the world, the role and power of the private sector is increasing in both global, as well as local markets. Businesses are increasingly being seen as important players in social and economic development on every level. Armenia is no exception.

Text: Nazareth Seferian, Sofia Manukian / CSR Armenia NGO / Photos: Pan Photo, Sputnik/ Asatur Yesayants

 

The concept of Corporate Social Responsibility (CSR) can be defined as a business function that allows the company to harmonize its activities with the community and environment in which it operates with the aim of mutual benefit and sustainability. In Armenian business circles, usage of the term arguably began around 2005-2006, when VivaCell (now VivaCell-MTS) launched mobile services in the country and began a broad philanthropy and community investment program, providing the phrase “corporate social responsibility” with extensive media coverage.
But to what extent have businesses in Armenia embraced CSR and embedded it in their everyday activities over the past 10 years?
In 2009, the profile on Armenia in The World Guide to CSR, a publication compiled by CSR International, stated that CSR was still “poorly understood” in the country, with little “visible activity.” It found that most of the projects being conducted in the name of CSR were simply corporate philanthropy initiatives, and that public relations was the motivation driving them. It is worth nothing that, even now, the phrase mainly used in the country for this topic remains “corporate social responsibility” while many other business communities have evolved to talking about “sustainability.” The 2008-2012 program of the Government of Armenia even explicitly stated “promoting corporate social responsibility” as one of its objectives. Nevertheless, there were no state initiatives to spur the business sector into action in this area.
However, the years that followed did show some improvement, specifically led by the telecommunications sector. VivaCell-MTS continued to be the most visible player, with Orange Armenia and Beeline both implementing innovative projects and developing useful partnerships. Orange Armenia conducted a CSR Stakeholder Dialogue, the first of its kind in the country, and introduced eco-labeling and bottom-of-the-pyramid solutions that made the internet more accessible to Armenian villagers. Beeline developed partnerships to encourage the use of internet technology in the classroom. All companies worked to promote the concept of child protection and internet safety, although they worked in silos, possibly missing out on any synergies that could have come from collaboration towards what was essentially a common interest. In 2013, VivaCell-MTS announced that it was using the ISO 26000 guideline for social responsibility, a big milestone for the adoption of sustainable business practices in Armenia.
The information technology (IT) sector has also had some success stories in the area of CSR. Synopsys has developed a curriculum with the Armenian State Engineering University that fills a gap in the technology education sector in the country, while simultaneously solving a labor pool problem for the company. The IT sector has been demonstrating promising growth in the country for a number of years now, and it seems only natural that expectations of these companies will grow when it comes to being better corporate citizens as well.
In the banking and finance sector, HSBC has had a modest but stable community program for several years, focusing on the education of underprivileged children. ACBA Credit Agricole has a sound set of internal policies to reduce energy and paper use. Now, other players, such as Ameria Bank and Converse Bank, are becoming more active in this area, shifting their focus from philanthropic initiatives to a more strategic engagement in sustainable business.
Nonetheless, the period from 2010 to 2016 still remains a mixed bag when it comes to responsible business in Armenia. The mining sector was often at the center of attention with some mining companies engaging in environmental destruction or neglect, leaving environmental activists frustrated at their efforts to maintain environmental justice for themselves and the communities, while the mines were hailed as big employers for the village inhabitants. In 2014, the Government and the World Bank hosted a conference on Responsible Mining, the first of its kind in a country that has hundreds of potential and active mines. While the international donor community hailed the event as a big step forward, activists denounced it as a diversion tactic and used the event to stage a protest. Shortly afterwards, the American University of Armenia established the Center for Responsible Mining, potentially taking on the role of a neutral participant with valuable expertise. Among other activities, the Center is taking samples of soil and drinking water from mining communities to assess the impact of the companies and has already voiced concerns regarding the level of arsenic in the soil in some areas.

In the retail sector, some supermarkets caused surprise in July 2016 when they introduced a 10-dram payment per plastic bag provided to shoppers. Such payments are standard practice in many Western countries and have led to a decline in plastic bag usage when properly combined with public awareness initiatives and the provision of viable alternatives. However, this move backfired in Armenia and many shoppers were outraged at what they saw as an attempt for big supermarkets to “make customers cover their costs.” There was no visible communication by any of the supermarkets that reducing the use of plastic bags would benefit Armenia’s environment, and the motives of this change in policy still remain unclear.
It is a common mis-perception that CSR is only relevant to large businesses. But in fact, small and medium enterprises (SMEs) around the world have a number of exciting CSR programs, and they form an important part of the picture. Armenia has a few promising companies in this area, such as the Green Bean, a chain of coffee shops that has had sustainability at the heart of its design, waste management practices, human resource policies, and so on. Another success story in this area is Nairian Cosmetics, featuring all-natural components in its products and a first-of-its-kind recycling program in the country for its cream jars.
While companies have been making headway in CSR individually in Armenia, the history of cross-sector collaboration on sustainability issues in the country does not (yet) make for good reading. The United Nations launched its Global Compact initiative in the country around 2008-2009, and featured more than 35 members at one point. A local Steering Committee was created, essentially handing over control of the group from the UN to the representatives of the private sector. But the effort failed. A new effort was needed to establish a community of like-minded businesses, working together towards CSR. Aimed at boosting companies’ engagement in adopting and implementing CSR policies, an NGO called CSR Armenia was launched in 2016. One of its first activities has been co-founding the Responsible Business Network (RBN) with the American Chamber of Commerce in Armenia (AmCham). AmCham is a powerful business organization in the country and a platform bringing over 100 companies together. AmCham has already focused the attention of its membership on the environmental challenges facing Armenia through its business magazine in 2013, with yet another issue on CSR and Corporate Governance planned for 2017. With the Responsible Business Network, AmCham and CSR Armenia NGO seek to promote corporate citizenship and find common ground through shared commitments in the areas of stakeholder engagement, environmental stewardship, responsible procurement, education, and more. The Network is intended to grow and include any company in the country that displays an interest in CSR, while having prior experience in this area is not required to join the RBN.
The concept of responsible business has seen very slow progress so far, but there is hope that the private sector will understand its role in Armenia’s progress. Inevitably, there will be considerable positive impact on the businesses themselves resulting from the use of more sustainable practices, and this “win-win” situation will benefit the whole country and herald a new period in Armenia’s economic maturity.