Social responsibility matters to ASEAN consumers

Other than the common perception might suggest, topics of corporate responsibility and sustainability are very much at the forefront of current business trends in the Southeast Asian markets. Already in 2014 a Nielsen consumer survey found that Asian-Pacific consumers care more, not less, about the social and environmental impact of brands they consider purchasing than their Western counterparts. This July a high-profile conference on corporate governance and responsibility organised by the National University of Singapore (NUS) and the ASEAN CSR Network, attended by more than 200 participants from governments, business, civil society, and trade unions, highlighted that corporate social responsibility (CSR) has become a topic of central interest to businesses, governments and consumers in the region.

Asian-Pacific consumers are the amongst the most socially conscious shoppers

The 2014 Nielsen report polled more than 30,000 consumers in 60 countries in order to assess which consumers care most about companies´ social responsibility initiatives, which social concerns matter to them and how their purchasing decision is influenced by the image they have of the companies’ sustainability efforts. Surprisingly, the survey found that Asian-Pacific consumers are far more socially conscious shoppers than consumers in any other region of the world.

For instance, 64% of online consumers in the Asia-Pacific were willing to pay more for products and services from companies they considered socially and environmentally responsible. In North America and Europe only 42% and 40% of consumers, respectively, were willing to do so. Among the Asian-Pacific consumers, Filipino consumers were found to put the greatest value on responsible business practices, with 79% of polled consumers factoring a company’s CSR record into their purchasing decision. Also, Filipinos were the most likely group of customers to check packaging for sustainability and environmental labels, with more than 80% of surveyed consumers indicating doing so, compared to a global average of only around 50%. Vietnam ranked second (73%), followed by Thailand (71%), Indonesia (65%), Malaysia (57%) and Singapore (48%).

Stuart Jamieson, Managing Director at Nielsen Philippines, explains the surprising result:  “We see the strongest propensity to buy socially and environmentally responsible brands from consumers in emerging markets such as the Philippines, Vietnam and Thailand where consumers face extreme levels of poverty and frequent encounters with natural and environmental disasters (…) Consumers in these markets are looking for brands which are committed to supporting local communities and improving the state of the environment. Brands should act fast to address this rising demand.” He is supported in his assessment by Vishal Bali, Nielsen’s Managing Director of consumer insights in Southeast Asia, North Asia and Pacific, stating “The value of social responsibility and giving back to society is an important part of the culture in many of these societies and this is having an influence on their purchasing decisions.”

Corporate sustainability reporting is obligatory in many ASEAN countries

In line with growing consumer awareness, standards of corporate governance have been improved by governments across the region. A growing number of Southeast Asian countries have made corporate sustainability reporting obligatory for stock exchange listed companies. According to a recent study by the National University of Singapore (NUS) and the ASEAN CSR Network, compliance with sustainability reporting requirements by government regulators in Indonesia, Malaysia and Thailand reaches almost 100%. As of now only 75% of Singaporean companies report on their sustainability initiatives, as mandatory CSR reporting on a ‘comply or explain’ basis will only enter into force from December 2017.

Major regional business players see the potential in CSR

The business sector, too, has taken note. “Businesses are universally recognized as the primary engine of the economic growth and development needed to alleviate poverty…,” Ms. Yanti Triwadiantini, chairwoman of the ASEAN CSR Network pointed out at the NUS Conference, “…and as ASEAN continues on the path of regional economic integration, businesses are increasingly expected to contribute not only to wealth generation, but also to solving some of the region’s pressing challenges.”

Maybe more important were the practical examples brought forth at the conference. Major regional players such as Sime Darby or Thailand´s CP group exemplified their move away from viewing CSR as a sub-function of communications and PR, creating a separate senior managerial position for the task. “In Sime Darby, we acknowledge the fact that we operate in a world that’s different, where we have a wider range of stakeholders,” Rashyid Redza Anwarudin, vice president and head of sustainability reporting/social performance of the Malaysia-based Sime Darby Berhad, emphasized. Investors show a growing interest in Sime Darby’s environmental impact and policy, he added. Essentially, CSR is a way to “minimize risk, and an opportunity to differentiate ourselves from our competitors”.

However, while CSR seems to be gaining prominence, there is still significant progress to be made. While the NUS-ASEAN CSR Network study found compliance with local CSR requirement to be high, the quality of assessed sustainability reports proofed to be relatively low across the board. As an example, while 96% or companies reported their commitment to comply with anti-corruption laws, only 18% actually specified ways to ensure their compliance.

BDG Insight

Nevertheless, it is evident that Southeast Asian consumers and authorities are increasingly holding companies responsible for their social and environmental impacts. In the words of Amy Fenton, global leader of public development and sustainability at Nielsen, “It’s no longer a question if consumers care about social impact. Consumers do care and show they do through their actions. Now the focus is on determining how your brand can effectively create shared value by marrying the appropriate social cause and consumer segments.” The uncaring consumer of the developing markets is a dream, one that European investors should wake up from sooner rather than later.

Sources: 1, 2