9B19M053

SINGTEL: PHILANTHROPIC OR STRATEGIC CORPORATE SOCIAL RESPONSIBILITY?

Weina Zhang, Ruth S. K. Tan, Shirley Jing Min Lim, Joan Jia Xin Loke, Wei Lim, and Su Yuan Liow wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2019, National University of Singapore and Ivey School of Business Foundation Version: 2019-06-18

It was early 2014. Andrew Buay, the vice-president of Singapore Telecommunications Limited (SingTel)’s Group Corporate Social Responsibility (CSR), had just scrutinized the proposal for the company’s CSR transformation. Creating shared value for both society and the company was a delicate balancing act for any company. Buay wanted to reposition SingTel’s CSR approach to create greater social impact while demonstrating greater benefit to the company beyond just branding and reputation. He was convinced that this repositioning would achieve that objective. However, he was mindful that the proposal would require greater investment on the part of the company. It would need to leverage the company’s capabilities and partnerships and address the possibility of dropping its current beneficiaries. His team would be briefing the board of directors and senior management on the proposed changes to gain their buy-in. BACKGROUND OF SINGTEL Tracing its roots back to 1879, SingTel was Singapore’s first telecommunications provider and its largest fixed and mobile network operator. Throughout its long history, the company had achieved great successes in transforming the telecommunication industry. It played a pivotal role in the development of Singapore by serving 4.1 million mobile customers locally and 638 million mobile subscribers in 22 countries through its regional subsidiaries, namely Optus (Australia) and Airtel (India). In line with its mission of “Breaking Barriers, Building Bonds,” SingTel sought to improve communication accessibility while bringing value to its stakeholders. This strategy placed much emphasis on CSR, which was not always a priority for most companies. PAST CSR EFFORTS Since 1992, SingTel had collaborated with Community Chest1 to raise funds and engage its staff as volunteers in support of social causes. As a corporate SHARE2 company, SingTel had also matched every dollar of

1 Community Chest (Singapore) was a non-profit organization, part of the National Council of Social Service (NCSS) to support people by engaging communities in fundraising and volunteering programs. 2 SHARE stood for Social Help and Assistance Raised by Employees.

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employees’ contributions to SHARE. However, the CSR approach the company adopted was mainly philanthropic in nature, which was a widespread practice among many local companies. The term “corporate philanthropy” referred to companies’ altruistic contributions of resources to society, and included cash donations and in-kind contributions. A cash donation was usually the first step in a company’s CSR efforts, but it involved lower engagement between the business and the charity organizations, and the volunteer efforts were mainly ad hoc (i.e., for that particular purpose only) and unskilled. According to the perception of many charity organizations, raising sufficient funds to support their programs was a major challenge. Cash donations served this need and gave the charities more control and flexibility on the use of funds. In situations of severe crisis such as natural disasters, such corporate philanthropy acts were especially valued. In 2002, SingTel implemented the SingTel Touching Lives Fund (STLF), its corporate philanthropy program. STLF focused on helping disadvantaged children and young people who had special needs. From its inception to 2013, the company, through STLF, had donated more than S$24 million3 to special needs education, with further donations raised from its employees, business partners, associates, customers, and the public. SingTel also encouraged staff volunteerism on an individual or team basis, and actively worked with STFL beneficiaries and other voluntary welfare organizations (VWOs) in the community. SingTel advocated the concept of VolunTeaming, wherein employees were encouraged to volunteer as a team to enhance teambuilding through CSR activities. In fiscal year 2013, more than 1,900 staff volunteers contributed to 5,500 VolunTeaming hours through 37 activities with 15 VWOs, representing a 54 per cent increase from 2012. Although SingTel had been contributing mostly in a philanthropic manner with a focus on funding, it was also aware of the drawbacks of mere cash funding. Cash donations, albeit easier to administer, often lacked a clear decision framework, and funding allocations were subjective. Sometimes, ambiguity surrounded the chosen charitable projects, and donors lacked an understanding of the manner in which their donations were used. Also, cash donations often resulted in lower staff engagement and advocacy. When faced with budget constraints, management might cut costs by restricting cash donations. As a result, charity organizations that lacked strong business interests might be abandoned during bad economic times. If these contributions were in the form of partnerships and volunteerisms, cash flow problems would have less adverse impact on the continuity of the CSR efforts. Hence, besides cash donations, SingTel had also experimented with using its expertise in areas of information and communication technology to help improve the lives of vulnerable communities. For example, SingTel supported a social enterprise and sponsored data SIM (subscriber information module) cards on a technical trial to aid autistic children. Controlled by a smartphone application (app), caregivers were able to monitor the vital signs of the child with the help of a vest worn by the child. As part of the global movement toward creating more CSR impacts, SingTel joined the United Nations Global Compact (UNGC) in 2007 and had been an active member since then. The UNGC was a global governance agency established in 2000 that was aimed at encouraging businesses to adopt sustainable and socially responsible policies. The UNGC had helped in placing an agenda for CSR, facilitating and promoting dialogue, and most importantly, establishing global ethical standards based on common consensus. In 2013, the UNGC had more than 12,000 corporate participants and stakeholders from more than 145 countries. Businesses participating under UNGC initiatives had aligned their CSR strategies and operations with the UNGC’s 10 universally accepted principles in the areas of human rights, labour, environment, and anti-corruption.4 By joining the UNGC, SingTel could access the United Nation’s knowledge and experience on sustainability and development issues. It could also tap into the large network

3 S$ = SGD = Singapore dollar; S$1 = US$0.7922 on December 31, 2013; all currency amounts are in S$ unless otherwise indicated. 4 “Who We Are,” accessed June 18, 2019, www.unglobalcompact.org/.

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of corporations to learn the best practices and solutions for common challenges in developing CSR strategies. SingTel produced yearly sustainability reports, which provided an overview of its sustainability efforts while supporting the UNGC’s 10 principles. SingTel’s corporate CSR efforts had been widely recognized. In 2012, SingTel topped the Governance and Transparency Index in Singapore for the third consecutive year. In 2011 and 2012, the Ethisphere Institute recognized SingTel as one of the “World’s Most Ethical Companies.” A survey found that SingTel had outperformed other companies on a local, sector, and global scale, by attaining a CSR engagement score of 83 per cent, which was five per cent above Singapore’s national norm, nine per cent above the norm for the global telecommunications sector, and one per cent above the norm for global high-performance companies. In 2013, SingTel was one of the two CSR practitioners invited to share its experience at the Global Compact Network Singapore Summit. Compared with other Singapore companies, SingTel’s CSR score was three per cent above the Singapore national average, one per cent below the average for global high-performance companies, and 10 per cent above the average for global transitional companies. Using the environmental, social, and governance (ESG) ratings from Morgan Stanley Capital International Inc. (MSCI), SingTel was found to rank higher in 2012 than the average Singapore company in a similar telecommunication industry in all aspects (see Exhibit 1). However, SingTel underperformed compared to global companies, specifically in the social aspect. BUAY AND HIS TEAM PROPOSE A NEW CSR APPRPACH

Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime. Source unknown

When you just give money, SingTel’s $1 is the same as any other company’s $1. There is no

differentiation. So charities from the non-profit sector basically engage you on the basis of your company’s donation with very little involvement and engagement thereafter.

Andrew Buay Buay believed that when SingTel made cash donations, its CSR efforts were unable to be differentiated from those of other companies, as cash donations did not add value based on SingTel’s core competencies or its stakeholders’ needs. In Buay’s opinion, the SingTel Group had the opportunity to adopt a more systematic, strategic approach to implement CSR initiatives with broader involvement from its internal capabilities and skills and from its corporate partnerships, to focus beyond just the social impact. Buay had graduated with a bachelor of arts degree from the National University of Singapore in 1990, majoring in geography, sociology, and political science. Joining SingTel as his first job, he had the opportunity to work across a diverse range of geographies and roles (including networks, product management, and corporate sales roles) before he assumed the CSR role in 2013. Under the company’s sponsorship, he obtained a master’s degree from Stanford University in 1996. Subsequently he headed the company’s corporate development and started up SingTel Ventures, a start-up technology investment fund. In the 2000s, he was chief executive officer of Singnet and the Multimedia group. He then went on to be the chief operating officer of Globe Telecom, SingTel’s mobile business in the Philippines. After that he moved to SingTel’s Australian subsidiary, SingTel Optus Pty Limited as the managing director (MD) for various Australian business units before becoming chief information officer. In early 2014, Buay had just assumed a newly created role as the vice-president of SingTel Group’s CSR, and was also a talent coach at Optus, which was Australia’s second- largest telecommunications company a wholly owned subsidiary of SingTel since 2001. These diverse experiences had shaped Buay’s perception of CSR, his leadership approach, and his response toward changes and opportunities in the external environment. He believed that there was an opportunity

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to engage CSR more strategically based on the company’s capabilities, which included the skills of the people, and SingTel’s products, technology, and partnerships. SingTel Group could effectively create more shared value and integrated solutions to tackle societal challenges. In the early 2010s, some companies in the United States and Europe had taken a more strategic approach toward CSR, but such an approach was nascent in Singapore and most parts of Asia. Buay noted:

When I took over the portfolio in 2013, CSR was mainly run as a stand-alone corporate function where we funded charitable causes and organized staff volunteering programs. Coming from within the business, I felt we could do a lot more and be more strategic in our approach.

VIEWS FROM SENIOR MANAGEMENT

We want to make a lasting positive impact on our stakeholders, leveraging our own resources and people and working closely with our strategic partners. At the same time, we acknowledge that our

industry can create unintended consequences. The Group’s sustainability strategy seeks to create shared value and mitigate the risks to the company, our stakeholders and the environment.

SingTel on its sustainability approach The senior management of SingTel believed in the advantages of a sustained and long-run initiative, the merits of co-operative effort, and the virtues of adequate discipline. SingTel’s senior leadership believed that any strategic initiatives should only be adopted only after extensive analysis and exploration. They adopted a company-wide disciplined approach in all its business investments, whereby perspectives and investments were managed with a long-term view, and risks were mitigated. This approach enabled the proper curation of information, the building of capacity, and the strengthening of partnerships that allowed for both lasting impact and the management of risk. The dot-com boom in the late 1990s and the subsequent bust in early 2000 represented a classic example of many companies joining a short-term trend. With its more measured and disciplined approach, SingTel had managed to avoid the overvaluations and massive losses sustained by many companies. In the same way, the senior management applied a long-term strategic lens to its CSR plans. The SingTel leadership also wanted to involve the government and other like-minded stakeholders or even pursue co-funding for initiatives that addressed major societal issues. These initial co-funding arrangements would help to bring attention to these issues, while lowering the risk until such time when the program was able to demonstrate its success and attract other corporate partners. The increasing momentum would ideally lead to a beneficial cumulative effect for the initiative to be self-sustainable in the long run. This perspective served as a motivating factor for SingTel’s top management to agree to multi-stakeholder collaboration, initially with the government, then involving other like-minded corporate partners. CONTENTION ISSUES FOR THE PROPOSAL Below are some specific considerations that were discussed in the past meetings between Buay’s team and SingTel’s senior management. Buay’s team needed to prepare the proposal to address the concerns raised. A

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Buy-In from Internal and External Stakeholders The first and foremost challenge for a strategic CSR approach was integrating the perspectives of both internal and external stakeholders.5 For the external stakeholders, this process involved looking into the needs, concerns, and expectations of the beneficiary. The internal response referred to how SingTel sought to address these needs, concerns, and expectations to ensure that the CSR efforts were well aligned with its core competencies. How would strategic CSR allow SingTel employees to better understand its commitment to sustainable business practices? Given that employees were more likely to work in a company that had a good reputation,6 the right CSR initiatives might have the capability to build trust and goodwill between SingTel and its employees. SingTel introduced VolunTeaming in 2011 to encourage employees to volunteer in CSR initiatives as a department as part of team building. In 2013 alone, more than 1,900 staff volunteers contributed about 11,000 hours to community and environmental projects, which included 5,500 hours from VolunTeaming by various departments through 37 activities with 15 VWOs. The number of VolunTeaming activities in 2013 had increased by 54 per cent from the previous year. Besides the benefit of retaining the talents within, strategic CSR that properly distilled the values of the companies and their stakeholders would project a better image to consumers. Consumers placed importance on the ethicality of the companies from which they purchased their products. The willingness of consumers to be associated with a company depended largely on their perception of the company and its reputation. This perception, in turn, may have been influenced by the firm’s CSR practices.7 Nowadays, consumers placed great importance on sustainability efforts and expected businesses to be responsible in their operations and to do “good” with their influence. Failure to do so might bring about negative impact on business performance, as consumers might boycott them.8 Understanding the needs to engage all stakeholders, SingTel commenced a structured stakeholder engagement exercise in 2012. It planned to do this for three years to review business practices and assess the voice on the ground about sustainability strategy issues and programs. SingTel also conducted an annual employee engagement survey. According to a survey by Cone Communication Green Gap Trend Tracker in 2013, consumers indicated that they would be willing to pay a 20 per cent premium for sustainable products.9 In 2012, SingTel conducted a stakeholder engagement exercise on sustainability issues to assess stakeholders’ opinions on SingTel’s CSR strategies, issues, and programs. From the customer survey panel of 1,500 selected customers, 21 per cent of the respondents “always” took the company’s sustainability practices into account when purchasing from a telecommunication service provider, while 48 per cent “sometimes” took such practices into account. Moving beyond individual customers, a positive business reputation could create greater opportunities for the company to collaborate with its corporate clients. Doing so would allow it to leverage each other’s expertise to create far-reaching and sustainable impact on communities, while meeting its own business needs.10 5 Heike Bruch and Frank Walter, "The Keys to Rethinking Corporate Philanthropy," MIT Sloan Management Review 47, no.1 (2005): 49–55. Available from Ivey Publishing, product no. SMR47111. 6 Rob Gross, Corporate Social Responsibility and Employee Engagement: Making the Connection, white paper commissioned by Bill Holland, president, Mandrake, accessed December 27, 2017, www.mandrake.ca/bill/images/corporate_responsibility_white_paper.pdf. 7 Jacquelyn Smith, “The Companies with the Best CSR Reputations,” Forbes, October 2, 2013, accessed December 5, 2017, www.forbes.com/sites/jacquelynsmith/2013/10/02/the-companies-with-the-best-csr-reputations-2/#6c7de84c34ff. 8 Lois A. Mohr, Deborah J. Webb, and Katherine E. Harris, "Do Consumers Expect Companies to Be Socially Responsible? The Impact of Corporate Social Responsibility on Buying Behavior," Journal of Consumer Affairs 35, no. 1 (2005): 45–72. 9 Archie B. Carroll, Business and Society: Ethics, Sustainability, and Stakeholder Management (Stamford, CT: Cengage Learning, 2013): 386. 10 Dana O’Donavan, “Why Bother with Next-Generation Collaboration? Two Words: Differential Impact,” Living Cities, June 22, 2012, www.livingcities.org/blog/116-why-bother-with-next-generation-collaboration-two-words-differential-impact.

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Short-Term versus Long-Term Value Creation A strategic CSR approach should align well with the company’s corporate and social mission. Only CSR efforts that could result in both true value for the beneficiaries and the company’s line of work could achieve sustainability in the long term, as initiatives that were not win-win tended to underperform and end up being sidelined or easily threatened in difficult economic situations.11 Companies may view shareholders as their only major external stakeholder. This perspective could pose a challenge for any CSR program, as creating shareholder value was a top priority for any profit-driven business, which made it more difficult for the company to collaborate with its business partners and/or stakeholders. A well-thought-out CSR initiative that spreads across a longer time frame would require many resources and hours of dedication. These efforts might not seem worthwhile to profit-driven companies; however, such CSR causes could result in positive stock returns beyond the expectations of investors. This outcome was possible because the excess resources that were devoted to CSR or withheld for CSR purposes signalled to investors the likelihood of positive future financial performance, as its executives might be acting on undisclosed information with regard to potential earnings and cash flows. The economic benefits hence might be worth the trade-off for a larger budget stemming from a more tailored and structured CSR strategy that serves a greater social good. Choice of Partnership Buay and his team believed that collaboration with all stakeholders such as its customers, employees, suppliers, partners, government agencies, and non-profit organizations was essential in aligning SingTel’s CSR efforts with the causes that stakeholders were concerned with. In this way, the company could leverage complementary skills, thereby amplifying the impact of the combined efforts. Buay was convinced that a minimum collaboration of three years was necessary to enable the program to mature and to reach a self- sustaining level. From his own experience in establishing partnerships and collaborations in the past, Buay felt that the process was not any different in term of CSR, where collaboration might be even more critical, as no single organization possessed all the skills and resources needed to solve broader societal challenges. Similarly, McKinsey & Company believed that in CSR, substantial shared value could be created only through smart partnering.12 One positive movement in this direction was that in 2013, SingTel introduced a supplier code of conduct to enhance advocacy and engagement in its supply chain on matters relating to CSR. SingTel’s senior management, however, was concerned about having to drop existing philanthropic work, which would not be aligned with the proposed strategic CSR. Buay wondered whether the new approach could be implemented by building on current partnerships with charities and adding value to them in a different way. In late 2013, Buay met with the MD of the Community Chest and the National Council of Social Services (NCSS). He had heard about the growing concerns of the government regarding the lack of progress and support from corporations for employment among persons with disabilities (PWDs) despite a growing base of skilled PWDs. He saw a strategic opportunity to develop a partnership approach to address the issue. Over the next few months in early 2014, Buay and representatives from Community Chest, the NCSS, and SG Enable, a national government agency for enabling PWDs, worked furiously to put together a proposal to build a pioneering information technology (IT) and contact training centre for PWDs, an assistive

11 Bruch and Walter, op. cit. 12 Tracey Keys, Thomas W. Malnight, and Kees van der Graaf, Making the Most of Corporate Social Responsibility, McKinsey & Company, December 2009, accessed December 5, 2017, www.mckinsey.com/global-themes/leadership/making-the-most-of- corporate-social-responsibility.

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