Israeli Firms Are Making Strides in Taking Social Responsibility

In a rundown neighborhood of this city in the Negev, community workers are struggling to keep Ethiopian Jewish teenagers off the streets and out of trouble.

“Ethiopian youth in Israel are torn between the traditions of their parents and the expectations placed on them by Israeli society,” said Zohara Aiaso, director of Almaya-the Association for the Advancement of the Ethiopian Family and Child in Israel based in Beersheba’s Shaul Hamelech district.

But Almaya can barely hold 20 people in its two small rooms, even though an average of 200 people pass through its doors every week.

Things would be worse at the crowded center, however, if not for the Baran Group, a Negev-based engineering company that runs a number of employee volunteer programs with underprivileged communities throughout Israel.

“We have been working with them for five years,” Aiaso said. “It’s difficult for me to see Almaya without Baran. Without them we could only just manage, but not do all the things we do. For example, they help us deal with the municipality, easing the bureaucratic process. If I need something, I turn to Baran.”

Baran, which has annual revenues above $200 million, is designing a larger and better-equipped center for Almaya. In the meantime, it runs volunteer programs that include tutoring the teens in math, physics and business studies.

Baran’s director of social responsibility, Israel Scop, says he sees this kind of investment not as charity but as a way of empowering the community.

“In each project we take care of the preliminary design, technical requirements and contracting,” Scop told JTA. “But the community itself has to raise the money for the direct costs, which amount to 80 to 90 percent of the required funds.”

Scop insists that the $295,000 Baran invested in community projects last year sparked a 5 percent jump in the value of its stock.

The Baran Group isn’t the only company i! n Israel that sees the benefits of community investment. What’s long been known as corporate social responsibility, or CSR, in the United States and Europe is now making its way to the Middle East.

“The world is changing,” said Talia Aharoni, president of Maala, a Tel Aviv-based nonprofit organization that promotes social responsibility for businesses. “Companies that look to be sustainable and successful in the next quarter, decade and even further must take into account their surroundings and the issues that create their business environment, such as poverty, climate change, education, water and health issues.”

There is little question Israel desperately needs that kind of investment. Political and economic crises in recent years have led to alarming social gaps, placing civil-society groups and nongovernmental organizations under enormous strain. With insufficient government aid, the corporate sector has begun to address these gaps — to the benefit of both society and stockholders.

According to Aharoni, more than 75 percent of Israeli companies now have employee volunteer programs in place.

“Employee volunteering has become a major component in CSR,” she said. “Companies have realized that involving their employees or presenting them with possibilities of volunteering makes them better employees.”

Dr. Yoav Shechter, external affairs director of the Israeli subsidiary of the pharmaceuticals giant Merck Sharp & Dohme, agrees.

“It’s very easy to donate money,” Shechter said, “but we have so much more to give than money. We have people who are very talented and intelligent, and they have much to contribute.”

At Merck Sharp & Dohme, the employees themselves pressured the management to establish a community program, in which more than half of the workforce now participates. Drug representatives, through their visits to hospitals and clinics, now promote the services of Yad Sarah, a charity that provides medical equipment to the d! isabled and elderly.

The importance Israeli companies are beginning to place on CSR is clear. Eight years ago the concept of CSR in Israel was nonexistent. Now at least 80 full-time community relations professionals are employed by Israeli companies.

“At the beginning, we approached companies when they were so confused and fed up with check writing,” Aharoni said. “They invested a lot of money but got nothing back. They felt that they were wasting their efforts, and couldn’t explain why they were giving to this or that charity.”

Maala showed them a way to invest in the community while proposing a new business model for risk management.

Today, the organization has more than 100 corporate members representing over 170,000 employees and combined annual revenues of $25 billion. Its roster includes well-known names such as Elite-Strauss, Fishman Holdings, Bank Leumi and Cellcom.

Despite the benefits, however, the CSR transition isn’t always easy for Israeli companies.

Aharoni points out that this is still the Middle East — a region in constant political and military turmoil. Israeli executives are used to managing businesses in crisis mode, demanding fast decisions for the short term and cutting long processes, thereby counteracting the whole idea of CSR, which is a long-term strategy.

But Aharoni sees that Israelis are quick to adopt ideas that make sense. Perhaps that’s why in 2005, Globes newspaper — Israel’s leading business publication — launched an annual Corporate Responsibility Awards program in cooperation with Maala.

Yet not everyone views this new trend with enthusiasm.

Yonatan Leibowitz, spokesman for Greenpeace Mediterranean, says that while some Israeli companies like the telecom giant Comverse are making a genuine effort to protect the environment, many more are simply exploiting CSR by adopting environmental policies for public-relations purposes — or as he puts it, “greenwashing.”

Pinch! as Rosen stein, director of the Business Ethics Center of Jerusalem, says that despite CSR’s increasing popularity, there is still a long way to go in terms of corporate ethics. Unlike the United States, he points out, Israel has no legislative incentive for promoting the environment.

However, pressure from NGOs and multinationals appears to be pushing Israeli companies in this direction.

In an effort to bring Israeli firms in line with international CSR standards, Maala in 2005 launched its Index for Social Responsibility on the Tel Aviv Stock Exchange. This index rates Israel’s public and private companies with annual profits exceeding $100 million on criteria including business ethics, human rights, workplace environment and community investment.

The Baran Group can already see the results of its efforts on the ground in Beersheba.

“The new building [Baran is partially financing] will give more children the chance to participate in more activities,” Aiaso said. “My dream is to build a big center for Ethiopian children. When the kids come here they can dream, be somebody else.”