Business Magazine

Corporate Citizenship Beyond Philanthropy

Posted on the 14 July 2011 by Center For International Private Enterprise @CIPEglobal

Corporate citizenship beyond philanthropy
Participants in the DFI corporate citizenship workshop [Photo: ADFIAP]

Development banks, or development financing institutions (DFIs), are set up by governments with the goal of providing credit to higher risk investment in the areas where commercial loans are otherwise hard to obtain such as long-term infrastructure projects or loans to SMEs. Due to their unique mandate, DFIs are supposed to operate according to the dual bottom line: achieving both financial sustainability and developmental impact. It often is a difficult balancing act that requires good governance structures and corporate citizenship principles to guide sound decision-making on lending.

The Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), currently consisting of 127 member-institutions in 44 countries, has been the focal the focal point of all development banks and other institutions engaged in the financing of development in the Asia-Pacific region since 1876. Over the past several years CIPE has worked with ADFIAP on implementing corporate governance programs among its members. In a recent workshop, CIPE and ADFIAP expanded their cooperation to strengthen good corporate citizenship practices in DFIs in Asia-Pacific region and beyond (ADFIAP now serves as the secretariat of the World Federation of DFIs).

Corporate citizenship is often narrowly understood as philanthropy. The CIPE-ADFIAP international workshop on institutionalizing responsible corporate citizenship in financial institutions, which took place July 4-8 in Manila, Philippines and brought together nearly 30 DFI representatives from 10 countries, strove to re-define this limited perception. ADFIAP’s responsible corporate citizenship framework outlines four key elements of responsible citizenship:

  • Governance and ethics: fairness, accountability and transparency, corporate culture and values;
  • People: equal opportunity and access, occupational health and safety;
  • Environment: environmental management system and due diligence, green finance;
  • Contribution to development: enterprise development, community investment.

During the workshop the participants – from Brunei through Tanzania to Vietnam – discussed their understanding of corporate citizenship, exchanged best practices and together made a business case for DFIs to be responsible as a necessary extension of their core mission.  

DFIs in countries around the world have a great potential to become trailblazers of the banking industry’s responsible citizenship, showing that a financial institution can do good while doing well. DFIs participating at the workshops shared examples of their corporate citizenship programs ranging from education and environmental protection efforts to community development. By focusing on how to use their core competencies to further benefit the communities they operate in and serve, DFIs can provide guidance and inspiration for other banks. Equally important is the multiplier effect that their responsible lending can have on borrowers and their countries’ institutional environment as a whole. As one of the participants put it, DFI focus on good corporate citizenship is much needed because it can put pressure on civil society and governments to demand better governance.  

As next steps, ADFIAP will conduct similar country workshops this summer and fall in India, Malaysia, Thailand, and Vietnam to further explore practical approaches to corporate citizenship in DFIs and place them within local contexts. Stay tuned for updates!

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