Bridging the ‘Gulf’ Towards Scaled Impact: How to Unlock CSR Potential
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Bridging the ‘Gulf’ Towards Scaled Impact: How to Unlock CSR Potential
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By Saniya Fatima, Lina Hourani and Devaangi Sharma
Sept, 2024
The Gulf has long been recognized as one of the largest philanthropic givers globally, with a rich tradition of generosity deeply embedded in the region's cultural values of altruism and religious philanthropy. Despite these commendable efforts, corporate social responsibility (CSR) in the region often fails to reach its full potential. A key reason is the absence of strategic CSR frameworks driven by firm-level values and motivations. This results in efforts that are well-intentioned but narrow in scope, often lacking the deliberate, long-term planning needed to create lasting and scaled impact.
CSR and Regulatory Compliance: A Missed Opportunity for Strategy
CSR regulation varies across Gulf countries. In the UAE, CSR reporting is mandatory for publicly traded companies under the Global Reporting Initiative (GRI), while Saudi Arabia offers guidance on CSR practices. In the UAE, this mandate drives CSR, particularly in regulated industries like manufacturing, oil and gas, and aviation. Many of these efforts, however, are confined to government-backed charitable initiatives or environmental efforts to offset carbon footprints. These strategies are often reactive, driven more by compliance than by a genuine desire to leverage CSR as a tool for social and commercial growth.
While regulatory requirements push companies to engage in CSR, they rarely encourage businesses to explore the broader societal impact of their initiatives. For small and medium-sized enterprises (SMEs), CSR activities are often ad hoc, driven by the religious and ethical values of top management. Such efforts, while altruistic, are limited both in scale and scope and frequently miss the opportunity to integrate CSR into the company’s core business strategy, thereby limiting CSR strategy’s transformational potential.
Careem: A Case Study in Strategic CSR
A shining example of how CSR can be aligned with corporate strategy is Careem, the Dubai-based ride-hailing app that was acquired by Uber in 2020 for $3.1 billion. Careem’s CSR efforts were not isolated from its commercial objectives; rather, they were strategically intertwined with its growth initiatives. By taking a multi-stakeholder approach, Careem targeted its gig workers, customers, communities, and governments, while enhancing its core services in ride-hailing, logistics, and digital payments.
Careem’s partnerships with regional and international players such as Du, Mastercard, and ADCB to support its gig workers demonstrate how CSR can create both social and commercial value. By launching a loyalty program that allowed customers to donate points to regional charities, Careem not only contributed to community development but also improved customer satisfaction and loyalty. Moreover, the company’s expansion into challenging markets like Palestine and Lebanon, driven by a commitment to social impact, helped it establish a foothold in underserved areas while fostering community development.
Careem’s model shows that CSR can go beyond compliance and philanthropy to become a driver of business success. It’s a blueprint for how companies in the Middle East, especially SMEs, can adopt strategic CSR approaches that create value for both the business and society.
Barriers to Strategic CSR in the Region
Despite these promising examples, many firms in the region remain skeptical about engaging with grassroots initiatives or lesser-known social impact organizations. This reluctance is driven by stringent financial regulations and concerns about Money Laundering and Terrorism Financing (MLTF). As a result, many firms limit their CSR activities to safer, government-approved initiatives, which restricts innovation in CSR.
Many businesses fail to recognize the potential of CSR to create meaningful social impact. Instead, they often follow trends, adopting CSR strategies that mimic those of competitors rather than crafting approaches aligned with their own values and business goals.
This trend is reflected in data from CircleMENA, which reveals that only 6.82% of the region’s philanthropic contributions come from corporate foundations, while corporate giving accounts for a mere 1.52%. These figures highlight the underutilization of CSR as a strategic tool for social impact and business growth in the Middle East.
Road Ahead for Middle Eastern CSR: Unlocking the Region's CSR Potential
To fully unlock CSR's potential, companies in the Middle East must shift their view of corporate philanthropy from an obligation or ad-hoc giving to a strategic asset that drives both social impact and business success. By identifying their unique motivations and aligning their CSR initiatives with their core commercial offerings, as seen with Careem, companies can go beyond government-driven initiatives to create value for customers, employees, and the community. Employee engagement, particularly in advanced CSR environments like the UAE, is an untapped resource that can boost both community capacity and employee satisfaction.
Another critical area for improvement is impact measurement and reporting. While many firms engage in CSR activities, they often fail to measure or communicate the results effectively. By implementing data-driven frameworks, businesses can align CSR with their broader marketing and business goals, boosting both reputation and customer loyalty.
With these strategies, the Middle East is poised to transform its CSR practices from traditional philanthropy to frameworks that create long-term, multi-stakeholder value. As the region develops, the goal is for more firms to recognize CSR’s potential not just as a tool for charity or compliance, but as a strategic pathway to growth and innovation.
Saniya is a Senior Analyst at Botho Emerging Markets Group, Lina Hourani is an independent CSR and Youth Development Consultant and Devaangi Sharma is a Stakeholder Management Expert with past experience in CSR, Customer Experience and Social Impact in the region.