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After 10 years of advancements in the field of corporate social responsibility, Israel's business community is about to face its toughest test yet in the wake of the current financial meltdown.
The adoption of CSR over the past 10 years has completely changed the way Israeli companies do business. With a delayed realization that CSR presents an advanced business culture, Israeli business leaders have navigated their companies from a basic approach of community investment and corporate philanthropy to the fully integrated approach of corporate social responsibility - addressing such issues as improved environmental strategies, a diversified workplace, strategic community empowerment and voluntary corporate governance and accountability.
The transition has not been an easy one. Not long ago, regional political and security realities meant executives were used to managing businesses in crisis-mode and making short-term decisions that contradicted the very essence of what CSR is - a long-term strategic approach to risk management.
The annual update of the Maala - Business for Social Responsibility in Israel - CSR Index on the Tel Aviv Stock Exchange three months ago proved just how embedded CSR has become in Israel's corporate community.
The Index ranks 60 participating companies, representing over 41 percent of Israel's business product, with a turnover of NIS 200 billion and almost 135,000 employees. Some of those leading in the ranking include Teva, Bank Hapoalim, Cellcom, Partner Communications, Bank Leumi and Strauss Group.
Voluntarily submitting themselves to public scrutiny, companies must report on almost every aspect of their impact in terms of corporate governance, their environmental policies, employment strategies and community involvement. The criteria aren't easy to fulfill. Yet companies have demonstrated an unprecedented willingness toward accountability and transparency.
However, Israel's business community is about to face tough challenges.
Israel is not immune to the global-markets meltdown. The unique intimate structure and size of the Israeli market means the country's business community won't be as severely hit by the financial earthquake as its American and European counterparts - but it will certainly feel the tremors.
In the wake of the financial crisis, companies will have to become much more effective by tightening their workforce and cutting expenses.
CSR could be one of the first areas to be perceived as luxury. Will companies cut spending on CSR and community investment? Will they put aside their social missions to allow short-term cuts and earnings?
This is certainly a questioning time, where old assumptions should be re-examined and re-assessed.
More than anything else, the current financial crisis is a crisis of trust. With that in mind, now is the time for more accountability - not less.
Companies - particularly those in the financial sector - will have to work hard to regain the trust of the public, consumers, investors and employees.
A driving force for innovation and competitiveness, CSR can be utilized as an effective tool for risk management and for examining the long-term impact of management decisions on multi-stakeholders.
Now is the time to fully adopt CSR as a tool to considering the long-term interests of company stakeholders - such as consumers, investors, suppliers and communities - by tightening regulations and expanding them to include more reporting, transparency and accountability, and by outlining new investment principles that are long-term, ethical, and environmentally and socially responsible.
Israel's corporate sector must not let the financial crisis hamper the immense strides made over the past 10 years in corporate social responsibility. It is the companies who will stick to their values and CSR practices who will be the ones who'll weather the storm in the long-term.
Talia Aharoni is founder, president and CEO of Maala - Business for Social Responsibility in Israel.
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