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Posted 11.2.05

One of the core CSR challenges of today is how to ensure the scalability of corporate efforts and close the governance gap that often prevents CSR from making a larger contribution to sustainable development. To that end, Business for Social Responsibility (BSR) has been involved in a year-long project to develop a coherent national CSR framework regarding the development of the private sector in El Salvador. At its annual conference in Washington, D.C., this month, BSR featured a case study on CSR development in El Salvador, inviting Armando Arias, president of the Sugar Association of El Salvador; Amy Luinstra, operations officer for social protection with the World Bank; and Ernesto Samayoa, advisor to the Minister of Economy for the Republic of El Salvador to discuss this issue.

The World Bank became involved with El Salvador when the Ministry of Economy asked for specific help in CSR education, hoping to improve labor standards and environmental practices in El Salvador, as well as evaluate the coffee and apparel sectors of the business community there. According to Luinstra, a subsequent survey of international buyers by the World Bank revealed that labor standards in El Salvador were at the top of the list in importance to outside business interests. She believes competitiveness in this country will continue to have something to do with labor standards and environmental practices highlighting the need for an industry-wide approach that involves the public sector.

“El Salvador finished a 15-year civil war,” Samayoa reminded the audience. “It has progressed a lot since then. We are now one of most open economies of Latin America with local and foreign investment, new markets, and improved health and education systems.”

The Ministries of Economy, Labor and Environment are working with three key sectors in the country - apparel, coffee, and sugar – which handle thousands of employees in many sectors of El Salvador. A new CSR project is in place in the sugar sector where they are working to develop new strategies with communities and stakeholders to support CSR and to produce sustainability. The sugar cane, coffee and corn industries in El Salvador provide the most important exports and involve almost 6% of the national population. The Sugar Association is a non-profit association and, according to Arias, about 15 years ago they noticed the association and the growers were on different sides of activities in this area. The sugar cane growers were trying to get higher prices and pay workers a lower wage. Arias says they now distribute on a better basis with 54.5% of the total income going to the growers and the rest to the mills. The partnership has proved to be an excellent way for CSR to develop between the growers and mills.

“Most of the sugar cane plantations are operated by peasants and people who now work their own land,” said Arias. “Income distribution has proved extremely responsible for all parties.”

In the mid-90’s the Sugar Association created a foundation to improve the living condition of grower’s families. The foundation does some work in conjunction with government of El Salvador. The result is that many children have been taken out of work in the sugar cane industry. According to Sugar Association figures, Arias says the country had a significant problem with child labor in sugar cane industry. That problem was very attached to other conditions in country, all the result of 12 to 15 years of civil war, which hurt the El Salvadorian infrastructure.

“We have reduced the number of children involved in child labor in the sugar cane industry by 60 percent,” said Arias. “These figures do not come from the sugar association, but from government and the NGO’s.”

Another CSR initiative by the Sugar Association has been the fortification of sugar with vitamin A to improve the health of low income persons. This initiative began 10 years ago after it was determined that a significant sector of the population suffered from the lack of vitamin A resulting in vision problems and eye disease. Samayoa believes the government should be a facilitator of different initiatives while private sector companies and associations should be working as actors of the initiatives. He believes the process should be more transparent ensuring they reach results in a better way.

Arias says the government is a facilitator for the private sector and has played a big role in El Salvador in trying to set the pace and rules for social responsibility for the private sector to follow. He believes the private sector has to see and feel people to be central to all its activities, but the government has to administer the taxes for the benefit of the people if they want the private sector to follow. Government, he says, should be very strict in following rules. Luinstra stated that a lot of the development needs are for public goods such as education and infrastructure, which are government areas. However, in El Salvador, the government may not be able to provide these things, so it is important to make sure that there is equal access for all. The government has a huge role in regulating private businesses and establishing CSR.

When asked by a Chevron executive about social cohesion in light of a long civil war and a history in the country of people feeling left out of the bigger picture and of fighting with one another rather than pulling together, Samayoa emphasized that, for the government, making people in El Salvador feel they are on the same team is the primary objective. Through large industries, they can share results and benefits that are brought from the private sector. It is tough to protect these initiatives, said Luinstra. She says there is a sense of fatigue; of wanting to do something that is immediately useful and worthwhile that others can eventually join in.

In response to a consumer product services manager who was a refugee to the U.S. from El Salvador fifteen year ago, Samayoa admitted that there is an issue with gangs who came back to El Salvador from the U.S. – primarily Los Angeles – after the civil war ended. Problems also exist in terms of providing opportunities in El Salvador, such as minimum wage, when the main opportunities for employment are in the apparel industry. The government and other sectors are working with the apparel industry to try to improve conditions to keep employment in El Salvador rather than losing it all to Asia.

By Janet Roberts

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