Corporate Social Responsibilty by Petronas

1.0 INTRODUCTION

There are many definitions of CSR. However, CSR basically is the process of accessing an organization’s impact on society and evaluating their responsibilities. CSR begins with an assessment of a business and their customers, suppliers, environment, communities and employees (Bell, 2016). It is a long term approach to business that addresses the needs of communities, people in their employers. It provides a framework for successful enterprise or organization that is harmonies with its surroundings. CSR also is an opportunity to generate honest, authentic good-news stories that a business and its community can be proud of. Another definition of CSR is referring to business practices that involve initiatives that give benefits to the society. A business’s CSR can contain a wide variety of tactics, form giving away a portion of a company’s proceed to charity, to implementing “greener” business operations (Caramela, 2016).

The objectives of CSR are to integrate long-term economic, environment, and social aspects in their business strategies while maintaining global competitiveness and brand reputation. By doing CSR, it will help the organization in fostering loyalty by investing in customer relationship management, and product and service innovation that focuses on technologies and systems, which use financial, natural, and social resources in an efficient, effective and economic manner over the long term. CSR can involve a range of activities such as working in partnership with local communities, socially responsible investment (SRI), developing relationships with employees and customers, and environmental protection and sustainability. Some businesses have as their main purpose the fulfilment of social or environmental goals, as opposed to a business that tries to achieve its financial goals while minimising any negative impact on society or the environment. For Starbucks, the objective of CSR program is to help inspire the employers and employees to be a better citizen, especially to nation’s youth. For Prudential, their CSR mission is to focus on helping communities establish those fundamental ‘building blocks’ essential for their long-term futures. They focus on areas such as education and life skills; disaster readiness and relief; and wellbeing and protection (Prudential, 2016).

There are three major types of CSR which are education, health and environment. In term of education, Mr Sanjeev Jain, the head of GE India Volunteer said, education is the key to successful life. It builds skills, gives a perspective to the young minds and therefore we emphasize on education in the formative years (ET Bureau, 2010). Many companies involve in giving CSR on education. For example, Starbucks have plenty CSR programs such as Starbucks College Achievement Plan to help youth gain a degree (Starbucks, 2016).

The vision of the Ministry of Health to work towards a healthy nation, many company has created CSR programs to support the nation’s agenda and recognize the importance of healthcare. Most organizations seek to raise the healthcare standards in Malaysia through reaching out and educating the community on health issues and to take charge of their health. For example, Sunway has reinforced the commitment in driving Sunway-owned buildings within the 800-acre Sunway City to be 100% smoke-free by 2018, thus creating a healthy and smoke-free environment for its stakeholders. Sunway has developed a Sunway Smoke-free Workplace Policy in 2014 to educate its employees of the benefits of a smoke-free environment. Currently, Sunway Medical Centre, Sunway University, Monash University Malaysia, Sunway Pyramid and Sunway Resort Hotel & Spa are smoke-free (with designated smoking areas). Sunway Medical Centre and the learning institutions in the Sunway Education Group often times organise smoke-free awareness campaigns and public health forums. Sunway Health Awareness Programme includes kidney and liver health by conduct health screenings around the nation and provide early detection and prevention of kidney disease (Sunway, 2016).

Environment is important as it one of the top priority issues in the world. Many companies also involve in contributing CSR in environment area while preserving and enhancing the quality of life for employees, customer and neighbours. For example, Starbucks introduce environment program such as Recycling & Reducing Waste to educate their customers by increasing recycling, promoting reusable cups and reducing the waste associated with their cups and other packaging (Starbucks, 2016). For Sony, their involvement in environment makes them to create a program “Road to Zero Sony’s Global Environmental Plan”. Sony’s recycled plastic called SORPLAS, Sustainable-Oriented Recycled Plastic, developed many Sony products by using remarkable material such as the 2015 FDR-AX/P30 series all incorporated a type of SORPLAS made with post-consumer recycled water bottles, which also supports recycling (Sony, 2016).

This paper is focusing only on CSR by PETRONAS in the field of education and will be look in the impacts of doing CSR on society, business and economy as a whole.

2.0 CSR UNDER PETRONAS IN EDUCATION

PETRONAS offers academic sponsorships to deserving students every year under its Education Sponsorship Programme. Since 1975, PETRONAS has sponsored more than 30,000 scholars under this programme, making PETRONAS one of the major education corporate sponsors in Malaysia. Under this programme, PETRONAS adopt an integrated approach in its investment in education, learning, and human capital development to help develop a well-rounded society that covers a broad spectrum of investment, one of which being the students.

2.1 TYPES OF PETRONAS’S SPONSORSHIPS

2.1.1 PETRONAS Education Sponsorship Programme (PESP)

PETRONAS continues to invest in developing and enriching its pool of talents through provision of sponsorship to deserving local students and from host countries to study in Malaysian and foreign universities for them to achieve academic excellence. The high requirements in the scholarship selection process are in place to ensure the quality of sponsored students is maintained. PESP enables deserving students to realise their academic pursuits and career aspirations.

2.1.2 BUDI-PETRONAS programme

Together with MARA, PETRONAS provides sponsorship to selected students from underprivileged families studying at six (6) MRSMs in Sabah and Sarawak (three at each state). The students will receive yearly education allowances to pay for their school uniforms, text books, sports attire, learning aids, and other basic needs. The programme aims to instil learning interest amongst students and motivate underprivileged students to stay in school while promoting interest in Science, Technology, Engineering and Mathematics (STEM).

2.2.3 VISTA Trainees Sponsorship

        Focusing only for VISTA institutions in Sabah and Sarawak, the main target of this initiative is to provide financial assistance to the selected trainees under VISTA programme that comes from underprivileged families. Under this initiative, the selected trainees will receive: preparatory allowance (preparation to join programme, including mobilisation), and course completion allowance (de-mobilisation).

3.0 IMPACTS OF PETRONAS’S CORPORATE SOCIAL RESPONSIBILITY ON SOCIETY, BUSINESS, AND ECONOMY

        The impact of corporate social responsibility for education are usually correlated with the human capital development theory. Education is a key element of human capital theory because it is viewed as the primary means of developing knowledge and skill. Most research around the human capital development and education is based on Mincer’s human capital earnings function, which predicts that earnings are a function of educational attainment and work experience.

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Figure 3.0: Potential Earnings with Different Educational Level

        Figure 3.0 above shows the differences between the potential earnings of high schools graduates and the college graduates. At the early stage, a person that choose to work immediately after graduated from high schools (age 18), will earn salary up to the retirement age (65). The salary will continuously increase as the experiences and skills increases. However, for those whom choose to pursue their studies after graduated from high schools will incur losses known as forgone earnings because they have to pay for the tuition fees. These losses are known as the investment to improve skills and knowledge level. However, once they graduated from college, they started to earn more than the high schools graduates and will continuously increase parallel with their experiences. This theory predicts that increased knowledge and skills will yield improved economic outcomes for both individuals and societies, especially in modern societies, where it is widely held that knowledge and skill convey a greater economic and social premium than in the past.

In relation with PETRONAS as one of the major education corporate sponsors in Malaysia, PETRONAS is committed to developing the people by providing education particularly in the field on science and technology. They are determined to create a skilled human resource base for Malaysia through various schemes. Through all of their programmes offered, young Malaysians have been able to pursue higher education in Malaysia and abroad. Some of these students come from a less privileged background. By helping them, it will give the opportunity to pursue their academic dreams, and create a better future for them and their families that will give contribution to society.