Corporate Social Responsibility. A Case Study of SABIC Organisation in Saudi Arabia

1.0 Introduction

Corporate Social Responsibility (CSR) is a responsible corporate behaviour that allows for voluntary sacrifices of corporate resources for the public benefit without consideration of the direct economic benefits. This is supported by Investopedia (2022) which identify the CSR as a self-regulating business model assisting an organisation in becoming socially accountable of itself, stakeholders and the general public. Specifically, in Saudi Arabia, which is the main focus country in this report, CSR is a strategy contributing to increased consumer trust, community life improvement, employees recruitment and retention with an improved financial performance without any formal organisation of these initiatives under a single CSR. Particularly, the scope of CSR has been broadened between the year 1990 to 2005. It is within this period that after the global economic recession, organisations have been prompted to invest in appropriate CSR in order to increase the public benefit with minimal preference of profitability or market dominance. Owing to the importance of the CSR to the organisations sustainability, it is essential to evaluate the best practice in the business environment. This is by focus on the SABIC organisation operating in Saudi Arabia (KSA).

  1. Aims

The aim of this report is to evaluate the concept of Corporate Social Responsibility (CSR) and its successful implementation in SABIC organisation in KSA. Through the application of content analysis methodology, the concept of CSR has been evaluated in depth. This is with appropriate conclusions and recommendations being made.

  1. Objectives

In order to achieve the identified report aim/goal, the following objectives would be pursued;

  • To evaluate the concept of CSR
  • To analyse the implementation of CSR activities in SABIC organisation
  • To investigate the CSR logics or institutional pressures in context of SABIC Organisaton in in KSA
  • To analyse the challenges of CSR implementation in SABIC organisation
  • To generate recommendations on the best practice of implementing CSR activities in SABIC case study organisation in KSA
    • Organisation Background

SABIC was founded in 1976 through a royal decree where over the years it has demonstrated amicable growth and development in terms of their capacity to do what others said could not be done. Currently, as evidenced in SABIC (2022) the organisation is ranked as the world’s largest petrochemicals manufactures with SABIC being a public sector organisation operating in Riyadh, Saudi Arabia. In regard to the organisation ownership, 70% of the organisation shares are owned by Saudi Aramco with the rest 30% being publicly traded on the Saudi Stock Exchange. Currently, owing to the organisation success in their practices in more than 50 countries, they engages an upward of 32,000 talented workforce. The organisation business profile is primarily in Petrochemicals, Agri-Nutrients and specialists and one standalone organisation which is metals. They consistently offer support to their clients through an identification and development of opportunities in their core end markets including construction sector, medical devices, packaging, Agri-nutrients, electrical and electronics, transportation and in clean energy (see figure 1);

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Figure 1: Summary of SABIC Background information

A success of the organisation is credited from its holistic investment in sustainability which is identified in SABIC (2021) as being guided by their preference of becoming the major chemical supplier by 2025. This entail building of a high-level resilience core for developing a foundation for the business thriving today and in the future.

2.0 Corporate Social Responsibility (CSR) Evaluation

As evidenced in Khan et al. (2012) it is significantly challenging defining the concept of CSR. This is due to lack of a sensible and consistent definition from the different bewildering range of concepts and definitions existence in the available literature. There are different proposed definitions of the concept of CSR which are in existing with its theoretical development and measurements being a significant issue. The definition of CSR used in this report is that the process entail a responsible corporate behaviour allowing for voluntary sacrifices of the corporate resources for the holistic public gain without consideration of direct economic benefits. This definition is supported by CFI (2022) study which identify CSR as a set of strategies that organisations prioritise by putting into action as part of the corporate governance set for ensuring such an organisation operations are both ethical and beneficial to a particular society. In summary, the categories of CSR which can be pursed in an organisation is summarised in table 1;

Category of CSR ActivityDescription
Environmental responsibilityThis entail a set of strategies implemented in an organisation for lowering the pollution and the greenhouse gas emissions and the sustainable application of natural resources
Human rights responsibilityThe human rights responsibility initiatives offer a fair labor practices such as equal pay for equal work and fairness in trade strategies and disallowing the child labor
Philanthropic responsibilityThis is inclusive of practices which entail offering funding to a series of educational programs, support of health initiatives, donation for causes, and support of community beautification initiatives
Economic responsibilityThis is a practice where an organisation harness the organisation business activities while engaging in sustainable strategies including manufacturing process for minimising wastage without any profitability or gaining from this

Table 1: Summary of the CSR Activities Categories

The foundation of CSR is identified in Riano and Yakovleva (2019) to be transitioned from the immense discussions on the role of business in society. Initially, prior its emergence, there had been immense negative outcomes of business results of organisation operations including the children labour, poor work conditions, unpaid overtime hours and environmental degradation. For the large organisations which have significantly embraced the use of CSR to ensure that they positively impact the population politically, economically, and institution-based and responding to the immense changes in societal concerns. Hence, Riano and Yakovleva (2019) note that the CSR is a voluntary practice and not imposed by existing legislations and inclusive of corporate actions which transition past their responsibilities to shareholders for reaching out to their clients, employees, suppliers and different communities. Nevertheless, despite of the CSR activities being non-profitable to an organisation, Revathy (2012) identify that the CSR harnesses success in promotion of appropriate organisation value which harness the business practices and their active operations. The rationale of this is that organisations are in a position of pursuing various policies for making effective decisions or following them in line with objectives and values of their society. To affirm this, the Agency Theory is applicable which evidence that corporations are responsible to both the stockholders as they are found authorising the management in operating corporations. This is with the social contract theory informing the scope in which organisations engage in implied contract with the society by necessitating them in being faithful to their functions and developing the society under the contract. In this context, Rahman et al. (2019) has noted on the success of the organisations in embracing competencies in environmental protection, education programs and human development and more.

2.1 CSR in Saudi Arabia

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