Cablegate: Colombia's Tradition of Corporate Social

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FM AMEMBASSY BOGOTA
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RUEHQT/AMEMBASSY QUITO 7181

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SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON SOCI CO
SUBJECT: COLOMBIA'S TRADITION OF CORPORATE SOCIAL
RESPONSIBILITY CONTINUES TO GROW

1. (U) SUMMARY: Colombia has a long tradition of Corporate
Social Responsibility (CSR). Philanthropic foundations and
industry associations have, fueled in part by absences of
state presence or resources as a result of civil conflict,
provided social services and built infrastructure in areas
where the conflict made it difficult for the GOC to operate.
Private company CSR investment has risen exponentially in
recent years as companies seek to realize "win-win" benefits.
Together these three forms of CSR make Colombia a regional
leader in the field. As a result of this culture of activism
the GOC has enacted some CSR programs into law and has
created a formal mechanism to incorporate CSR into GOC
development policy design. END SUMMARY

Colombia's Rich CSR Traditions
------------------------------

2. (SBU) Colombia's history of CSR includes three distinct
strands: philanthropic foundations with a regional emphasis
on improving worker living conditions, industry associations
focused on infrastructure, and corporations that view CSR as
a strategic tool. Juana Oberlaender, Director of Enlaza
Colombia, a consulting company that helps corporations
develop CSR projects, told Econoff that modern corporate CSR
differs from the efforts of foundations and associations in
that it ties into specific corporate strategies and has
"hard" dollar benefits to companies through increased worker
productivity, public relations and lowered production costs
by incorporating environmentally friendly practices into the
production cycle. She thinks associations and foundations
will continue to have an important role in Colombian CSR, but
that corporate programs will become the dominant model.

3. (SBU) Irena Bello, the editor of a Colombian magazine
devoted solely to CSR, called Colombia a regional CSR leader.
Bello told Econoff that hard data on CSR in different
countries remains elusive, but a recent study found that
Colombia had 111 CSR foundations while Peru, Argentina and
Chile all had less than 60 such foundations each. Bello also
noted that 140 Colombian companies registered as
participating members of the UN Global Compact on CSR, but
Peru, Argentina and Chile respectively registered half or
less this amount.

Why Colombia?
-------------

4. (SBU) Oberlaender said Colombia's history of political
instability actually strengthened CSR. She said that
companies stepped into the gap to provide social services
where conflict made it difficult for the government to
operate. Oberlaender noted that Colombian CSR often focuses
on worker-oriented areas, such as education, housing, health
and food. Andean AFL-CIO representative Rhett Doumitt, a
frequent critic of Colombian companies, admitted to Econoff
that companies in Colombia often did more than their Andean
counterparts for workers because conflict-weakened unions
largely lacked the resources to create worker social safety
nets.

Providing Social Services
-------------------------

5. (SBU) Andres Penate, the head of CSR for
Bavaria/SABMiller, one of Colombia's largest beverage
companies, said that many large family-owned companies
established semi-independent foundations with a regional
focus (usually where the family came from) in the 1960s when
new tax laws made such donations tax deductible. Penate, the
former Director of the Department of Administrative Security,
said conflict spurred such foundations in two ways. First,
company founders with a "patron" relationship with employees
used foundations to provide services in areas where the GOC
had difficulty operating. Second, Penate said that wealthy
families saw CSR as a form of risk insurance to create
goodwill and insulate them from attacks against their
companies, or themselves.

6. (U) Penate pointed to the Carvajal Foundation as a
paradigm of a Colombian philanthropic foundation. The
Carvajal family created the foundation in 1961 by donating 35
percent of the shares (currently valued at USD 200 million)
of its 100 year-old multinational Carvajal company.
Foundation Director Roberto Pizarro told Econoff the
Foundation spends USD 10-15 million per year in the family's
home department of Valle del Cauca, especially in the slums
of Cali, on social programs for the poor focused on housing,

health, education, and entrepreneurial development. Pizarro
said the Foundation has trained over 50,000
microentrepreneurs and helped over 10,000 people own their
own homes.

Building Critical Infrastructure
--------------------------------

7. (SBU) In one of the most prominent examples of an
industry association involved in CSR, the National
Association of Coffee Growers (FedeCafe) and its 565,000
coffee-growing members have directed much of their CSR focus
on infrastructure. Maria del Pilar Fernandez, special
advisor to FedeCafe's Director, told Econoff that FedeCafe's
strong grassroots relationships in rural areas allowed it to
build critical infrastructure in areas with traditionally
weak GOC presence. Over an eighty-year history FedeCafe has
worked on infrastructure critical to the coffee industry in a
quarter of Colombia's municipalities, including building
6,000 aqueducts, 16,000 kilometers of roads and over 2,000
bridges. FedeCafe also constructed over 16,000 classrooms
and 50 health clinics. In 2007 alone FedeCafe spent USD 145
million on CSR activities with most devoted to infrastructure
development, quality of life, and productivity enhancement.

Creating "Win-Win" Corporate Programs
-------------------------------------

8. (SBU) John Karakatsianis, CSR Director for the National
Association of Industries (ANDI), Colombia's most powerful
private sector group, told Econoff that a recent survey
showed 98 percent of ANDI members had CSR programs with
average contributions of 2.7 percent of sales funding
programs in worker education and health with a growing
emphasis on environmental protection. Karakatsianis noted
that ANDI-member CSR investment more than quadrupled in the
last four years, from USD 100 million in 2003 to USD 450
million in 2007.

9. (SBU) Andres Penate pointed to Bavaria/SABMiller's CSR
as an example of the "win-win" model. Bavaria/SABMiller
invests USD 10-15 million per year in CSR, the majority of
which goes towards helping small Colombian farmers improve
and expand the production of domestic grains suitable for
beer. While this helps small farmers, Penate said it also
benefits Bavaria/SABMiller which buys the grain since
currency fluctuations will have less impact on the company,
the company will have tighter control over its inputs, and
the program will create up to 100,000 rural jobs for small
farmers thus giving Bavaria/SABMiller a large group of voters
on whom it could call when it needed "political goodwill."

Spearheading Government-Private Sector Collaboration
--------------------------------------------- -------

10. (U) CSR has lead the way in developing social programs
later adopted by the GOC. Karakatsianis said that in 1954
ANDI created the Family Compensation Fund of Antioquia to
ensure a "living wage." ANDI and 45 Antioquian companies
created the fund by matching 4 percent of workers salaries.
In 1957 the GOC adopted the idea and made such compensation
funds mandatory. Colombian companies now contribute over USD
500 million annually to such funds with 10 million Colombians
receiving benefits. Similarly, a Carvajal Foundation program
for microenterprise development evolved into a National Plan
for Microenterprise Development. The GOC recently began
institutionalizing the private-public CSR relationship with a
national "Roundtable on Sustainability." Chaired by the
office of the Vice-President, the Roundtable brings together
the private sector, various government branches, academia,
and labor to create a formal mechanism to incorporate CSR
into GOC development policy design.
BROWNFIELD

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