SURPRISES CAN VARY

The world economic crisis has raised many questions to which international organizations and major research centres are trying to find an answer. They talk about many causes and ways out of the current situation. Several Western experts think that major companies could ease their plight, even avoiding bankruptcy and redundancies, if they observed the norms of corporate social responsibility (CSR). This is the opinion of the US Chamber of Commerce's chief consultant on CSR and professor at the Business School at Britain's Middlesex University, Michael Hopkins. He shared his views on the economic situation today in the world and Azerbaijan in an exclusive interview with Region+.

 -Mr Hopkins, to start with I would like to know what CSR really means and how failure to observe it can have an influence on the state of a business? 

- Corporate social responsibility is a respectful and right attitude on the part of a company towards its employees, management, partners, suppliers and contractors. The company must be aware of its social responsibility towards them and settle its debts on time. For example, CSR is strictly observed in such giants of the world economy as Chevron, Exxon and Coca-Cola. These companies even have whole departments on CSR. In other words, serious companies think this is very important and, research has shown, confidence grows in them as a result. A survey conducted in the USA showed that 86 per cent of consumers prefer to buy the products of companies that meet their social obligations and do charitable work. 

- But could failure to observe CSR really change the economic situation?

- If we look at the causes of the current economic crisis, we can see that major companies and banks are experiencing credit problems. Loans were often made to people who were unable to repay them. But if CSR principles had been observed, these problems would either not have arisen or been resolved much more easily.

- What's the situation in Azerbaijan? Are companies observing CSR norms?

- I would like to draw attention to one thing. When the Baku-Tbilisi-Ceyhan pipeline was still under construction, BP-Azerbaijan established a link with the public in the territory that the pipeline was to cross. The people were informed about the significance of the project and some 100 million dollars were allocated to them in compensation. This is observing CSR. In a case like this, trust grows in the company on the part of the public and the company's partners and the company's rating goes up accordingly. Companies operating in Azerbaijan, especially local business structures, should worry about their future. Famous American investor Warren Buffett said: "It takes decades to win trust and just one day to lose it." 

- Many experts think that the world economic crisis has not had a major effect on Azerbaijan. Do you agree?

- We ourselves forecast an oil price of between 40 and 50 dollars per barrel this year. But you saw that oil was initially 150 dollars and then even higher. Even though the Azerbaijani government factored in a price of around 70 dollars per barrel, your budget has emerged a winner. However, recently prices have begun to fall and, according to the latest statistics, have dropped to 40 dollars per barrel. And the price might fall further, too. This means that the economic crisis has not passed Azerbaijan by. At the same time, in comparison with its neighbours, the crisis is not making itself felt in particular in Azerbaijan. I think that if the oil income of recent years had been even better spent, the crisis would not have affected the country at all. The reality is that Azerbaijan's main income comes from the sale of oil and its price will remain around 40 dollars over the next six months, according to our forecasts. However, my forecasts might not be right and oil could go up in price again. There could be all kinds of surprises. 

- A while ago you were involved in a project in Baku by the name of "Let's convert black gold into human gold". How do you think Azerbaijan can turn black gold into human gold?

- The aim of the "Let's convert black gold into human gold" project was to look for the best ways to use oil income to develop the non-oil sector of the economy. The government of Azerbaijan has already begun work in this respect. It's too early to talk about results, but I hope that in the near future the Azerbaijani government will achieve major success.

- What's your assessment of the development of the Azerbaijani economy as a whole? 

- Azerbaijan is well ahead of other CIS countries. The current financial crisis has had more of an effect on its neighbours. The situation is worst of all in Russia. You probably heard the harsh questions put to Vladimir Putin when he was answering questions from the public on Russian TV. This is a clear indicator of the welfare of Russians and evidence that Putin's policy has led to misspending of oil income. 

- How might the global financial crisis turn out?

- We have already submitted our thoughts on this. Unfortunately, I cannot reveal them at the moment. 

- Well, there's nothing for it but to wait for the results and hope for the best.  Thank you for the interview.