Act Locally: Israel’s Maala Shows How National Standards Can Move the Needle on Global CSR
Image: Maala releases its 2019 CSR Index at the Tel Aviv Stock Exchange on July 2.
This article series is sponsored by Maala and produced by the TriplePundit editorial team.
Global reporting systems have become a mainstay of major multinational companies seeking to track their progress on human rights and environmental impact. However, some companies may benefit from a more detailed accounting that focuses on national issues. Maala, Israel’s corporate social responsibility (CSR) standards-setting organization, shows how a nation-based CSR rating system can help companies balance global priorities with what’s happening in their own communities.
The power of nation-based metrics
As we often report here on TriplePundit, investors are increasingly interested in companies’ CSR performance. Globally, sustainable and socially responsible investing now represents more than $1 in every $4 under professional management, according to the Global Sustainable Investment Alliance.
The impact of global indices like the Dow Jones Sustainability Index are well recognized: They serve as a stamp of quality for investors and help companies see how they stack up compared to their competitors. Nation-based indices are less recognized and used. In Israel, Maala shows how nation-based data can help companies—particularly those that are large in their local market but have limited or no international operations—apply global sustainability and CSR standards locally.
A nonprofit corporate networking organization founded in 1998, Maala publishes the Maala CSR Index annually on the Tel Aviv Stock Exchange (TASE). Based on the research this rating provides, the TASE offers three sustainability indices for investors, which represent about 50 percent of the total market value traded on the exchange.
The nonprofit first developed the rating 15 years ago and continues to update the criteria, which is now recognized as the voluntary standard for CSR in Israel. Released on July 2 at the TASE, the 2019 Maala Index includes 161 companies that receive the highest marks from Maala on CSR and sustainability.
Leveraging corporate culture
Maala’s corporate network comprises 120 companies, including leading Israeli companies, as well as multinationals with operations in Israel. Maala CEO Momo Mahadav cites Israeli corporate culture as a key factor in developing the index, which can be both a challenge and an opportunity.
“A lot of major ratings and sustainability analyses have been done in Europe and the United States, where most of the major players are multinational companies,” he explains. “Companies this size are somewhat different than a nation-centered company, in terms of their internal procedures and management systems.”
Specifically, Israeli companies tend to have leaner corporate headquarters than global firms, Mahadav explains. Without excess layers of staff as a cushion, executives at Israeli companies may be more directly exposed to local issues that can have an impact on their progress toward their sustainability goals.
Zeroing-in on diversity
That closer connection with local issues is reflected in Maala’s approach to rating Israeli companies on CSR—particularly when it comes to diversity and inclusion.
Diversity is a foundational challenge for most businesses and is especially fraught in Israel. Ratings based simply on numerical percentages—in other words, the number of women or underrepresented groups employed by a company—only address a fraction of the issue.
To be truly inclusive, Israeli companies cannot focus only on quantity, Mahadav explains. They also need to develop internal processes that enable people of all backgrounds to make progress in their careers—and work like this cannot be measured by numbers alone.
By providing space for qualitative benchmarking, the Maala index allows companies to see beyond short-term, quantifiable gains and focus on the long term. “Even organizations with vast diversity efforts may occasionally find it difficult to gain 'quick wins,’ and it may take a number of years until the change they've initiated will show,” explains Tal Yallon, former executive director of the Israeli Forum for Employment Diversity. “As [the Maala index] examines both quantitative and qualitative performance, it enables companies to measure their performance internally throughout the process.”
The index also serves as motivation, allowing companies to benchmark against their peers on best practices that reflect “the current bar that companies should aspire to,” says Yallon, who was recently succeeded by Noa Tron as executive director of the Forum.
Setting the bar for CSR
As for how to set that bar, Maala looks beyond its network of business stakeholders to assemble an independent committee of volunteer experts, which updates the CSR index on a continual basis. Included in the committee are members of academia, non-governmental organizations and government agencies, as well as leaders in the business community.
“It is a mechanism that defines the consensus as to what is required from a company that is committed to sustainability and CSR,” Mahadav says of the committee. “It is a powerful mechanism, and it enables other stakeholders to come forward with issues they feel are urgent and relevant, in Israel and globally.”
To be considered for inclusion on the index, companies fill out questionnaires reflecting both their negative and positive impacts on people and the planet. These surveys address not only global issues, but also “areas that complement priorities in Israel,” Mahadav says, allowing companies to put a greater focus on their local impacts. “Most global questionnaires won’t go into those kinds of details,” he adds.
The next Maala questionnaire, for example, includes a comprehensive new chapter on employees—with a focus on reporting metrics related to social mobility, especially for employees in entry-level positions. The new chapter also covers broader social issues like in-work poverty and inclusive growth, and it looks ahead to the impact of foundational trends like automation, increased lifespans and careers after retirement.
Next steps for progress
As demonstrated by social conflict in the U.S. and elsewhere, progress is more like a maze than a stepladder—peppered with dead-ends and circular pathways that can keep the end goal out of reach for generations. Nation-based reporting systems offer an important tool for accelerating change. By putting broad-sweeping global efforts in a local context, rating systems like Maala’s help companies identify areas where they’re best positioned to drive impact in their own communities—efforts that, in turn, support the global push for sustainability and social equity.
As a nation-based reporting system, the Maala index provides Israeli companies with a forum for competing with one another and claiming hometown glory within their own “club,” as well as on a global stage.
In other words, the Maala index gets to the heart of human nature and our drive to compete not only on a global scale, but also within a community. “Elevating local standards is the primary goal,” Mahadav concludes.
Image credit: Ilan Spira