7a. CSR Past Present Future.pdf

8/14/2019 7a. CSR Past Present Future.pdf

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CSR Past, Present & Future

An overview of key trends & conceptsWayne Visser

CEO, CSR International

Before we begin

YOUR LEARNING EXPECTATIONS

Write down one question you have about corporate socialresponsibility (CSR), which you hope this course may

help to answer.

Be as specific as possible.

Introductions

Course Outline

09.00 - Registration 09.30 - The Evolution of CSR and related concepts

10.30 - Coffee Break

10.45 - CSR in a Developing Country Context

13.00 - Lunch Break 14.00 - CSR in Asia and India

15.30 - Tea Break

15.45 - ISO 26000, CSR 2.0 and the Future

17.00 - End

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Why is CSR Important?

Wealth Distribution

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Issue: Population growth

Source: UNEP

Global Warming

Corruption

World Consumption

Water Distribution

Global Obesity

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A Short History of CSR

CSR concepts & terms

CSR – 10 related concepts

Business ethics Business & human rights Corporate accountability Corporate citizenship Corporate governance Corporate social responsibility Corporate sustainability Environmental management Occupational health & safety Stakeholder engagement

The origins of CSR: 1850-1950

John H Patterson: National CashRegister

Cornelius Vanderbilt & John DRockerfeller

Macy’s of New York West Cork Railroad & Steinway

cases Pullman Palace Car Company Charter of Incorporation YMCA Community Chest Movement Barnard, Clark & Krep books Fortune Magazine survey

The development of CSR: 1950-2005

Bowen – Social responsibilities ofbusiness

Carson – Silent Spring Nader – Unsafe at any speed

Friedman – Social responsibility is tomake profits Schumacher – Small is beautiful Carroll – CSR pyramid Freeman – Stakeholder theory Elkington – Triple bottom line Prahalad & Hart – Bottom of the pyramid Porter – Strategic CSR

Exercise

Write down your definition of CSR Share with the class

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CSR and

Related Concepts

Definition: CSR

Economic

Ethical, and

Discretionary orphilanthropic

expectations that society has

of organisations

- Archie Carroll

Economic - Anglo American case

Value added statement(Africa) Employment (135,000

employees, value added $3.3bn)

Distribution of benefits(employees $1.9 bn,suppliers $4.2 bn)

Tax & related payments togovernment ($630 m)

Capital expenditure ($1.8 bn) BEE expenditure &

transactions ($835 m) Shareholders (32% South

African)

Economic – Unilever Indonesia & SA

Indonesia Jobs created

Direct: 7,069

Indirect: 293,695

Economic value added Direct: $212 million

Indirect: $421 million

South Africa

Jobs created Direct: Indirect ratio – 1: 22

Indirect jobs: 100 000

Source: Unilever & Oxfam Report, 2005Unilever & PwC Report, 2007

Legal - Anglo America

Principle “We respect the laws of host

countries” and “we will comply with all

laws and regulations applicable to ourbusinesses and to our relationship

with our stakeholders” Fines

Safety breaches ($235,000),environmental incidents ($40,000)

Ethical - Quote

Whenever an institutionmalfunctions asconsistently as boardsof directors have innearly every majorfiasco of the last forty orfifty years it is futile toblame men. It is theinstitution thatmalfunctions

Peter Drucker, managementauthor

Ethical - Anglo American case

Principle “We are implacably opposed to

corruption. We will not offer,pay or accept bribes orcondone anti-competitive

practices” Mechanisms

Whistle-blowing facility

Support of Extractive IndustriesTransparency Initiative

Philanthropic - Rankings

With $31 billion inassets, the Bill andMelinda GatesFoundation is theworld's largest charity.

Warren Buffett'sadditional $31-billioncommitment to the Bill &Melinda Gates

Foundation will fundefforts to improve globalhealth and U.S.education.

Philanthropic - Anglo American case

Chairman’s Fund 7,800 projects & $66 m in pastdecade

442 projects & $10 m in 2003

HIV/Aids

HIV wellness programme, 3,300employees $4 m to LoveLife AIDS charity Voluntary AIDS testing, 10% of

employees Free ARV treatment, all employees

Corporate Social Responsiveness

The capacity of a corporation to respond to socialpressures (Carroll, Wood, Frederick)

Carroll’s four strategies of responsiveness:

Reaction

Defence

Accommodation

Pro-action

Corporate Social Performance (CSP)

Principles of CSR Processes of social responsiveness

Outcomes of corporate behaviour Social policies

Social programmes Social impacts

Donna Wood

CSR Codes

Stakeholder Theory

Source: R. Edward Freeman in The A to Z of CSR

Stakeholder Management

Source: Novo Nordisk

Power Urgency Legitimacy

Environmental Management

Source: Richard Welford, in The A to Z of CSR

Health & Safety

Source: Richard Welford, in The A to Z of CSR

Sustainability (Triple Bottom Line)

Business Ethics

Source: Crane & Matten

Corporate Accountability

Source: Sillanpaa, A to Z of CSR

Human Rights

nal.org

CSR in Developing Countries

Exercise

Write down the mostimportant: Economic

Social

Environmental and Ethical

issue for developing countries(one for each)

Chart: Population age

Source: UN

Facts About Development

2.5b still live on less than $2 a day; poverty

reduction slowed down in the 1990s 10m unnecessary child deaths each year 115m children still out of school; average

years of schooling in South Asia half that of

rich countries; even lower in Sub-Saharan Africa Still more than 1b have no access to safe

water; 2.6b lack access to sanitation 18 countries with 460m people had a decline

in their HDI in the 1990s Since 1981, 65 million people have been

infected with HIV and 25 million have died of AIDS-related illnesses.

Source: UNDP

Mill i D l t G l

Millennium Development Goals

Source: UN

Overcoming poverty is not a gesture ofcharity. It is an act of justice. It is theprotection of a fundamental human right,the right to dignity and a decent life.

Nelson Mandela, Former President of South Africa

Exercise

Watch the Jeffrey Sachsvideo (extract)

CSR pyramid: North v. South

Developing

countries

Legal compliance Ethical conduct

Philanthropy

Economiccontribution

Source: Visser (2006)

Developed

countries

Philanthropy

Ethical conduct

Legal compliance

Economiccontribution

Source: Carroll (1979)

CSR pyramid: Guatemala

Policy engagement Community responsibility

Family responsibility

Economic responsibility

I R M t i

Issues v Responses Matrix

Energy / climate

Chemicals / pollution

Accounting scandals

Poverty / development

Human rights / labour

Corruption /transparency

Kyoto Protocol, EU Emissions TradingScheme, ClimateWise

Responsible Care, ISO 14001, ToxicRelease Inventory, Environmental duediligence

Corporate governance, Sarbanes Oxley,Global Reporting Initiative, AA1000

Base of the Pyramid, MillenniumDevelopment Goals, Global BusinessCoalition on HIV/Aids

Global Compact, SA 8000, UN Human

Rights for Business Extractive Industries Transparency

Initiative, NEPAD

Issues Responses

e v e l o p e d

D e v e l o p i n g

D l i C t CSR I

Developing Country CSR Issues

Role of legislation - BEE v. Env. rehab. Impact of voluntary codes - King II v. AA 1000 Influence of globalisation - Sentrachem v.

SPDC Poverty alleviation - Beyond philanthropy? HIV/AIDS - Beyond the gates? Transparency - Beyond corruption? Global vs local priorities - E.g. Energy v.

Health

Profitability vs disinvestment - E.g. AngloZambia Political vs corporate governance - E.g.

D i f CSR i D l i C t i

Drivers for CSR in Developing Countries

INTERNAL DRIVERS

EXTERNAL DRIVERS

Socio-

economic

priorities

Political

reform

Governance

Crisis

response

International

standardisation

Cultural

tradition

Investment

incentives

Market

access

Stakeholder

activism

Supply

integrity

Source: Visser, W. (2008)

Exercise

Choose a CSR leader inIndia or from a developingcountry

Discuss: What are the main issues

being addressed?

What is the approach toCSR?

What codes & standards arebeing used?

E i M k t S

Emerging Markets Survey

Argentina Brazil

Chile China

Colombia Czech Republic

Egypt Hungary

India Indonesia

Malaysia Morocco

Mexico Pakistan

Peru Philippines

Poland Russia

South Africa Thailand

Turkey

127 emerging marketcompanies (largest20% from eachcountry)

Compared with all the

companies in Japan,North America andWestern Europe

Source: Jeremy Baskin (2006); reworkedEIRIS data - 2005

Fi di (1)

Findings (1)

Average total score (out of 10)

4.1 3.8

Europe Japan North America Emerging markets

Findings (2)

Community/Philanthropy

6.25.9

Europe Emerging markets North America Japan

Findings (3)

Ethics

North America Europe Japan Emerging markets

Growth in ISO14001 Certifications

11,859

19,061

29,568

38,219

50,220

65,438

10,206

14,513

23,668

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1999 2000 2001 2002 2003 2004

Emerging markets

OECD High Income

Source: ISO Survey, 2005

Findings (5)

BRICS comparative scores

South Africa Brazil India Russia China

Overall scorePhilanthropyEthicsEnvironmentHuman Resources

Average scores: Europe (6.3); Japan (4.6); North America (4.1); Emerging mkt average (3.8)

Source: Jeremy Baskin (2006); reworked

EIRIS data - 2005

GlobeScan Polls

Source: GlobeScan (2005, 2007)

What is the most important thing a company can do to be

seen as socially responsible? The US, Canada and Brazil - community involvement

Australia, UK and much of Europe - protecting the environment

Mexico and China - quality and safety of their products

How responsible should companies be held for their impacton society More than 80% of Brazilians hold business responsible for its

performance in 10 dimensions of CSR

59% of British

57% of Americans

53% of Indians

46% of Chinese

Reputation Institute studies

Source: Reputation Institute

CorporateGovernance

1. Chile

2. South Korea

3. Australia4. Canada

5. India

6. USA

7. Italy

8. Mexico9. UK

Importance to corporate reputation of:

Social /Environment

1. Finland

2. Norway

3. Netherlands4. Denmark

5. Sweden

6. Portugal

7. France

8. Russia9. Poland

Workplace /Employees

1. Finland

2. Portugal

3. Denmark4. Canada

5. France

6. Brazil

7. Switzerland

8. Netherlands9. Poland

EIRIS Research

Source: EIRIS, 2007

High impact companies with advanced environmental

policies 90% in Japan

90% in Europe

75% in Australia/New Zealand

67% in the USA

15% in Asia (excl. Japan)

Companies operating in high-risk countries that havedeveloped a basic human rights policy 75% of European companies

40% of US companies

Bottom of the Pyramid (BoP)

The Nature of the BoP Market

There is money at the BoP Access to BoP markets BoP markets are brand-conscious The BoP market is connected BoP consumers accept technology

Create the capacity to consume Affordability Access Availability

Trust is a prerequisite Dignity & choice

Case: Grameen Bank & Microfinance

Now a $2.5 billion banking enterprise

with over 7 million active clients,affecting 35 million family members.

By 2007 there were 3,316 microcreditinstitutions reaching over 133 millionclients. 93 million (up from 7.6 million in 1997)

were among the poorest when they tooktheir first loan. Of these poorest clients,85% percent, or 79 million, are women.

The microcredit model has spread to

over 50 countries worldwide, from theU.S. to Papua New Guinea, Norway toNepal.

“Worms-eye view”

Exercise

What the Yunus interviewvideo

Case: Hindustan Lever Ltd (HLL)

Following the success of local firm Nirma Ltd in India,

Unilever redesigned its detergent business: Single serving sachets Reduced oil to water ratio (due to river & public water

use) Decentralised production, marketing & distribution Lower costs & margins

HLL has also developed a low-energy fridge thatallows ice cream to be transported across India instandard, non-refrigerated trucks

Case: Mobile Phones

Africa = 1000%growth in 5years

Mobile phones: Growth dividend

Vodafone Study – 92countries, 1980-2003

Philippines (penetration 27%)may enjoy 1% higher annualper capita income growth than

Indonesia (9% penetration)due to mobile phones

A developing country whichhas an average of 10 moremobiles per 100 population

between 1996 and 2003 wouldhave enjoyed per capita GDPgrowth 0.59% higher

No education

Primary

Secondary

Technical college

University

No education

Primary

Secondary

Technical college

University

Owners

Tanzania

Reasons for rapid growth

Shorter payback

period Lower skill levels

needed Lower barriers to

Business modelinnovations Prepaid system Grameen model of

micro-entrepreneurship

Mobiles as publictelephones

Telecentre models

Exercise

What is your assessmentof the BoP model? Strengths?

Weaknesses?

Social enterprise

1844 - 28 working men in Rochdale in

the UK scraped together £28 to opentheir own shop

1850s - Franz Hermann Schulze-Delitzsch established the first creditunions in Germany

1981 - Bill Drayton set up Ashoka inWashington

1984 - Panama Marcos McGrath andStephan Schmidheiny set up FUNDESin Panama

Klaus Schwab created the SchwabFoundation for Social Entrepreneurship

1991 - Café Direct and The Big Issuewere founded

Social enterprise

I like to support causeswhere "a lot of goodcomes from a little bitof good," or, in otherwords, where thepositive social returnsvastly exceed theamount of time andmoney invested

Jeff Skoll, First President ofe-Bay

http://www.skollfoundation.org/videos/

Exercise

Having selected andwatched a socialenterprise video, discuss: What was the issue?

How was it beingtackled?

What lessons can welearn?

Regional & National

Perspectives Asia & Malaysia

Exercise

Each is allocated one regional perspective

Please take 15 minutes to recap on these

Then summarise key insights to the group

Discuss What do regions have in common?

Are the any distinctive characteristics?

Report back to the class

Top 10 Issues in Asia

1. Climate change

2. Corporate governance

3. Labour & human resources

4. Environmental issues

5. Partnerships with stakeholders

6. Regulation & leadership from governments

7. Community investment & pro-poor development

8. Product responsibility

9. The professionalisation of CSR

10.Bribery & corruption

Influencers of CSR in Asia

CSR Asia 2008 Barometer

Malaysia Top 5

Asia Top 10

CSR Asia 2007 Study on CSR in Malaysia

CS s a 00 Study o CS a ays a

Sample Size = 200

Study commissioned by Bursa Malaysia

Exercise

Discuss What is the state of CSR

in Malaysia?

What are the priority

issues? Where has the most

progress been made?

Where is there still room

for improvement?

Exercise

Review a CSR report from a Malaysiancompany

Summarise key insights to the group

Discuss Does this reflect the wider Malaysian

experience? Are the any distinctive characteristics?

Report back to the class

CSR and the Financial

Crisis

The Cost of Financial Crises

Size of the Financial Crisis

2007 Figures only

Causes: Irresponsible Banking?

Causes: Irresponsible Financial Markets?

Warning: The Casino Economy

" Speculators may do no harm asbubbles on a steady stream of

enterprise. But the position is

serious when enterprise becomes

the bubble on a whirlpool of

speculation. When the capitaldevelopment of a country

becomes a by-product of the

activities of a casino, the job is

likely to be ill-done.‖

John Maynard Keynes

Causes: Irresponsible Corporations?

―The corporation has a legally defined mandate to

relentlessly pursue—without exception—its own self-interestregardless of the often harmful consequences it might

cause to others. Lying, stealing, killing are not rare

aberrations but the duty of the corporation when it serves

the interests of its shareholders to do so.‖ – Joel Bakan

Causes: Irresponsible Executives?

Causes: Irresponsible Capitalism?

How will the financial crisis affect CSR?

CSR International Blog Poll (October 2008)

44% StrengthenWeaken

Change

No Effect

Source: www.csrinternational.blogspot.com

Implications for CSR?

Philanthropic CSR will be

worst hit

Legal compliance

Ethical conduct

Philanthropy

Economic contribution

Visser (2006)

Source: Visser, W. (2008) Corporate social responsibility indeveloping countries, In Crane et al., The Oxford Handbook of

Corporate Social Responsibility , Oxford: OUP, 473-479.

CSR Pyramid for Developing Countries

Strategic CSR will be less

affected Example: Coca Cola &

Source: Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, by Michael E.

Porter & Mark R. Kramer

Implications for SMEs

The supply chain and eco-efficiency will continue to bethe most powerful driversfor CSR in SMEs

SMEs through their leaders

often have strongerphilanthropic commitment

Beyond this, SMEspractices “implicit” rather

than “explicit” CSR

Embedded CSR willbe the least affected

―CSR can only be resilientif it is part of the DNA ofan organisation, i.e. CSR

will only survive thevagaries of fickle markets,fluctuating profits,financial crises andleadership whims if it is

totally embedded in thecorporate culture, strategyand governance systems‖ – Wayne Visser, 2008

Environmental / moral

Community /social

Human /labour

Financial /

Economic

CSR 2.0 Double-Helix Model™

The Future of CSR

The evolution of responsibility

1970sShareholders

1980sPhilanthropy

Late 1990sStakeholders

Engagement

Late 2000sResponsible

Competitiveness

Engagement

1980sPhilanthropy

Early 1990sCorporateGovernance

Early 2000sCorporate

Accountability

Engagement

1970sShareholders

1980sPhilanthropy

Engagement

The evolution of sustainability

1970sQuality

management

Late 2000sSustainable markets

Early 1990sEnvironmentalmanagement

Early 2000sTriple bottom line

1980sHealth & safety

Late 1990sHealth, safety

& environment

CSR 2.0 as the new DNA of Business

ISO 26000: Fit for the future?

Principles, including: Accountability,

Transparency, Ethics,Stakeholder interests,Rule of Law, Internationalnorms, Human rights

Core subjects, including: Governance, Human

rights, Labour,Environment, Fairoperating practices,

Consumer issues,Community involvement& development

Integration, including:

Organisational characteristics Understanding SR of

organisation

Communication on SR

Enhancing credibility of SR

Reviewing & improving SR Voluntary initiatives on SR

Curse 1 – Incremental CSR

Source: ISO

Curse 2 – Peripheral CSR

Source: Greenpeace

Curse 3 – Uneconomic CSR

CSR 1.0 – Burying the Past

Web 1.0 and CSR 1.0

Web 2.0 and CSR 2.0

Principle 1 - Creativity

Principle 2 - Scalability

Principle 3 - Responsiveness

Principle 4 - Glocality

Source: Marketing Responsibly, IBE/Mallen Baker,

Principle 5 - Circularity

Source: Marketing Responsibly,IBE/Mallen Baker, 2009

CSR 1.0 versus CSR 2.0

CorporateSocialResponsibility Philanthropic

Risk-based Image-driven Specialized Standardized

Marginal Western

Corporate

Sustainability &Responsibility Collaborative Reward-based Performance-

driven Integrated

Diversified Scalable Global

CSR 1.0 versus CSR 2.0: Shifts

CSR premium

Charity projects CSR indexes CSR departments Ethical

consumerism Product liability CSR reporting

cycles Stakeholder groups Process standards

Base of the pyramid Social enterprise CSR ratings CSR incentives

Choice editing Service agreements CSR data streams Social networks

Performancestandards

CSR 2.0 as the new DNA of Business

The Challenge Ahead for CSR 2.0

As with Web 2.0, the success of

CSR 2.0 will depend on:

C = CREATIVITY

S = SCALABILITY

R = RESPONSIVENESS

2 = GLOCALITY

0 = CIRCULARITY

What Have We Got to Lose?

Good Luck!!!

You can doanything you

set your mindto when youhave vision

Optional Exercise

Watch the rest of the JeffreySachs interview video

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